Financial Market Development Research Articles

Current trends in the development of digital financial and payment market in Azerbaijan

Aim. To consider the key aspects of digital transformation of the financial sector in the context of large-scale changes taking place in the digital financial sphere.Objectives. To determine the sequence of actions of the Central Bank of Azerbaijan in the direction of cashless economy; to study the change in the architecture of the financial sector in connection with advanced financial technologies; to study the problems of FinTech providers of new financial technologies as a result of the introduction of the concept of open banking.Methods. The dialectical approach to analyzing the key phenomena and regularities contributing to the development of economic relations, as well as a systematic approach to revealing the main factors of development of digital transformation of the financial and payment sector served as the methodological basis of the research. Along with this, such methods of scientific analysis of socio-economic phenomena and processes as statistical, comparative, fundamental and functional analysis, expert assessments and modeling were used. The theoretical basis was formed by the final results of fundamental and applied research, reflected in periodicals, a number of monographs, materials of scientific conferences.Results. The Central Bank of the Republic of Azerbaijan with the purpose of expanding the process of application of innovative financial technologies on the basis of advanced technological solutions and thus supporting FinTech activities has started to implement measures on formation of appropriate legislative bases for introduction of open banking and technological infrastructure. The main reason for people’s decreasing attachment to traditional banking is the availability of digital banking services in a convenient and easy way, without wasting time and waiting in long queues.Conclusions. Azerbaijan has formed a positive trend in the development of digital banking, which can be considered one of the main challenges of modernity. Today, digital banking in Azerbaijan is replacing traditional banking services. The emergence of prominent FinTech providers of new financial technologies as a result of the introduction of the concept of open banking, which allows individual banks and customers to share financial information with third parties, is changing the status quo of the financial ecosystem. This new paradigm has the potential to transform the traditional financial services ecosystem into a dynamic and competitive environment where startups and small innovative companies, competing with larger providers, offer new products and services. A positive trend in the development of digital banking as one of the main challenges of modernity has emerged in Azerbaijan. Today digital banking in Azerbaijan displaces traditional banking services.

Развитие российского рынка финансовых технологий

В статье рассматриваются трансформирующийся сегмент финансовых технологий, а также всевозможные финансовые парадигмы, их поддерживающие. Отражены возможности совершенствования российских финансовых технологий, а также обстоятельств, которые определяют их дальнейшую трансформацию и развитие. The article examines the transforming segment of financial technologies, as well as various financial paradigms that support them. The possibilities of improving Russian financial technologies are reflected, as well as the circumstances that determine their further transformation and development.

The Role of Financial Technologies in the Development of New Financial Instruments and Markets

The Role of Financial Technologies in the Development of New Financial Instruments and Markets

Country risk, global uncertainty, and firms’ cash holdings: Do the role of law, culture, and financial market development matter?

To the extent of our knowledge, there is a gap in scrutinizing the impacts of the country's risk and global uncertainty on Asian firms' cash holdings. Therefore, this work aims to shed light on this gap by choosing 989 listed non-financial Asian firms and performing both the static (fixed-effects) and dynamic (Difference-GMM and System‐GMM) panel data methods between 2008 and 2020. The findings reveal that an increase in a country's risk and global uncertainty stimulates firms to stockpile more cash though the impact of country risk is more pronounced. Likewise, the results underscore that among the country risk factors, firms have more precautionary motives to stockpile more cash with increases in financial and political instability while they hold more cash with rises in economic stability. Remarkably, the results emphasize that the impacts of country risk and global uncertainty on cash holdings are more prominent in environments characterized by common-law legal origin, high uncertainty avoidance cultures, and less financial market development. Moreover, the results reveal that firm-specific factors including growth opportunity, leverage, profitability, dividend, and size have an important role in shaping Asian firms' cash holdings policy.

Trust and inter-regional M&As: Evidence from China

This paper investigates the economic impact of trust on inter-region mergers and acquisitions (M&As) using a large sample of M&As in China. We find that trust distance among regions negatively predicts frequency of inter-region mergers, merger volume and synergy gains. Economic mechanism analysis shows that trust distance lowers merger gains through imposing transaction cost on the deal. The negative effects of trust distance on inter-region M&As activities and synergy gains are less pronounced when legal institution level distance between regions are smaller, consistent with trust being a substitute for formal institutions; it is less prominent when corporate governance and information disclosure level distance between regions are smaller, suggesting that trust is more important in transactions with higher information asymmetry; it is less salient when financial market development level distances between regions are smaller, consistent with trust is less important with repeated interactions between economic parties. Overall, our results highlight the role trust plays in shaping corporate decisions and economic outcomes.

The potential of Islamic financing in making financial development more entrepreneurship friendly

Purpose Literature has pointed that conventional financial development theories have inconclusive role on motivating new businesses. New ventures often consider the conventional system that passes through risk and provides fixed-interest lending as a burden. Comparatively, Islamic finance contributes using participative and equitable substitute for startups and has a potential in promoting new businesses. This study aims to investigate the holistic financial development index quadratic effect on entrepreneurship and include the moderating role of Islamic financing at national level. Design/methodology/approach Islamic banks of 21 nations constitute the unbalanced panel data. Financial development and entrepreneurship indices were developed using factor analysis and panel median regression to estimate the nonlinear financial market development effects and Islamic financing moderation model. Findings The results indicated that low financial market development is entrepreneurship deterring because of interest burden effect, which could be eased with a proportional increase in the Islamic financing, which is participative. The moderating effect has led to the categorization of the sample countries into entrepreneurship promoting and entrepreneurship discouraging with respect to the current incidence of financial market development and Islamic financing, which can help policymakers in understanding the entrepreneurship promoting combination of financial development and Islamic financing. Research limitations/implications Central banks and Shari’ah advisory councils can adopt Islamic financing transition in the national financial inclusion policy for new business facilitation. Originality/value This study is instrumental in exploring the assessment of introducing Islamic financing while developing the financial sector on multidimensional entrepreneurship.

Green Finance and Sustainable Development: Paths and Policies for Global Economic Transformation

This article provides an in-depth exploration of the key role of green finance in the transformation of the global economy. First, the definition and basic principles of green finance are clarified, and its practice and development, as well as its close relationship with sustainable development, are analyzed in detail. In terms of environment, green finance contributes to environmental protection by mitigating climate change and promoting the development of clean energy. At the social level, it promotes social justice and inclusive growth and improves social well-being. In terms of economy, green finance promotes innovation and industrial upgrading, and improves the resilience and sustainability of the economy. However, green finance faces challenges such as information asymmetry and policy instability. In its future development directions and suggestions, it calls for efforts such as international cooperation, policy support, professional training, business guidance, and public education to promote a more healthy, transparent, and sustainable development of the green financial market. The article concludes by emphasizing that green finance is a key force leading the transformation of the global economy. It not only plays a role in the environmental field, but also plays a vital role in promoting the green transformation of enterprises and promoting the upgrading of economic structure.

Analysis of the impact of financial market development on China's national economy

Finance serves as the nerve center in the modern economic model, connecting various modern economic sectors and reflecting the development status of each modern economic sector. In the past 20 years, the international situation has been turbulent, and international economic development and recovery are also full of instability. The global interest rate hike frenzy led by the Federal Reserve has also added more risks to the stability of the financial environment. Currently, China is at a critical node in the transformation of its economic structure from growth to quality. The economic development structure also reflects the shift from a real-based economy to a virtual economy. The unbalanced characteristics of the transformation, in which the flow of financial capital can adjust the focus of the structure of economic development, and at the same time reflect the scope of benefits of economic development dividends, what role finance plays in the growth of China's national economy will be based on statistics Analyze and conduct research.

Regional institutional environment and R&D performance: Evidence from marketization index of China’s provinces and panel data of high-tech manufacturing firms

Purpose How does the regional institutional environment of China’s transitional economy influence the relationship between a firm’s R&D investment intensity and innovation performance? Based on the resource-based view and institution-based view, an empirical study was executed to identify the moderating effects of institutional environment variables from the Marketization Index of China’s Provinces: National Economic Research Institute (NERI) Report on the relationship between a firm’s R&D investment intensity and innovation performance. This paper aims to study how effectively improve the impact of R&D investment intensity on innovation performance under the influence of the institutional environment. Design/methodology/approach Against the background of China’s transitional economy, the authors present empirical evidence from panel data covering 374 Chinese A-share listed high-tech manufacturing firms on the Shanghai and Shenzhen Stock Exchange to examine the relationship between R&D investment intensity and innovation performance. Findings Empirical results illustrate the following: The R&D investment intensity and innovation performance displayed an inverse U-shaped relationship, and R&D investment intensity had a lagged effect on R&D output according to the uncertainty and industrialization period of R&D activities. The level of financial market development can intensify the effects of R&D investment intensity on innovation performance. The degree of government intervention weakens the effect of R&D investment intensity on innovation performance. Originality/value Based on the background of China’s institutional environment during the transition period, combined with previous research and the Marketization Index of China’s Provinces: NERI Report, selecting financial market development, government intervention level and legalization level as moderating variables to study how effectively improve the impact of R&D investment intensity on innovation performance under the influence of the institutional environment. Due to the different ownership of firms during the transition period, the appropriate impact of the institutional environment on the relationship between R&D investment intensity and innovation performance will vary. Moreover, the level of legalization would impact on innovation insignificantly.

Financial development and mortality rates

ABSTRACT This study uses a broad cross-section of countries to identify a link between financial market development and mortality rates. Our research is motivated by the idea that robust financial markets can facilitate innovation by efficiently channelling essential capital to the entities responsible for health-related advancements, resulting in improved overall health outcomes. Consistent with this conjecture, our findings reveal that countries with better-developed credit markets have markedly lower infant and maternal mortality rates. These results are robust to controls for time-series variation in mortality rates, country-specific determinants such as GDP per capita and other measures of wealth, and potential simultaneity bias.

Development of the Financial Law Mechanism for the Functioning of Payment Systems in New Economic Conditions

The paper suggests promising directions for improving the financial law mechanism of functioning for payment systems, ensuring achievement of the goals of financial market development provided for by the Strategy for the Development of the Financial Market of the Russian Federation until 2030 and the goals of ensuring national security defined by the National Security Strategy of the Russian Federation in the face of unfriendly actions of foreign states. Payment systems are one of the key elements of the payment infrastructure necessary to maintain uninterrupted cash flow in order to fulfill individual civil and public obligations. Since currently unfriendly actions of foreign states are directly aimed at the functioning of payment systems in Russia, it seems important to provide financial law mechanisms that mitigate or eliminate the corresponding negative consequences. Thus, the author proposes to establish requirements for the mandatory use of national financial information transmission systems in the operation of payment systems, and justifies the expediency of creating a special regulation for settlements in case of unilateral termination of participation in the payment system. In addition, the paper proposes financial law mechanisms that take into account the ongoing digitalization of the payment sector and are necessary in this regard to maintain the smooth operation of payment systems. In particular, the paper substantiates the conclusion that it is advisable to unify the rules for assigning MCCs that determine the type of activity of the recipient of funds in order to ensure the correctness of their use when making card transfers. Ultimately, the legal mechanisms proposed in the paper are aimed at improving legislation on payment systems and documents of payment systems.

EFFECTS OF FINANCIAL MARKET DEVELOPMENT ON BANK CAPITALIZATION RATIO: EVIDENCE FROM COMMERCIAL AND NON-COMMERCIAL BANKS IN TANZANIA

Financial market development in many developing countries is a series of financial market reforms aimed at improving the market and the financial system in general. Theoretically, major reforms that improve the stock market are expected to increase bank performance by reducing bank risk of default by increasing the bank capitalization ratio. This results in stability in the financial market and banking sector. Nonetheless, empirical literature in addition shows that the quality of the financial market may be at high risk following the reforms process because of the integration effects of the markets across the countries or regions. A good example of this is the global financial crisis of 2007/2008. Based on this background, the present study investigates the extent to which the financial market development in Tanzania influences the bank's capitalization ratio (commercial and non-commercial banks). Employing a two-step system GMM technique in a dynamic panel dataset regression model for the investigation for a period of 2012 to 2021, while macroeconomic and bank-specific variables have been used as control variables. We proxy financial market development as stock market development. This study finds that stock market development in Tanzania measured in terms of stock market turnover ratio improves bank capitalization ratio with the goals of enhancing the financial market and maintaining stability in the banking sector.

ОСНОВЫ ИСЛАМСКИХ ФИНАНСОВ И БАНКИНГА: ПРИНЦИПЫ И ПРАКТИКА

The main thesis in Muslim finance is the fact that money itself has no value. From the point of view of Islam, Muslims cannot lend or receive money from anyone, while expecting benefits. The development of the Islamic financial market is an important global process. This research is based on the analysis of the development of the Islamic financial market and banking, the basic principles of Islamic banking, as well as alternative mechanisms and tools of Sharia financing are studied. The analysis of the changes and development of Islamic banking necessitated the following research methods: analysis, synthesis, formal logic, comparison, induction, deduction, etc. Islamic finance represents a unique form of financing based on the principles of Sharia law. They offer alternative mechanisms and tools that avoid the interest rate system and usury. The article discusses the principles of Islamic banking, which include the rejection of interest-bearing transactions, the provision of financing based on partnership and fair risk sharing. Islamic finance has significant potential for development and expansion in the global financial system. They offer opportunities for ethical investment and financing of projects that promote sustainable development and social progress. However, the introduction of Islamic banking requires the development of appropriate infrastructure, regulatory and legal frameworks, as well as qualified specialists. Further research and development of Islamic finance will help expand their application and strengthen the position of this form of financial activity in the global economy.

Impact of Energy Intensity, R&D, Trade Openness, and Financial Market Development on Carbon Productivity in MENA: A Spatial Analysis

Impact of Energy Intensity, R&D, Trade Openness, and Financial Market Development on Carbon Productivity in MENA: A Spatial Analysis

The Financial Markets Development and Economic Growth in Rwanda: A Causality Test

The Financial Markets Development and Economic Growth in Rwanda: A Causality Test

МЕЖДУНАРОДНЫЕ САНКЦИИ ПРОТИВ РОССИИ (2014–2024 гг.): ОЦЕНКА И ПОСЛЕДСТВИЯ ДЛЯ ФИНАНСОВОГО РЫНКА

In 2024, it has been exactly 10 years since the Russian financial market was under the influence of economic sanctions from the leading countries of the world economy. Despite attempts to destabilize and degrade the Russian market, the shocks from international sanctions have not had a serious destructive effect on it. The purpose of the study is to assess the impact of sanctions restrictions on various segments of the Russian financial market and determine the extent to which sanctions can contribute to its transformation and stable development. Statistical analysis for 2004–2023 showed that international sanctions have a negative impact: volatility in the money and capital markets has increased, the Russian ruble has devalued, and inflation has surged. At the same time, the sanctions contributed to the sovereignization of the Russian financial market, the growth of which began to be determined by internal sources of financing. The further development of the Russian financial market should be associated with reforms aimed at attracting domestic investment into the economy, unconventional monetary policy and reducing the outflow of private capital, as well as appealing to financial investments from friendly countries.

Main problems of the derivatives market in Ukraine and ways to solve them

This article highlights one of the key problems of the financial market of Ukraine – the development of the derivative securities market. The relevance of the study of the problems of the market of derivative financial instruments based on the example of Ukraine is substantiated. Special attention is paid to the study of the scientific works of Ukrainian researchers and scientists, their results and the significance of these works for Ukraine. The article also highlights interesting approaches and relevant information on the basis of which this research was conducted. The main types of derivative securities (forward and futures contracts, options, swaps and warrants) and their key features are characterized – essence, terms of conclusion, functions and significance for the market, roles of participants in these operations, etc. The use of these derivatives is explained, with advantages and disadvantages indicated. The principles of the functioning of the derivatives market in Ukraine are also described and researched, the main types of derivatives concluded on the Ukrainian financial market over the past few years and the prevailing trends in this area are mentioned. With the use of statistical data and comparative analysis, the dynamics of the main indicators of the Ukrainian derivatives market were studied, compared with some indicators inherent in the world derivatives market, and graphically interpreted. With the help of general scientific methods of synthesis, induction and deduction, the main differences between the indicators of the Ukrainian and world markets of derivative financial instruments, as well as possible reasons for their appearance, were determined. The main internal shortcomings of the derivative securities market in Ukraine are highlighted. The influence of the mentioned shortcomings was studied, the negative consequences of the pandemic and full-scale war on the dynamics of these indicators were proved. In contrast to the described shortcomings, attention is focused on successful participants of the derivative securities market and the results of their activities. Key trends were also displayed graphically. In conclusion, the intended strategy of our state in solving the existing problems of the derivatives market is described, and its own ways of solving them and accelerating the development of the derivative financial instruments market in Ukraine are proposed.

ХАРАКТЕРИСТИКА ТА ОСОБЛИВОСТІ ДІЯЛЬНОСТІ ІНСТИТУТІВ СПІЛЬНОГО ІНВЕСТУВАННЯ У НАЦІОНАЛЬНІЙ ЕКОНОМІЦІ

Mutual investment institutions are key participants in the financial system of each country, playing a significant role in the mobilization and efficient allocation of capital. However, with the development of the global financial market and the growth of competition, new challenges and questions arise regarding the effectiveness of joint investment institutions in the national economy. The problem is to study the characteristics and peculiarities of joint investment institutes in the context of modern trends and challenges of the national economy. The purpose of the study is to systematize and analyze the characteristics and peculiarities of the activities of joint investment institutions in the national economy, taking into account modern trends and challenges, as well as to determine the key aspects of the functioning of these institutions and to determine ways of their further improvement to ensure the stability and efficiency of the financial system. The object of the study is the institutions of joint investment in the national economy, while the subject of the study is the characteristics, functions and impact on economic development. Various methods were used to achieve the goal of the research, including the analysis of scientific articles on the subject under investigation, as well as statistical analysis of the Ukrainian market of joint investment institutions. A thorough analysis of the state of joint investment institutions was carried out, the key problems and challenges they face were identified. Their role and influence on the economic development of the country were analyzed, as well as specific ways of optimizing their activities were proposed. Based on the conducted research, the author concluded that there is a need to intensify regulation and supervision of the activities of joint investment institutions in order to ensure their stability and efficiency. Recommendations are also provided for improving risk management strategies and developing new investment products to ensure the competitiveness of joint investment institutions in modern market conditions.

An Empirical Study on the Efficiency of China's Convertible Bond Market

Since 2017, with the increased demand for margin financing and securities lending in the capital market and the improvement of relevant regulations, China's convertible bond market has experienced a boom. As of March 9, 2024, China has issued a total of 823 convertible bonds, amounting to 1.3 trillion yuan. The stock of convertible bonds has expanded from 24 bonds totalling 55.9 billion yuan at the end of 2016 to 553 bonds totalling 853.3 billion yuan. The importance of convertible bonds in the capital market has become increasingly prominent, becoming an essential part of financial tool diversification and market development. However, academic research on the convertible bond market is relatively scarce, mostly focusing on pricing mechanisms, financing effects, and the impact on the underlying stock prices, with little attention paid to the market itself. This paper uses runs tests, autocorrelation tests, and variance ratio tests to analyze the efficiency of China's convertible bond market. By examining whether the daily returns of the convertible bond index follow a random walk, the paper tests if the market is weak-form efficient. The results show that China's convertible bond market has not reached weak-form efficiency. Subsequently, a new index sample was created from the top ten convertible bonds by trading volume in May 2024, and its daily returns were tested for adherence to the random walk model. The results were compared to the overall market's convertible bond index returns in the same period of 2023 to identify factors influencing market efficiency, providing directions and insights for future research.

Дискуссия о правовой природе российского финансового рынка

On December 18, 2023, a round table on the topic «The Russian financial market: legal nature and structure» was held at the Institute of State and Law of the Russian Academy of Sciences. The article provides a brief overview of the discussion that took place, reflecting the scientific community's understanding of the concept, structure and elements of the modern financial market of the Russian Federation. During the round table, leading experts from leading research and higher educational institutions in Russia and neighboring countries were asked how effective the existing legal instruments are to ensure the stable functioning of the financial market, is the Russian financial market coping with its assigned role. The participants of the round table paid special attention to such controversial issues as the theoretical and legal content of the concept of «financial market» and its structural elements, the formation of a legal model of the financial market of the Russian Federation at the present stage of economic development. At the end of the discussion, the participants unanimously stated the expediency of further improving the legal model of the financial market. We have identified the legal tools necessary to achieve the primary goals of financial market development. We decided to continue the study of the legal nature of money and money circulation, which plays a key role in the functioning of the financial market and in the general economic mechanism.