The venture capital community is showing signs of middle age -- moving more slowly and cautiously than before, and hitting fewer home runs than it did in younger, leaner days. As a result, experts say, the sector is having trouble producing the robust performance long associated with it. This means investors need to look at venture capital, and its impact on their portfolios, in a new way.

With the world record-breaking $22 billion IPO of Agricultural Bank of China (ABC) on July 15, Beijing relinquished another small part of its hold on the country's financial services sector. But the process of modernizing the country's banks is far from over, say experts in China and beyond. As ABC and its local rivals struggle to shed their legacy as state-directed "policy banks," many observers still question the central government's willingness to cede control over the balance sheets of what have become some of the world's largest lenders.

While most experts agree that a single-minded focus on the short term can cause negative consequences for companies, they also suggest that blaming quarterly earnings reports, and the pressure to meet analysts' targets or company guidance, is like shooting the messenger. Although the system of quarterly earnings might be broken, fixing it is no easy matter and might create even more pressure to produce immediate results.

After a year of solid gains, the economic recovery is beginning to slow. Demand is trailing off as inventory levels have been restored and emergency stimulus measures withdrawn. Continued high unemployment and a downtick in housing are weighing on consumer confidence and spending. Add unexpected shocks from Europe and a slowdown in China, and forecasters are now ratcheting down their expectations for growth over the next year. While many still expect economic expansion to continue in the longer term, "we have definitely hit a soft patch," one Wharton faculty member notes.

At the opening session of the Global Alumni Forum in Madrid, Sebastián Escarrer, vice chairman of Sol Meliá SA, Wharton dean Thomas S. Robertson and Wharton finance professor Jeremy Siegel each offered different observations about the state of the global markets, the outlook for reform, and the roles that companies, governments and business schools must play in a newly reconfigured economic environment.

Before introducing the panelists taking part in a session during the recent Wharton Global Alumni Forum in Madrid called "Relaunching Private Equity," moderator Raffi Amit summarized the challenges that both venture capital and private equity face at a time when investors have become more conservative, returns are down, and transactions have declined in both volume and value. Panelists offered their views on the new investment climate, and suggested strategies for coping with today's tough economic environment.

A panel at the recent Wharton Global Alumni Forum in Madrid was titled, "The New Financial World." "So, one might ask, what happened to the old financial world?" was the question posed to Forum participants by Wharton finance professor Richard Marston, who led the discussion. Marston asked his panelists to discuss the causes of the economic crisis, the ways in which increased market volatility should be managed, and how the world can address credibility issues related to global imbalances.

Financial institutions add to their woes during an economic downturn, experts say, by refusing to provide capital to worthy businesses because they fear other lenders will also cut back. In the end, banks create a credit shortage that does even more to extend the crisis and delay recovery. In a new paper, Wharton professor Itay Goldstein examines different approaches to halt an over-reaching credit crunch and concludes that the private and public sectors should work together to direct money toward viable businesses.

China's announcement in June that it will abandon the peg tying the renminbi (RMB) to the U.S. dollar and gradually let its currency appreciate was widely applauded in international business and economic circles. The decision is important, experts say, not only in debates about the future clout of the dollar and the RMB in global trade and politics, but also for correcting global economic imbalances. Yet now many observers are wondering what impact the revaluation will have on jobs and prices for the average person -- whether in Boston, Beijing or anywhere in between.

The recent financial crisis, triggered primarily by bad bets in the financial sector, has added momentum to the idea that executive compensation should be tied more closely to corporate debt rather than equity. Last month, for example, American International Group (AIG) announced that it will link incentive pay to the value of the troubled insurer's bonds. In a new paper, Wharton finance professor Alex Edmans and doctoral student Qi Liu argue that these types of incentives protect bondholders' interests and the value of the firm, particularly when a company's solvency is in question.