Financial Market Research Articles

Impact of country-specific business integrity and firm-specific ESG on earnings quality: evidence from EU civil law jurisdictions

Purpose This paper aims to examine whether variations in country-specific business integrity (BI) and firm-specific environmental, social and governance (ESG) dimensions can explain variations in earnings quality (EQ) in Northern and Southern EU civil law countries. Design/methodology/approach Regarding EQ, the analysis builds on the “small gain, small loss” (SGSL) model of Burgstahler and Dichev (1997) and Burgstahler and Chuk (2015). The authors explain SGSL with the BI. Southern Europe or “Club Med” is typically associated with a less rigorous institutional regime than Northern Europe. Findings Results evidenced higher EQ in the Northern EU compared with the Southern EU. Furthermore, EQ is explained successfully with the Business Integrity Index (BII) and ESG. The results suggest that BII and ESG represent different dimensions, and, therefore, both should be included in the models explaining EQ. Practical implications The results show that the Northern EU civil law countries have higher EQ compared with the Southern EU civil law countries. The difference is explained by the BII variable. For the Southern EU, legislators and other public policy decision-makers should build up and apply tools to limit and fight corruption in those jurisdictions. The impactful elimination of corruption would, in turn, establish a firmer basis to foster ethical behavior and financial market sophistication developments. Originality/value The study offers additional insights on the determinants of EQ in the EU civil law countries. The prior literature has argued that, categorically, in common law countries firms engage in higher-quality reporting than those in civil law countries. The results evidence that EQ varies within the EU civil law countries; that is, a country’s BI and firm-specific ESG contribute to the explanation for EQ. A more specific explanation for the reasons in the EQ “within” civil law jurisdictions could be related to legislators and other public policy decision-makers in charge of establishing regimes and public policies supporting high-quality accounting.

On penalized goal-reaching probability minimization under borrowing and short-selling constraints

Abstract We consider a robust optimal investment–reinsurance problem to minimize the goal-reaching probability that the value of the wealth process reaches a low barrier before a high goal for an ambiguity-averse insurer. The insurer invests its surplus in a constrained financial market, where the proportion of borrowed amount to the current wealth level is no more than a given constant, and short-selling is prohibited. We assume that the insurer purchases per-claim reinsurance to transfer its risk exposure to a reinsurer whose premium is computed according to the mean–variance premium principle. Using the stochastic control approach based on the Hamilton–Jacobi–Bellman equation, we derive robust optimal investment–reinsurance strategies and the corresponding value functions. We conclude that the behavior of borrowing typically occurs with a lower wealth level. Finally, numerical examples are given to illustrate our results.

Carbon omission and financial market sustainability via government effectiveness: a cross-culture comparison of OECD and Asian emerging economies

PurposeFinancial market sustainability is gaining attention as investors and stakeholders become more aware of environmental, social and governance issues, pushing demand for responsible and ethical investment practices. Therefore, this study aims to investigate the impact of carbon (CO2) emissions from three sources, oil, gas and coal, on the stock market sustainability via effective government policies.Design/methodology/approachThe eight countries belong to two different regions of world: Asian economies such as Pakistan, India, Malaysia and China, and OECD economies such as Germany, France, the UK and the USA are selected as a sample of the study. The 22-year data from 2000 to 2022 are collected from the DataStream and the World Bank data portal for the specified countries. The generalized methods of movement (GMM) and wavelet are used as the econometric tool for the analysis.FindingsOur findings show that the CO2 emission from coal and gas significantly negatively impacts stock market sustainability, but CO2 emission from oil positively impacts stock market sustainability. Moreover, all the emerging Asian economies’ CO2 emissions from coal and gas have a much greater significant negative impact on the stock market sustainability than the OECD countries due to the critical situation. However, the government’s effective policies have a positive significant moderating impact between them, reducing the effect of CO2 emission on the stock market.Research limitations/implicationsThis study advocated strong implications for policymakers, governments and investors.Practical implicationsEffective government policies can protect the environment and make business operations suitable, leading to market financial stability. This study advocated strong implications for policymakers, governments and investors.Originality/valueThis study provides fresh evidence of the government’s effective role to control the carbon environment that provide the sustainability to the organizations with respect to OECD and emerging economy.

Exploring the predictive power of artificial neural networks in linking global Islamic indices with a local Islamic index

This study aims to analyze the correlations and information flow between a local Sharia-compliant index and global Sharia-compliant indices using Artificial Neural Network (ANN) models, shedding light on the integration of international and national Sharia-compliant markets. Given recent market conditions and uncertainties at both local and global levels, the research investigates the predictive power of ANNs and examines the relationship between the Dubai Financial Market Sharia Index (DFMSI) and three well-known global Islamic indices: the Dow Jones Islamic Market World Index, the Standard and Poor’s Global Sharia Index, and the Financial Times Stock Exchange Sharia All World Index. By incorporating data from multiple global Sharia indices, the study expands data sources beyond the local market, providing a comprehensive analysis of factors influencing the DFMSI’s price. This approach reduces reliance on a single dataset and strengthens the robustness of the research findings. Additionally, the inclusion of the three global Sharia indices offers benefits such as access to global market insights, risk management, and practical applications for investors. The study demonstrates that ANNs, particularly the Nonlinear Autoregressive with External Input Neural Network (NARX), outperform classical models in accurately predicting the DFMSI. This research contributes significantly to the understanding of Sharia-compliant investments by providing a comprehensive analysis of how multiple global indices affect a local market index. It also offers valuable insights for investors and portfolio managers, suggesting that the integration of advanced machine learning models can enhance decision-making processes and improve risk management strategies.

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.

Is a Rural Entrepreneurial Ecosystem Conducive to the Improvement of Entrepreneurial Performance? Evidence from Typical Counties of Rural Entrepreneurship and Innovation in China

Rural entrepreneurship is an important means to solve the problem of “rural decline” and is also the focus of the “rural revitalization” strategy. The rural entrepreneurship ecosystem directly affects entrepreneurial performance. Based on the configurational perspective, using the fuzzy-set qualitative comparative analysis (fsQCA) method, taking 85 typical rural innovation and entrepreneurship demonstration counties in China as research samples, this study explores the impact path of the rural entrepreneurship ecosystem composed of multiple factors on entrepreneurial performance and the complex causal mechanisms behind it. The results show that market size, human capital, financial capital, infrastructure (both hardware and software), and government scale cannot individually constitute the necessary conditions for high or non-high rural entrepreneurial performance; there exist two pathways driving high entrepreneurial performance in rural areas: a market-driven financing-and-intelligence integration pathway and a government-supported infrastructure-assisted pathway. Under certain conditions, there is a substitution relationship between rural entrepreneurial market allocation and government intervention; there are two paths driving non-high rural entrepreneurial performance, which are summarized into market–financing suppression and market–government suppression according to the core driving factors. By systematically analyzing the impact of the rural entrepreneurial ecosystem on entrepreneurial performance, and explaining the intrinsic logic and path of high and non-high entrepreneurial performance based on the configurational perspective, this paper provides a decision-making reference for further enhancing the entrepreneurial performance in rural China and realizing rural revitalization.

Research on the Correlation between the Movement of the Dollar and the Price of Gold

Abstract. Gold acts as a hedge to protect investors' assets. The U.S. dollar is a global currency and has an important place in international trade. Oil, on the other hand, is a non-renewable resource and an important international resource with unstable prices. This study used price data for the U.S. dollar, gold and oil from 2000 to 2023 to analyze the movement of gold, U.S. dollar and oil prices. The experiment uses a regression model to determine the effect of the dollar on the price of oil and gold. The study found a significant negative correlation between the U.S. dollar and the price of gold and an insignificant negative correlation with oil between 2000 and 2014. Between 2015 and 2023, there is a change in U.S. monetary policy, which leads to a weakening of the negative price correlation between gold and the U.S. dollar, but U.S. dollar still with the negative correlation with oil remaining weak. These results suggest that buying gold is the best way to protect your assets in times of financial crisis or market instability, but the US dollar and oil can change in price due to macroeconomic and political factors. To some extent these data provide a reference value for investment in the coming year.

The Impact of Asset Specificity on Corporate Tax Avoidance: Do Financial Constraints and Product Market Power Matter?

The Impact of Asset Specificity on Corporate Tax Avoidance: Do Financial Constraints and Product Market Power Matter?

Monetary and Fiscal Policy Impacts on the Indian Sovereign Bond Market: A VAR Approach

This study analyses the dynamic relationship between yield curve behaviour and the macroeconomy in India, with a focus on both monetary and fiscal policy impacts. Using the monthly data on yields of Treasury bills and government securities from April 2000 to March 2020, we employ principal component analysis to extract the three yield curve factors—level, slope and curvature. We then use an unrestricted vector autoregressive model to analyse the relationship between these three yield curve factors and macroeconomic variables: inflation, GDP growth, exchange rate and monetary and fiscal policy indicators. Our findings reveal a bidirectional causality between yield curve factors and macroeconomic variables. Monetary policy plays an important role in shaping the yield curve, with short-term rates having more pronounced effects than long-term rates. Notably, this study is among the first to incorporate fiscal policy indicator in the Indian context, providing a more comprehensive understanding of policy impacts on the sovereign bond market. Our results offer valuable insights for policymakers and investors, showing the interrelationship of fiscal and monetary policies with bond market dynamics in emerging economies. This research contributes to the growing macrofinance literature and enhances our understanding of financial market dynamics in a developing economy. JEL Classification: E430, C32, G120, E44

Comparative Analysis of Mint vs Business Standard Newspaper in Ahmedabad

This newspaper caters to readers with a strong interest in business news, particularly in India. Leaning towards a national perspective, Mint prioritizes comprehensive financial journalism and market analysis. Their content is tailored for readers who want to stay informed about broader economic trends and make informed financial decisions. This might translate to a stronger pulse on the city's business environment and a quicker response to local developments. They likely have a print edition readily available in Ahmedabad and a digital edition with subscription options. Primarily a national publication, Mint's availability in Ahmedabad might be limited to the digital sphere. While they might offer print editions delivered to major cities, their local presence might be less pronounced than Business Standard's. They likely have a welldeveloped online platform with free and paid subscription options. Both newspapers have established reputations, but their writing styles can differ. Mint might have a more concise and analytical approach, while Business Standard could offer a more narrative style. This can give you valuable insights into how others perceive their strengths, weaknesses, and suitability for different reader preferences. If a national perspective on financial markets and concise analysis is your focus, Mint might be a better fit. If you prioritize in-depth business news and local coverage, Business Standard could be ideal

Nexus between Financial Markets and Crude Oil Prices: Evidence from Selected GCC Countries

Nexus between Financial Markets and Crude Oil Prices: Evidence from Selected GCC Countries

The Impact of White Noise on Chaotic Behavior in a Financial Fractional System with Constant and VariableOrder: A Comparative Study

In this study, we investigated the impact of white noise on the chaotic dynamics of a financial system with Caputo fractional derivatives of constant- and variable-order. We solve thesefractional financial systems numerically. We analyze the chaotic behavior of these fractional-order hyperchaotic systems through simulations, study the effects of white noise on chaotic dynamics, and provide a comparison between fractional hyperchaotic systems of constant and variable orders. The study reveals that white noise can either amplify or suppress chaos, with significant differences observed between the constant- and variable-order cases. We obtained numerous intriguing graphical findings for the model by evaluating various scenarios. The findings provide useful information for better understanding financial market dynamics in the presence of noise.

Collapse of Silicon Valley Bank: Impacts on Startups & Global Financial Markets, Comparison Between Lehman Brother and Silicon Valley Bank Crises

The sudden collapse of Silicon Valley Bank (SVB) sent shockwaves through the startup ecosystem and the global financial landscape. This research delves into the factors that led to SVB's downfall, exploring how its unique role in supporting tech startups became a double-edged sword. By examining the parallels between SVB's crisis and the infamous collapse of Lehman Brothers in 2008, we uncover important lessons about risk management and the fragility of financial institutions. The fallout from SVB's failure didn't just affect its immediate clients; it rippled through the entire venture capital community and beyond, prompting startups to rethink their banking relationships and funding strategies. We reflect on the broader implications for the financial industry and the lessons learned about the need for diversification and sustainable growth. Ultimately, this research is a reminder of the interconnectedness of our financial systems and the human stories behind the numbers. As we navigate an ever-changing economic landscape, the insights gained from SVB's collapse will shape the future of banking and entrepreneurship for years to come.

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.

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.

The true position of the Russian financial market

Subject. The article addresses the true position of the Russian financial market. Objectives. The purpose is to reveal the true position of the Russian financial market in the context of sanctions. Methods. The study rests on the application of general scientific methods, primarily, the analysis and synthesis of data, and special economic and mathematical methods, like correlation and regression analysis. Results. The paper established that the true position of the Russian financial market under sanctions is associated with a focus on capital withdrawal to a greater extent by non-financial organizations, at the expense of domestic borrowings through debt securities, and shifting debt to households. Conclusions. The revealed characteristics of the Russian financial market, describing its true position under the sanctions, enable the expert community to correctly determine its parameters, and the monetary authorities to choose the optimal financial instruments.

Moroccan SMEs and the Casablanca Stock Exchange: Governance Issues and Prospects for Introduction

This research paper examines the relationship between corporate governance mechanisms and Moroccan SMEs' access to the Casablanca Stock Exchange. It highlights the importance of SMEs in the Moroccan economy, their key role in value creation and economic growth, and the challenges they face in accessing finance, particularly through the capital markets. The text also explores corporate governance systems, comparing open (Anglo-Saxon) and closed (continental European) models, and situates Morocco in a closed system with a high concentration of capital in large companies. Cross-tabulation and multiple correspondence analysis reveal significant correlations between IPO and various variables, such as the presence of an audit committee, a corporate governance body and knowledge of good governance codes. The econometric model, based on binary logistic regression, confirms that the presence of an audit committee is the main determinant of IPO, significantly increasing the probability of listing. On the other hand, other variables such as beliefs and values, the management system, capital concentration or the management market did not show any significant correlation, highlighting that the quality of internal governance plays an essential role in access to the financial market in Morocco.

Do Green Bonds Issue Statistically Significant Effect on the Indebteness’ European Companies’ Performance?

Objectives: The objective of this paper is to analyze the impact of issuing Green Bonds on the financial performance of European energy companies. This paper analyses the indebtedness of 30 European companies in the energy sector and verifies if there is any relationship between the Green Bonds issue and companies’ value between 2015 and 2022. Theoretical Framework: Green Bonds have been increasing their visibility in the financing market, representing an innovative debt instrument, becoming a way of reducing the pressure of bank loans and the associated financial costs. Green Bonds present themselves as an important choice for economic agents, with a positive impact on the financial performance of financed projects expected. We therefore thought it would be interesting to analyze whether green bonds have a statistically significant effect on the debt performance of European energy companies. Method: For this purpose, the Bloomberg database was used, and a sample of bonds from Euronext ESG Bonds. A Pooled OLS and Random model were applied. The software chosen for analyzing the empirical model was R Studio. The Chi-Square independence test and Cramer's V were also applied. Results and Discussion: Results indicate that in the years in which energy companies issued Green Bonds they had a better performance, measured by the ROE indicator. The internal variables TTA, LTA, STA, EAF and GAF are statistically significant in the performance (ROE) of the Energy European Companies. The Chi-Square independence test and Cramer's V degree of association between the debt and DUMMY variable were also applied. The conclusion is that when Green Bonds are issued, indebtedness decreases. Issuing Green Bonds is a more sustainable alternative to traditional sources of finance. There is a lot of research in this area, and it is quite diverse. There are researchers interested in this topic on all continents. In this sense, given the difference in Green Bonds legislation and cultural aspects, it is not always straightforward to carry out a comparative analysis of the results obtained. Research Implications: Green finance has become an important subject for researchers and promotes sustainable economic development. The goal is financing green projects, contributing to mitigation and adaptation to climate changes. Represent a resent an innovative debt instrument. In other words, it is an important choice for economic agents. Originality/Value: It's the first study of the European Union's energy companies that emit Green Bonds. It should be noted that issuing Green Bonds is not only important for environmental and sustainability issues, but also means reducing bank loans, which have high financial costs. More sustainable forms of financing are important for growth and keeping up with the changes the world is going through. Companies must be aware of these new forms of financing as routine bank loans are not always the best way to meet companies' financial needs.

The Effect of Financial Leverage, Profitability and Dividend Policy on Firm Value

This research provides valuable insights into the factors influencing company value within the manufacturing sector, specifically the cement subsector in Indonesia. Financial leverage, profitability, and dividend policy are key variables examined, as they significantly impact a company's financial health and market perception. Financial leverage reflects a company’s reliance on debt financing relative to equity, and the study shows that higher leverage can positively affect company value if managed effectively, thereby increasing returns for shareholders. Profitability, often measured through indicators such as Return on Assets (ROA) or Return on Equity (ROE), also plays a significant role in enhancing company value, as it reflects efficient resource management and attracts investor interest. Additionally, a consistent dividend policy reinforces the company’s reputation and draws investors, contributing positively to company value in the stock market. The findings emphasize that cement subsector companies with balanced leverage, solid profitability, and a consistent dividend policy tend to perform better in terms of company value, providing essential insights for stakeholders in optimizing strategies to maximize company value.

Enhancing Income for Farmer Producer Organizations (FPOs) through Ginger Value Addition: Opportunities, Strategies and Market Insights

Ginger (Zingiber officinale) is one of the most valuable spices globally, known for its culinary, medicinal, and industrial uses. As a primary cash crop in many regions, it offers substantial income opportunities for smallholder farmers. However, the traditional farming and marketing methods often limit the potential earnings of smallholder farmers. This review explores the concept of value addition in ginger, focussing on post-harvest processing, product diversification, packaging innovations, and market expansion strategies. It further highlights how Farmer Producer Organizations (FPOs) can leverage these techniques to improve profitability and sustainability. The paper also discusses the challenges faced by FPOs, such as financial constraints and market access barriers, while highlighting opportunities supported by government policies and technological advancements. Advanced processing techniques, improved package, branding, and exploring new markets would achieve profitability and sustainability of FPOs. The reduction of value chain and directly paying to the farmers give opportunity to the consumers to get the ginger products at better prices.