Investors In Financial Market Research Articles

Influence of political stability on the stock market returns and volatility: GARCH and EGARCH approach

Political instability has increased drastically in Pakistan during the last few decades. This may intensify the fear of investors and eventually affect investment decisions. Therefore, the stock market’s reaction to political stability must be explored and appropriate policy measures should be prescribed. This paper examines the effect of political stability on stock market returns and volatility using time series data from Pakistan for the period from January 02, 2004, to May 31, 2018. The study uses the Generalized Autoregressive Conditional Heteroskedastic (GARCH) and Exponential Generalized Autoregressive Conditional Heteroskedastic (EGARCH) models to achieve the main objectives. The findings of the GARCH and EGARCH models confirm that political stability has a positive and significant influence on both stock market returns and volatility in Pakistan. In addition, the EGARCH findings indicate that negative shock (political instability) creates more volatility in the stock market than positive shock (political stability). The results of this study reveal that financial market investors are affected more by political instability. In conclusion, this study suggests that political stability is an essential factor affecting financial market volatility, and it leads to stable financial markets. It also emphasizes that political instability needs to be resolved to achieve stable financial markets.

Internet use and household financial market participation: evidence from China

ABSTRACT This paper examines the effect of internet use on household financial market participation and its underlying mechanism. Using data from the 2018 China Family Panel Studies (CFPS), we find that households with internet use are 4.7% more likely to participate in financial market investments than those without. The finding remains robust after accounting for endogeneity concerns using the instrumental variables approach and a fresh double machine learning approach. We highlight the phenomenon of ‘digital divide’ that the positive effects of internet use on making financial investments are more substantial among families living in economically developed regions, and families with higher income and education levels than their counterparts. We identify three novel mechanisms through which internet use affects household investment decision-making, namely the internet information mechanism, the internet social mechanism, and the internet enabling mechanism. These findings suggest that expanding digital infrastructure building and increasing the number of internet users are important ways to enhance households’ participation in financial markets.

Financial Literacy, Fintech, and Risky Financial Investment in Urban Households—An Analysis Based on CHFS Data

In recent years, China’s financial markets have come under increasing scrutiny. In order to explore the impact of financial literacy on urban household investment in the risk financial market, this paper used the micro-data of the 2019 China Household Finance Survey (CHFS) to start from two perspectives: household risk financial investment and the number of investment financial products, namely the breadth of investment. By constructing a probit model and ordered probit model for empirical analysis, the main conclusions are as follows. Benchmark regression results show that the improvement of financial literacy can significantly promote urban households to make risky financial investments and can significantly broaden the types of risky financial investments. Based on the IV-probit model and two-stage least square method, the endogeneity test using the economic and financial information attention degree as the instrumental variable showed that the model results were credible. The robustness test showed that the model results were basically correct. Furthermore, the mechanism analysis found that the use of fintech played an intermediary effect in the process of financial literacy affecting urban household risky financial investment and the amount of investment. This indicates that the improvement of financial literacy can improve the probability of using fintech, thus promoting the household risky financial investment behavior. Heterogeneity analysis based on risk attitude showed that financial literacy had a greater effect on the improvement in the risky financial investment behavior of risk-inclined families, followed by risk-neutral families, and had the least effect on risk-averse families. The research conclusions of this paper are of practical significance to solve the problems related to urban household financial market investment. Therefore, this paper puts forward some suggestions for reference, especially in terms of financial education and the digital economy.

How Is AI Enhancing Investment Behavior in Today's Financial Markets

The present investigation delves intricately into AI's pivotal function in shaping contemporary financial market investment dynamics. Amidst surging data volumes and computational leaps, AI has emerged as a cornerstone in finance, particularly in enhancing investment efficacy, risk assessment, and tailored services. By scrutinizing AI's present adoption across domains like data analysis, algorithmic trading, risk mitigation, and advisory services through concrete case studies, we illustrate their tangible impact. Our study subsequently unfolds how AI bolsters investment activities by expediting decision-making, refining strategic investments, reinforcing risk controls, and enriching user experiences. Furthermore, we delve into the technological hurdles, ethical dilemmas, and regulatory challenges encountered in AI's financial sector integration. Lastly, we propose recommendations for financial institutions and regulators to foster AI's sustainable growth within the market. This research not only contributes to a profound comprehension of AI's role in financial applications but also furnishes valuable insights and future research directions.

Technology acquisitions and investor expectations: Reputation and expectancy violation perspectives

AbstractEmploying the organizational reputation lens and expectancy violation theory (EVT), I examine how financial market investors (investors) affect the technology acquisition activity and the likelihood of survival of firms facing technological change. I theorize that when a firm has a growth reputation, that is, investors expect revenue growth in future periods, the likelihood of making an acquisition will increase in anticipation of a positive expectancy violation on the part of investors. In contrast, for a firm that has an income reputation, that is, investors expect shareholder returns in future periods, the likelihood of making an acquisition will decrease in avoidance of a negative expectancy violation on the part of investors. I predict a novel moderating effect of investor expectations—a firm's acquisition activity will exert a stronger positive effect on its likelihood of surviving technological change when investor expectations are growth‐oriented, that is, when there is a positive expectancy violation. Using a multi‐industry sample of industry convergence, a salient form of technological change, I find support for my theoretical predictions. I advance research that examines the reactions of investors to firm strategies during technological change to the domain of technology acquisitions, a salient strategic decision. I also expand the predictive utility of the reputation lens and EVT to the context of firm survival during technological change.

Spillover effect of the geopolitical uncertainty on the cryptocurrency market

PurposeThis study aims to examine the influence of geopolitical uncertainty on cryptocurrency markets (CM).Design/methodology/approachUtilizing two distinct sets of daily returns data spanning from January 1, 2019, to May 4, 2023, the analysis employs the geopolitical risk (GPR) index formulated by Caldara and Iacoviello (2022), which encapsulates two pivotal events: the COVID-19 pandemic and the Russia–Ukraine conflict. The cryptocurrency market (CM) encompasses Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Dogecoin (DOGE). Employing the DCC-GARCH model and supplementing it with wavelet coherence analysis to discern perceptual distinctions between short- and long-term market reactions.FindingsThe main findings indicate that the GPR index clearly impacts the return of CM in the short-, mid- and long-term periods. BTC exhibited the highest volatility in response to changes in the GPR index. The cryptocurrency market offers a better diversification opportunity, and the impact of geopolitical events varies across time, with their direction and magnitude closely related to the specificity of the CM.Practical implicationsThis research is helpful for financial market investors, portfolio and risk managers, make informed decisions about including cryptocurrencies in their investment portfolios to mitigate the risks in uncertainty period.Originality/valueCryptocurrency market volatility is treated weakly during the risk period. With advanced statistical method, this study links two important events: the COVID-19 pandemic and the Russia–Ukraine conflict and selects the top four cryptocurrencies constituting 80% of the market. This study examines the impact of geopolitical risk on the cryptocurrency market and shows that this market is considered a safe haven.

Herding towards pygmalion: Examining the cultural dimension of market and bank based systems

The study aims to not only detect the presence of herd behavior in the countries studied, but also to examine the effect of cultural dimensions and market/bank-based systems on the herding behavior of financial market investors. The study employs the Cross-Sectional Standard Deviation and Cross-Sectional Absolute Deviation methods to analyze daily data from public companies traded in the capital markets in Emerging Seven and Group of Seven economies. The results suggest that being a member of E7-G7, a Future Oriented (FO), and a Performance Oriented (PO) cultures are the most important factors in explaining herd behavior. Additionally, the study found that the Ridge Classifier and CatBoost Classifier algorithms arethe most superior model for estimating herd behavior periods determined by the CSSD and CASD models, respectively. The feature selection results show that the Assertiveness (A) in-group collectivism (GC) are the three most important explanatory factors of the herd behavior.

Mitigating Financial Investment Polarization: The Role of Digital Payments in Enhancing Household Participation

ABSTRACT This study examines the impact of digital payments on household financial asset investment, using the China Household Finance Survey (2013–2019). Our findings indicate that digital payments positively affect financial market participation and investment size, reshaping asset allocation structures. While households using digital payments show increased participation and investment amounts across various financial assets, a reduction in the weight of deposits is evident. The study highlights two key channels through which digital payments influence financial behavior: enhancing subjective financial literacy and increasing households’ attention to financial information. The research emphasizes the role of digital payments in mitigating polarization effects in household financial asset allocation.

Co-movement between COVID-19, oil price and American stock market during 2020: Fresh investigation from partial and multiple wavelet methods

The pandemic has brought economic and social challenges to society, policymakers, financial market investors and firms. The current study aims to shed light on the financial aspects of COVID-19 during the first wave in 2020. In doing so, the study aims to explore the association between COVID-19 cases, oil prices, and the stock market returns (Standard & Poor's). In this paper, the authors use the daily new cases of COVID-19, oil price and stock market return from 21 January 2020 to 10 April 2020. To check the nexus between studied factors, we apply Wavelet Coherence, Partial Wavelet Coherence and Multiple Wavelet Coherence methods. The graphical empirics of Wavelet Coherence Methods mentioned interesting outcomes; (i) COVID-19 and oil price tend to move in the same direction, with COVID-19 leading, (ii) COVID-19 affect stock market returns, and (iii) oil price and stock market returns have strong co-movement.

THE VIRTUAL DEGREE OF LEVERAGED CAPITAL WITHIN CHINESE ENTERPRISES

The transition of China's tangible real economy to an intangible economy, along with phenomena such as capital idling and shadow banking, has significantly altered the relationship between financial markets and actual enterprises. As leveraged capital flows into real enterprises, it is crucial to discern how much is allocated to operational endeavors versus financial market investments. Leveraging the logic of asset allocation and capital acquisition in real enterprises, we developed a model to discern the allocation of leveraged capital. Through descriptive analysis, we delineate the landscape of Chinese listed companies' utilization of leveraged capital for financial assets. Our findings reveal that the proportion of Chinese enterprises holding leveraged capital has steadily risen, surpassing 86.53%, with an increasing trend in leveraged enterprises utilizing capital for financial asset acquisition, growing from 35.02% to 79.12% annually. Among leveraged enterprises investing in financial assets, the portion of leveraged capital directed toward such investments escalates annually, from 20.44% to 46.37%. However, as leveraged capital increases, the ratio allocated to financial assets diminishes. Approximately 14.38% of all leveraged enterprises allocate more than 50% of their financial assets through leveraged capital, with the proportion of enterprises solely reliant on leveraged capital for financial asset purchases steadily increasing, reaching 23.35% in 2020, predominantly concentrated in the manufacturing sector. This research holds theoretical significance for understanding the dichotomy between the virtual and tangible applications of leveraged capital at the microlevel. It uncovers the logical mechanisms governing leveraged capital and disparate asset allocations, fostering opportunities for quantitative exploration of the interplay between finance and the tangible economy. Additionally, our insights provide valuable reference points for regulatory bodies seeking to fortify oversight over leveraged capital utilization.

Can ESG Integration Enhance the Stability of Disruptive Technology Stock Investments? Evidence from Copula-Based Approaches

This paper provides an investigation into the dependence structure among different disruptive technology sectors driving the Fourth Industrial Revolution and scrutinizes the impact of ESG integration on shaping investments in different tech stock sectors in the presence of ESG consideration, represented by the ESG stock index, versus without specific ESG consideration, represented by the general stock index. The results show that (i) C-vine outperforms R-vine and D-vine when modeling the dependence structure of tech sectors. Intelligent infrastructure is the most crucial sector, with substantial reliance on smart transportation and advanced manufacturing. (ii) ESG integration reduces dependence, especially tail dependence, between tech sectors and the stock market, which benefits the future security sector the most and future communication the least. (iii) ESG integration mitigates risk spillover between tech sectors and the stock market, particularly benefiting final frontiers and intelligent infrastructure. The decrease in downside spillover is more significant compared to upside scenarios. For downside risk, spillover from tech sectors to stock indices is more reduced than the reverse, while the opposite holds for upside risk. These sectoral findings offer insights for market participants in financial market investments, financial regulators in risk management, and listed companies in ESG disclosure.

Media społecznościowe jako źródło wiedzy wykorzystywanej w inwestycjach na rynku finansowym

Social media are a source of an enormous amount of data that can support investment decisions, with the development of digital technology in the field of data processing making the analysis of the content published on sites such as Twitter, Facebook and YouTube an indispensable part of the investment process for many financial market participants. The aim of this study is to identify the applications of social media in financial market investing, as well as undertaking to determine the position of social media among the available sources for obtaining market information. The empirical data used in the analysis was obtained through a survey carried out using the CAWI method. The results of the survey indicate that social media are an important source of information, especially for respondents with experience in financial market investments, although they are inferior to financial portals in this respect. The varied use of the social media platforms analysed was also recognised. The main advantage of using Twitter was identified as the ability to monitor current trends and follow the profiles of investment experts, for Facebook it was the ability to join investment-themed groups, while YouTube was valued for its access to educational content.

EXCHANGE RATE REGIMES AND ECONOMIC POLICIES: AN INDIAN PERSPECTIVE

This research paper provides a comprehensive analysis of exchange rate regimes (ExRRs) and their implications for economic policies particularly for the Indian economy. The study investigates the relationship between different ExRRs, including fixed, floating, and managed float systems, and their impact on macroeconomic policies which are drivers of economic growth. We have recognised four different regimes for the Indian rupee on the basis of level of flexibility of the exchange rate. In India, before liberalisation, fixed exchange rate system was followed but after economic liberalisation of early 1990s, the Reserve Bank of India (RBI) started intervening in the currency market to regulate the exchange rate. The exchange rate was made comparatively more flexible since the global financial crisis of 2008. After 2013,the exchange rate was efficiently and regularly managed by adopting the currency market intervention methhod. The RBI has acted in an asymmetric manner to reply to the EMP. When there was pressure to appreciate, the RBI acted by buying the foreign exchange reserves whereas rupee depreciation was adopted in case of vice-versa. The present study discusses the broader implications of ExRRs and economic policies for global economic governance, financial market stability, trade and investment flows, policy innovation, and public perception. It provides valuable insights for policymakers, central banks (CBs), financial institutions, and researchers, informing policy formulation processes in the dynamic global economic landscape.

Население как участник фондового и срочного рынков: ожидания, риски, перспективы

The relevance of the article is due to the fact that the instruments of the stock and futures markets are currently considered by the population as an attractive alternative to traditional investments in bank deposits. This category of inves-tors, which ten years ago did not have any noticeable weight on stock and fu-tures markets, is gradually turning into active participants in the securities market, capable not only of ensuring the efficiency of the Russian economy, but also of overcoming market risks. The subject of the study is the activity of retail investors in the domestic finan-cial market during the period of tightening anti—Russian sanctions. The pur-pose of the work is to consider the specifics of citizens' investment behavior, identify the main trends of the current period and factors contributing to the further development of the investor protection system and increase citizens' confidence in financial markets. The article identifies the peculiarities of the de-velopment of the retail segment of the domestic market in the period 2022–2023, and on this basis it is concluded that the sanctions regime has caused significant damage to the Russian financial market, however, the degree of im-pact of the negative processes constraining its development turned out to be less significant than predicted by most researchers. The continuation of the regulator's work in terms of developing additional measures to protect inves-tors' rights and improve financial culture, coupled with the implementation of initiatives by trade organizers and the professional community, will make it possible to counteract the spread of unfair trading and marketing practices, improve the investment climate in the country, and strengthen the confidence of private investors in financial market instruments and institutions.

International Financial Market Analysis and Investment Strategy Formulation Based on Social Network Data

International Financial Market Analysis and Investment Strategy Formulation Based on Social Network Data

LIFE INSURANCE DEVELOPMENT AND ECONOMIC GROWTH: A CASE STUDY OF NIGERIA (2000-2022)

This research looked at the development of life insurance and economic growth using Nigeria as a case study from 2000 to 2022. Specifically, the authors examined the causal relationship between life insurance development and economic growth, analyzed the effect of life insurance penetration and life insurance density on real GDP growth rate. Data used for the study were collected from sources including the World Development Indicator database, Global Financial Development Indicator database, NIA digest database, and Central Bank of Nigeria statistical bulletin. Granger causality test and Autoregressive Distributed Lag (ARDL) co-integration were used in the investigation approach. The granger causality test result indicated that there is no causal connection between Nigeria's economic growth and the development of life insurance. According to ARDL estimate results, life insurance density and penetration had a negligible positive effect on the real GDP growth rate. Hence, this study established that life insurance development is yet to contribute to economic growth in Nigeria, due mainly to its low level and mode of operations. Therefore, this study recommended among others that life insurance institutions should also increase their scope of operations to be directly involved in business investments other than financial market investment to enhance their level of significance in the growth process of Nigeria.

Exploration on Portfolio Selection and Risk Prediction in Financial Markets Based on SVM Algorithm

In order to cope with the complex risk environment of the current financial market, achieve portfolio optimization and accurate risk prediction, this paper conducts effective research using SVM algorithm. This article uses stock data as a sample to empirically analyze the risk return and risk prediction performance of investment portfolio strategies based on SVM algorithm. Compared with traditional index fund investment strategies, the risk resistance of investment portfolio strategies is significantly improved, and the risk return is also stable at a high level. In addition, with the support of SVM algorithm, the risk prediction error level in the financial market remains within a relatively low range. From the perspective of practical applications, the financial market investment portfolio selection and risk prediction based on SVM algorithm has strong feasibility.

Life insurance with insurance capital funds as a form retirement savings: Determinants for the self-employed

Reduction of the public pension system generosity should encourage all future retirees to accumulate private retirement savings. They have many options in this area, both dedicated pension programs (pension pillars), and a whole range of financial market investment instruments (non-pillar solutions). The main objective of the paper was the empirical identification of factors that determine the level and propensity to save in the form of life insurance with insurance capital funds for retirement purposes by self-employed persons in Poland. The microeconomic perspective of considerations was adopted in the research process. On the basis of a review of economic literature, a set of individual characteristics that affect savings decisions of natural persons was distinguished, then an attempt was made to find out whether the same groups of factors also determined the individual decisions of self-employed persons regarding saving for retirement in the form of insurance capital funds. The following research hypothesis was verified: Ownership of retirement savings in the form of life insurance with insurance capital funds by self-employed natural persons in Poland is determined both by social and economic factors, and the impact of these factors varies. The empirical study showed that the accumulation of retirement savings by self-employed persons in the form of life insurance with insurance capital funds was the least important way to supplement the future pension from the public pillar. Self-employed persons are characterized by a relatively high propensity to save for retirement (higher than the average propensity to save in Poland), prefer non-pillar forms of collecting voluntary savings for retirement, primarily in the form of real estate. The strength of the social and economic factors varies.

The Impact of Stock Selection, Market Timing and Equity Fund Size on Equity Funds Performance during Covid-19

Investors in Indonesia pay attention to the financial market's investment tools, including mutual funds. Some mutual funds even provide a higher return on investment than alternative stock investments, with a lower level of risk be-cause investment managers properly manage them. This research aims to determine how stock mutual fund success is affected by factors such as stock selection, market timing, mutual fund size, and Covid-19, with Covid-19 serving as a moderator. Purposive sampling was utilized to conduct research on Indonesian equity funds. This study's sample consists of equity funds administered by fourteen investment management firms authorized and regulated by the Financial Services Authority (OJK). Panel data regression analysis in Eviews is used to examine the information. It was discovered that neither mutual fund size nor Covid-19 played a statistically important role in determining the success of equity funds. However, equity fund returns are significantly influenced by company picking and market timing. As a supplementary benefit, Covid-19 can significantly reduce the beneficial effects of overly optimistic stock picking on the returns of equity funds. This research also demonstrates that the effects of mutual fund size and market timing on stock fund returns are not reduced by using Covid-19.

Penerapan Model Markowitz dalam Memperoleh Portofolio Optimal di Pasar Saham IDX30

Investment in financial market is inextricably linked to risk. The risk cannot be eliminated, but indeed it can be minimized. By using Markowitz model, investor can gain optimal result while taking on acceptable risk. This study intends to examine the findings of optimal portfolio construction using Markowitz model on IDX 30. The method was quantitative descriptive. The population was all companies listed on IDX 30. Then, there were three companies chosen as the sample. The investigation of the three stocks yielded two efficient portfolios. First were the stocks of PT Bank Negara Indonesia, Tbk. and PT Astra International. The second was stocks of PT Bank Negara Indonesia, Tbk. and PT Adaro Energy Indonesia, Tbk. Each stock provided a return of 1.03 % with the risk level of 7.75%, and 4.4% with the risk level of 8.49%. The conclusion is that by using these two portfolios, investor can get optimal expected returns with the degree of risk comparable to individual equities. Thus, it is suggested for the investor to apply the calculation of Markowitz model on Indonesia Stock Exchange over a longer period than the one used in this study. It is also suggested for them to select the portfolio in accordance to their preferences.