Financial Sector Research Articles

Application of Sensitivity Analysis for Multiple Attribute Decision Making in Lean Production System

Lean production is a dynamic process that is governed by a set of decision-making principles. The concept of MCDM has been widely used in lean production systems. In this paper, the methodology and approach of MADM, particularly focusing on Multi-Attribute Decision Making, encompass several key steps and considerations. To assess the degree of lean manufacturing implementation, a questionnaire was developed based on scholarly literature. The questionnaire consisted of 52 questions that assessed the implementation of four strategies: JIT, TPM, 5S Kaizen, and VSM. The study employed a three-stage elimination strategy, consisting of an elimination search and a TOPSIS-based ranking of lesions. Total Productivity Management was found to be the most effective and widely adopted approach among the 18 companies surveyed. TPM was the most widely adopted and effective waste reduction technique among the companies. The MADM ideology has significant future potential in various domains, including healthcare, supply chain management, energy and environmental management, financial sector, e-commerce, and marketing. This study provides insight into the practical application of waste reduction techniques by various industries and their potential benefits for a nascent company seeking to adopt such practices. These objectives aim to advance understanding, methodologies, and applications of MADM, particularly within lean production systems, while addressing challenges and leveraging advancements in technology for improved decision-making and performance optimization.

Comparison of Linear Regression and LSTM (Long Short-Term Memory) in Cryptocurrency Prediction

Abstract Cryptocurrency, particularly Bitcoin, has become a major topic in the financial and digital trading sectors due to its ability to facilitate direct transactions without intermediaries and the transparency offered by blockchain technology. However, the high volatility of Bitcoin prices necessitates accurate prediction methods to support better investment decisions. This research aims to compare the accuracy of Linear Regression and Long Short-Term Memory (LSTM) methods in predicting Bitcoin prices using historical data from Yahoo Finance. The research process begins with the collection of historical Bitcoin price data from September 17, 2014, to July 15, 2024, followed by data processing that includes cleaning and splitting the dataset into training and test data. Linear Regression and LSTM models are applied to the training data and tested to evaluate their performance in price prediction. The research findings show that the LSTM model significantly outperforms the Linear Regression model in terms of prediction accuracy. The LSTM model records much lower Mean Squared Error (MSE) and Root Mean Squared Error (RMSE), as well as perfect R² scores on both datasets, demonstrating its high precision in prediction. In contrast, the Linear Regression model shows higher errors and lower explanatory power of data variability. These findings indicate that LSTM is more effective in capturing temporal patterns and Bitcoin price fluctuations, offering better accuracy and potentially being more suitable for future cryptocurrency price analysis, providing better guidance for investors in this highly dynamic market.

The application of Bayesian inference under SAFE model

This paper responds to Professor Paolo Giudici's call for papers in ‘Safe Machine Learning’ and explores the application of Bayesian inference within the SAFE model framework, aiming to enhance the accuracy and reliability of environmental, social, and governance (ESG) factor analysis in the financial sector. The paper begins by introducing the basic concept of the SAFE model, which integrates ESG factors into the assessment of corporate credit ratings to promote sustainable development in the financial field. Furthermore, this paper discusses forecast estimation, uncertainty quantification, Gaussian processes, iterative optimization, and model robustness within the SAFE model framework. It is important to note that the SAFE model is not limited to the aforementioned applications; it also has the capacity to understand the model's extensive utility in other financial sectors, which can reflect the model's comprehensive scope.

Resource dependence and life expectancy in sub-Saharan Africa: Does financial sector stability break the curse?

Natural resource wealth can contribute to human and economic development if the revenues from natural resource sectors are effectively invested by the government. In particular, countries with abundant natural resources have the potential to experience significant development and improvements in their quality of life. This study first examines the impact of natural resource rents on life expectancy in sub-Saharan Africa. We then investigate the moderating role of the financial sector in this relationship. Using mainly the Generalized Moments Method in a panel of 44 Sub-Saharan African countries over the period 1990–2021, the results obtained in this paper reveal a negative effect of natural resource rents on life expectancy, supporting the resource curse-health hypothesis. However, the stability of the financial system moderates this relationship and makes it positive, at specific thresholds. These results are consistent with Hirschman's conjecture that production leakage is low in landlocked countries, but that there are stronger links with public revenues than with other sectors of activity. The ‘wealth channel’ lubricated by the financial sector that this study identifies calls for greater caution when adopting non-rentier policies in countries exploiting their natural wealth, specifically countries with low human capital. We suggest that a portion of resources should be allocated to financing human capital in order to increase life expectancy.

Applications of knowledge graph in medical and financial fields: Data integration and intelligent decision-making from an interdisciplinary perspective

With the rapid advancement of AI and deep learning technologies, knowledge graphs have emerged as a key technology for improving the performance of intelligent decision-making systems and driving interdisciplinary innovation. This article outlines the core principles and structure of knowledge graphs, including how they construct knowledge networks to support complex queries and intelligent reasoning. It reviews their innovative applications in the healthcare and financial industries, emphasizing their significant roles in data integration, decision support, and risk assessment. In the healthcare domain, knowledge graphs contribute to improving the accuracy of medical diagnoses, accelerating drug discovery, and enabling intelligent semantic searches. In the financial sector, they optimize risk management and aid in fraud prevention. The article also looks ahead to the future potential of knowledge graphs, stressing the importance of interdisciplinary collaboration and technological innovation in their development. It aims to provide valuable references for further research and application of knowledge graphs.

Understanding Consumer Decisions to Continue Using e-Wallets in Jabodetabek

The development of internet technology makes human activities easier and faster. One form of technological innovation in the financial sector is an electronic wallet (e-wallet) online payment system. At the beginning of its launch, some e-wallets provided consumers with massive promotions (spend money). However, currently, massive promotions are no longer offered by some e-wallets. This study aims to examine consumer intentions to continue using e-wallets even though the company currently no longer provides promotions as before. Adopting the Post Acceptance Model (PAM) to determine consumer sustainability factors when using information systems. This is achieved by examining the variables that affect satisfaction and the impact of satisfaction on the value of continued use of information systems on e-wallet applications. A total of 307 samples were collected by purposive sampling of e-wallet users who live or work in Jabodetabek. The data analysis method uses structural equation modeling. The results showed that satisfaction could influence the desire to continue using the e-wallet application felt after use, the perceived benefits received (perceived usefulness), and the enjoyment or pleasure felt in using the e-wallet application.

Stock Selection Analysis of Innovative Multifactor Model in New Energy Sector

As of 2024, China’s new energy sector has made significant progress, ranking first in the world in terms of installed photovoltaic (PV) and wind power capacity. The proportion of new energy in the energy mix has increased significantly, driving China’s energy transition and sustainable development. Meanwhile, with the rapid development of Internet technology, quantitative investment strategies based on artificial intelligence technology are expected to show great growth potential in the future financial sector. In this context, this paper will construct a multi-factor model with the help of machine learning, combine value analysis and technical analysis, select candidate factors, develop exclusive factors for the characteristics of the new energy industry, test the validity of the factors, construct a multi-factor stock picking strategy and carry out backtesting analysis. The results demonstrate that the strategy can effectively manage risks and achieve excess returns, which is theoretically and practically instructive for the construction of investment portfolios. The results provide an effective investment strategy reference for financial institutions such as banks, brokerage firms and fund companies.

PENGARUH RASIO KEUANGAN DAN FAKTOR LAINNYA TERHADAP NILAI PERUSAHAAN NON-KEUANGAN DI INDONESIA

The purpose of this research is to obtain empirical evidence about the effect of return on equity, debt to equity ratio, current ratio, firm size, dividend payout ratio, managerial ownership, institutional ownership, and free cash flow on firm value. This research uses samples from all companies except financial sector listed on the Indonesia Stock Exchange (IDX) from 2019 to 2022 with 65 listed non-financial companies used as samples in this research. This sample selection used the purposive sampling method with research data with a total of 195 data and analysis using multiple linear regression. The results of this research showed that return on equity and debt to equity ratio have positive effect on firm value. Higher return on equity shows that the company is generating higher profits and the profits can exceed the cost of equity, thereby giving a positive impression to shareholders which can increase firm value. Higher debt to equity ratio means that the company is more confident about the company’s prospects and increases the management discipline in managing company’s financial, which makes investors interested in buying shares, thereby increasing firm value. Other independent variables such as current ratio, firm size, dividend payout ratio, managerial ownership, and institutional ownership have no effect on firm value.

PENGARUH STRUKTUR MODAL DAN FAKTOR LAINNYA TERHADAP NILAI PERUSAHAAN NON-KEUANGAN DI INDONESIA

This study aims to analyze how the capital structure, institutional ownership, managerial ownership, profitability, company size, dividend policy, and current ratio influence the firm value. The research used all companies listed on the Indonesia Stock Exchange (IDX) except for the financial sector over a 3-year period, from 2020 to 2022. Purposive sampling was employed as the sampling method, and multiple regression analysis was used for data analysis. There were 65 companies and 195 data that met the research criteria. The research findings indicate that capital structure and profitability have a positive influence on company value. High capital structure and profitability lead investors to perceive that the company has promising prospects in the future thereby increasing firm value. Company size has a negative impact on company value because having substantial but idle assets can adversely affect company performance which results decreasing firm value. However, institutional ownership, managerial ownership, dividend policy, and current ratio do not affect firm value.

Risks, Regulations, and Impacts of FinTech Adoption on Commercial Banks in the United States and Canada: A Comparative Analysis

ABSTRACTThe growth of FinTech has increasingly attracted the attention of financial industry players. The speed and complexity with which new financial technologies have spread around the world have created regulatory challenges for the United States and Canadian authorities. Unlike the United States, where there is regulatory fragmentation and a supervisory instrument with regulatory relief, Canada has a more integrated regulatory approach managed by regulatory sandbox principles. The aim of this article is to study and compare the impact of FinTech adoption on commercial banks over the 2018–2023 period in the United States and Canadian FinTech ecosystems. The results essentially show that FinTech has a positive impact on commercial banks' performance and financial growth, and a negative impact on liquidity and financial risk. Our results present several contributions and mainly show that: (1) In the presence of multiple entry channels for FinTech startups, the impact of FinTech on financial performance is higher in the United States than in Canada. (2) Because of its regulatory approach, Canada lags behind the United States in the adoption rate of financial technologies. (3) Balance of power in the financial sector induces commercial banks not to consider FinTech startups as threats but rather as partners that offer opportunities for expertise and reduced regulatory costs. Finally, FinTech can be disruptive and presents many challenges for regulators given the complexity and speed of innovation it promotes.

The impact of digital financial development on corporate leverage ratio: The case of a-share listed non-financial enterprises in China's Shanghai and Shenzhen stock exchanges.

This study investigates the impact of digital finance on corporate leverage ratios. The study employed a large sample of China's Shanghai and Shenzhen A-share non-financial listed enterprises from 2011-2020. The study's results depict that the development of digital finance can significantly reduce the leverage ratio of enterprises. We empirically identified that digital finance affects the difference in the term structure of the corporate leverage ratio. It was found that the development of digital finance has a significant negative impact on enterprises' short-term and long-term leverage ratios. Moreover, our heterogeneity analysis shows that the negative effect of digital financial development on corporate leverage ratios is different in state-owned and non-state-owned enterprises, large-scale and small-scale enterprises, and high-leverage and low-leverage enterprises. Mechanism analysis shows that the development of digital finance can reduce corporate leverage by lowering financing costs, alleviating financing constraints, and weakening non-systemic risks. Therefore, policymakers should focus on developing and adopting digital finance by creating a supportive regulatory environment, improving access to digital financial services, and encouraging innovation in the digital finance sector. Finally, our results remain robust after addressing endogeneity issues and conducting robustness checks.

Navigating the Integration of Blockchain Technology in Banking: Opportunities and Challenges

Integrating blockchain technology within the banking sector represents a pivotal transformation, promising enhanced security, transparency, and efficiency in financial operations. This qualitative research employs a systematic review approach to investigate the current state, challenges, and prospects of blockchain adoption in banking, drawing insights from a comprehensive analysis of scholarly literature. Through a systematic search and review of relevant academic journals, conference papers, books, and reports, this study explores critical variables such as security, transparency, efficiency, challenges, opportunities, and impact associated with blockchain adoption in banking. Thematic analysis is the primary methodological approach to identify recurring themes, patterns, and relationships across literature, facilitating a nuanced understanding of blockchain's implications for banking operations. The findings reveal a dual nature of blockchain adoption in banking, highlighting significant opportunities alongside critical challenges. While blockchain technology offers enhanced security, transparency, and efficiency, challenges like scalability issues, regulatory uncertainties, and interoperability concerns persist. Nonetheless, the study underscores the transformative potential of blockchain in revolutionizing banking operations, urging policymakers and banking practitioners to address these challenges through continued research, technological innovation, and collaborative efforts. By leveraging blockchain effectively, the banking industry can navigate the digital landscape, enhance operational efficiency, and deliver superior customer experiences, thereby gaining a competitive edge in the financial sector

Strategic Directions of the Capital Market Development of Georgia

The development of the capital market in Georgia is an important prerequisite for the creation of a free and competitive environment, which naturally ensures the need for capital and investments in the country. It will become effective, innovative, focused on high results and a guarantee of economic development. The purpose of the study is to study the current situation in the sector in order to identify the main problem in the sector and by analyzing the shortcomings identified as a result of comparison with the desired situation, the main problem was identified. The diagnosis of the current situation in the sector is based on the conclusions of the overview of the development of the capital market made within the framework of the financial sector assessment program developed by the World Bank, the Asian Bank and other financial institutions. The mentioned conclusions were also used to determine the main problem-causing factors and negative consequences. The purpose of the capital market development strategy in Georgia is to create the most important action mechanism for the coordinated and consistent development of the capital market. The strategy reviews the current situation in the direction of the capital market, challenges in the field and ways to overcome them. The strategy defines the strategic position and future direction of the capital market of Georgia in the coming years. The capital market strategy defines the framework for the consistent introduction of new supervisory, regulatory and legislative acts, which is important for market participants to operate in a transparent and predictable environment. Keywords: Capital market strategy; Operating in a stimulating environment for market participants; Guarantor of economic development.

Blockchain Technology and Its Potential to Benefit Public Services Provision: A Short Survey

In the last few years, blockchain has emerged as a cutting-edge technology whose main advantages are transparency, traceability, immutability, enhanced efficiency, and trust, thanks to its decentralized nature. Although many people still identify blockchain with cryptocurrencies and the financial sector, it has many prospective applications beyond digital currency that can serve as use cases for which traditional infrastructures have become obsolete. Governments have started exploring its potential application to public services provision, as confirmed by the increasing number of adoption initiatives, projects, and tests. As the current public administration is often perceived as slow, bureaucratic, lacking transparency, and failing to involve citizens in decision-making processes, blockchain can establish itself as a tool that enables a process of disintermediation, which can revolutionize the way in which public services are managed and provided. In this paper, we will provide a survey of the main application areas which are likely to benefit from blockchain implementation, together with examples of practical implementations carried out by both state and local governments. Later, we will discuss the main challenges that may prevent its widespread adoption, such as government expenditure, technological maturity, and lack of public awareness. Finally, we will wrap up by providing indications on future areas of research for blockchain-based technologies.

Riding the wave of change: Buy now, pay later as a disruptive threat to payment cards in the global market

This paper studies changes in the worldwide payment system by examining the growing popularity of buy now, pay later (BNPL). Considering variables related to individual financial personality and socio-demographic traits, we provide an original dataset to investigate whether BNPL could be a valid substitute for the use of payment cards. The results show that the payment card sector should take BNPL seriously as a competitive challenge. The developments of the COVID-19 pandemic suggest a possible change from the usage of payment cards towards BNPL, similar to what happened with cash transactions. This research contributes to the literature on the topic by proposing fresh ideas for payment methods and the financial sector, which continue to evolve in response to consumer needs.

Which Global Cycle? A Stochastic Factor Selection Approach for Global Macro-Financial Cycles

Abstract Instead of assuming a certain factor structure, we statistically test for the factor structure driving common global dynamics in macroeconomic and financial data by employing a stochastic factor selection approach. Using a sample of 16 developed countries from 1996Q1 to 2019Q4, we present strong empirical evidence of a global macro-financial cycle and an independent global financial cycle. Moreover, the global macro-financial cycle we estimate is essentially the global business cycle identified in the literature. It captures the common global macroeconomic dynamics and drives a significant share of the comovement in the financial sector. The remaining commonality in financial variables is driven by separate global financial cycles: the global credit cycle and the global capital flow cycle.

Enforcement of international sanctions as the third pillar of the anti-money laundering framework. An unannounced effect of the AML reform and the Sanctions Directive

The recently adopted Sanctions Directive harmonises definitions and penalties for violations of restrictive measures with the aim of ensuring that criminal law can be used to enforce international sanctions in the European Union. It has also made violations of restrictive measures a predicate offence of money laundering. In parallel, the anti-money laundering (AML) framework is undergoing a significant reform, which includes the adoption of the first AML Regulation (previous legal acts being directives) containing AML duties of obliged entities as well as the establishment of an EU AML Authority. Also, for the first time, due diligence obligations as regards international sanctions will be included among these duties. The combined reading of the Sanctions Directive and the AML Regulation indicates that those duties will be even greater, which will have an outstanding impact on obliged entities, in particular of the financial sector. In fact, the extent of those obligations would justify calling enforcement of sanctions the third pillar of the AML framework. Yet, this aspect – and its consequences – remained fully under the radar of the legislative process. The objective of this article is, first, to examine the role of the AML framework in the enforcement of international sanctions, especially after the Sanctions Directive and the AML Regulation start to be applied and, second, to analyse the impact of including enforcement of international sanctions in the AML framework, on the entities subject to its duties and other actors affected by this framework.

Modelling the effects of green finance and renewable energy on environmental sustainability: Fresh insights for BICST economies

Policymakers are increasingly recognizing the need to prioritize sustainability in their economic growth agendas due to escalating environmental deterioration. Green financing and the utilization of clean energy are advanced solutions to this problem. However, there is a significant need to investigate the green finance‐emission nexus in the presence of renewable energy. This study investigates the impact of green financing and renewable energy on environmental sustainability in BICST economies from 2000 to 2021. The analysis considers GDP, urbanization and access to electricity as controlling factors in the model. A Method of Moments Quantile Regression was executed and indicated that green financing and renewable energy play a crucial role in managing and reducing ongoing CO2 emissions in BICST countries. The scientific evidence indicates that increasing levels of CO2 emissions can be attributed to both urbanization and economic development. On the other hand, having access to power has a positive impact on the environment. Additionally, numerous other tests confirm the validity, strength and reliability of the major findings. In the BICST countries, major policy recommendations to enhance environmental sustainability include private sector investment, promoting incentive‐based policies and ensuring the financial sector's autonomy to stimulate the integration of renewable energy sources into economic operations.

The Influence of Audit Fees, Audit Tenure, and Auditor Switching on Audit Quality

Financial statement falsification involving company management and auditors is a prevalent issue in the business landscape. Ensuring the integrity of audit outcomes holds paramount importance in verifying the adherence of financial statements to generally accepted accounting standards (GAAP). Consequently, auditors are expected to maintain high professionalism, prioritizing objectivity over personal considerations in executing their responsibilities. This research aimed to assess the impact of audit fees, audit tenure, and auditor turnover on audit quality. Employing a quantitative research methodology, descriptive analysis and logistic regression tests were conducted to evaluate the hypotheses. The study targeted publicly traded companies within the financial sector, specifically in the insurance sub-sector, listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022. Sample selection utilized purposive sampling techniques. Results reveal that audit fees significantly influence audit quality, whereas audit tenure and auditor turnover do not exhibit significant effects. This study contributes to efforts aimed at advancing audit quality.

Analysis of the Implementation of Sales Accounting Systems with Based Payment Transactions Fintech MSMEs Telukjambe Karawang

The development of digital technology has brought transformation in society. Financial technology or fintech is a risk-taking service that currently helps many people, this technology is used in the economic and financial sectors. Fintech comes in various forms to help people overcome their financial and business problems. Additionally, fintech is becoming increasingly popular due to its fast and simple methods and services. This research aims to analyze the application of fintech in helping the development of micro, small and medium enterprises. The method used is descriptive research with a qualitative approach. Data collection was obtained through interviews and observation. The data obtained is in the form of primary and secondary data. The results of this research state that the implementation of a fintech-based sales accounting system in payment transactions in MSMEs helps buying and selling transactions so that the payment system becomes more efficient and economical but remains effective. All interviewees from all samples have sufficient financial literacy because they have general knowledge about fintech payments, confidence and skills in using fintech payments.