Capital Market Infrastructure Research Articles

Аналіз стану організації довгострокових портфельних іноземних інвестицій у Республіці Польща: уроки для України

The article describes the process of creation of the European international capital market, new financial instruments and formation of an investment portfolio from them in order to achieve the main goal of the investor – diversification, caused by investor’s desire not to participate in the operational management of the enterprise, however reducing the risk and maximizing the return on investment of his capital. The article then reviews the recent CEE Capital Markets conference, which was held in Poland, and concludes that by many criteria the Polish capital market is the largest in the region. In addition, the article emphasizes that foreign investment inflows to Poland reached a record level in 2021-2022. Therefore, based on all this data, the article analyses in detail the attraction of foreign investment into the economy of the Republic of Poland, taking into account three main prerequisites, namely: the establishment of uniform and unchanging rules of the game by creating an institutional framework for investment and ensuring the development of capital market infrastructure; ensuring the management of the Polish capital market with the help of two main players (the Central Securities Depository of Poland and Polish Financial Supervision Authority), shaping the professional activities of market participants and providing the supervision. The subsequent analysis of the state of Poland investment activity, presented in the National Banks Report “Poland International Investment Position for 2021”, showed that all this has played a significant role in attracting long-term portfolio investments, the biggest share of which is treasury debt, to the neighbouring countrys economy in recent years. Drawing a parallel with the current situation on the Ukrainian securities market, the article goes on to note that its regulatory framework generally meets the contemporary requirements. The other two prerequisites for creating acceptable conditions for a foreign portfolio investor are only under establishment. Right now, there is an urgent need to start building the infrastructure of Ukrainian securities market with the help of a neighbouring country.

УДОСКОНАЛЕННЯ ПОЛІТИКИ РЕГУЛЮВАННЯ МІГРАЦІЙНИХ ПРОЦЕСІВ В УМОВАХ СОЦІАЛЬНО-ЕКОНОМІЧНОЇ НЕСТАБІЛЬНОСТІ: ІНСТИТУЦІОНАЛЬНИЙ ПІДХІД

The paper substantiates that the institutional provision of the state policy of migration processes management – one of the key system-forming factors and a prerequisite for ensuring proper efficiency of regulation of migration of the population and its consequences – consists in combining a full-fledged system of institutions and institutions, the functioning of which ensures the definition and observance of rules of conduct, directing the relevant trends in the desired direction. Particularly significant is the role of institutions in the system of state management of migration processes, which act as actors – generators of institutions and carriers of their capabilities. Institutional support is formed in three areas: (1) institutional and legal, (2) institutional-organizational and (3) institutional-psychological.
 The strategic tasks of improving the institutional support of the state policy of migration processes management in Ukraine are determined: formation of the regulatory background of the state policy, development of the system of strategizing and planning the course of migration processes, formation of the organizational structure of management, increasing the efficiency of the state regulation of migration abroad, establishing proper accounting and statistical support, realization of the potential of subjects civil society and big business, balance and efficiency of the system of elements of the migration services market, development of migration capital market infrastructure, formation of information and psychological environment of migration activity of the population. Achieving certain tasks requires the implementation of a system of coordinated measures.
 Applied instruments of state policy of modernization of the institutional environment for regulating migration processes are differentiated from existing developments (1) structuring in areas of support – institutional and legal, institutional and organizational (state, public and market), institutional and psychological; (2) the system of institutional support is formed according to certain strategic directions of development of the national economy; (3) measures to regulate external migration are defined in the projection of eliminating current shortcomings of the state policy of migration management and overcoming its consequences for the socio-economic development of the country;

The evolution of financial reporting quality for companies listed on the Tadawul Stock Exchange in Saudi Arabia: New emerging markets' evidence

Motivated by the Saudi Arabian government's objective to diversify its economy away from oil and correct deficiencies associated with the Saudi stock market crash of 2006, a series of significant capital market infrastructure reforms were initiated that began with the 2007 reorganization of the Tadawul Stock Exchange (TSE) and the Capital Market Authority (CMA) as its sole regulator. This paper adds to the growing body of emerging market literature by providing new evidence of the effects of these initiatives on earnings quality for firms listed on the TSE. The results of tests of this study provide robust evidence that earnings quality increased during the 2007 to 2018 reform period. In particular, we document that relative to pre – reform years, reform period R squares, earnings response coefficients (ERCs) increased and discretionary accruals decreased. We rationalize these findings by asserting that improved regulatory oversight in juxtaposition with significant reform period investments into Saudi Arabia's capital markets infrastructure enhanced earnings quality (Jiambalvo et al., 2002; Latif et al., 2017; Zhong et al., 2017).

Strategic priorities of fnancial market development in Ukraine

The article analyzes the current state of the fnancial market of Ukraine and assesses the dynamics of its development in the framework of the implemented fnancial and credit policy of the state during the war. The main factors influencing the development trends of the domestic fnancial market are identifed and substantiated. Emphasis is placed on the need to support the fnancial and economic system of the country through the widespread use of various types of securities as effective fnancial instruments to attract investment capital to restore destroyed infrastructure, industrial facilities and further development of all sectors of Ukraine in the war and postwar period. Today there is no doubt that the further development of the fnancial market depends on the availability and accessibility of various sources of investment resources that will be used to support Ukraine's economic development. An analysis of a number of current domestic regulations on simplifying the attraction of investments and expanding the list of fnancial instruments. Approaches to the organization of state regulation of issues of issue, circulation, redemption and redemption of new securities are highlighted. The influence of digitalization of economic processes on the emergence of innovative fnancial instruments such as bank certifcates of deposit, infrastructure and green bonds is substantiated. It is proved that the intensifcation of operations on placement and circulation of bank certifcates of deposit will help revive the stock market and ensure the inflow of investment capital into the banking system of Ukraine. At the same time, the issue of infrastructure and green bonds will provide ample opportunities to attract fnancing to support the greening of Ukraine's fnancial system. An analytical review of the features of issuance and circulation of innovative fnancial instruments in the international space and European countries in particular. The main characteristics of the world fnancial market are analyzed, the experience of the world's leading countries in the organization and use of alternative fnancial instruments is revealed. The expediency of using the project fnancing mechanism is substantiated in view of the emergence of alternative fnancial instruments for attracting investment funds through the disclosure of their nature, purpose and features of application. The directions of implementation of foreign experience in the application of the project fnancing mechanism in the national economy are outlined. The influence of the trajectory of previous development and functioning of the fnancial market of Ukraine on modern investment processes of the country is determined. Based on the generalization of world experience in the circulation of innovative fnancial instruments, taking into account the peculiarities of the domestic fnancial market, the main strategic priorities of the fnancial market in Ukraine, including the formation of favorable conditions for capital investment for potential investors; increasing the liquidity of modern fnancial instruments; introduction of a number of tax benefts with control over their proper application; providing reliable state guarantees for the protection of foreign investments; creation of tools to reduce the risks of fnancial transactions; inclusion of Ukrainian securities in international indices;implementation of international standards for the functioning of capital market infrastructure etc. Practical recommendations for minimizing risks in the process of implementing investment projects, taking into account the conditions of Ukrainian legislation and the business environment. Key words: fnancial instruments, bank certifcates of deposit, infrastructure bonds, green bonds, military treasury obligations, investment capital, project fnancing, tax benefts.

Buffetology's Use in Stock Trading Amid the COVID-19 Pandemic

The impact of the COVID-19 Pandemic has affected the whole of human life, including the world capital market and all its problems. COVID-19 has influenced trading patterns in the capital market, both in terms of trade rules that are superstructure and capital market infrastructure itself. Indonesia's economic turmoil is not only caused by the pandemic COVID-19, but also by several financial scandals such as the Jiwasraya, Asabari and several moral hazards by stock market brokers. The moment of capital outrage at the moment is like a honeymoon in stock trading that occurs during an extreme event. Some events that have caused the world capital market to fall deeply, are the Black Tuesday 1988, the monetary crisis in Indonesia and Asia in 1998, the global financial crisis in 2008, and most recently the pandemic COVID-19 phenomenon that began in 2020. The extent to which Buffettology's role in investment decision making by Investment managers in the Indonesian capital market is the aim of the author's research. The main finding of this study is the prospectus of vigilant leader company as a determinant in making investment decisions both in normal situations and in the midst of a pandemic. This research will be very essential for investment and financial decision makers and for the Financial Services Authority (OJK) in Indonesia. This is because the wrong decisions of investment managers, as well as the company's performance with a stock price characterized by Roller Coaster (called saham gorengan) is a special concern for OJK to take decisive action for the sustainability of a healthy and conducive Indonesia Capital Market for investors.

Quarterly Operating Information Disclosure and Accounting Information Quality Improvement: A Research on the Interaction of Information in Regulatory Innovation

The production and transmission of accounting information is of great value in the capital market infrastructure. How to effectively improve the quality of accounting information tests the wisdom of all participants in the capital market. This paper breaks through the previous theories of internal governance and external supervision and expands a new perspective to improve the quality of accounting information from the interaction of information. This paper takes the opportunity of the natural experiment that the Shanghai Stock Exchange issued industrial information disclosure guidelines from 2013 to 2016, which required listed companies to disclose quarterly operating information, and the Shenzhen Stock Exchange did not have relevant mandatory requirements, to empirically test the interaction of information contents.This paper finds that, as a kind of information that can be mutually verified and interpreted with accounting information in content, the disclosure of operating information significantly improves the quality of accounting information of companies, which is manifested in the reduction of earnings management under accrual earnings management and the significant reduction of earnings reversal in the fourth quarter. Further research verifies the improvement of the quality of accounting information from the perspective of the capital market – the value relevance of accounting information is significantly improved.The contributions of this paper are as follows: Firstly, this paper takes operating information and accounting information as the research object, discusses whether and how different information contents disclosed by the same company can affect each other, and deepens the understanding of complex information transmission in the capital market environment. Secondly, the improvement of the quality of accounting information is a global problem. From the perspective of information competition, this paper discusses that timely understanding and verifying accounting information can improve the quality of accounting information, and provides a new theoretical basis for improving the quality of accounting information. Thirdly, the impact of non-accounting information on the information environment of the capital market has been paid more and more attention. This paper studies the effect of novel and unique non-accounting information on the improvement of information environment and enriches the literature of non-accounting information research. Fourthly, the research results provide evidence for regulatory authorities to improve the information environment in the capital market by using the interaction of information contents, and support the market-oriented reform direction of regulatory authorities to enhance the quantity and quality of information disclosure.

Pendampingan Pentingnya Strategi dalam Meningkatkan Minat Nasabah terhadap Investasi Saham di Surabaya

Capital markets are often interpreted as a market for a long-term financial instrument (securities) (its maturity is more than 1 year). In addition to that understanding, the capital market is also often associated as a place for the transaction of the party that needs funds (the company) and the Excess party (financier). The initial step of Sharia capital market developments in Indonesia began with the issuance of sharia funds on 25 June 1997 followed by the issuance of sharia bonds at the end of 2002, followed by the presence of the Jakarta Islamic Index (JII) in July 2000. The marketable securities traded on the stock exchange include stocks, bonds and mutual funds. Marketable securities are often referred to as ' financial instruments ' or ' securities ' or ' Sekuritas ' (Securities Act No. 8 year 1995 defines the capital market as "the activities concerned with public offerings and securities trading, public companies relating to securities, published, as well as institutions and professions relating to the securities". The capital market acts as a liaison between investors and companies or government institutions through the long-term trading of financial instruments. In an effort to support the realization of the Indonesian capital market to become a resilient and global economic driver of the national economy as stated in the Indonesian capital market blueprint, it needs to be done continuously to improve and expand the capital market infrastructure towards the better direction.

‘Too Big to Reform or Too Important to Miss?’ Why the EU Needs More Consistency on the Rules on Collateral and Custody of Client Assets and Client Money as Part of CMU 2.0

The impending departure of the UK from the EU makes progress on Capital Markets Union all the more urgent. Unless the EU-27 takes action soon, its capital market may leave the EU along with the UK as early as the end of next year, when the transition period in the UK-EU Withdrawal Agreement (assuming agreed) is (currently) scheduled to end. The foundation of any capital market is its infrastructure, including its arrangements for the “collateral ecosystem” (the regulatory, institutional and operational arrangements for collateral, custody, client assets and client money). Capital market infrastructure should work in an integrated fashion across the market so that issuers, investors and intermediaries can transact seamlessly. If the collateral ecosystem is the plumbing of the financial markets then it needs to be laid out in a uniform manner as opposed to a patchwork. That is not the case today in the EU. In particular, there is no uniform single EU-wide collateral ecosystem. Although various EU Directives and Regulations have improved the workings of individual aspects of the ecosystem, such legal instruments have neither been uniformly applied across the EU nor integrated with one another. As Member States transposed EU Directives into national law, they did so in national terms in the context of national institutions. This creates gaps in protection for market participants, particularly where they document, transact and/or hold assets in different jurisdictions. That in turn increases risk as well as transaction costs. This lowers the attractiveness of the EU capital market and hampers growth. Creating an integrated, uniform EU-27 regime for the collateral ecosystem should therefore have high priority. Although institutional-led operational-based and thus non-legal driven changes have provided jurisdiction agnostic solutions that work across multiple jurisdictions free from national influences this is not a panacea to plugging the (potential) problems in the plumbing. While the Eurosystem's work on the operational system known as TARGET2 Securities is very much a step in the right direction in terms of operational-led cross-border functionality, more is needed. Some hope that new technologies (such as distributed ledger technology) and/or new entrants (e.g. FinTech) will supply what is missing. They cannot. Legislative and regulatory changes will also be required. The question is what form they should take. Economically, the most effective measure would be the harmonisation across the EU of the laws and regulations affecting the collateral ecosystem, ideally along the lines of the most commonly used regime. Politically, however, such an approach is likely to encounter severe challenges. The question is whether EU-27 policymakers, in light of the UK's changing relationship with the remaining bloc, will take the plunge and move the discussion on fixing the plumbing from too big to reform to too important to miss. In answering that question, this Working Paper summarises some proposals, discussed in fuller detail in the Main Paper, on how that might be achievable. The Annexes to this Working Paper support the conclusions by assessing conceptual gaps and what is discussed in the Main Paper as conceptual translation risks in relation to the EU, Irish and UK rules on collateral, custody of client asses and client money.

Economics of Technology, Securities and Capital Markets

In this survey, I focus on the economic implications of FinTech innovation for securities and capital markets. I outline the key economic issues that have emerged in this area, review the literature that has studied these issues, and discuss open questions. The survey is structured around the key technological developments that affect capital market infrastructure and data analytics. The topics include electronic trading venues and high-frequency trading, blockchain technology, cloud computing, and machine learning and artificial intelligence. We further discuss new investment and financing tools, which were enabled by recent technological advances, such as exchange-traded funds and blockchain-based assets.

Explanatory Power of Pre-Issue Financial Strength for Long-Term Market Performance: Evidence From Initial Equity Offerings on an Emerging Market

This study tests possible sources of long-term risk-adjusted returns on initial public offerings (IPO) in Poland under the calendar-time portfolio (CTP) approach. The moment of going public still remains a puzzle in many areas. Poland’s status as an emerging market has been indisputable for many years, though improvements in capital market infrastructure have led to its recent reclassification as a developed country. It is an important European equity market. Thus, research on IPO pricing explanation for Poland is important for both investors and academics. In this study, we estimate risk premiums and run regressions on four asset pricing models, including the latest innovation, which is the Fama-French 5-factor model. We also check the robustness. The research documents the existence of the long-run underperformance for Polish IPOs independently of the specification of the calendar-time portfolio approach as alphas range from -9.6% to -13.2% annually. We show that the underperformance is mainly driven by IPOs in a position of weak pre-issue financial health. More profitable IPOs experience less negative long-term returns and the underperformance is even absent in some specifications.

The Nexus of Financial and Political Interests between Crowd Funders and Regional Economic Development Professionals: The New-New Innovation Economics

Crowdfunding does not magically create jobs and economic growth, as securities officials in Kansas note about their 2 year old intrastate crowdfunding initiative. In Kansas, only six companies have claimed the intrastate crowdfunding exemption in more than two years, according to Lynn Hammes, director of finance and administration at the Kansas Office of the Securities Commissioner. The unexamined assumption about crowdfunding and job creation is just like an earlier fascination in the economic developer community about clusters, whose promotion, it was assumed, would automatically lead to more jobs and increased regional income. Just like roads and sewer lines formed the infrastructure resource base of the older industrial recruitment strategy, crowdfunding requires its own type of regional capital market infrastructure in order to become a viable economic development policy tool. Innovation economics has the right theoretical framework to guide the build-out of that bigger capital market infrastructure because it covers the entire capital market process involved with technological innovation.

The Indiana Technology Innovation Super Cluster: Creating Jobs in a Mid-Western Regional Economic Environment

The just-so happy story told by global trade proponents that promised that the loss of manufacturing jobs would be made up by the increase in service sector jobs is not supported by the BDS data, and it is just now dawning on state government officials that there is something seriously wrong with their traditional job creation policies based on industrial recruitment. The dirty little secret of job creation and job loss in America is that there are no more big companies to recruit to all the vacant U. S. industrial parks, built on the lure of low cost production and the image of prosperity from the 1950's. Increasing the rate of industrial recruitment tax incentives is not going to change this picture.Understanding the economic malfunction in the American labor markets contains two parts: Why is the rate of job creation in small companies so low and why is the rate of job destruction in older bigger companies so high? Both answers are tied together by a common factor related to how the United States implemented the new global trade policies in the past 20 years.In the absence of economic vitality caused by investments in domestic technology innovation in the formerly integrated national economy, national economic growth strategy shifted to a series of speculative bubbles that did not create the conditions for sustained economic growth for small businesses. Large companies offshored manufacturing production jobs, and small businesses suffered because their regional industrial value chains were destroyed by the way global trade policies offshored the American foundation of innovationAlong with the new innovation park infrastructure, the most important job creation strategy that the EDA could implement is creating the new capital market infrastructure that targets investments to regional innovation opportunities. This is not a task that can be done by the private capital markets themselves because the creation of capital market infrastructure does not generate profits that can be appropriated by private actors.

Creating the Private Capital Market Infrastructure for Sustainable Innovation Economics

Creating the Private Capital Market Infrastructure for Sustainable Innovation Economics

Capital financing behaviour: evidence from firms listed on the Nairobi Stock Exchange

This study investigates the determinants of capital structure for a sample of 22 firms listed on the Nairobi Stock Exchange during the period 1991–1999. Reduced form equations derived from the static trade-off model and the pecking order hypothesis are estimated and tested using panel data techniques. The results show that a pecking order model with an adjustment process cannot be rejected. Specifically, it is found that the main determinants of capital financing behaviour consist of information asymmetries, non-debt tax shields and local capital market infrastructure.

Deep underpricing of China's IPOs: sources and implications

The empirical findings of this paper suggest that IPOs in the Chinese stock market were deliberately, substantially underpriced by the issuers rather than overpriced by the aftermarket. We propose that the Chinese government has deliberately underpriced the IPOs primarily to create a viable capital market without any particular regard to maximisation of issue proceeds (or minimisation of underpricing). The implications of these findings for Chinese policy makers and local as well as foreign investors are significant. The high level of underpricing leads to a wealth transfer but it can be rationalised as an investment in building a capital market infrastructure. There is evidence suggesting that the issuer prefers to keep the offer price low regardless of the offer size; presumably this makes the issues accessible to a wider clientele and thereby makes the wealth transfer more equitable. The combination of a high level of underpricing and a small offer price makes the IPOs widely desirable and also widely affordable; this makes the potential wealth transfer equitable and also facilitates a wide dispersion of ownership that may be essential for a huge emerging capital market such as that of China.

Doing business in?Sri Lanka

Having a well-developed human resource base and a relatively well-developed capital market infrastructure, Sri Lanka offers a liberal and dynamic investment environment. Over the years, macrostability has been achieved and considerable reforms have been implemented, contributing to a healthy economic growth. This article provides useful information on the business environment and is intended to help foreign businessmen and investors to develop a good grasp of essential background knowledge for being successful in Sri Lanka. It reviews the Sri Lankan political structure, climate, and economy. Sri Lanka's infrastructure, legal framework, and socioculturel set-up, as well as market structure and potential, are also analyzed. © 2005 Wiley Periodicals, Inc.

Legal and Institutional Obstacles to Growth and Business in Russia

Although financial stabilization has laid the foundation for growth, structural reform of the economy will determine whether Russia achieves sustained medium-term growth. The next step for Russia is to create an institutional and regulatory environment that fosters investment and promotes new private sector activity. This paper examines the most critical reforms for promoting private sector development: reforming the tax system, reducing red tape and bureaucratic corruption, strengthening the judicial system, and improving capital market infrastructure.