Financial Market Performance Research Articles

FINANCIAL MARKET PERFORMANCE AND FOREIGN PORTFOLIO INFLOWS TO NIGERIA: AUTOREGRESSIVE DISTRIBUTIVE LAG APPROACH

This study examined the relationship between financial market performance and foreign portfolio investment in Nigeria. The study specifically assessed whether there is a long run and short run causal relationship running from financial market performance to foreign portfolio investment in Nigeria. Financial market performance was measured using stock market performance, stock market liquidity and total new issues. The data for the study were source from the CBN statistical bulletin for the period 1984 to 2015. The exploratory design was combined with the ex-post facto research design; the data collection method was desk survey. The study used the Autoregressive Distributive Lag (ARDL) technique for data analysis. Findings from the analyses showed that financial market performance has no long run causal relationship with foreign portfolio investment in Nigeria. Also, stock market performance and stock market liquidity have no short run causal relationship with foreign portfolio investment in Nigeria. Lastly, total new issue has a short run causal relationship with foreign portfolio investment in Nigeria. The study on the basis of these findings recommends that stock market regulators should through conscious enlightenment campaigns encourage more domestic participation in the market to enhance the market performance, deepening and growth as this will strengthen its long run causality with FPI. Lastly, stock market regulators should through conscious risk reduction policies formulation and implementation reduce the riskiness of investing in the stock market to increase transactions and liquidity in the stock market, boost the rate of turnover to investors as this will attract foreign portfolio investors to the Nigerian financial market.

Government Certainty Index and Stock Market Outcomes

We develop an index, termed the Government Legislative Index (GLX), that measures the ability of the US Government to execute legislation. In essence, the GLX measures the ability of the President and the ruling party to successfully convert proposed legislation into rules and regulations. Additionally, the index provides important insights about stock market movements. One, the GLX comoves positively with stock market performance, and two, for high values of GLX, it comoves negatively with stock market volatility. It also outperforms related indexes in these contexts. Three, we find that the relationship between the GLX and financial markets varies by industry sector and stock market capitalization (deciles). Four, within the context of presidential terms, the GLX is higher during the second-term of a presidency, and for Democratic presidents, vis-a-vis Republican presidents, the GLX is higher by as much as 6.4%, thus, contributing insight into the presidential puzzle. In sum, the GLX enhances our understanding of overall market uncertainty and is a valuable predictor of financial market performance.

The Influences of Sustainability Report and Corporate Governance toward Financial and Entity Market Performance with Political Visibility as Moderating Variable

The aim of this research was to identify the effect of corporate governance and sustainability report on the financial performance of entities, and corporate governance and sustainability report on the market entity with political visibility as moderating variable. Sustainability report was measured by a dummy variable by the Corporate Governance Scorecard with Indonesian Institute for Corporate Directorship (IICD). Then, financial performance as measured by profitability ratio (ROA) and Liquidity Ratio (CR), as well as the market performance were measured using Tobin’s Q. Meanwhile, the political visibility was measured by the log of total assets. The analysis of the data used Path Analysis method with Structural Equation Modeling (SEM). The analysis shows four results by using political visibility as moderating variable. First, the quality of corporate governance affects the financial performance. Second, the quality of corporate governance influences Tobin’s Q. Third, the sustainability report has an effect on the Return on Assets and current ratio. Last, sustainability report also affects Tobin’s Q.

Inventory Investment, Financial Leverage and Firm Performance: Evidence from Chinese Listed Companies of Real Estate

According to the descriptive statistical analysis and empirically test based on samples of 2007-2015 Chinese listed companies of real estate, I find that the inventory accounted for more than half of the total amount of assets and increased heavily; the inventory investment turnover is slow, the asset-liability ratio is higher; ZZR, ZFZ and YXFZ have a significantly negative effect on ROA; SYXY and YHXY have a significantly positive effect on ROA; CTC, ZFZ, YXFZ, SYXY and YHXY have a significantly negative effect on TBQ; ZZR has a significantly positive effect on TBQ. These findings show that the destocking and deleveraging will help to improve the financial performance and market performance of Chinese listed companies of real estate.

Gender Diversity and Company Performance

The objective of this study is to find the empirical evidence of the influence of gender diversity on the company performance, which will be measured with financial performance using ROA and market performance using Tobins’ Q. This study used sample of 64 listed companies on Indonesia Stock Exchange (BEI) year 2015. Sample in this study is selected using purposive sampling method. While multiple regression analysis is used to test the four hypotheses developed in this research. The result of this study shows that board of commissioner’s gender and board of director’s gender does not influence financial performance and market performance.

LOYALITAS NASABAH DAN KINERJA PERBANKAN DI INDONESIA

The purpose of this study was to investigate the impact of customer loyalty on firm performance in the banking industry in Indonesia. This study used a sample of banking firms listed on the Indonesian Stock Exchange. The data was processed and analyzed by Partial Least Square (PLS). We hypothesized that firm’s financial performance, market performance, and non-financial performance were positively affected by customer loyalty. The results provided evidence which was consistent with the hypothesis. It showed that customer loyalty provided incremental information to the firm’s performance that consisted of financial performance, market performance, and non-financial performance.

International Financial Transactions and Corporate Performance in a Dynamic Financial Market (Evidence from Nigerian Financial Sector)

The primary aim of this study is to examine the relations between international financial transactions and corporate performance in a dynamic financial market within the banking industries using Annual Time Series Data of the Variables. The annual time series data were sourced majorly from central bank of Nigeria statistical bulletin. This study covers 33 years period between 1980-2013. Econometric techniques of ordinary least square (OLS) Augmented were employed in the analysis. Return on investment was used as a measure of corporate performance. The international financial transactions measure includes (growth of cross-border credits to total deposit money banks assets, growth of non oil export to deposit money bank asset, cross border banking claims to total deposit money bank assets and exchange rate) as independent variables. The results indicate that corporate performance in a financial market which is measured by return on Investment has a positive and significant relationship on growth of cross boarder credit to total deposit money banks assets, growth of non-oil export to deposit money banks assets, cross boarder banking claims to total deposit money bank assets and ratio of exchange rate of Naira to Dollar. Consequently, it is recommended that there is every need for the deposit money banks management to strengthen their international financial transactions management scope as the indicators studied largely exhibit strong influence on the performance of deposit money banks.

Financial market performance: An influence of personal remittances

This study examined the relationship between banking sector development and personal remittances in Zambia using the vector error correction model (VECM) approach with annual time series secondary data ranging from 1980 to 2014. Literature has found out that the relationship between financial sector development and remittances is fourfold: (1) financial sector development influences remittances inflow into the receiving country, (2) remittances positively influences financial sector development, (3) there is a feedback relationship between financial sector development and remittances inflow and (4) there is no or negligible relationship between the two variables. The study found out that there existed a long run causality relationship running from either banking sector development towards personal remittances or from personal remittances towards banking sector development in Zambia during the period under study. The short run causality from either side to another could not be confirmed in this study. It is against this background that the current study encourages Zambian authorities to stimulate banking sector development in order to increase personal remittances inflow. They should also design sustainable remittances harnessing policies as that will go a long way in as far as promoting banking sector development is concerned.

РЕФОРМУВАННЯ ДЕРЖАВНОГО РЕГУЛЮВАННЯ ТА НАГЛЯДУ ЗА ФІНАНСОВИМИ УСТАНОВАМИ В УКРАЇНІ

Urgency of the research. Introduction of efficient system of state regulation and supervision of financial institutions is key direction of state policy of Ukraine for creating stable financial system. Target setting. Difficult situation in financial sector of Ukraine, low financial stability of financial institutions and high sensitivity to risks tell about necessity of reforms in state regulation and supervision of financial institutions. Actual scientific researches and issues analysis. Native and foreign scientists pay much attention to mechanisms of state regulation and supervision of financial services markets, including: O. Baranovsky, S. Barnes, V. Korneev, I. Krupka, V. Mischenko, S. Naumenkova, T. Smovzhenko, K. Styroch, M. Tailor, V. Fedosov, and others. Uninvestigated parts of general matters defining. At the same time existing scientific researches don’t provide proper review of justification of efficient institutional model for Ukraine. The research objective. Investigation of existing models of state regulation and supervision of financial institutions in the world and justification of efficient institutional model for Ukraine. The statement of basic materials. The results of investigation show that in terms of open financial market existing in Ukraine model doesn’t provide efficient supervision of financial institutions. Conducted critical analysis of existing models of state regulation and supervision of financial institu-tions helped to determine advantages and disadvantages of each model and justify the necessity of reforms in state regulation and supervision. Conclusions. Is suggested the way of transformation of existing in Ukraine sectoral model into efficient system of state regulation and supervision of financial institutions by combining model of concentration of all monitoring functions in one monitoring institution with assignment of supervising responsibilities under systemically important financial institutions on individual and consolidated basis on National bank of Ukraine.

Mutual funds and market performance: New evidence from ASEAN markets

ABSTRACTThe contemporaneous growth in ASEAN financial markets over the last two decades raises empirical questions regarding the role of institutional investors in financial market performance. Our study examines the dynamic relationship of aggregate mutual fund flows with market performance variables, i.e. stock market returns and volatility in ASEAN financial markets. Findings suggest that equity and balanced flows have a positive (negative) relationship with market returns (volatility), whereas bond and money market flows have a negative (positive) linkage with market returns (volatility). Furthermore, equity and balanced mutual funds contribute towards reducing market volatility. In addition, mutual funds respond concurrently to risk-related information as compared to returns-related information in the stock market. We also identify that risky securities have a stronger relationship with the market variables than less risky securities do. Moreover, investors direct flows away from equity-based funds to fixed income-type funds in times of high market risk.

Financial Depth and Exchange Rate Volatility

It is empirically well established that financial depth increases the power of the financial system and helps both government and the private sector to have access to adequate funds without a noticeable change in asset prices and exchange rates. Exchange rate uncertainty is considered one of the many factors that affect financial market performance. In this study, we try to determine the short-run and long-run effects of exchange rate volatility on financial depth in 26 selected countries, classified as developed, developing, and emerging economies over the period 1980-2011. Our findings indicate that exchange rate volatility has short-run and long-run effects in the majority of countries in this study. We found for 16 countries out of 26, financial depth responds significantly to exchange rate volatility (nine positive, seven negative). Furthermore, using the bounds testing approach shows that exchange rate volatility has significant impact on financial deepening in 20 out of 26 countries in the short run. The results show that despite similar classification and grouping, the estimated results could be very country specific depending on each country’s particular characteristics. We suggest that for every country, it is crucial to choose and implement appropriate financial market and exchange rate policies.

BALANCING ACT: CENTRAL BANKING POLICIES AND FINANCIAL MARKET PERFORMANCE IN EMERGING ECONOMIES - A CASE STUDY OF INDIA

This research study investigates the intricate relationship between central banking policies and the performance of financial markets in emerging economies, with a specific focus on the case of India. Central banks in emerging economies play a pivotal role in maintaining economic stability, and their policies have far-reaching implications for financial markets. Through comprehensive analysis, this study explores the impact of monetary policies, interest rates, and regulatory measures on India's financial market performance. The findings shed light on the challenges and opportunities faced by emerging economies in balancing growth and stability in the financial sector.

Predictability of Growth in Emerging Markets: Information in Financial Aggregates

This paper tests for predictability of output growth in a panel of 22 emerging market economies. We use pooled panel data methods that control for endogeneity and persistence in the predictor variables to test the predictive power of a large set of financial aggregates. Results show that stock returns, the term spread, default spreads and portfolio investment flows help predict output growth in emerging markets. We also find evidence that suggests that global aggregates such as the performance of commodity markets, a cross-sectional firm size factor, and returns on the market portfolio contain information about the future state of the economy. We benchmark our results against those from the U.S. and find that there are differences in the ability of financial markets in predicting economic growth. Our results generalize to emerging markets previous findings in the empirical macro-finance literature on the linkages between financial market performance and the real economy.

QUARTERLY OUTLOOK ON MONETARY, BANKING, AND PAYMENT SYSTEM IN INDONESIA: QUARTER I, 2016

The growth of domestic economy in Indonesia is lower than forecasted in first quarter of 2016.However, the economy is expected to revive and will grow higher in the next quarter, with a well maintained financial system stability. The limited growth of government consumption as well as private investment are the main reason for the slower growth in this quarter, eventhough the government spending on capital goods accelerates. The growth of private consumption remains high with reasonable price movement. With the increase of several commodities’ export, the external performance of export in aggregate also increased. On the other hand, the financial system stability was stable due to viable banking system and better financial market performance. The stability of Rupiah was well maintained, supported by positive expectation on domestic economy and the lower risk of the global financial market.

Financial market performance and growth in Africa

Financial market performance and growth in Africa

Exchange Rate Flexibility, Financial Market Openness and Economic Growth

With global recovery not in sight, along with calls for stronger structural reform, international policy coordination is again under spotlight. Correcting global imbalance would contribute towards closing the demand gap. Emerging economies in particular should allow greater exchange rate flexibility and not intervene in the foreign exchange market to reflect fundamentals. Yet, the impact of greater exchange rate flexibility is unclear as they also struggle to keep their growth momentum alive and hedge against greater exposure to potential capital reversal than ever before. With the loss of monetary policy independence, emerging markets (EMs) are running out of policy options. Against this background, unless international policy coordination is fundamentally recast, a comprehensive review of all emerging market economies’ policy options are in order, including both macro policy instruments, micro measures, and global safety net aimed at attaining the best possible solution to escaping global recession.

The ‘trilemma’ hypothesis and policy implications for Fiji

type=main> This paper examines the trilemma constraint for Fiji; that is, we investigate how trilemma policy variables were used to address policy trade-offs among the three objectives of exchange rate stability, monetary autonomy, and financial openness. Fiji makes an interesting case because of its policy orientation towards a stable exchange rate and adequate foreign reserves. Our results suggest that the trilemma constraint is binding for Fiji and policy priority is given to exchange rate stability and monetary policy independence, while less emphasis is placed on financial market openness. We also find that the actual policy levels do not deviate substantially from optimal levels, which evidences that Fiji's policy management has been efficient under the trilemma constraint. Finally, we also study the effects of various trilemma policy combinations and foreign reserve holdings on output growth and inflation.

Analysis of the Impact of Governance on Bank Performance: Case of Commercial Tunisian Banks

Most studies that have investigated the relationship between governance and performance of banks were interested in the developed countries and to a lesser extent, the emerging countries. In this study, we tried to look from an empirical perspective, at the impact of governance through some internal mechanisms, on the performance of banks in a developing country like Tunisia. According to Kolsi and Ghorbel (2011), the effect of governance on the financial and stock market performance is still unknown. This result goes in the same direction as that of Adjaoud et al. (journal compilation 15, 2007), leading to the lack of connection between governance and traditional performance measures. The empirical analysis is performed on a sample of eight Tunisian commercial banks listed on the Stock Exchange over the period 2000–2011; we can conclude that there is no standard governance structure and that each bank should adopt the appropriate governance structure to improve the performance of the financial market, in general, and the banking market, in particular. The verification of this central assumption in the Tunisian context, therefore, is the fundamental contribution of this study. It is for this reason that the results we, even modest, have achieved allow enriching the issue of the impact of some governance variables varying according to the chosen performance measurement, which is a neglected theme in the Tunisian context.

QUARTERLY OUTLOOK ON MONETARY, BANKING, AND PAYMENT SYSTEM IN INDONESIA: QUARTER IV-2015

Indonesia ‘s economy in the fourth quarter 2015 was marked by maintained macroeconomic and financial system stability, with a starting economic growth momentum. Macroeconomic stability reflected by lower inflationary pressures, a current account deficit in a healthy level, and manageable pressure on Rupiah. The stability of the financial system remains solid, underpinned by the resilience of the banking system and the relatively stong financial market performance. As the third quarter of 2015, economic growth in the fourth quarter 2015 increased mainly driven by government spending. Looking ahead, economic growth is expected to be higher, with the support of fiscal stimulus, particularly a faster implementation of infrastructure projects, and also with the increase of private investment

Financial Weakness and Product Market Performance: Internal Capital Market Evidence

AbstractUsing a data set of Korean business groups in the period 1999–2006, just after the Asian Financial Crisis, this study shows how business groups’ financial leverage can lead group-affiliated firms to lose market share to industry rivals. This analysis reveals that the negative effect of group leverage is greater when an affiliated firm is financially weak. Additionally, high group leverage is more detrimental to firms operating in fast-growing industries, discouraging affiliated firms from investing while encouraging their rivals. The results suggest that groups’ financial positions encompass a substantial strategic dimension of group-affiliated firms.