Search results for: financial capitalism

Authors: Y. Tahat, T. Dunne, S. Fifield, D. Power

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Information about a firm’s usage of Financial Instruments (FIs) plays a very important role in determining its financial position and performance. Yet accounting standard-setters have encountered problems when deciding on the FI-related disclosures which firms must make. The primary objective of this paper is to review the extant literature on FI disclosure. This objective is achieved by surveying the literature on: the corporate usage of FIs; the different accounting standards adopted concerning FIs; and empirical studies on FI disclosure. This review concludes that the current research on FI disclosure has generated a number of useful insights. In particular, the paper reports that: FIs are a very important risk management mechanism in ensuring that companies have the cash available to make value-enhancing investments, however, without a clear set of risk management objectives, using such instruments can be dangerous; accounting standards concerning FIs have resulted in enhanced transparency about the usage of these instruments; and FI-related information is a key input into investors’ decision-making processes. Finally, the paper provides a number of suggestions for future research in the area.

Keywords: financial instruments, financial reporting, accounting standards, value relevance, corporate disclosure

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Authors: K. Matušínská, H. Starzyczná, M. Stoklasa

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The paper deals with finding and describing of the effective marketing communication forms relating to the segment 50+ in the financial market in the Czech Republic. The segment 50+ can be seen as a great marketing potential in the future but unfortunately the Czech financial institutions haven´t still reacted enough to this fact and they haven´t prepared appropriate marketing programs for this customers´ segment. Demographic aging is a fundamental characteristic of the current European population evolution but the perspective of further population aging is more noticeable in the Czech Republic. This paper is based on data from one part of primary marketing research. Paper determinates the basic problem areas as well as definition of marketing communication in the financial market, defining the primary research problem, hypothesis and primary research methodology. Finally suitable marketing communication approach to selected sub-segment at age of 50-60 years is proposed according to marketing research findings.

Keywords: population aging in the Czech Republic, segment 50+, financial services, marketing communication, marketing research, marketing communication approach

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Authors: Kerem Ok, Serafettin Senturk, Serdar Aktas, Cem Cevikbas

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Mobile technology is very popular nowadays and it provides a digital world where users can experience many value-added services. Service Providers are also eager to offer diverse value-added services to users such as digital identity, mobile financial services and so on. In this context, the security of data storage in smartphones and the security of communication between the smartphone and service provider are critical for the success of these services. In order to provide the required security functions, the SIM card is one acceptable alternative. Since SIM cards include a Secure Element, they are able to store sensitive data, create cryptographically secure keys, encrypt and decrypt data. In this paper, we design and implement a SIM and a smartphone framework that uses a SIM card for secure key generation, key storage, data encryption, data decryption and digital signing for mobile financial services. Our frameworks show that the SIM card can be used as a controlled Secure Element to provide required security functions for popular e-services such as mobile financial services.

Keywords: SIM card, mobile financial services, cryptography, secure data storage

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Authors: Lukasz Kurowski, Paweł Smaga

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We explore the procyclicality of monetary policy decisions towards the financial cycle in the 1995−2015 period on a sample of six central banks. Using interest rate paths and the credit-to-GDP gap to construct a monetary policy procyclicality ratio, we provide evidence that monetary policy procyclicality was high in BoE and CNB and low in Riksbank and ECB. The results support the need for coordination between macroprudential and monetary policies, for example, by including financial stability considerations to the inflation targeting strategy.

Keywords: central bank, financial stability, macroprudential policy, monetary policy

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Authors: Giorgi Methodishvili, Iuliia Methodishvili

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In this paper product development algorithm is used to determine the optimal management of financial resources in company. Aspects of financial management considered include put initial investment, examine all possible ways to solve the problem and the optimal rotation length of profit. The software of given problems is based using greedy algorithm. The obtained model and program maintenance enable us to define the optimal version of management of proper financial flows by using visual diagram on each level of investment.

Keywords: management, software, optimal, greedy algorithm, graph-diagram

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Authors: Nada Souissi, Mourad Mroua

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The main purpose of this study is to examine the interaction between financial asset volatility, economic factors and investor's behavioral indicators related to both the company's and the markets stocks for the period from January 2000 to January2020. Using multiple linear regression and Bayesian Networks modeling, results show a positive and negative relationship between investor's psychology index, economic factors and predicted stock market return. We reveal that the application of the Bayesian Discrete Network contributes to identify the different cause and effect relationships between all economic, financial variables and psychology index.

Keywords: Financial asset return predictability, Economic factors, Investor's psychology index, Bayesian approach, Probabilistic networks, Parametric learning

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Authors: Salma Mefteh-Wali, Marie-Josephe Rigobert

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We investigate the impact of foreign currency debt on firm performance for a sample of non-financial French firms studied over the period 2002 to 2012. As foreign currency debt is both a financing and hedging instrument against foreign exchange risk, we mobilize optimal hedging theory and capital structure theory. When we study the impact on firm value, our main results show that before and after the financial crisis of 2008, foreign debt had the same behavior as domestic debt. We find that during the crisis period, foreign debt positively affects firm value. Investors perceive foreign debt as a natural hedging instrument that is likely to reduce the costs of underinvestment, alleviate cash flow volatility, limit the costs of financial distress, and generate tax shield benefits. Also, our results show that foreign leverage negatively affects the firm performance proxied by ROA and ROE, during and after the financial crisis. However, this impact is positive in the pre-crisis period.

Keywords: foreign currency derivatives, foreign currency debt, foreign currency hedging, firm performance

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Authors: Lawrence Ngalim

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In this paper, we investigate whether the adoption of recent technological advancements in delivering financial services, such as crowdfunding, assists the financially excluded across twenty-seven Sub Saharan Africa (SSA) through entrepreneurship. Results show that even after addressing potential endogeneity issues as much as possible, crowdfunding and entrepreneurial-ventures are strongly associated i.e., crowdfunding translates a 5 – 9 percentage increase on incumbent/prospective individuals who borrowed to enhance/embark on a venture across SSA economies between 2014 to 2017. The study has some implications for regional financial alliance if economies adopt this recent financial technology which offers another financing opportunity that’s unrestricted by territorial boundaries.

Keywords: fintech, finance, entrepreneurship, SSA

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Authors: Xuefan Li

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Parts of Chinese doctoral students in Canada are facing significant academic pressure. The factors contributing to such pressure are diverse, including financial conditions and cultural differences. Students from various academic disciplines have been interviewed to investigate the factors that Chinese students consider when selecting Canada as a destination for doctoral studies, as well as to identify the challenges they face during their academic pursuits and the associated factors influencing their performance. The findings indicate that their motivations to pursue doctoral study in Canada are concluded as both push and pull factors. Financial conditions and cultural differences are critical factors affecting academic performance, with disciplinary variations in the degree of influence observed.

Keywords: Chinese doctoral students, financial status, cultural cognition, academic performance

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Authors: Ben-Caleb Egbide, Egharevba Mathew, Achugamonu Uzoma, Faboyede Samuel

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The importance of budgeting in government and corporate entities as medium for the efficient management of scarce resources is self-evident. But when it comes to home or personal budgeting, there seem to be lingering misconceptions as regards its relevance. While most people view personal budgeting merely as a tool for tracking expenses and schedule for paying bills and indebtedness, very few consider it as one of the most important device for sound financial planning, money management instrument and/or wealth-creation mechanism. This paper is conceptualised to investigate the association between personal budgeting and financial well-being among staffers of tertiary institution in the South West Nigeria. Underpinned by the individualistic/cultural theory of well-being and the adoption of a survey research design, a structured questionnaire was used to gather data from a cross section of staff of tertiary Institutions in Ogun State. A Spearman Rank Correlation was utilised for analysis of data. The result indicates a high positive relationship between personal budgeting and tendencies for enhanced financial well-being among staff. The paper established that a change of value and behavioural pattern by individuals and household, especially in the areas of personal spending and budgeting could drastically reduce the incidence of the severity of financial stress, hence, enhanced wellness among staff.

Keywords: personal budgeting, financial well-being, tertiary institutions staffers, Nigeria

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Authors: Evagelia Makri, Maria Tsourela, Dimitris Paschaloudis, Dafni M. Nerantzaki

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One of the biggest financial and social problems, which at the same time constitute one of the greater challenges that Greek society faces today, is the illegal avoidance of tax payments. Tax evasion may negate financial data and community budgets, as well as breed financial chaos. This research seeks to reflect Greek reality concerning tax measures. Also, there will be an effort to record the factors surrounding tax evasion. Greek tax system’s data will be rendered in financial terms. Questionnaires will be handed out to tax payers, and interviews will be conducted to taxmen. The quantitative analysis of the questionnaire answers will define the tax payers’ opinion towards the existence of tax evasion. The qualitative analysis of the interviews will reveal the main reason that boosts tax evasion. At the end, there will be some realistic proposals about how to better collect taxes, through the creation of a strong regulatory mechanism.

Keywords: tax evasion, tax collection measures, insurance recovery measures, Greek tax system

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Authors: Mohamed Aljarallah, Mohamed Nurullah, George Saridakis

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This paper aims and objectives are to investigate how the structural change of the financial regulatory bodies affect the financial supervision and how the regulators can design such a structure with taking into account; the Central Bank, the conduct of business and the prudential regulators, it will also consider looking at the structure of the international regulatory bodies and what barriers are found. There will be five questions to be answered; should conduct of business and prudential regulation be separated? Should the financial supervision and financial stability be separated? Should the financial supervision be under the Central Bank? To what extent the politician should intervene in changing the regulatory and supervisory structure? What should be the regulatory and supervisory structure when there is financial conglomerate? Semi structure interview design will be applied. This research sample selection contains a collective of financial regulators and supervisors from the emerged and emerging countries. Moreover, financial regulators and supervisors must be at a senior level at their organisations. Additionally, senior financial regulators and supervisors would come from different authorities and from around the world. For instance, one of the participants comes from the International Bank Settlements, others come from European Central Bank, and an additional one will come from Hong Kong Monetary Authority and others. Such a variety aims to fulfil the aims and objectives of the research and cover the research questions. The analysis process starts with transcription of the interview, using Nvivo software for coding, applying thematic interview to generate the main themes. The major findings of the study are as follow. First, organisational structure changes quite frequently if the mandates are not clear. Second, measuring structural change is difficult, which makes the whole process unclear. Third, effective coordination and communication are what regulators looking for when they change the structure and that requires; openness, trust, and incentive. In addition to that, issues appear during the event of crisis tend to be the reason why the structure change. Also, the development of the market sometime causes a change in the regulatory structure. And, some structural change occurs simply because of the international trend, fashion, or other countries' experiences. Furthermore, when the top management change the structure tends to change. Moreover, the structure change due to the political change, or politicians try to show they are doing something. Finally, fear of being blamed can be a driver of structural change. In conclusion, this research aims to provide an insight from the senior regulators and supervisors from fifty different countries to have a clear understanding of why the regulatory structure keeps changing from time to time through a qualitative approach, namely, semi-structure interview.

Keywords: financial regulation bodies, financial regulatory structure, global financial regulation, financial crisis

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Authors: Vishwa Nath Maurya, Rama Shanker Sharma, Saad Talib Hasson Aljebori, Avadhesh Kumar Maurya, Diwinder Kaur Arora

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Present paper deals with problems of determining the relationship between the variables of corporate governance and financial performance of Islamic banks. Here, we dealt with the corporate governance in the banking sector, where increasing the importance of corporate governance, due to their special nature, as the bankruptcy of banks affects not only the relevant parties from customers, depositors and lenders, but also affect financial stability and then the economy as a whole. Through this paper we dealt to the specificity of governance in Islamic banks, which face double governance: Anglo-Saxon governance system and Islamic governance system. In addition, we focused our attention to measure the impact of corporate governance variables on financial performance through an empirical study on a sample of Islamic banks during the period 2005-2012 in the GCC region. Our present study implies that there is a very strong relationship between the variables of governance and financial performance of Islamic banks, where there is a positive relationship between return on assets and the composition of the Board of Directors, the size of the Board of Directors, the number of committees in the Council, as well as the number of members of the Sharia Supervisory Board, while it is clear that there is a negative relationship between return on assets and concentration ownership.

Keywords: correlation analysis, parametric estimation, corporate governance, financial performance, financial stability, conventional banks, bankruptcy, Islamic governance system

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Authors: Yosra Makni, Mariam Dammak, Dhouha Abed

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Purpose: This paper investigates the mediating role of corporate reputation on the relationship between corporate social responsibility and financial performance. Design/Methodology/Approach: Based on a sample of 4329 drawn from 33 developed and developing countries and over a period of eight-year ranging from 2009 to 2016, we apply an Ordinary Least Squares regression (OLS) regressions to test our hypotheses. Findings: The authors find that there is a positive association between Corporate Social Responsibility (CSR) engagement and the financial performance of a company. They also document that there is a positive association between CSR engagement and a company's reputation and the company's reputation mediates the relationship between engagement in CSR activities and financial performance. Originality Value: This study contributes to the literature in the following ways. First, our research advances the understanding of the link between corporate social responsibility and financial performance by responding to the requests of several researchers to study the mechanisms of mediation between these two concepts given the scarcity relative to currently available research. So we include the most important predicted advantage of CSR, namely reputation, by developing and testing a more complex relationship. Secondly, these relationships have been investigated using an international sample drawn from a large number of countries with a high reputation. Using Judy and Kenny's method, we have confirmed that the company's reputation can play the role of a mediating variable on the relationship between CSR's commitment to operations and the financial performance of the company. More specifically, the more the company is engaged in the activities of CSR, the more it can have a good reputation, more than it has a good financial performance.

Keywords: corporate social responsibility, company's reputation, financial performance, mediating variable

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Authors: Chengxuan Geng, Yizhou E

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This paper mainly examines the changes in the relationship between earnings management and audit quality before and after financial crisis in the context of American firms from 2005 to 2010. Based on a sample of 3584 firm year observations, we find that there are changes concerning the relation between accrual-based earnings management and audit quality during the pre-crisis and post-crisis periods. However, the results do not provide enough evidence with regard to the variances in the association between real activities earnings management and audit quality during these two periods.

Keywords: audit quality, earnings management, financial crisis, relationship

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Authors: Aleksandra Nocoń (Szunke)

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The study is a review of the literature concerning the consequences of non-standard monetary policy, which are used by central banks during unconventional periods, threatening instability of the banking sector. In particular, the attention was paid to the effects of non-standard monetary policy tools for financial markets. However, the empirical evidence about their effects and real consequences for the financial markets are still not final. The main aim of the study is to survey the consequences of standard and non-standard monetary policy instruments, implemented during the global financial crisis in the United States, United Kingdom and Euroland, with particular attention to the results for the stabilization of global financial markets. The study analyses the consequences for short and long-term market interest rates, interbank interest rates and LIBOR-OIS spread. The study consists mainly of the empirical review, indicating the impact of the implementation of these tools for the financial markets. The following research methods were used in the study: literature studies, including domestic and foreign literature, cause and effect analysis and statistical analysis.

Keywords: asset purchase facility, consequences of monetary policy instruments, non-standard monetary policy, quantitative easing

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Authors: Amit Das

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Background and significance of the study: Generally investors and market forecasters use financial statement for investigation while it awakens contribute to investing. The main vicinity of financial accounting and reporting practices recommends a few basic financial performance indicators, namely, return on capital employed, return on assets and earnings per share, which is associated considerably with share prices. It is principally true in case of Indian pharmaceutical companies also. Share investing is intriguing a financial risk in addition to investors look for those financial evaluations which have noteworthy shock on share price. A crucial intention of financial statement analysis and reporting is to offer information which is helpful predominantly to exterior clients in creating credit as well as investment choices. Sound financial performance attracts the investors automatically and it will increase the share price of the respective companies. Keeping in view of this, this research work investigates the impact of financial performance indicators on share price of pharmaceutical companies in India which is listed in the Bombay Stock Exchange. Methodology: This research work is based on secondary data collected from moneycontrol database on September 28, 2015 of top 101 pharmaceutical companies in India. Since this study selects four financial performance indicators purposively and availability in the database, that is, earnings per share, return on capital employed, return on assets and net profits as independent variables and one dependent variable, share price of 101 pharmaceutical companies. While analysing the data, correlation statistics, multiple regression technique and appropriate test of significance have been used. Major findings: Correlation statistics show that four financial performance indicators of 101 pharmaceutical companies are associated positively and negatively with its share price and it is very much significant that more than 80 companies’ financial performances are related positively. Multiple correlation test results indicate that financial performance indicators are highly related with share prices of the selected pharmaceutical companies. Furthermore, multiple regression test results illustrate that when financial performances are good, share prices have been increased steadily in the Bombay stock exchange and all results are statistically significant. It is more important to note that sensitivity indices were changed slightly through financial performance indicators of selected pharmaceutical companies in India. Concluding statements: The share prices of pharmaceutical companies depend on the sound financial performances. It is very clear that share prices are changed with the movement of two important financial performance indicators, that is, earnings per share and return on assets. Since 101 pharmaceutical companies are listed in the Bombay stock exchange and Sensex are changed with this, it is obvious that Government of India has to take important decisions regarding production and exports of pharmaceutical products so that financial performance of all the pharmaceutical companies are improved and its share price are increased positively.

Keywords: financial performance indicators, share prices, pharmaceutical companies, India

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Authors: Mohammad Ghavami, Reza S. Dilmaghani

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This paper presents an adaptive framework for modelling financial markets using equity risk premiums, risk free rates and volatilities. The recorded economic factors are initially used to train four adaptive filters for a certain limited period of time in the past. Once the systems are trained, the adjusted coefficients are used for modelling and prediction of an important financial market index. Two different approaches based on least mean squares (LMS) and recursive least squares (RLS) algorithms are investigated. Performance analysis of each method in terms of the mean squared error (MSE) is presented and the results are discussed. Computer simulations carried out using recorded data show MSEs of 4% and 3.4% for the next month prediction using LMS and RLS adaptive algorithms, respectively. In terms of twelve months prediction, RLS method shows a better tendency estimation compared to the LMS algorithm.

Keywords: adaptive methods, LSE, MSE, prediction of financial Markets

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Authors: Brian Tung, Yam Wing Siu, Tsun Se Cheong

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Purpose: This research aims to explore how personal and environmental factors, especially the socio-economic changes and behavioral changes fostered by the COVID-19 outbreak pandemic, affect the financial vulnerability of a specific segment of people in financial distress. Innovative research methodology of machine learning will be applied to data collected from over 300 local individuals in Hong Kong seeking counseling or similar services in recent years. Results: First, machine learning has found that too much exposure to digital services and information on digitized services may lead to adverse effects on respondents’ financial vulnerability. Second, the improvement in financial literacy level provides benefits to the financially vulnerable group, especially those respondents who have started with a lower level. Third, serious addiction to digital technology can lead to worsened debt servicing ability. Machine learning also has found a strong correlation between debt servicing situations and income-seeking behavior as well as spending behavior. In addition, if the vulnerable groups are able to make appropriate investments, they can reduce the probability of incurring financial distress. Finally, being too active in borrowing and repayment can result in a higher likelihood of over-indebtedness. Conclusion: Findings can be employed in formulating a better counseling strategy for professionals. Debt counseling services can be more preventive in nature. For example, according to the findings, with a low level of financial literacy, the respondents are prone to overspending and unable to react properly to the e-marketing promotion messages pop-up from digital services or even falling into financial/investment scams. In addition, people with low levels of financial knowledge will benefit from financial education. Therefore, financial education programs could include tech-savvy matters as special features.

Keywords: personal finance, digitization of the economy, COVID-19 pandemic, addiction to digital technology, financial vulnerability

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Authors: Rafikoddin Kazi

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Almost all the major religions of the world condemn the transactions based on interest which promotes self-centered and materialistic thinking. Still, it is amazing to note that it has become the tradition of transaction at world level hence it is called traditional financial system. The main feature of this system is that it considers economic aspects of the transaction only. This system supports the economic development and not the welfare of humankind. However, it is worth mentioning the fact that, except Islamic financial system no other financial system stood in front of it as a viable alternative system. Although many countries have tried to create financial infrastructure and system, still the Malaysian Islamic financial system has got its own peculiarity. It has made tremendous progress in creating sound Islamic Financial system. However, the historical aspect of this country which has passed through Islamic and traditional financial system has got its own advantages and disadvantages. The advantageous factor is that, despite having mix and heterogeneous culture, it has succeeded in creating Islamic Financial System based on the dual legal system to satisfy the needs of multi-cultural factors. This fact has proved that Islamic Financial System does not need purely Muslim population. However, due to adoption of the dual legal system, several legal issues have been taken place. According to this system, the application of Islamic Law has been limited only up to some family and religious matters. The rest of the matters are being dealt with under the traditional laws, the principles and practices of which are different from that of the Islamic Legal System. The matter becomes all the more complicated when the cases are partially or simultaneously concerned with traditional vis-à-vis Islamic Laws as it requires expertise in both the legal systems. However, the educational principles and systems are different in respect of both the systems. To face this problem, Shariah Advisory Council has been established. But the Multiplicity of Shariah authorities without judicial power has created confusion at various levels. Therefore, some experts have stressed the need for improving, empowering the Islamic financial, legal system to make it more integrated and holistic. In view of the above, an endeavor has been made in this paper to throw some light on the matters related to the adoption of the dual legal system. The paper is conceptual in nature and the method adopted is the intensive survey of literature thereby all the information has been gathered from the secondary sources.

Keywords: Islamic financial system, Islamic legal system, Islamic capital market (ICM) , traditional financial system

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Authors: Laura Sour

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Government accounting is an essential instrument of transparency and accountability in public administration, which allows connecting internal management with the implementation of policies and their evaluation by third parties through the construction of indicators on the cost of government. Several countries have adopted the International Public Sector Accounting Standards (IPSAS) as part of their modernization strategy. This document will evaluate the quantity and harmonization of the financial information published in the financial statements of 12 Latin American countries based on what is established in IPSAS 1, 2 and 17. For this, seven types of financial statements are analyzed. published during the period from 2015 to 2019. Based on this information, it will be possible to describe the evolution in the government financial publication to carry out a detailed analysis of the items that have been most transparent in these countries. Finally, the level of harmonization of the financial statements will be studied using the Herfindahl-Hirschman index (IHH) to determine the degree of comparability of the information. To date, the results indicate that the public sector has increased the quantity and harmonization of the financial information published during the study period, but in a heterogeneous way: From the data collected, it has been found that the financial statement published with greater frequency and quantity is the Income Statement (classification of expenses by nature). On the other hand, the most complete reports were published by Costa Rica (2017 to 2019) and Mexico (2016 to 2018), periods during which these countries complied with 92.9 percent of the items analyzed. Although 2017 and 2018 are the years in which the most financial statements were reported, it is important to mention that Mexico is the country that has published the most financial information throughout the entire study period. The use of the IHH is expected to provide accurate information on the quality with which countries have adopted IPSAS within their government accounting systems to promote transparency and accountability in the continent.

Keywords: accounting and auditing, government policy and regulation, harmonization, public sector accounting and audits IPSAS

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Authors: Onyinyechi Joy Kingdom

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Mergers and Acquisitions (M&A) have been proposed as a mechanism through which, problems associated with inefficiency or poor performance in financial institution could be addressed. The aim of this study is to examine the proposition that recapitalization of banks, which encouraged Mergers and Acquisitions in Nigeria banking system, would strengthen the domestic banks, improve financial deepening and the confidence of depositors. Hence, this study examines the impact of the 2005 M&A in the Nigerian-banking sector on financial deepening using mixed method (quantitative and qualitative approach). The quantitative process of this study utilised annual time series for financial deepening indicator for the period of 1997 to 2012. While, the qualitative aspect adopted semi-structured interview to collate data from three merged banks and three stand-alone banks to explore, understand and complement the quantitative results. Furthermore, a framework thematic analysis is employed to analyse the themes developed using NVivo 11 software. Using the quantitative approach, findings from the equality of mean test (EMT) used suggests that M&A have significant impact on financial deepening. However, this method is not robust enough given its weak validity as it does not control for other potential factors that may determine financial deepening. Thus, to control for other factors that may affect the level of financial deepening, a Multiple Regression Model (MRM) and Interrupted Times Series Analysis (ITSA) were applied. The coefficient for M&A dummy turned negative and insignificant using MRM. In addition, the estimated linear trend of the post intervention when ITSA was applied suggests that after M&A, the level of financial deepening decreased annually; however, this was statistically insignificant. Similarly, using the qualitative approach, the results from the interview supported the quantitative results from ITSA and MRM. The result suggests that interest rate should fall when capital base is increased to improve financial deepening. Hence, this study contributes to the existing literature the importance of other factors that may affect financial deepening and the economy when policies that will enhance bank performance and the economy are made. In addition, this study will enable the use of valuable policy instruments relevant to monetary authorities when formulating policies that will strengthen the Nigerian banking sector and the economy.

Keywords: mergers and acquisitions, recapitalization, financial deepening, efficiency, financial crisis

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Authors: J-C. Leneveu, A. Chereau, L. Mansart, T. Mesbah, M. Wyka

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Extracting and interpreting information from Big Data represent a stake for years to come in several sectors such as finance. Currently, numerous methods are used (such as Technical Analysis) to try to understand and to anticipate market behavior, with mixed results because it still seems impossible to exactly predict a financial trend. The increase of available data on Internet and their diversity represent a great opportunity for the financial world. Indeed, it is possible, along with these standard financial data, to focus on exogenous data to take into account more macroeconomic factors. Coupling the interpretation of these data with standard methods could allow obtaining more precise trend predictions. In this paper, in order to observe the influence of exogenous data price independent of other usual effects occurring in classical markets, behaviors of Bitcoin users are introduced in a model reconstituting Bitcoin value, which is elaborated and tested for prediction purposes.

Keywords: big data, bitcoin, data mining, social network, financial trends, exogenous data, global economy, behavioral finance

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Authors: Ender Su, Kai Wen Wong, I-Ling Ju, Ya-Ling Wang

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In this study, the systemic risk change of Taiwan’s banking sector is analyzed during the financial crisis. The risk expose of each financial institutions to the whole Taiwan banking systemic risk or vice versa under financial distress are measured by conditional Value-at-Risk (CoVaR) and conditional coherent expected shortfall (CoES). The CoVaR and CoES are estimated by using vector quantile autoregression (MVMQ-CaViaR) with the daily stock returns of each banks included domestic and foreign banks in Taiwan. The daily in-sample data covered the period from 05/20/2002 to 07/31/2007 and the out-of-sample period until 12/31/2013 spanning the 2008 U.S. subprime crisis, 2010 Greek debt crisis, and post risk duration. All banks in Taiwan are categorised into several groups according to their size of market capital, leverage and domestic/foreign to find out what the extent of changes of the systemic risk as the risk changes between the individuals in the bank groups and vice versa. The final results can provide a guidance to financial supervisory commission of Taiwan to gauge the downside risk in the system of financial institutions and determine the minimum capital requirement hold by financial institutions due to the sensibility changes in CoVaR and CoES of each banks.

Keywords: bank financial distress, vector quantile autoregression, CoVaR, CoES

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Authors: Vânia Costa, Nuno De Sá Teixeira, Ana C. Santos, Eduardo Santos

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Financial literacy and numeracy have been regarded as paramount for rational household decision making in the increasing complexity of financial markets. However, financial decisions are often made under sub-optimal circumstances, including cognitive overload. The present study aims to clarify how financial literacy and numeracy, taken as relevant expert knowledge for financial decision-making, modulate possible effects of cognitive load. Participants were required to perform a choice between a sure loss or a gambling pertaining a financial investment, either with or without a competing memory task. Two experiments were conducted varying only the content of the competing task. In the first, the financial choice task was made while maintaining on working memory a list of five random letters. In the second, cognitive load was based upon the retention of six random digits. In both experiments, one of the items in the list had to be recalled given its serial position. Outcomes of the first experiment revealed no significant main effect or interactions involving cognitive load manipulation and numeracy and financial literacy skills, strongly suggesting that retaining a list of random letters did not interfere with the cognitive abilities required for financial decision making. Conversely, and in the second experiment, a significant interaction between the competing mnesic task and level of financial literacy (but not numeracy) was found for the frequency of choice of a gambling option. Overall, and in the control condition, both participants with high financial literacy and high numeracy were more prone to choose the gambling option. However, and when under cognitive load, participants with high financial literacy were as likely as their illiterate counterparts to choose the gambling option. This outcome is interpreted as evidence that financial literacy prevents intuitive risk-aversion reasoning only under highly favourable conditions, as is the case when no other task is competing for cognitive resources. In contrast, participants with higher levels of numeracy were consistently more prone to choose the gambling option in both experimental conditions. These results are discussed in the light of the opposition between classical dual-process theories and fuzzy-trace theories for intuitive decision making, suggesting that while some instances of expertise (as numeracy) are prone to support easily accessible gist representations, other expert skills (as financial literacy) depend upon deliberative processes. It is furthermore suggested that this dissociation between types of expert knowledge might depend on the degree to which they are generalizable across disparate settings. Finally, applied implications of the present study are discussed with a focus on how it informs financial regulators and the importance and limits of promoting financial literacy and general numeracy.

Keywords: decision making, cognitive load, financial literacy, numeracy

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Authors: Inka Maria Vilhelmiina Hiltunen

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The crisis of liberal democracy has been recognized from many sites of political literature; scholars of Marxist critical political economy and deliberative democracy, as well as critics of neoliberalism, have become concerned about how either the rise of populism and authoritarianism, institutional decline or the overarching economic rationality erode political democratic citizenship in favor of economic technocracy or conservative protectionism. However, even if these bodies of literature recognize the generalized crisis that haunts Western democracies, dialogue between them has been very limited. That said, drawing from contemporary Marxist perspectives, this article aims at bridging the gap between the criticism of neoliberalism and theories of deliberative democracy. The first section starts by outlining what is meant by neoliberalism, liberal democracy, and the crisis of liberal democracy. The next section explores how contemporary capitalism acts upon society and transforms it. It introduces Jurgen Habermas’ thesis of the ‘colonization of the lifeworld’, Wendy Brown’s analysis of neoliberal rationality and Étienne Balibar’s concepts of ‘absolute capitalism’ and ‘total subsumption,’ that the essay aims at connecting in the last section. The third section is concerned with the deliberative democratic theory and practice. The section highlights the qualitative socio-political impacts of deliberation, as predicted by theorists and shown by empirical studies. The last section draws from contemporary Marxist perspectives to examine the question if deliberative democratic theories and practices can resolve the crisis of liberal democracy in the current financially driven era of neoliberal capitalism. By asking this question, the essay aims to consider what is required to reverse the current global trend of rising inequality. If liberal democracy has declined towards commodified and reactionary forms of politics and if ‘market rationality’ has shaped social agency to the extent that politicians and the public struggle to imagine ‘any alternatives’, the most urgent political task is to bring to life a new political imagination based on democratic ideals of equality, inclusivity, reciprocity, and solidarity, that thereby enables the revision of the transnational institutional design. This part focuses on the hegemonic role of finance and money. The essay concludes by stating that the implementation of substantive global democracy must start from the dissolution of the hegemony of finance, centered on U.S., and from the remaking of the conditions of socioeconomic reproduction world-wide. However, given the still present overarching neoliberal status quo, the essay is skeptical of the ideological feasibility of this remaking.

Keywords: deliberative democracy, criticism of neoliberalism, marxist political economy, crisis of liberal democracy

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Authors: Nadezhda Kvatashidze

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The International Accounting Standards Board updated the conceptual framework for financial reporting. The main reason behind it is to resolve the tasks of the accounting, which are caused by the market development and business-transactions of a new economic content. Also, the investors call for higher transparency of information and responsibility for the results in order to make a more accurate risk assessment and forecast. All these make it necessary to further develop the conceptual framework for financial reporting so that the users get useful information. The market development and certain shortcomings of the conceptual framework revealed in practice require its reconsideration and finding new solutions. Some issues and concepts, such as disclosure and supply of information, its qualitative characteristics, assessment, and measurement uncertainty had to be supplemented and perfected. The criteria of recognition of certain elements (assets and liabilities) of reporting had to be updated, too and all this is set out in the updated edition of the conceptual framework for financial reporting, a comprehensive collection of concepts underlying preparation of the financial statement. The main objective of conceptual framework revision is to improve financial reporting and development of clear concepts package. This will support International Accounting Standards Board (IASB) to set common “Approach & Reflection” for similar transactions on the basis of mutually accepted concepts. As a result, companies will be able to develop coherent accounting policies for those transactions or events that are occurred from particular deals to which no standard is used or when standard allows choice of accounting policy.

Keywords: conceptual framework, measurement basis, measurement uncertainty, neutrality, prudence, stewardship

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Authors: Ghadeer A.Al-Jabaree, Husam Aldeen Al-Khadash, M. Nassar

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This study aimed at investigating the effect of well-designed corporate governance system on the financial stability of insurance companies listed in ASE. Further, this study provides a comprehensive model for evaluating and analyzing insurance companies' financial position and prospective for comparing the degree of corporate governance application provisions among Jordanian insurance companies. In order to achieve the goals of the study, a whole population that consist of (27) listed insurance companies was introduced through the variables of (board of director, audit committee, internal and external auditor, board and management ownership and block holder's identities). Statistical methods were used with alternative techniques by (SPSS); where descriptive statistical techniques such as means, standard deviations were used to describe the variables, while (F) test and ANOVA analysis of variance were used to test the hypotheses of the study. The study revealed the existence of significant effect of corporate governance variables except local companies that are not listed in ASE on financial stability within control variables especially debt ratio (leverage),where it's also showed that concentration in motor third party doesn't have significant effect on insurance companies' financial stability during study period. Moreover, the study concludes that Global financial crisis affect the investment side of insurance companies with insignificant effect on the technical side. Finally, some recommendations were presented such as enhancing the laws and regulation that help the appropriate application of corporate governance, and work on activating the transparency in the disclosures of the financial statements and focusing on supporting the technical provisions for the companies, rather than focusing only on profit side.

Keywords: corporate governance, financial stability and solvency margin, insurance companies, Jordan

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Authors: Salma Krafessi

Abstract:

The financial markets have a multifaceted, intricate environment, and enormous volumes of data are produced every day. To find investment possibilities, possible fraudulent activity, and market oddities, accurate anomaly identification in this data is essential. Conventional methods for detecting anomalies frequently fail to capture the complex organization of financial data. In order to improve the identification of abnormalities in financial time series data, this study presents Tucker Decomposition as a reliable multi-way analysis approach. We start by gathering closing prices for the S&P 500 index across a number of decades. The information is converted to a three-dimensional tensor format, which contains internal characteristics and temporal sequences in a sliding window structure. The tensor is then broken down using Tucker Decomposition into a core tensor and matching factor matrices, allowing latent patterns and relationships in the data to be captured. A possible sign of abnormalities is the reconstruction error from Tucker's Decomposition. We are able to identify large deviations that indicate unusual behavior by setting a statistical threshold. A thorough examination that contrasts the Tucker-based method with traditional anomaly detection approaches validates our methodology. The outcomes demonstrate the superiority of Tucker's Decomposition in identifying intricate and subtle abnormalities that are otherwise missed. This work opens the door for more research into multi-way data analysis approaches across a range of disciplines and emphasizes the value of tensor-based methods in financial analysis.

Keywords: tucker decomposition, financial markets, financial engineering, artificial intelligence, decomposition models

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Authors: Tochukwu Timothy Okoli, Devi Datt Tewari

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The high rate of Fintech adoption has not transmitted to greater financial inclusion and development in Africa. This problem is attributed to poor Fintech diversification and usefulness in the continent. This concept is referred to as the Fintech depth of penetration in this study. The study, therefore, assessed its determinants and growth process in a panel of three emergings, twenty-four frontiers and five fragile African economies disaggregated with dummies over the period 2004-2018 to allow for heterogeneity between groups. The System Generalized Method of Moments (GMM) technique reveals that the average depth of Mobile banking and automated teller machine (ATM) is a dynamic heterogeneity process. Moreover, users' previous experiences/compatibility, trial-ability/income, and financial development were the major factors that raise its usefulness, whereas perceived risk, financial openness, and inflation rate significantly limit its usefulness. The growth rate of Mobile banking, ATM, and Internet banking in 2018 is, on average 41.82, 0.4, and 20.8 per cent respectively greater than its average rates in 2004. These greater averages after the 2009 financial crisis suggest that countries resort to Fintech as a risk-mitigating tool. This study, therefore, recommends greater Fintech diversification through improved literacy, institutional development, financial liberalization, and continuous innovation.

Keywords: depth of fintech, emerging Africa, financial technology, internet banking, mobile banking

Procedia PDF Downloads 103