Liquidity Maneuver in the Russian Financial System in the Context of Inflation Issues and Stock Market Development

The article is devoted to the study of the current state, problems and prospects of development of the Ukrainian stock market. It is proved that the stock market is a tool for implementing the state's Innovation Policy and a priority factor in mobilizing financial and capital resources. Stock market commodities are securities (stocks, bonds, etc.). Trends, features of functioning and development of the Ukrainian stock market are analysed. The analysis of the main indicators of exchanges, the structure and volume of exchange contracts with securities is carried out. The structural distribution of exchange contracts by trading organizers is established. The analysis of operations with securities on the organized market, unorganized market and stock exchanges of the country is carried out. The largest volume of trading on financial instruments on trade organizers in 2019 was recorded with government bonds of Ukraine – UAH 295 billion according to the National Securities and stock market Commission, the exchange market during 2019 saw consolidation of securities trading on two stock exchanges “Perspektyva” and “PFTS Ukraine Stock Exchange”: 98.7% of the value of exchange contracts. Analysis of the main indicators that determine the state of the stock market has shown that the modern securities market of Ukraine is characterized by an extremely high degree of fragmentation, limited liquidity and a variety of types of securities, which, in turn, are the main obstacles to the development of the stock market and the capital market as a whole. Attention is focused on the main problems that hinder the functioning of the stock market. It is proved that the development of the stock market is hindered by: insufficient competitiveness of the domestic stock market; imperfect tax incentives for market development; low level of corporate governance development; imperfect regulatory and legislative framework of Ukraine; low liquidity and capitalization. The directions of development of the stock market of Ukraine are proposed: improving the efficiency of regulation of issuers; stimulating the inflow of investment to the stock market; ensuring reliable and efficient functioning of the market infrastructure; ensuring the functioning of the unified state policy for stimulating the improvement of the investment climate.

Viewing the development of the stock market in Ukraine, the economy, which world financial organizations characterize as small and open, is largely determined by the trends formed by the global stock markets and leading stock exchanges. Therefore, the study aims to analyze Ukraine’s stock market, the world stock market, stock markets in the regions, and to assess their mutual influence. The study uses the data of the World Federation of Exchanges and National Securities and Stock Market Commission (Ukraine) from 2015 to 2020. Stock market performance forecasts are built using triple exponential smoothing. Based on pairwise correlation coefficients, the existence of a significant dependence in the development of the world stock market on the development of the American stock market was determined. Regarding the Ukrainian stock exchanges, only SE “PFTS” demonstrated its dependence on the US stock market. The results of the regression model based on an exponentially smoothed series of trading volumes in all markets showed that variations in the volume of trading on the world stock market are due to the situation on the US stock markets. Trading volume dynamics on Ukrainian stock exchanges such as SE “PFTS” and SE “Perspektiva” is almost 50% determined by the development of stock markets in the American region. Although Ukraine is geographically located in Europe, the results show a lack of significant links and the impacts of stock markets in this region on the major Ukrainian stock exchanges and the stock market as a whole.

PurposeThe purpose of this paper is to investigate the impacts of stock market and banking sectors development on a country’s efficiency in transforming its innovation input into output.Design/methodology/approachThis study employs a generalized method-of-moments panel estimator to examine the role of stock market and banking development in influencing innovation efficiency.FindingsFindings show that a country’s stock market development is positively related to its innovation efficiency ratio. Countries with more developed stock markets have relatively higher efficiency in transforming innovation input into innovation output than those with less developed stock markets. There is no evidence that innovation efficiency is influenced by banking sector development. However, when stock market and banking sectors are modeled together, while stock market development retains its positive influence, the findings indicate that banking sector exerts negative impact on innovation efficiency.Practical implicationsThe findings provide useful insights to guide policy decisions for a country’s innovation agenda in enhancing its innovation performance. The findings imply that stock market development should be embraced as one of the key policy areas in order for a country to be more efficient in transforming its innovation input into innovation output.Originality/valueThis paper provides first evidence using data sourced from Global Innovation Index report, first available in 2007 and published by Cornell University, INSEAD and the World Intellectual Property Organization.

would like to thank Ross Levine and Thorsten Beck for useful discussions. The views expressed here are the authors ’ own and not necessarily those of the World Bank or its member countries. Funding Growth in Bank-Based or Market-Based Financial Systems: Evidence from Firm Level Data We investigate whether firms ’ access to external financing to fund growth differs in marketbased and bank-based financial systems. Using firm-level data for forty countries, we compute the proportion of firms in each country which relies on external finance and examine how that proportion differs across financial systems. We find that the development of a country’s legal system predicts access to external finance, and that stock markets and the banking system affect access to external finance differently. However, we find no evidence that firms ’ access to external financing is predicted by a country’s score on any of several indices measuring the development of stock markets relative to the development of the banking system. 2 A key question in development economics is the relation between a country’s financial system and its economic development. Historians such as Gerschenkron (1962) have sought to explain a

The exposure and vulnerability of financial markets in developing countries have been at center stage of empirical debates in recent time. The crux of the debate is not whether the financial system is isolated or not but the extent of such exposure. As an attempt to investigate the Nigerian exposure to external shock, this paper investigates the impact of foreign portfolio investment on the stock market between the study period of 1980 and 2014. Data for the study were sourced from the statistical bulletins published by the Central Bank of Nigeria. A model that captures the fundamental drivers of stock market development was built while the time series properties of the variables were examined using Augmented Dickey Fuller and Johansen co-integration tests. In view of the results of the pre-estimation tests, the Error Correction Modeling approach was used to estimate and examine the relationship between foreign portfolio investment, stock market development and other variables such as economic growth, exchange rate and inflation rate. The results show that there was a significant positive long run relationship between foreign portfolio investment and stock market development. It was also found that the level of domestic economic activities, exchange rate and inflation rate were other key fundamentals dictating the momentum of investment flow and direction of stock market development in Nigeria. The lagged error correction term (ECMt-1) is -0.012 indicating that the speed and time to full adjustment from short run shock to long run stability is low. The paper concludes that portfolio investment is a major driver of stock market development and more importantly, the main channel through which external financial instability is transmitted into the Nigerian economy. The policy implication is that increase in the foreign portfolio investment increases the domestic stock market performance. This could however lead to a great instability and financial distress if the enabling domestic macroeconomic conditions and policy framework to insulate the stock market against the vagaries of external shocks are not properly coordinated.

Does Anglo-Saxon Corporate Governance Matter for Capitalist Development of Emerging Asian Economy? A Case Study of India

Aim. To substantiate the potential advantages of introducing the digital ruble into the financial system of Russia.Tasks. Theoretical analysis of existing views of Russian and foreign economists on the spread of digital currencies in the modern financial system. To study the possibilities of using digital currencies. Consideration of the concept of introduction of the digital ruble in the financial system of the Russian Federation (RF) and justification of its potential advantages and risks. Study of the digital ruble as a new form of national currency and its legitimization. Analysis of the annual growth rate of the monetary aggregate M0 in Russia for the period 2018-2023.Methods. The study uses system and logical approaches, general scientific methods (analysis, synthesis), methods of comparative and economic analysis, analytical processing of information, graphical presentation of information and mathematical modeling.Results. In connection with the growth rate of digitalization development, the trend of digital currencies distribution in the modern financial system of the Russian Federation was characterized: the legislatively enshrined definitions of concepts were analyzed, electronic and digital money were compared, and the main types of digital currencies and their key features were identified. The annual growth rates of the monetary aggregate M0 in Russia for the period 2018-2023 were analyzed.Conclusions. The identified potential advantages of the introduction of the digital ruble into the financial system of Russia will contribute to the reduction of the share of the shadow economy, large settlement transactions using smart contracts, reducing the costs of settlement and payment transactions, which should lead to a positive economic effect, but it is necessary to take into account the risks of this process. Periods of socio-economic instability may lead to an increase in the risk of mass desire of citizens to use cash. The analysis of the annual growth rates of the monetary aggregate M0 in Russia for the period 2018-2023 allowed us to conclude that for the effective implementation of such a property of the digital ruble as markability, it is necessary to reduce the volume of cash in the hands of the population. This goal can be achieved by increasing the financial and digital literacy of the population, which minimizes the risks of its implementation. In the future, the development of digital technologies in the economy will make it possible to give virtual currencies the official status of a means of payment.

Introduction. The recovery of Ukraine's economy in the war and post-war periods is impossible without rebuilding the modern institutional structure of the financial sector, in which the leading place will be occupied by the domestic stock market. Problem Statement. Taking into account the fact that the stock market of Ukraine is not formed and does not correspond in most parameters to other countries of the Eastern European region, it is advisable to consider its features in more detail and propose more effective reforms in this area. Purpose. To identify the key problems that led to the decline of the domestic stock market, analyze the best practices and successful approaches to the development of securities markets in the world, as well as formulate proposals for the reconstruction of a more modern and efficient market in Ukraine. Methods. Theoretical and methodological basis of the research is scientific works of foreign and Ukrainian scientists, modern statistical information base of the stock exchanges. The study of problems and approaches related to the peculiarities of the development of the Ukrainian stock market was carried out using the methods of critical and scientific analysis, comparative analysis, scientific generalization and systematization, induction and deduction. Results. The development of the stock market in the context of digitalization opens up significant opportunities for a more innovative and rapid renewal of Ukraine. But the essential problems of the domestic stock market remain: 1) non-performance of the basic functions that are typical for other countries; especially the asset pricing function; 2) insecurity of the rights of citizens of Ukraine on the stock market; 3) lack of corporate efficiency and clear specialized vertical integration of large Ukrainian enterprises; 4) payment of dividends only to the majority shareholders, the state and manipulation with them. Conclusions. Modern developed stock markets of the world have a significant potential in the context of the development of both traditional and digital economies, so there is an urgent need to modernize the domestic stock market. At the same time, the development of the stock market will have great prospects if the infrastructure is significantly improved, the ownership of assets in Ukraine is respected, and the corporate sector respects the public interest.

The stock market represents a major source of long-term funds. However, the Nigerian stock market lacks depth due to the weak regulatory system and legal framework. Extant studies have shown that both institutional quality and openness are enablers of the stock market. An analysis of the effects of institutional quality and openness on the development of the Nigerian stock market from 1996 to 2021 is therefore crucial. The Auto Regressive Distributive Lag (ARDL) method is used to analyze data from World Bank databases and the Lane-Milesi Ferreti index, with results showing that institutional quality has a positive and significant impact on stock market development in Nigeria. Meanwhile, development of the stock market, institutional quality, and openness are related over the long term based on the ARDL bounds test. A further finding revealed that the development of Nigeria’s banking sector and the exchange rate had positive (negative) effects on the development of the stock market, respectively. Additionally, stock market liquidity contributed to development of the market. This study came to the conclusion that an enabling stock market in Nigeria could be strengthened by the interaction of institutional quality and openness. The study concludes that strengthening Nigeria’s governance institutions through the creation of an appropriate legal framework is necessary to ensure political stability and the absence of violence in the country’s political system. Besides, the government really needs to grant autonomy to agencies in charge of tackling corruption to enable them to enjoy simultaneous openness. Monetary authorities should also ensure exchange rate stability and improved credit for domestic investment activities.

The financial system controlled by the government developed slowly relative to the West Europe in the imperial time. This characteristic seemed to be carried over into the Soviet financial system where the state budget played the main role in financing and bank financing had only a subsidiary role. This pattern of Soviet finance changed in the mid-1960s. Bank financing expanded using household deposits, while the Soviet government turned to be a net absorber of financial resources. This financial system collapsed eventually because of its low use efficiency of funds. After the collapse, the Russian financial system returned to a standard financial system of a market economy, although a sound financial system is still under construction. The monetary and financial data are fragmental and often incomparable, reflecting all these developments in the Russian financial system.

This study explores the functional interaction between bank development and stock market development in the face of uncertainty variables. The geography of the study is one of the largest economies in Africa—Nigeria—regarding the following variables: credit to the private sector (CPS), broad money (M2) stock market capitalization (MCAP), and industrial production (IP), which are all scaled by the gross domestic product (GDP) and used in natural log form. Additionally, we included the natural logarithm of a measure of monetary policy uncertainty, which represents the uncertainty variable. In terms of methodology, the study uses monthly time series data from 1990:M1-2022M4 (384 observations) and adopts the linear and nonlinear autoregressive distributed lag model. We conclude that both positive and negative changes in policy uncertainty drive bank development. Industrial production did not significantly impact bank and stock market development, and monetary policy uncertainty shows a negative long-run linear relationship with market development. In addition to other significant findings, this study contributes to the literature by demonstrating that monetary policy uncertainty impacts both the stock market and bank development. Given that policy uncertainties impact bank and stock market developments, it is prudent to implement mitigants and safety nets when formulating policies for bank and stock market development.

Stock market development and economic growth: Evidence from seven sub-Sahara African countries

Rapid development of financial markets particularly stock markets has been a main feature of many emerging markets. The conventionally held view, which has a basis in the seminal work of Schumpeter (1911), is that the stock market development is beneficial to the economy since it provides liquidity and an avenue for risk sharing and diversification, allows efficient allocation of resources to productive investment, reduces information and transaction costs and, consequently allows firms to undertake profitable investments. This view has been supported by various early empirical studies noting a positive relation between stock market development and economic growth. It has also been supported by recent studies utilizing advanced time series econometrics and finding the causal influences of stock market development on economic performance. Still, against this view and empirical evidence, some have also noted potential detrimental effects of stock market development through saving reduction, facilitation of counterproductive corporate takeovers, attraction of speculative inflows and reversal of financial capitals. The questions as to whether the stock market development influences macroeconomic performance and whether it can be employed as a development policy strategy are particularly relevant for emerging or developing economies. Over the past years, these economies have attempted to promote their stock markets with the objective of improving resource allocation and, consequently, of propelling their economic growth. However, after especially the liberalization of their financial markets, they have been exposed to sharp swings and wide fluctuations of their market performance, which may have inflicted detrimental impacts on macroeconomic performance. In this regards, the 1997/1998 Asian crisis, which started in Thailand and propagated to other Asian economies, is a good example. In looking at whether stock market development contributes to macroeconomic performance, existing studies have mainly looked at the relation between stock market development indicators and measures of economic performance using a linear regression model or has ascertained the causal relations that run from the stock market development indicators to macroeconomic variables using such approached as Granger causality, vector error correction modeling (VECM) and vector autoregressive modeling (VAR). While it is essential to document a strong relation between them, the linear regression model is not sufficient to establish causation. Moreover, the employment of a dynamic model such as the VAR or VECM and the finding of a causal pattern that runs from the stock market development to economic growth are not sufficient for policy prescription. This stems from the fact their relation or causal influences may shift due to the shift in regimes, signifying that the stock market development cannot be employed as a policy variable. In short, their relations are the subject of the well-known Lucas critique. In this paper, we utilize a 4-variable framework and quarterly data from 1993 to 2007 to examine the stock market and macroeconomic performance relation for Thailand. To this end, we first evaluate the causal patterns between a measure of stock market development and measures of macroeconomic performance, which is essential to evaluate whether stock market development 'causes' growth. Then, we assess whether the relations between the two main variables, i.e. measures of stock market development and macroeconomic performance, are structurally invariant to policy shifts. Hence, in addition to using standard time-series econometrics of cointegration and vector autoregressions (VAR), we alo examine within the error correction setting the superexogeneity of the stock market development. More specifically, to make a strong case for promotion of the stock market as a development strategy, the stock market development must be superexogenous since their relationship is structurally invariant to policy shifts and, accordingly, circumventing the famous Lucas critique in making policy recommendation. The cointegration test results suggest the presence of a long run relationship among the variables, namely, real gross domestic product (GDP), market capitalization ratio, investment ratio, and the aggregate price level. Further, the impulse-response functions and variance decompositions simulated from the estimated VAR models clearly indicate positive and sizeable contributions of stock market development to real GDP as well as investment ratio. Finally, the superexogeneity test indicates that the stock market development is superexogenous in the system. Thus, the relation between economic development and stock market development is structurally invariant to policy shifts. In the case of Thailand, there is a strong case for policy prescription to promote the development of its stock market as a catalyst to economic growth.http://dx.doi.org/10.5755/j01.ee.22.3.513

Unveiling the causal relationships among banking competition, stock and insurance market development, and economic growth in Europe

The stock markets of most CEE countries have been actively developing and improving over the past decades but they still do not belong to the developed markets according to MSCI classification, the financial systems of these countries tends towards the bank-oriented type. Does the level of stock market development affect economic growth in CEE countries and do these countries need to develop their stock markets accordingly? The purpose of this article is to identify the direction of the causal link between stock market development, banking sector development and economic growth in Central and Eastern European (CEE) countries. The subject of the research is the relationship between the stock market development, banking sector development and economic growth in the CEE countries. Methodology. The research is based on the annual data for two time periods 1999-2012 and 1999-2015 for the 8 and 5 CEE countries, respectively. The study is based on the Granger causality test and linear regression models. According to results of the research the stock market development plays an important role in attracting foreign direct investment and economic growth in CEE countries in the long-run period. There are revealed the channels of indirect influence of the stock market capitalization on the economic growth. Stock market capitalization has impact on the banking sector and gross capital formation, which in turn have impact on the economic growth of CEE countries. There is the impact of both the stock market and the banking sector development on the economic growth in CEE countries during 1999-2015. However, the impact of the stock market size on the economic growth is positive and the impact of domestic credit to private sector is negative. Practical implications. The study proves the reasonable need for the CEE countries to move towards further development of the stock market, improving the market infrastructure and institutional environment in order to expand the size of the stock market and thereby contribute to the economic growth of this countries. Value/originality. The obtained conclusion about the role of the stock market in economic growth and attraction of FDI is of great importance both for Ukraine and other countries with similar trajectory of economic development in general and similar historical aspects of the origin of stock markets in particular and should be taken into account by state leaders when making decisions on the need to create conditions for development of such element of the country’s financial system as the stock market.