Diversified Investment Research Articles

Strategies for Mitigating and Managing Risks in Bank Investments

This paper suggests that while studies of banking risk management often emphasize analytics and stress testing to improve risk governance, there is too little emphasis on historical case studies to generate comprehensive risk management strategies. Using numerous case studies, the paper suggests four categories of risk - market risks, credit risks, regulatory risks, and operational risks - that impact overall investment outcomes. By extensively reviewing both historic failures and historic successes, the paper highlights the importance of understanding different types of risks and adopting strategic measures to manage them effectively. Emphasis is placed on the necessity of a diversified investment portfolio to mitigate market volatility and credit exposure. Additionally, the paper provides actionable strategies for navigating regulatory complexities and operational challenges, supported by real-world case studies and practical examples. This research aims to equip investors with valuable insights and tools to optimize investment opportunities while minimizing potential risks in the banking sector.

Extreme time-frequency connectedness between energy sector markets and financial markets

The renewable energy market has developed into a distinct asset class that has garnered significant attention from investors worldwide. This study investigates the connectedness between the S&P 500 and various energy sectors, including the Green Bond (Green Bond), S&P GSCI Carbon Emission Allowances Index (GSCI EUA), S&P GSCI Biofuel (GSCI Biofuel), and S&P Global Clean Energy Indices (Global Clean Energy). Combining the quantile connectedness approach of Ando et al. (2022) and the spillover index developed by Chatziantoniou et al. (2022), we investigate the quantile time-frequency connectedness among these markets. Our findings reveal that the impact of tail risk spreading to the energy sector during extremely challenging market conditions is significantly amplified. Most tail risk spillovers between the energy sectors involve short-term risk spillovers, as seen by analyzing the frequency domain. The impact of tail risk spillover is stronger during extreme situations, showing a short-term asymmetry. Global Clean Energy and the S&P 500 play important roles in spreading risk to other sectors, known as tail risk spillover. They add to the overall risk that affects the network system. On the other hand, other energy sectors (GSCI EUA and GSCI Biofuel) as well as green bonds act as net recipients by receiving the risk rather than spreading it further, potentially providing portfolio diversification. It is essential to understand how these key players influence risk in the financial system. Utilizing a variety of techniques to assess portfolio performance shows the importance of understanding the return transmission mechanism in the process of developing a portfolio and suggests that Clean Energy, given its relative independence, may make an excellent diversification investment.

FINANCIAL INCLUSION (FI): KINERJA UMKM DI INDONESIA DARI PUBLISH OR PERISH

Purpose: This study aims to analyze the financial inclusion of Micro, Small, and Medium Enterprises (MSMEs) that are currently supporting economic growth in Indonesia. Design/Methodology/Approach: Systematic Literature Review (SLR) is a method in this observation by reviewing certain topics of discussion that focus on specific problems that have been identified and classified in a structured manner, assessed, concluded, and selected based on previously determined benchmarks based on evidence and facts from quality research that is relevant to the research question. Research data was obtained from Google Scholar for the period 2011-2022 based on the initial search, there were 198 articles, and only 25 articles were used as data sources and will be studied in more depth. Findings: The results of the research show that through investment diversification, risk management, and wise financial planning, individuals and companies can reduce the negative impact of economic impacts and maintain their financial stability. Research Implications: Insulation can help MSMEs protect their businesses from market shocks, interest rate changes, or other external impacts that can be detrimental. Financial inclusion after the economic crisis that occurred in 2008 hurt financial stability in Indonesia.

Evaluating ESG Investment Profitability: From the Perspective of Sophistication in Investment Decision-Making

Environmental, Social, and Governance (ESG) investments are widely discussed in the stock market. Further, the debate on ESG investment profitability has garnered significant scholarly attention. This study examines the relationship between ESG investments and equity investment return (EIR) and whether this relationship is affected by investors' sophistication. The results suggest that while ESG investors generally gain relatively lower profits than others, sophisticated investors, characterized by greater financial knowledge, diversified investments, contrarian investment strategies, and not being influenced by familiar biases, can mitigate these lower returns. These findings enhance our understanding of ESG investments and offer valuable insights to guide investors in making sophisticated ESG investment decisions.

Unraveling stock exchange connections: an empirical study of India, US, Hong Kong, Germany, France and Amsterdam

PurposeThe current study immerses itself in the realm of diversification prospects within a select group of preeminent global stock exchanges. Specifically, the study casts its discerning gaze upon the financial hubs of the United States, Hong Kong, Germany, France, Amsterdam and India. In this expansive vista of international financial markets, the present analytical study aims to unravel the multifaceted opportunities that lie therein for astute portfolio management and strategic investment decisions.Design/methodology/approachThe study encompasses daily time series data spanning from 2019 to 2022. To assess the interconnectedness among these stock indices, advanced statistical techniques, including Johansen cointegration methods and vector autoregressive (VAR) models, have been applied.FindingsThe research outcomes reveal both unidirectional and bidirectional relationships between the Indian, Hong Kong and US stock exchanges, encompassing both short-term and long-term time frames. Interestingly, the empirical findings indicate the presence of diversification opportunities between the Indian stock exchange and the stock exchanges of Germany, France and Amsterdam.Research limitations/implicationsThese insights hold significant value for both Indian and international investors, including foreign institutional investors (FIIs), domestic institutional investors (DIIs) and retail investors, as they can utilize this knowledge to construct more effective and diversified investment portfolios by understanding the intricate interconnections between these prominent global stock exchanges.Originality/valueThis research undertaking aspires to bring coherence to a landscape rife with divergent interpretations and methodological divergences. We are poised to offer a comprehensive analysis, a beacon of clarity amidst the murkiness, to shed light on the intricate web of interconnections that underpin the world's stock exchanges. In so doing, we seek to contribute a seminal piece of scholarship that transcends the existing ambiguities and thus empowers the field with a deeper understanding of the multifaceted dynamics governing international stock markets.

Research on the Mechanism and Strategy of Equity Investment Driving the Transformation of New Material Innovation Achievements

Under the wave of global technological revolution, the new materials industry is facing difficulties in innovation and transformation. Equity investment has become a key driving force due to its flexible mechanism, risk sharing, and deep participation. Based on introducing the current development status of China’s new materials industry, this article reveals the mechanism of equity investment in financial support, risk management, incentive constraints, and resource integration. The article proposes optimization strategies, such as building an information-sharing mechanism and a diversified investment fund system, to promote the high-quality development of the new materials industry driven by innovation and provide strategic guidance for policymakers, investors, and enterprises.

Behavioral Biases and Decision-Making in Investment among working individuals in the education sector

This study investigates the impact of behavioral biases on investment decisions among working individuals within the education sector. Behavioral finance theory serves as the theoretical foundation, emphasizing the role of psychological factors in shaping investment choices. The study employs a mixed-methods approach, combining surveys and in-depth interviews to gain insights into the investment behavior of educators, administrators, and support staff. Our findings reveal that a range of behavioral biases, including loss aversion, overconfidence, and herding, significantly influence investment decisions. Working professionals in the education sector often exhibit a strong preference for conservative investment strategies, even when market conditions may suggest otherwise. Psychological factors, such as fear of losses and a tendency to follow trends, play a vital role in shaping investment behavior. These biases are further exacerbated by a lack of financial literacy and investment education. The implications of this research suggest a need for targeted financial education programs to mitigate behavioral biases and enhance decision-making among working individuals in the education sector. Addressing these biases can lead to more informed and diversified investment strategies, potentially improving financial security and long-term wealth accumulation for this demographic. This abstract provides a brief overview of the research focus, methodology, key findings, and the potential implications of the study. It gives readers a clear understanding of the research's scope and significance.

Financial Performance Evaluation Using Profitability and Liquidity Ratio Analysis

A company's financial performance is an important indicator used to assess the financial health and operational efficiency of a business entity. In the context of PT Rig Tenders Indonesia Tbk, the consolidated financial statements as of March 31, 2024 showed an increase in current assets to IDR 330.44 billion from IDR 263.97 billion in the previous period. Although the company has recorded an increase in current assets and net profit, unstable global economic conditions can cause uncertainty in revenue and operating costs. This study uses a quantitative research design with a descriptive approach to evaluate the financial performance of PT Rig Tenders Indonesia Tbk through profitability and liquidity ratio analysis. The results of the study show that PT Rig Tenders Indonesia Tbk has good financial performance with high liquidity, significant profitability, and effective asset management. The company shows a strong ability to meet short-term obligations and generate profits from its assets and equity. A holistic and sustainable evaluation of financial performance is essential to maintain the stability and growth of the company in the future. The findings of this study provide important contributions both theoretically and practically in the field of financial management. Theoretically, this study enriches the literature on financial ratio analysis with a focus on the maritime industry. In practice, these findings offer solutions for companies in managing risk and improving operational efficiency through better asset management strategies and investment diversification. The limitation of this study lies in the use of financial data in one period that may not reflect long-term dynamics. For future research, it is recommended to examine financial data in a longer period and consider other external factors such as regulatory changes and global market conditions.

Exploring Market Dynamics: A Qualitative Study on Asset Price Behavior, Market Efficiency, and Information Role in Investment Decisions in the Capital Market

This qualitative study explores market dynamics, asset pricing behavior, market efficiency, and the role of information in investment decisions within the financial markets. The research aims to provide insights into the underlying motivations, perceptions, and experiences of market participants, offering a comprehensive understanding of these complex phenomena. Employing qualitative methods such as semi-structured interviews and textual analysis, data was collected from a diverse range of participants including investors, financial analysts, and market regulators. The study found that market dynamics are influenced by various factors including investor sentiment, economic indicators, regulatory changes, and technological advancements. Behavioral biases among investors, such as herd mentality and overconfidence, challenge traditional theories like the efficient market hypothesis (EMH), indicating the presence of market inefficiencies. Moreover, information plays a central role in shaping investor perceptions and driving market trends, though concerns exist regarding the reliability of information sources in the era of social media and algorithmic trading. The study underscores the importance of investor education, diversified investment strategies, transparency, and regulatory interventions in fostering fair, efficient, and resilient financial markets. Moving forward, addressing these issues will be crucial for informed investment decision-making and advancing our understanding of financial market dynamics.

Determinants of Investment Decisions of Mutual Fund in Nepal

Mutual funds in Nepal are financial vehicles that pool money from multiple investors to invest in diversified portfolios of securities, managed by professional fund managers. They play a crucial role in mobilizing savings and providing access to diversified investment opportunities for Nepalese investors. This study examines the factors influencing investment decisions in mutual funds in Nepal, focusing particularly on financial literacy, risk perception, investment behavior, and peer group influence. To achieve the stated objective, data were collected from the primary source using a structured questionnaire administered through convenience sampling technique. The respondents comprised 204 individual investors of mutual funds inside the Kathmandu Valley. The Smart PLS 4.0 was used to analyze the structural relationships within the proposed theoretical model. The findings of this study validated the set hypotheses that financial literacy, risk perception and investment behaviour have positive and significant effect on investment decisions among the investors in Nepalese mutual funds but the peer group has no any effect on investment decision. These results underscore the importance of targeted financial education programs and tailored investment strategies that enhance individual investor knowledge and understanding, thereby fostering more informed and independent investment decisions in Nepal's mutual fund market. The results may encourage to promote financial literacy through educational programs and integrating it into national curricula can empower investors to make informed decisions in Nepalese context.

The Canadian Pacific Railway's diversification strategies: A financial performance story, 1883–2020

The diversification and financial performance literature is ambiguous. To shed light on this relationship, quantitative and qualitative research was used to study the Canadian Pacific Railway (CPR) from 1883 to 2020. The CPR was selected because of its extensive archives and past range of diversification activities. Most of CPR's diversification investments were unrelated and unsuccessful. There is a statistically significant negative relationship between diversification and operating income/Tobin's Q. This negative relationship can become U-shaped or even positive by increasing operating income via reduced costs, improved conversion of inputs into outputs, and improved service to customers. The absence of diversification is not sufficient to significantly increase performance; satisfactory financial performance only comes from increasing operating income. These findings contribute to understanding the nuanced relationship between diversification and financial performance, highlighting the advantages of pureplay and the necessity for continuous financial performance improvement with related diversification and even pureplay.

Research on Influencing Factors and Strategies of Art Collection Investment Decision

The realm of art collection holds an irreplaceable position in the long-standing cultural heritage, showcasing the taste and status of the holders from ancient nobility to modern high-net-worth individuals. However, with the development of economic globalization, art collection is not merely a symbol of identity, but also a hot investment target sought after by numerous investors. In recent years, the market value of the global art industry has rapidly climbed, making art gradually an essential component of diversified investment portfolios for investors. The development of the art market has sparked widespread attention from various sectors, prompting scholars and companies to explore, through scientific methods and data analysis, how to maximize the investment returns of art collection. However, art differs significantly from other investment tools in the financial market, involving not only the intrinsic value judgment of the art itself but also complex market environments and individual judgment and psychological expectations of investors. Its unpredictability and unique value assessment system make art collection investment more challenging and research-worthy compared to other types of investments.

Do clean energy stocks diversify the risk of FinTech stocks? Connectedness and portfolio implications

The FinTech sector is growing rapidly, prompting a need to explore effective investment diversification strategies for stocks in this sector. The existing literature has identified the benefits of using clean energy stocks to diversify stock portfolios and the purpose of this research is to estimate how useful clean energy stocks are for diversifying an investment in FinTech stocks. This study uses a QVAR model to estimate the dynamic return connectedness between FinTech stocks and clean energy stocks for the period September 2016 to April 2024. Total connectedness is time varying and is higher in the tails than at the median. The onset of the COVID-19 pandemic had a large but short-term impact on connectedness. Under normal market conditions, systemic risk increases by 3.5% per year. FinTech is a net transmitter of shocks to nuclear energy but is mostly unaffected by shocks from wind, solar, and nuclear energy stocks illustrating the diversification benefits of these sub-sectors. Portfolio analysis shows that adding solar, wind, and nuclear energy to a portfolio with FinTech can produce higher risk adjusted returns and lower drawdown than an investment solely in FinTech stocks. These results are robust across various portfolio rebalancing frequencies (daily, weekly, monthly). For example, a minimum connectedness portfolio rebalanced daily has an average annual return of 11% and a Sharpe ratio of 0.37. These values are higher than their respective values for an investment solely in FinTech stocks (5.4%, 0.11). Thus, clean energy stocks do provide diversification benefits for investments in FinTech stocks.

Risks of managing financial resources of the agricultural sector of Ukraine in the zone of military conflict: Challenges, threats, ways of counteraction

This study was aimed at identifying the risks that affect financial management in the agro-industrial sector of Ukraine during military operations in order to develop effective countermeasures. The research methodology included an analysis of the main risks, such as exchange rate fluctuations, inflation, disruption of supply chains and political instability, as well as an assessment of strategies to minimise these risks. The main stages of risk management are identified as identification, assessment, and monitoring of risks, as well as development of appropriate strategies, such as investment diversification, insurance, and hedging. The study results showed that the key factors for ensuring stability are the introduction of technological innovations, government support, creation of reserve funds and diversification of funding sources. In particular, the development of modern agricultural technologies, subsidies, soft loans and investments in infrastructure significantly increase the resilience of the agricultural sector to crisis conditions. It is also important to plan cash flows to maintain liquidity and meet financial obligations in a timely manner. The experience of several countries, such as Israel and Georgia, which have faced similar challenges, was reviewed and analysed to see how they managed the financial resources of their agricultural sectors. The experience of these countries has shown that successful management of the financial resources of the agricultural sector in the context of military conflict requires a comprehensive approach that includes technological innovation, government support, financial planning and human capital development to ensure sustainable development of the agricultural sector in times of war. This approach allows not only preserving but also developing the agricultural sector, ensuring food security and economic stability of Ukraine

Global Equity Markets: An Empirical Study of Return Prediction and Diversification Benefits

My research delves into the equity market trends of China, Japan, and the UK in the post-2000 era. I analyze a dataset of macroeconomic variables from 2000 to 2022 to assess their ability to predict equity market returns. My study reveals that all three nations have seen an upward trajectory in their equity markets, with China's market experiencing the most substantial growth. In addition, I explore how macroeconomic variables affect stock prices and identify the variables that have the most significant impact on equity market returns. Finally, I conclude that a diversified investment strategy in multiple countries stock markets produces higher Sharpe ratios than any single-country investment.

From manure to megawatts: Navigating the sustainable innovation solution through biogas production from livestock waste for harnessing green energy for green economy

This article aims to provide a systematic review of the literature on animal biomass and biogas plants through an analysis of externalities and benefits in economic, social, and environmental terms. In recent years, the spread of biogas plants has played an important role, especially in rural areas, generating benefits not only for the individual farm but for entire communities, contributing to the reduction of energy poverty and, at the same time, promoting the production of energy and organic manure. In light of the findings, the study argues that: (a) more public subsidies are needed; (b) the deployment of an appropriate policy mix would encourage the spread of small and medium-sized plants, with a reduction in road transport; and (c) targeted and diversified investments are needed on a geographic-by-geographic basis.

Portfolio Selection: Efficient Diversification of Investments, 1959

Portfolio Selection: Efficient Diversification of Investments, 1959

Old age care fund helps to manage their funds In easy way

Abstract: A Old Age Care Funds is a sort of investment vehicle in which the combined capital of several participants is used to purchase a diverse range of bonds, equities, and other securities. Funds, which are professionally managed, give people the chance to invest in a variety of assets without having to handle them themselves. The value of the Fund shares that investors purchase varies according to how well the underlying assets perform. Funds are well-liked by both rookie and seasoned investors because they offer diversity, liquidity, and expert management. Diverse mutual fund categories, such as stock, bond, money market, and hybrid funds, are available to suit varying investment goals and risk tolerances. Investors can select funds according to their risk tolerance, time horizon, and financial objectives. Securities regulators supervise mutual funds to maintain transparency and safeguard the interests of investors. They are now an essential instrument for people to develop a diversified investment portfolio and engage in the financial markets. Old Age Care Fund portfolio analysis is an important component of investment management that includes a variety of approaches for evaluating the performance, risk, and composition of investment portfolios. The efficient market hypothesis (EMH) states that markets are efficient and reflect all available information, making it difficult for fund managers to regularly outperform the market, according to Malkiel and Fame (1970). Jensen (1968) proposed the Capital Asset Pricing Model (CAPM), which emphasizes risk-adjusted returns and the identification of alpha, which indicates a fund manager’s capacity to create excess returns above the market. IndexTerms – Python, Powet-BI, Data Analysis.

FACTORS INFLUENCING INDIVIDUAL INVESTORS’ INVESTMENT DECISIONS AT THE DHAKA STOCK EXCHANGE

The goal of the study is to identify the factors affecting individual investors’ investment decisions on the Dhaka Stock Exchange (DSE). To do this, the research also looks at how accounting issues, information obtained from independent sources, financial needs, advocate recommendations, and personal reputation/company reputation compliance may all affect an investor's behavior. Data were collected from Dhaka, Bangladesh. The researcher individually delivered a standardized questionnaire to each respondent in order to collect data. There were 27 items in the survey. SPSS 26 and AMOS 24 are used to analyze the functional data from 300 surveys. The Friedman rank test is used to test the research hypotheses. The study revealed that there does appear to be some association between the factors affecting the DSE investors' decisions to invest. The researcher found that expected dividends, the stock's past performance, collecting information about firms, stock index fluctuations, interest in non-stock investment, investment diversification, obtaining borrowed funds easily, broker recommendations, family members’ opinions, friend or coworker recommendations, the company's public reputation, well-organized financial markets, and the ethics of a firm are the most crucial factors that affect individual investors' investment decisions. The results of this study will help investors comprehend the various choices they will have to make based on their current circumstances and the likely results of each choice. The research will also help the companies identify the factors that will have the biggest impact on investors' behavior in the future, which will affect future strategies and policies.

The mediating role of intellectual capital on the nexus between diversification, financial stability and efficiency of commercial banks in Ethiopia

PurposeThe main objective of this study is to analyze the mediating role of intellectual capital in the relationship between diversification, financial stability, and efficiency of the banking sector in Ethiopia.Design/methodology/approachSecondary data for this study was obtained from audited financial statements of 17 Ethiopian commercial banks for a decade starting in 2013. A descriptive and explanatory research design with a quantitative research approach was employed. The seemingly unrelated Hierarchical regression analysis is used to estimate diversification’s effect on banks' financial stability and efficiency, considering the interaction between diversification and intellectual capital as a mediating variable.FindingsThe Mediation analysis reveals that asset diversification improves the financial stability of commercial banks when mediated by intellectual efficiency. Investment diversification negatively impacts risk-adjusted return on asset and Z score. Intellectual capital significantly enhances commercial banks' efficiency and financial stability in Ethiopia and mediates the relationship between geographic diversification, financial stability, and efficiency. The mediation analysis also indicates that intellectual capital significantly mediates the relationship between income diversification and efficiency.Practical implicationsThis study highlights the importance of intellectual capital and promotes its strategic allocation by management and regulatory bodies to enhance the financial stability and operational effectiveness of the banking industry in Ethiopia.Originality/value To the best of the researcher’s knowledge, this study is one of the rare attempts to investigate the mediating role of intellectual capital on the nexus between diversification, financial stability, and efficiency of commercial banks in Ethiopia.