In this essay, we will follow Tang Junyi’s lead in exploring issues related to Chinese diaspora and Chinese philosophy. While we largely endorse Tang’s call for overseas Chinese to establish themselves in their adopted lands, we will argue for a more nuanced view on the identity of Chinese people outside China: they are not marginalized individuals scattered out of “homeland” China, rather they are people legitimately established in their own respective countries. In this connection, we will also advance a view (...) of future Chinese philosophy as a world philosophy that takes roots in China as well as in the world at large. In our view, although Chinese immigrant thinkers in the past century have played a major role in promoting Chinese philosophy outside China, the importance of such a role is likely to decline along with the success of Chinese philosophy becoming a world philosophy. (shrink)

Ratio, Volume 34, Issue 4, Page 303-311, December 2021.

Lack of a historical sense is the hereditary defect of philosophers. … So what is needed from now on is historical philosophizing, and with it the virtue of modesty.

Both motivational internalism and externalism need to explain why sometimes moral judgments tend to motivate us. In this paper, I argue that Dreier’ second-order desire model cannot be a plausible externalist alternative to explain the connection between moral judgments and motivation. I explain that the relevant second-order desire is merely a constitutive requirement of rationality because that desire makes a set of desires more unified and coherent. As a rational agent with the relevant second-order desire is disposed towards coherence, she (...) will have some motivation to act in accordance with her moral judgments. Dreier’s second-order desire model thus collapses into a form of internalism and cannot be a plausible externalist option to explain the connection between moral judgments and motivation. (shrink)

Introduction: The development of advanced sewage technologies empowers the industry to produce high-quality recycled water, which greatly influences human’s life and health. Thus, this study investigates the mechanism of individuals’ adoption of recycled water from the technology adoption perspective. -/- Methods: Employing the mixed method of structural equation modeling and artificial neural network analysis, we examined a research model developed from the extended Unified Theory of Acceptance and Use of Technology (UTAUT2) framework. To examine the research model, this study employs (...) a leading web-survey company (Sojump) to collect 308 valid samples from the residents in mainland China. -/- Results: The structural equation modeling results verified the associations between the six predictors (performance expectancy, effort expectancy, social influence, facilitating conditions, environmental motivation, and price value), individuals’ cognitive and emotional attitudes, and acceptance intention. The artificial neural network analysis validates and complements the structural equation modeling results by unveiling the importance rank of the significant determinants of the acceptance decisions. -/- Discussion: The study provides theoretical implications for recycled water research and useful insights for practitioners and policymakers to reduce the environmental hazards of water scarcity. (shrink)

This article proposes a term structure model for dual-currency interest rate markets. The model assumes that volatility is a deterministic function of time alone. This volatility structure can reduce the dimension of the required state variables. An important special case is presented, which corresponds essentially to a Vasicek/Hull-White yield curve model in each currency. The model is very useful for pricing cross-currency derivatives.

This article presents a generic model for pricing financial derivatives subject to counterparty credit risk. Both unilateral and bilateral types of credit risks are considered. Our study shows that credit risk should be modeled as American style options in most cases, which require a backward induction valuation. To correct a common mistake in the literature, we emphasize that the market value of a defaultable derivative is actually a risky value rather than a risk-free value. Credit value adjustment (CVA) is also (...) elaborated. A practical framework is developed for pricing defaultable derivatives and calculating their CVAs at a portfolio level. (shrink)

In this thesis, I explore motivational internalism and externalism, which concern the relationship between moral judgments and motivation. I first introduce the basic terms and different forms of internalism and externalism, including the externalist objections to internalism based on the famous counterexamples. I then argue against externalism by defending and developing Michael Smith’s fetishism argument. I not only respond to the externalist objections to the fetishism argument but also further argue against different externalist explanations of moral motivation that intend to (...) avoid the fetishism charge. Finally, I re-examine different forms of internalism in order to argue for a new form of internalism that can better preserve our internalist intuitions whilst accommodating the externalist counterexamples. My ultimate conclusion will be that the most plausible form of internalism to accept is constitutional, unconditional, relatively strong, direct internalism that is formulated in terms of dispositional desires. (shrink)

This essay introduces the philosophy of harmony in Classical Confucianism. In the first part of the essay the author summarizes the concept of harmony as it was developed in various Confucian classics. In the second part, the author offers an account of the Confucian program of harmony, ranging from internal harmony in the person, to harmony in the family, the state, the international world, and finally to harmony in the entire universe.

All cultures are infused by or even rooted in certain values. Although those values are generally recognised in all societies, they are diversely ranked or proritised in different human groups and different perceptions partly account for cultural diversity as not all values can be equally upheld in any community or by any individual. Though value universalism in a strict sense is unachievable, we can all agree on a pluralistic mutual understanding of and tolerance for diversity.

Abstract: In this essay I will discuss five major challenges faced by Confucianism in recent times. Two of these challenges have been widely acknowledged, namely those of science and democracy. I believe that Confucianism's problem with science has been largely solved, even though more constructive work would further strengthen Confucianism in this regard. The problem of democracy is still being dealt with. I will examine three more major challenges. The third major challenge for Confucianism comes from environmentalism. Confucianism has taken (...) note of its important message and has begun to respond to it. The fourth major challenge is the feminist challenge. Even though contemporary Confucianism accepts sexual equality, philosophically significant progress is yet to be made. The final challenge is the challenge of Confucianism's own survival. After serving three major assults in the 20th century, especially the most recent assult by "the glorious cat," Confucianism needs to find a way to renew itself into future. . (shrink)

Equity-linked securities with a guaranteed return become popular in a volatile market environment. This paper presents a new model for valuing guaranteed equity-linked notes. We consider a security whose value depends on the performance of a basket of equities averaged over certain points in time, but that is floored by a guaranteed amount. We show that the security’s price is given by the sum of the guaranteed amount plus the price of an Asian style option on the basket above. The (...) model provides analytical formulas for the security’s price as well as for corresponding hedge ratios; these respective formulas appear to be accurate over a wide range of underlying security parameter values, based on numerical testing against a Monte Carlo benchmark, Finally, we apply our method to value a type of segregated fund with a maturity guarantee. (shrink)

Engaging in dialogue with African philosophy, I respond to questions raised by Thaddeus Metz on characteristics of Confucian philosophy in comparison with African philosophy. First, in both Confucian philosophy and African philosophy, harmony/harmonization and self-realization coincide in the process of person-making. Second, Confucians accept that sometimes it is inevitable to sacrifice individual components in order to achieve or maintain harmony at large scales; the point is how to minimize such costs. Third, Confucians give family love a central place in the (...) good life before extend love to the rest of the world. Fourth, the Confucian philosophy of gender equality is based on appropriate division of labor consistent with its yin-yang philosophy, rather than equal split of power in the family. Fifth, in the Confucian view, hierarchy and harmony do not necessarily contradict each other, though hierarchy is not essential to all forms of harmony. The two can co-exist. (shrink)

This article presents a comprehensive framework for valuing financial instruments subject to credit risk. In particular, we focus on the impact of default dependence on asset pricing, as correlated default risk is one of the most pervasive threats in financial markets. We analyze how swap rates are affected by bilateral counterparty credit risk, and how CDS spreads depend on the trilateral credit risk of the buyer, seller, and reference entity in a contract. Moreover, we study the effect of collateralization on (...) valuation, since the majority of OTC derivatives are collateralized. The model shows that a fully collateralized swap is risk-free, whereas a fully collateralized CDS is not equivalent to a risk-free one. (shrink)

Since antiquity, Confucians have sought to work with the state in order to implement their philosophy through state sponsorship. And yet, whenever Confucians have sought state sponsorship, naturally the government has adopted Confucian philosophy selectively to serve its own purposes and thus compromised the integrity of Confucianism. Throughout Chinese history, countless Confucian officials attempted to help rulers to do the right thing. They often failed when their advice went against the fundamental interest of rulers. On reflection, this outcome should not (...) be unexpected. The primary goal of rulers is to solidify power; the primary concern of Confucianism is the wellbeing of the people. When the two conflict, it is highly unlikely for a government to prioritize Confucian ideals. In a democratic era, Confucianism can influence society without joining the state apparatus. It can and must promote its social ideals through grassroots democratic participation rather than leave itself to the mercy of state sponsorship. (shrink)

This paper presents a new model for pricing OTC derivatives subject to collateralization. It allows for collateral posting adhering to bankruptcy laws. As such, the model can back out the market price of a collateralized contract. This framework is very useful for valuing outstanding derivatives. Using a unique dataset, we find empirical evidence that credit risk alone is not overly important in determining credit-related spreads. Only accounting for both collateral arrangement and credit risk can sufficiently explain unsecured credit costs. This (...) finding suggests that failure to properly account for collateralization may result in significant mispricing of derivatives. We also empirically gauge the impact of collateral agreements on risk measurements. Our findings indicate that there are important interactions between market and credit risk. (shrink)

Michael Sandel has been one of the most powerful critics of liberalism in the past decades. His work, especially in Liberalism and the Limits of Justice, exposes some of the fundamental flaws of Rawlsian liberalism and shows the need for a community-based framework in order for us to adequately understand and appreciate the concept of the individual and just society. Confucians can endorse many of Sandel’s critiques of liberalism. From a Confucian perspective, however, Sandel’s version of communitarianism is nevertheless too (...) thin for a robust communitarian society. Confucians maintain a thick notion of community and take it to be vital to human flourishing. In this essay, I first discuss a key point where Confucians converge with Sandel as an example of the common ground between the two philosophies before turn to one important difference between them. The key point of convergence is about the circumstances of justice; the difference is on harmony. Harmony lies in the very center of the Confucian notion of community, whereas it has been given no place in Sandel’s conception of community. This essay offers a Confucian critique as well as an endorsement of Sandel’s communitarian philosophy. It also extends a friendly invitation to Sandel for him to take harmony into his conception of community. (shrink)

This paper argues that the reduced-form jump diffusion model may not be appropriate for credit risk modeling. To correctly value hybrid defaultable financial instruments, e.g., convertible bonds, we present a new framework that relies on the probability distribution of a default jump rather than the default jump itself, as the default jump is usually inaccessible. As such, the model can back out the market prices of convertible bonds. A prevailing belief in the market is that convertible arbitrage is mainly due (...) to convertible underpricing. Empirically, however, we do not find evidence supporting the underpricing hypothesis. Instead, we find that convertibles have relatively large positive gammas. As a typical convertible arbitrage strategy employs delta-neutral hedging, a large positive gamma can make the portfolio highly profitable, especially for a large movement in the underlying stock price. (shrink)

This paper attempts to assess the economic significance and implications of collateralization in different financial markets, which is essentially a matter of theoretical justification and empirical verification. We present a comprehensive theoretical framework that allows for collateralization adhering to bankruptcy laws. As such, the model can back out differences in asset prices due to collateralized counterparty risk. This framework is very useful for pricing outstanding defaultable financial contracts. By using a unique data set, we are able to achieve a clean (...) decomposition of prices into their credit risk factors. We find empirical evidence that counterparty risk is not overly important in credit-related spreads. Only the joint effects of collateralization and credit risk can sufficiently explain unsecured credit costs. This finding suggests that failure to properly account for collateralization may result in significant mispricing of financial contracts. We also analyze the difference between cleared and OTC markets. (shrink)

This paper presents a Least Square Monte Carlo approach for accurately calculating credit value adjustment (CVA). In contrast to previous studies, the model relies on the probability distribution of a default time/jump rather than the default time itself, as the default time is usually inaccessible. As such, the model can achieve a high order of accuracy with a relatively easy implementation. We find that the valuation of a defaultable derivative is normally determined via backward induction when their payoffs could be (...) positive or negative. Moreover, the model can naturally capture wrong or right way risk. (shrink)

This essay analyses two kinds of harmony as exemplified in Confucianism and Daoism and examines their relation with domination and freedom.

Wang Guowei expressed doubts about Xun Zi’s proposition on “establishing ritual practices in accord with qing,” arguing that it was in direct confict with the philosopher’s famous thesis that “human natural tendency is evil.” The word qing (情) has several connotations in the Xunzi: it may refer to factual truth (实情), sincerity (诚实) or emotions (情感). Readers of the Xunzi tend to view the emotional connotation of qing in a negative light, but in actuality qing as human emotions can also (...) be understood in a commendatory or neutral sense in the Xunzi. I argue that Xun Zi’s proposition on “establishing ritual practices in accord with qing” can only be consistent with his view that “human natural tendency is evil” when qing is used in the neutral sense. In other words, “establishing ritual practices in accord with qing” means to establish, on the basis of actual circumstances, ritual practices and rules that adequately satisfy people’s normal feelings. Xun Zi’s proposition on “establishing ritual practices in accord with qing” can be validated within his own philosophical framework。 -/- . (shrink)

The study of Chinese philosophy in the English-speaking world has largely focused on ethical and political theories. In comparison, Chinese metaphysics—here understood primarily as theories regarding the nature, components, and operating principles of reality—has been far less researched and recognized. In this essay, we examine various meanings of “metaphysics” as it has been used in denoting a branch of philosophy and make the case that metaphysics is an important part of Chinese philosophy. We argue for the need to study Chinese (...) metaphysics as a serious field of scholarship. We also present some most recent studies of Chinese metaphysics by leading scholars of Chinese philosophy who publish in the English-speaking world. This essay aims to show that not only that Chinese metaphysics is an appropriate and legitimate subject of scholarly research but it can also be a fruitful subfield of in the study in Chinese philosophy. (shrink)

I argue that a Heideggerian reading of the concept of cheng 誠 strengthens Roger Ames's interpretation of the Confucian concept by providing a grounding framework that connects various dimensions of the concept.

The idea of the Anthropocene is not only about environmental issues; it is for a new geologic epoch. Moreover, it is a new worldview, a new philosophy. It provides a new context and perspective for us to re-think some traditional philosophical ideas, including the ancient Confucian philosophy of harmony among heaven, earth, and humanity.

The one-side defaultable financial derivatives valuation problems have been studied extensively, but the valuation of bilateral derivatives with asymmetric credit qualities is still lacking convincing mechanism. This paper presents an analytical model for valuing derivatives subject to default by both counterparties. The default-free interest rates are modeled by the Market Models, while the default time is modeled by the reduced-form model as the first jump of a time-inhomogeneous Poisson process. All quantities modeled are market-observable. The closed-form solution gives us a (...) better understanding of the impact of the credit asymmetry on swap value, credit value adjustment, swap rate and swap spread. (shrink)

The LIBOR Market Model has become one of the most popular models for pricing interest rate products. It is commonly believed that Monte-Carlo simulation is the only viable method available for the LIBOR Market Model. In this article, however, we propose a lattice approach to price interest rate products within the LIBOR Market Model by introducing a shifted forward measure and several novel fast drift approximation methods. This model should achieve the best performance without losing much accuracy. Moreover, the calibration (...) is almost automatic and it is simple and easy to implement. Adding this model to the valuation toolkit is actually quite useful; especially for risk management or in the case there is a need for a quick turnaround. (shrink)

He (和), or harmony, has traditionally been a central concept in Chinese thought, and to this day continues to shape the way in which people in China and East Asia think about ethics and politics. Yet, there is no systematic and comprehensive introduction of harmony as has been variously articulated in different Chinese schools. This edited volume aims to fill this gap. The individual contributions elaborate the conceptions of harmony as these were exemplified in central Chinese schools of thought, including (...) Daoism, Confucianism, Legalism, Mohism, Buddhism, and trace their impact on contemporary Chinese philosophy. The volume explores the various meanings and implications of harmony so as to consider its relevance as a value and virtue in the modern world. It provides an accessible but substantial introductory work for readers interested in learning about pertinent core concepts and theories in Chinese thought, as well as engages specialists in Chinese philosophy by explicating its implications for ethical, political, epistemological, and metaphysical reflection as the basic point of reference. (shrink)

This article presents a new model for valuing a credit default swap (CDS) contract that is affected by multiple credit risks of the buyer, seller and reference entity. We show that default dependency has a significant impact on asset pricing. In fact, correlated default risk is one of the most pervasive threats in financial markets. We also show that a fully collateralized CDS is not equivalent to a risk-free one. In other words, full collateralization cannot eliminate counterparty risk completely in (...) the CDS market. (shrink)

This paper presents a new model for valuing hybrid defaultable financial instruments, such as, convertible bonds. In contrast to previous studies, the model relies on the probability distribution of a default jump rather than the default jump itself, as the default jump is usually inaccessible. As such, the model can back out the market prices of convertible bonds. A prevailing belief in the market is that convertible arbitrage is mainly due to convertible underpricing. Empirically, however, we do not find evidence (...) supporting the underpricing hypothesis. Instead, we find that convertibles have relatively large positive gammas. As a typical convertible arbitrage strategy employs delta-neutral hedging, a large positive gamma can make the portfolio highly profitable, especially for a large movement in the underlying stock price. (shrink)

This article presents a new model for valuing financial contracts subject to credit risk and collateralization. Examples include the valuation of a credit default swap (CDS) contract that is affected by the trilateral credit risk of the buyer, seller and reference entity. We show that default dependency has a significant impact on asset pricing. In fact, correlated default risk is one of the most pervasive threats in financial markets. We also show that a fully collateralized CDS is not equivalent to (...) a risk-free one. In other words, full collateralization cannot eliminate counterparty risk completely in the CDS market. (shrink)

The incremental risk charge (IRC) is a new regulatory requirement from the Basel Committee in response to the recent financial crisis. Notably few models for IRC have been developed in the literature. This paper proposes a methodology consisting of two Monte Carlo simulations. The first Monte Carlo simulation simulates default, migration, and concentration in an integrated way. Combining with full re-valuation, the loss distribution at the first liquidity horizon for a subportfolio can be generated. The second Monte Carlo simulation is (...) the random draws based on the constant level of risk assumption. It convolutes the copies of the single loss distribution to produce one year loss distribution. The aggregation of different subportfolios with different liquidity horizons is addressed. Moreover, the methodology for equity is also included, even though it is optional in IRC. (shrink)

This article presents a new methodology for pricing and hedging commodity derivatives. A generic model calibration is provided. The calibration procedure consists of an offline step where the mean reversion rates, the ratio of the long and short factor volatilities and the correlation between the long and short factors are determined via historical analysis. This offline step is performed relatively infrequently. There’s also an online step of the calibration which happens every time the model is used to price an option (...) or to simulate price paths. Empirical study shows that the model is quite accurate. (shrink)

This paper presents an analytical model for valuing interest rate swaps, subject to bilateral counterparty credit risk. The counterparty defaults are modeled by the reduced-form model as the first jump of a time-inhomogeneous Poisson process. All quantities modeled are market-observable. The closed-form solution gives us a better understanding of the impact of the credit asymmetry on swap value, credit value adjustment, swap rate and swap spread.

A combinatorial analysis of intrinsicality takes intrinsic properties to be independent of accompaniment: a property is intrinsic only if it is possible for a lonely or an accompanied thing to have it or lack it (I). Cameron argues that the combinatorial analysis in Langton & Lewis (1998) faces an epistemic circularity, which makes (I) suspicious. In this paper, I examine two approaches to free the combinatorial analyses from the circularity and find them all fail. Then I provide an outline of (...) an argument for (I) by appealing to the grounding analyses of intrinsicality, which shows an advantage of the grounding analyses over the combinatorial ones. (shrink)