Pace M.B.A. students to serve as finance consultants at Securities Arbitration Clinic

Pace M.B.A. students to serve as finance consultants for small investors helped by Securities Arbitration Clinic
of Pace Law School

FOR IMMEDIATE RELEASE

Contact: Bill Caldwell, Office of Public Information, Pace University, 212-346-1597, wcaldwell@pace.edu

Pace M.B.A. students to serve as finance consultants for small investors helped by Securities Arbitration Clinic
of Pace Law School

New initiative allows law student interns and M.B.A. students to collaborate and learn from each other

White Plains, New York – February 3, 2003 – Pace University’s Lubin School of Business is collaborating with the Securities Arbitration Clinic (SAC) of John Jay Legal Services, Inc. at Pace Law School to enrich the service and curricular strength of both programs. In this interdisciplinary endeavor, M.B.A. students of the Lubin School will serve as finance consultants to the SAC and provide expert financial opinions on transactions in the client brokerage accounts of the clinic.

The Securities Arbitration Clinic at Pace Law School provides assistance to small investors who are unable to obtain legal representation because of the small amount of their claims. Law students, under the supervision of a faculty member, represent brokerage firm customers in handling their disputes with broker-dealers that must be resolved in arbitration.

Typically, law firms are not willing to handle securities arbitration cases where the amount of the claim is less than $50,000. The SAC specializes in these kinds of cases, providing service to those in the community who have small claims and need legal assistance in disputing and resolving broker misconduct.

“This collaboration will provide SAC student interns access to financial analysis to better understand our clients’ claims of wrongdoing by brokers,” said Jill Gross, Visiting Professor of Law and co-director of the Securities Arbitration Clinic. “Students will be trained in working with consultants and experts, a key aspect of lawyering in almost any area of practice.”

In turn, the M.B.A. students will learn to decipher actual (rather than simulated) investors’ account statements, understand brokerage firm conduct and trading, and work with lawyers on substantive cases. Dr. Ronald Filante, associate professor and director of the Student Managed Investment Portfolio at the Lubin School, will supervise the M.B.A. students.

“We expect this interdisciplinary curriculum approach to be a tremendous benefit to our students,” said Dr. Filante. “The experience gained by the students in our clinic will be extremely valuable when pursuing careers in both law and finance. Furthermore, the interaction between faculty from the business and law schools of Pace fosters the community of spirit and purpose that characterizes all great institutions of higher learning.”

Pace is a comprehensive, independent university with campuses in New York City and Westchester County, and a Hudson Valley Center located at Stewart International Airport in New Windsor. More than 14,000 students are enrolled in undergraduate, graduate and professional degree programs in the Dyson College of Arts and Sciences, Lubin School of Business, School of Computer Science and Information Systems, School of Education, Lienhard School of Nursing and Pace Law School.

New Study Shows Mutual Fund Rating Services Possess Little Ability to Predict Winning Funds

Although mutual fund rating services state that their ratings should not be used as signals of future performance, the simple fact is that investors and financial consultants do use the ratings to choose funds in which to invest. A new study, conducted by researchers at Pace University’s Lubin School of Business, concludes that mutual fund rating services like Morningstar and Value Line show little ability to predict winning funds, and cautions those who use ratings as signals of future performance.

Contact: Bill Caldwell, Office of Public Information, Pace University, 212-346-1597, wcaldwell@pace.edu

New Study Shows Mutual Fund Rating Services Possess Little Ability to Predict Winning Funds

New York, New York – January 15, 2003 – Although mutual fund rating services state that their ratings should not be used as signals of future performance, the simple fact is that investors and financial consultants do use the ratings to choose funds in which to invest. A new study, conducted by researchers at Pace University’s Lubin School of Business, concludes that mutual fund rating services like Morningstar and Value Line show little ability to predict winning funds, and cautions those who use ratings as signals of future performance.

“Investors should be very cautious about interpreting mutual fund ratings,” said Matthew Morey, Ph.D., associate professor of finance at the Lubin School and author of the study. “Ratings should be used as measures of past performance, and investors should remember that the ratings are of dubious help in terms of predicting future winning funds.”

The new Pace study examines two issues. First, the study documents the mutual fund ratings/rankings methodology of the Morningstar, Value Line and Lipper Analytical systems. Second, the study investigates the out-of-sample predictive ability of the Morningstar and Value Line ratings.

The findings are as follows:

1. Analyzing the ratings methodologies, the researchers find the Morningstar system “emphasizes expense, load and risk-adjusted returns where risk is defined as downside risk”. On the other hand, the Value Line system “emphasizes the persistence of fund performance, i.e., the ability of a fund to consistently out-perform other funds in terms of simple (non-expense, non-load, non-risk adjusted) returns. There is also a difference in the time horizons that the two systems examine: Morningstar uses a system that emphasizes a fund’s long-term performance (up to 10 years), while Value Line uses a shorter period of time (up to five years). While both Morningstar and Value Line rate mutual funds on a scale of 1 to 5, the Lipper Analytical system, conversely, separates funds into many styles that are determined by Lipper itself, and then ranks funds in each of the defined styles from top to bottom by their total return. Lipper does not provide any formal ratings for funds.”

2. In terms of the predictive ability of the Morningstar and Value Line ratings, the researchers use “an approach that is robust to survivorship bias and load-adjusted returns.” Furthermore, the researchers use four different measures of “out-of-sample” performance and also examine alternative ratings systems that are based on simpler methodology than the Morningstar and Value Line systems. The researches note three findings in this analysis:

a) “Neither of the ratings systems, nor the alternative ratings systems, are able to successfully predict winning funds. Specifically, the researchers find that the difference in out-of-sample performance between top-rated and median-rated funds is never significant with the correct signs and sometimes actually has the incorrect signs.”

b) “There is some ability using risk-adjusted measures to predict losing funds, as the lowest rated funds do have lower levels of out-of-sample performance than other funds.”

c) “There is some weak evidence that the Value Line system actually predicts future performance better than the Morningstar system. However, this result only holds for the poor performing funds and only for the Sharpe index and Jensen alpha performance metrics. The Morningstar system is able to better predict future performance using the more complicated 4-index alpha performance metric.”

This study appears in the current issue of the Journal of Investment Consulting. For a copy of the paper, email wcaldwell@pace.edu .

Pace is a comprehensive, independent university with campuses in New York City and Westchester County, and a Hudson Valley Center located at Stewart International Airport in New Windsor. More than 14,000 students are enrolled in undergraduate, graduate and professional degree programs in the Dyson College of Arts and Sciences, Lubin School of Business, School of Computer Science and Information Systems, School of Education, Lienhard School of Nursing and Pace Law School.

Forum: “Can High-Tech Industries Help Fuel the Future Growth of Lower Manhattan?”

“Can High-Tech Industries Help Fuel the Future Growth of Lower Manhattan?” is the first of a series of panel discussions on “The Economic Future of Downtown Manhattan” sponsored by City Council Member Alan Gerson, The Center for an Urban Future, and Pace University’s Center for Downtown New York.

October 28, 2002

Contact: Bill Caldwell, Office of Public Information, Pace University, 212-346-1597, wcaldwell@pace.edu

WHAT: Forum: “Can High-Tech Industries Help Fuel the Future Growth of Lower Manhattan?”, the first of a series of panel discussions on “The Economic Future of Downtown Manhattan” sponsored by City Council Member Alan Gerson, The Center for an Urban Future, and Pace University’s Center for Downtown New York.

WHO: Panelists include Kathy Wylde, CEO of New York City Partnership; Bruce Bernstein, President of the New York Software Industry Association; John Gilbert, Chief Operating Officer and Chief Technology Officer of Rudin Management Company; and Alice O’Rourke, President of the New York New Media Association. Moderator: Jonathan Bowles, Research Director, Center for an Urban Future.

WHEN: Tuesday, October 29, 6 to 8 p.m.

WHERE: Pace University, Lecture Hall North, 1 Pace Plaza. (Use main entrance, across from City Hall. Lecture Hall North is on the 2nd floor.)

Nobel Prize Laureate to Discuss Euro’s Impact at Pace University

The 1999 recipient of the Nobel Memorial Prize in Economic Science, whose influence was felt from the supply-side economics of the Reagan years to the creation of the Euro, will present his views at Pace University.

The 1999 recipient of the Nobel Memorial Prize in Economic Science, whose influence was felt from the supply-side economics of the Reagan years to the creation of the Euro, will present his views at Pace University.

Robert Mundell, a Canadian-born economist, will speak on Tuesday, February 26, 2002, at the Michael Schimmel Theatre for the Arts at Pace University. A reception will be held from 5:00 p.m. – 6:00 p.m.. The lecture, The Euro: What does it Mean for the International Monetary System? will follow. The event is the Lubin School of Business’ Second Annual Henry George Symposium.

Dr. Mundell has been recognized by the Royal Swedish Academy of Sciences for his contributions to international economics as the first theorist to demonstrate how the international flow of capital could affect an individual country’s ability to manage its own economy through interest rate changes and tax and budget policies. Although that discovery may seem commonplace today, when Dr. Mundell was developing his prize-winning theories in the early 1960s, most nations heavily regulated the flow of capital across their borders, and governments tinkered with their own economies without much attention to global currency movements.

The Nobel Prize winner also contributed substantially to the emergence of a common currency for Europe, known as the Euro. He asserted that it is difficult to transition to a fixed exchange rate without a common currency.

Dr. Mundell earned his doctorate in economics in 1956 from M.I.T. after spending a year at the London School of Economics. He is presently a professor of economics at Columbia University.

NASDAQ Helps Launch New Center for Global Finance at Pace University’s Lubin School of Business

The Nasdaq Stock Market® today honored Pace University’s Lubin School of Business for establishing its new Center for Global Finance. As part of the recognition, Jorge Pinto, the Center’s director, was on hand to open the Nasdaq’s trading day, at the Nasdaq MarketSiteSM on Times Square in New York City. Pinto punched the red button that ignites the MarketSite Wall, opening trading on Nasdaq for the week. Participating in the ceremony were Pace University President David A. Caputo and Lubin School of Business Dean Arthur L. Centonze.

Contact: Public Affairs
(212) 346-1637
Director Jorge Pinto opens Nasdaq Stock Market, Dec. 11

NEW YORK, December 11, 2000 – The Nasdaq Stock Market® today honored Pace University’s Lubin School of Business for establishing its new Center for Global Finance. As part of the recognition, Jorge Pinto, the Center’s director, was on hand to open the Nasdaq’s trading day, at the Nasdaq MarketSiteSM on Times Square in New York City. Pinto punched the red button that ignites the MarketSite Wall, opening trading on Nasdaq for the week. Participating in the ceremony were Pace University President David A. Caputo and Lubin School of Business Dean Arthur L. Centonze.

“The new Center for Global Finance will capitalize on the Lubin School’s strategic location in the world’s financial capital, its academic expertise in finance and international business, and our relationships with alumni in the financial services industry,” said Dean Centonze. “The Center will enhance these strengths and serve as a vital link between the Lubin School and the global finance community.”

“We are fortunate to have Jorge Pinto join us as the director for the Center for Global Finance,” said Centonze. “He brings a wealth of international experience and ties to the business, political and academic communities worldwide.”

Jorge Pinto comes to the Lubin School from the Mexican Consulate in New York. During his time as Consul General, Pinto was responsible for implementing a general modernization and exponential expansion of the Consulate’s operations, such as the launch of the Mexican Government’s first Web site in 1995. Ambassador Pinto has offered conferences relating to Mexico’s current affairs and U.S.-Mexico relations. He spent two years as the executive director of the World Bank and three years as Ambassador of Mexico in Sweden.

“The Center will develop research and academic programs that respond to the challenges that the new and changing economic global environment is imposing on business today,” said Jorge Pinto.

In the summer of 1999, Pace University’s Lubin School of Business created one of the first campus-based trading and analysis rooms with support, in part, from a $50,000 in-kind gift from Nasdaq. It’s basic function is to simulate an actual Wall Street trading room, thus giving students exposure to financial data and risk management environments that exist in the real world. The facility contains Nasdaq Market Link and the Nasdaq Head Trader simulation, coupled with Bridge data to integrate the actual conduct of business with concepts taught in the classroom.

The Nasdaq MarketSite, which opened in December 1999, communicates to the world up-to-the-minute market information and provides public education on the financial markets. The Nasdaq Stock Market lists nearly 5,000 companies, has the largest dollar volume of trades of any financial market, and trades more shares per day than any other U.S. market. Current market capitalization is $5.34 trillion. Nasdaq is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States.

Pace University’s Lubin School of Business, with 5,800 students, offers undergraduate, graduate and doctoral degree programs, and hosts a number of research centers and institutes that extend its scholarship and teaching to a worldwide audience. The School is accredited by AACSB: the International Association for Management Education.

Pace is a comprehensive, independent University with campuses in New York City and Westchester County. More than 13,000 students are enrolled in undergraduate, graduate and professional degree programs in the Dyson College of Arts and Sciences, Lubin School of Business, School of Computer Science and Information Systems, School of Education, School of Law, Lienhard School of Nursing and the World Trade Institute.

NASDAQ Helps Launch New Center for Global Finance at Pace University’s Lubin School of Business

The Nasdaq Stock Market® today honored Pace University’s Lubin School of Business for establishing its new Center for Global Finance. As part of the recognition, Jorge Pinto, the Center’s director, was on hand to open the Nasdaq’s trading day, at the Nasdaq MarketSiteSM on Times Square in New York City. Pinto punched the red button that ignites the MarketSite Wall, opening trading on Nasdaq for the week. Participating in the ceremony were Pace University President David A. Caputo and Lubin School of Business Dean Arthur L. Centonze.

Contact: Public Affairs
(212) 346-1637
Director Jorge Pinto opens Nasdaq Stock Market, Dec. 11

NEW YORK, December 11, 2000 – The Nasdaq Stock Market® today honored Pace University’s Lubin School of Business for establishing its new Center for Global Finance. As part of the recognition, Jorge Pinto, the Center’s director, was on hand to open the Nasdaq’s trading day, at the Nasdaq MarketSiteSM on Times Square in New York City. Pinto punched the red button that ignites the MarketSite Wall, opening trading on Nasdaq for the week. Participating in the ceremony were Pace University President David A. Caputo and Lubin School of Business Dean Arthur L. Centonze.

“The new Center for Global Finance will capitalize on the Lubin School’s strategic location in the world’s financial capital, its academic expertise in finance and international business, and our relationships with alumni in the financial services industry,” said Dean Centonze. “The Center will enhance these strengths and serve as a vital link between the Lubin School and the global finance community.”

“We are fortunate to have Jorge Pinto join us as the director for the Center for Global Finance,” said Centonze. “He brings a wealth of international experience and ties to the business, political and academic communities worldwide.”

Jorge Pinto comes to the Lubin School from the Mexican Consulate in New York. During his time as Consul General, Pinto was responsible for implementing a general modernization and exponential expansion of the Consulate’s operations, such as the launch of the Mexican Government’s first Web site in 1995. Ambassador Pinto has offered conferences relating to Mexico’s current affairs and U.S.-Mexico relations. He spent two years as the executive director of the World Bank and three years as Ambassador of Mexico in Sweden.

“The Center will develop research and academic programs that respond to the challenges that the new and changing economic global environment is imposing on business today,” said Jorge Pinto.

In the summer of 1999, Pace University’s Lubin School of Business created one of the first campus-based trading and analysis rooms with support, in part, from a $50,000 in-kind gift from Nasdaq. It’s basic function is to simulate an actual Wall Street trading room, thus giving students exposure to financial data and risk management environments that exist in the real world. The facility contains Nasdaq Market Link and the Nasdaq Head Trader simulation, coupled with Bridge data to integrate the actual conduct of business with concepts taught in the classroom.

The Nasdaq MarketSite, which opened in December 1999, communicates to the world up-to-the-minute market information and provides public education on the financial markets. The Nasdaq Stock Market lists nearly 5,000 companies, has the largest dollar volume of trades of any financial market, and trades more shares per day than any other U.S. market. Current market capitalization is $5.34 trillion. Nasdaq is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States.

Pace University’s Lubin School of Business, with 5,800 students, offers undergraduate, graduate and doctoral degree programs, and hosts a number of research centers and institutes that extend its scholarship and teaching to a worldwide audience. The School is accredited by AACSB: the International Association for Management Education.

Pace is a comprehensive, independent University with campuses in New York City and Westchester County. More than 13,000 students are enrolled in undergraduate, graduate and professional degree programs in the Dyson College of Arts and Sciences, Lubin School of Business, School of Computer Science and Information Systems, School of Education, School of Law, Lienhard School of Nursing and the World Trade Institute.

Economic Benefits and Emerging Community Issues of Latinos in Westchester Is Topic of Forum at Pace University, September 28

“During the 1990s, 53,000 new immigrants settled in Westchester, many of them from Spanish-speaking countries. In the 2000s, we expect this trend to continue and grow,” said Andy Spano, Westchester county executive. “While this new diversity brings vitality to Westchester, it also challenges us to find ways to make our new residents feel welcome and help them assimilate.”

Contact: Public Affairs
(914) 923-2798
News@Pace.Edu

WHITE PLAINS, N. Y. – “During the 1990s, 53,000 new immigrants settled in Westchester, many of them from Spanish-speaking countries. In the 2000s, we expect this trend to continue and grow,” said Andy Spano, Westchester county executive. “While this new diversity brings vitality to Westchester, it also challenges us to find ways to make our new residents feel welcome and help them assimilate.”

Pace University’s Michaelian Institute for Public Policy and Management, the Westchester Hispanic Coalition, the Westchester Municipal Officials Association and Westchester County will host a forum, Latinos in Westchester: Economic Benefits and Emerging Community Issues, for municipal leaders, community advocates and interested citizens on Thursday, September 28. The workshop begins at 5:30 p.m. with a buffet supper at Pace’s Graduate Center, One Martine Avenue, in White Plains. The fee (which includes dinner) is $25.

“Latinos in Westchester is a place where community leaders can exchange ideas on the topics of housing, recreation, cultural differences and community policing,” said Spano. The keynote presentations will address Emerging Latino Communities and Their Impact on Your Community by Arnoldo H. Resendez, Vice President for Technical Assistance and Constituency Support, National Council of La Raza; and The Social and Economic Impact of Immigration in the New York Metropolitan Area, by Dr. Philip Kasinitz, Professor of Sociology, Hunter College and CUNY Graduate School.

“We need to work collaboratively, local government, business organizations, and leading educational institutions, like Pace University, to insure that the needs of the Latino populations are met,” said Anthony Cupaiuolo, director of the Michaelian Institute. Workshop sessions include discussions of recreation, culture and education, housing and code enforcement, police and community relations, and organizing and insuring the rights of day laborers. “The conference workshops will provide participants with the best practice for each of the issues that will be discussed,” said Cupaiuolo.

The Edwin G. Michaelian Institute for Public Policy and Management and its legal research affiliate, the Municipal Law Resource Center (MLRC), respond to the needs of the public and not-for-profit sectors for governance and management training and development and for research and support to enhance their operations. The Michaelian Institute and the MLRC are part of Pace University’s Dyson College of Arts and Sciences.

The Westcheser Hispanic Coalition is a private, not-for-profit human services agency dedicated to the economic and social development of the Latino community by implementing programs that facilitate greater community integration. Founded in 1974, the Coalition is uniquely qualified to articulate the concerns of Latino immigrants in Westchester.

The Westchester Municipal Officials Association provides a forum for all of Westchester’s 45 cities, towns and villages to discuss issues of mutual concern. The association studies and discusses activities and actions that will have a beneficial effect upon the public safety, health and welfare of its members’ citizenry.

Pace is a comprehensive, independent University with campuses in New York City and Westchester County. Nearly 13,500 students are enrolled in undergraduate, graduate and professional degree programs in the Dyson College of Arts and Sciences, Lubin School of Business, School of Computer Science and Information Systems, School of Education, School of Law, Lienhard School of Nursing and the World Trade Institute.

Tipsheet: Stocks or Bonds? How to Decide Which is Better for You

Worries plague “new” investors. Recently flush with cash from their investments and the long-running bull market, young inexperienced stock market players are besieged with anxieties about the inevitable market crash, the Asian crisis, and the loss of their gains. In order to sleep at night, more and more investors are choosing to invest their money in bonds to circumvent fears of “hitting bottom” in the stock market. When making the decision to invest in stocks or bonds, consider information from Professor P.V. Viswanath of the Pace University’s Lubin School of Business.

Contact: Public Affairs
(212) 346-1696
PLEASANTVILLE, N.Y. —
Tips from Pace University’s Lubin School of Business

Worries plague “new” investors. Recently flush with cash from their investments and the long-running bull market, young inexperienced stock market players are besieged with anxieties about the inevitable market crash, the Asian crisis, and the loss of their gains. In order to sleep at night, more and more investors are choosing to invest their money in bonds to circumvent fears of “hitting bottom” in the stock market. When making the decision to invest in stocks or bonds, consider the following information from Professor P.V. Viswanath, Pace University’s Lubin School of Business:

I understand what a stock is, but what is a bond? Are there different types besides the Treasury bond?

    Bonds are securities that represent loans made either to the US Government (Treasury bonds or T-bonds), local or state governments (municipal bonds) or to corporations (corporate bonds). T-bonds are free of default risk, i.e., it is almost certain that the principal lent to the US Government will be repaid, and that the interest payments (coupons) will be made on time. However, if the bonds are not held until maturity, their value can go up or down as interest rates fluctuate. Corporate bonds do have default risk, but the amount of risk depends very much on the characteristics of the issuers.

  1. If you are investing for just a few years, do you invest in stocks or bonds?

If you are investing for just a few years, bonds provide much more safety. In addition, it is possible to choose bonds of the appropriate maturity, so that interest rate risk is minimized. If you want to minimize down-side risk, then you should invest much more in bonds than in stocks.

3) I am in my thirties, do I invest in stocks or bonds? Why?

The average return on bonds, particularly T-bonds is very low, compared to that on US equities. Long-term T-bonds have yielded an average of 5.35% from 1926 to 1993, while the average return on the Standard and Poor’s Composite Index over the same period was 12.31%. Inflation over the same period was 3.23% on average. This means that long-term bonds barely provided a 2% return over inflation, while equities provided about 9% over inflation. Although the year to year variation in returns is much higher for bonds than for stocks, the variation in returns over 20-year periods is actually smaller for stocks than for bonds. Hence, anybody investing for the long-run should probably invest a sizeable portion of their wealth in stocks, provided that the portfolio is well diversified.

  1. Are bonds subject to the same market fluctuations as stocks? Stocks are subject to two kinds of market fluctuations: one, fluctuations in earnings, and two, fluctuations in interest rates, i.e. fluctuations in the value of money. Bonds, on the other hand (at least, T-bonds), are subject only to fluctuations in interest rates. However, there are empirical relationships between the level of business activity and interest rates, which vary over the business cycle. Hence, T-bonds will also be indirectly affected by fluctuations in corporate earnings, through their effect on interest rates.

  2. What are “emerging-market bonds”? Emerging Market bonds are bonds issued by governments in countries that do not have fully industrialized and developed economies, or economies that are somewhat more risky. These countries frequently have high substantial political, as well as exchange rate risk. Due to the adventurous nature of these securities, returns can sometimes be handsome, making them attractive to investors willing to tolerate risk. However, the downside danger can be substantial. Examples are bonds issued by the governments of Mexico, Russia, Brazil, China, Hong Kong and India.

  3. What are some “tips” you can give to first time investors in bonds? Investing in T-bonds is pretty easy, since these bonds mainly differ by maturity. Investing in corporate bonds is much more difficult, since it is necessary to look at the financial statements of the companies issuing the bonds, as well as specific characteristics of the bonds: are they callable, are they convertible, are they secured, are they senior or subordinated, etc. However, in either case, it is advisable to look for mutual funds with objectives and maturities that match your needs. If you are thinking of investing in tax-free bonds, compare their return with the after-tax return on regular taxable bonds. If you are in a high tax bracket, they may be worthwhile for you.

  4. Who should consider investing in bonds? Bonds should form a part of almost everybody’s portfolio. However, two categories of investors would be particularly interested in bonds: those who don’t like risk, and those who are investing for a specific point in time in the not-too-distant future and cannot bear downside risk (e.g. somebody saving to buy a house in two years).

  5. What are some websites that provide background information on bonds?

A simple introduction to bond pricing can be found at http://library.pace.edu/~viswanat/class/301/notes/bonds.html

Information on Bond Portfolio Management can be found at http://library.pace.edu/~viswanat/class/652/notes/fixportf.html

In addition, all the mutual fund companies, such as Vanguard (www.vanguard.com) or Fidelity (www.fidelity.com) have information on bonds.

Other sources are:

http://www.bonds-online.com/
http://www.investinginbonds.com/
http://www.wsrn.com/home/
http://biz.yahoo.com

Despite Major Differences Commercial Banks and Credit Unions Fare Equally in the 1990’s

Banks and credit unions are equal performers says a quantitative analysis comparing the performance and profitability of commercial banks — those that accept deposits and have the ability to make commercial loans — and credit unions in the 1990’s. Raymond H. Lopez and Surendra K. Kaushik, professors of finance at Pace University’s Lubin School of Business, find that banks are not at a competitive disadvantage despite their tax-paying status. Credit unions, on the other hand, maintain a non-taxable status and have a limited client base, and perform on par with behemoth banks. Some of these findings are explained by the new competitive realities of deregulated financial markets.

Contact: Public Affairs
(212) 346-1696

NEW YORK — Banks and credit unions are equal performers says a
quantitative analysis comparing the performance and profitability of
commercial banks — those that accept deposits and have the ability to
make commercial loans — and credit unions in the 1990’s. Raymond H.
Lopez and Surendra K. Kaushik, professors of finance at Pace
University’s Lubin School of Business, find that banks are not at a
competitive disadvantage despite their tax-paying status. Credit
unions, on the other hand, maintain a non-taxable status and have a
limited client base, and perform on par with behemoth banks. Some of
these findings are explained by the new competitive realities of
deregulated financial markets.
Looking at both loan and securities portfolios of the two industries,
Lopez and Kaushik conclude that the large size of the commercial banking
industry does not necessarily generate higher profitability.
Demonstrating a significant comeback from the 1980’s, commercial banking
has visibly recovered from some of its crises, and is performing well
across the board. According to Lopez, “Credit unions — even with their
circumscribed client base and potential volatility — have continued
since the Eighties to steadily perform well.” Data show a narrowing of
spreads between the two industries in most areas of financial
performance. Key findings include:
* Although credit unions operate under more restrictive guidelines
than commercial banks, their loan portfolios have grown more rapidly
than banks in the 1990’s and their net interest margins have remained
above banks.

* Non-interest income margins for credit unions, although still lagging
behind banks,
are rising, as are non-interest expense margins. In contrast, at
commercial banks, these expenses have been declining slightly since
1993. With the unprecedented consolidation taking place in the banking
industry through mergers and acquisitions, within the next decade,
parity could be reached between the two.

* Credit union growth rates of equity capital have ranged from 11
percent in 1994 to 20 percent in 1992. These growth rates have mostly
been 50 percent higher than bank equity growth.

Lopez and Kaushik further point out that product and service diversity
between these two industries is not converging. Whereas commercial
banks are branching out into many areas of the financial services
marketplace that were previously unavailable to them, credit unions
remain primarily domestic institutions and highly regional in their
operating composition.
Pace University is a comprehensive, independent University with
campuses in New York City and Westchester County. Nearly 14,000
students are enrolled in undergraduate and graduate degree programs in
the Dyson College of Arts and Sciences, Lubin School of Business, School
of Computer Science and Information Systems, School of Education, School
of Law and Lienhard School of Nursing.

Former Russian Ambassador to Address Country’s Future at Pace Forum

Gennadi Gerasimov, a former Russian ambassador, will participate in an open forum on the future of Russia, Wednesday, February 26 at 6 p.m., on Pace University’s New York City campus across from City Hall Park. Pace faculty members Dr. Diana Nakeeb, professor of modern languages, and Dr. Farrokh Hormozi, professor of economics, also will participate in the program sponsored by the University’s Center for Academic Excellence.

Contact: Public Affairs
(212) 346-1637
NEW YORK — Gennadi Gerasimov, a former Russian ambassador, will participate in an open forum on the future of Russia, Wednesday, February 26 at 6 p.m., on Pace University’s New York City campus across from City Hall Park. Pace faculty members Dr. Diana Nakeeb, professor of modern languages, and Dr. Farrokh Hormozi, professor of economics, also will participate in the program sponsored by the University’s Center for Academic Excellence.

In the late 1980s, as the Soviet Union and Mikhail Gorbachev changed 20th century world politics, Ambassador Gerasimov was the primary image-maker for Soviet Foreign policy. Having risen through the ranks of Soviet journalism as a columnist, editor and international corres pondent, Gerasimov became popular in the United States.

He has written several books and collected journalistic awards. In 1990, he was recognized as “Communicator of the Year” by the National Association of Governmental Communicators, the first non-Am erican recipient.

Gerasimov earned and an undergraduate degree in international relations from the Moscow Institute of International Relations, and a degree in international law from Moscow State University. He and Gorbachev were classmates at the Mosc ow State Law School. After pursuing his journalistic career for almost three decades, Gerasimov served as Soviet, then Russian Ambassador to Lisbon under Presidents Gorbachev and Yeltsin. Subsequently, he worked briefly as chief liaison officer at the Ru ssian-American Press and Information Center in Moscow before coming with his wife and daughter to the United States in 1993.

Gerasimov is a visiting professor at Muhlenberg College in Pennsylvania and lectures on current political, economic and social i ssues in Russia.

Pace is a comprehensive, independent university with campuses in New York City and Westchester County. Nearly 14,000 students are enrolled in undergraduate and graduate degree programs in the Dyson College of Arts and Sciences, Lubin S chool of Business, School of Computer Science and Information Systems, School of Education, School of Law and Lienhard School of Nursing.