Investment Function Research Articles

RISKS OF THE BANKING SYSTEM OF UKRAINE IN THE CONDITIONS OF MARTIAL LAW

Introduction. The peculiarities of the manifestations of credit, market and currency risks, liquidity risks and risks of "state failure" for the functioning of the banking system of Ukraine in the conditions of martial law were examined the article. Recommendations are offered for minimizing existing risks and restoring the functionality of the banking system in the context of performing financial intermediation functions. Methods. Traditional methods of scientific knowledge were used in the article. In particular, methods of analysis and synthesis, as well as a graphic method for visualization and comparison of trends of certain indicators, were used to study the main trends of the risks of banking activity under martial law. Methods of generalization and abstraction were used to formulate recommendations for minimizing banking risks during martial law. Results. In the course of the study, it was proved that the credit risk in the conditions of martial law is minimal for the banking system of Ukraine, because as a result of ineffective monetary policy, the credit burden on the national economy is minimal and insufficient for its recovery. The negative impact of currency and market risks on the functioning of the banking system of Ukraine is substantiated. It is proved that due to the use of the monetary regime of inflation targeting, the banking system of Ukraine has lost the ability to implement the investment function and the functions of financial intermediation in general. Disscussion. As a result of the state of war and the negative expectations of economic agents, the short-term deposit base of banks will increase, and the volume of deposits will decrease, which may lead to a liquidity crisis in the banking system, however, the uninterrupted functioning of the banking system of Ukraine in terms of settlement and cash services will be preserved due to the high level of concentration of capital and banking assets owned by the state. In order to minimize the negative impact of banking risks, the NBU should resort to the use of mechanisms for targeted cheap long-term refinancing of banks under specific economic development programs, which will allow restoring the intermediary functions of the banking system. Keywords: credit risk, currency risk, liquidity risk, market risk, “state failure” risk, refinancing, lending, monetary policy.

MONEY AS AN INVESTMENT AND SAVINGS TOOL ON INFLATIONARY PERIODS: AN ANALYSIS OF THE TURKISH LIRA

Covid-19 salgını sonrasında dünya genelinde ekonomilerin yavaşlama eğilimi göstermesi ve bu yavaşlama tehdidine karşılık merkez bankalarının genişlemeci para politikası araçlarına yönelmesi dünya genelindeki enflasyonist etkilerin artmasına yol açmıştır. Dünya geneline yayılan enflasyon tehdidi; uzun yıllar enflasyonla ve dalgalı döviz kurlarıyla mücadele etmiş ancak 2000’li yıllardan sonra kısmen başarı sağlamış olan Türkiye’de halkın enflasyon korkularını yeniden canlandırmıştır. Enflasyonist dönemlerin bir özelliği olarak vatandaşlar gelecekte alım güçlerinin azalacağı endişesiyle üretimden ve ulusal paradan uzaklaşarak daha hızlı getiri sağlayacağına inandığı altın, döviz ve gayrimenkul gibi daha spekülatif alanlara kayma eğilimi göstermektedir. Türkiye’de son yıllarda vatandaşların döviz tevdiat hesaplarındaki hacimsel artış, Türk lirası cinsinden artan borçlanma ve kişilerin uzun vadeli alışverişlerini döviz cinsi varlıklar üzerinden gerçekleştirme eğilimi gibi davranışlar herhangi bir değişim biriminin para olarak nitelendirilebilmesi için gerekli sayılan yatırım, işlem, değer saklama ve tasarruf aracı olma fonksiyonlarını azalttığı görülmektedir. Bu çalışmada yurtiçinde ve küreselde enflasyonist gerçeklerin hâkim olduğu dönemde hane halklarının Türk Lirasına yönelik tutumunun ve liranın sergilediği performansın incelenmesi amaçlanmıştır.

Reassessing the Classical Investment Function. A Panel Data Analysis from NAFTA-USMCA

This study applies the second generation of panel cointegration techniques in conjunction with those estimators that control cross-sectional dependence to test the plausibility of the classical approach to capital accumulation in Canada, Mexico, and the United States from 1960 to 2019 empirically. The findings suggest that private investment is positively related to the profit rate, unit labour costs, and growth in demand in both the short and long-run, while the causality analysis indicates potential feedback loops between the variables.

The existence of flight-to-quality under extreme conditions: Evidence from a nonlinear perspective in Chinese stocks and bonds' sectors

The COVID-19 pandemic has showed that distress to the financial system is always accompanied with the interconnection between the stock and bond markets. However, limited studies have identified the flight-to-quality effect between these two markets from a nonlinear extreme perspective. Thus, using the multi-quantile VaR Granger causality test that measures the non-linearity of extreme risk, we investigated this effect in Chinese sectors via extreme risk spillover networks. Based on the findings, defensive (offensive) sectors are dominant in the stock market when facing upside (downside) risk to avoid potential investment losses. The results also confirm the robustness of the conclusion that the investment function of the financial markets weakened during the financial crisis. Moreover, compared to the Financial Bond and Enterprise Bond, the Government Bond is likely to show better risk hedging effect in cross-market risk spillover networks due to its high information transparency.

Optimal HARA Investments with Terminal VaR Constraints

This paper studies the impact of Value at Risk (VaR) constraints on investors with hyperbolic absolute risk aversion (HARA) risk preferences. We derive closed-form representations for the “triplet”: optimal investment, terminal wealth, and value function, via extending the Bellman-based methodology from constant relative risk aversion (CRRA) utilities to HARA utilities. In the numerical part, we compare our solution (HARA-VaR) to three critical embedded cases, namely, CRRA, CRRA-VaR, and HARA, assessing the influence of key parameters like the VaR probability and floor on the optimal wealth distribution and allocations. The comparison highlights a stronger impact of VaR on a CRRA-VaR investor compared to a HARA-VaR (HV). This is in terms of not only lower Sharpe ratios but also higher tail risk and lower returns on wealth. The HV analysis demonstrates that combining both, capital guarantee and VaR, may lead to a correction of the partially adverse effects of the VaR constraint on the risk appetite. Moreover, the HV portfolio strategy also does not show the high kurtosis observed for the PV strategy. A wealth-equivalent loss (WEL) analysis is also implemented demonstrating that, for a HV investor, losses would be more serious if adopting a CRRA-VaR strategy as compared to a HARA strategy.

The Chinese‐style macroeconomic control: The role of state‐owned enterprises

AbstractThis paper extends the existing studies of cyclical fiscal policy by providing the first systematic theoretical and empirical study of cyclical quasi‐fiscal investment of state‐owned enterprises (SOEs) in China. Using data from Chinese listed companies and the System GMM method, the results show that: (1) both central and local SOEs exhibit expansion‐biased investment behaviours; (2) the expansion‐biased investment of central SOEs mainly goes to the tertiary industry and the western regions of China, while the expansion‐biased investment of local SOEs mainly occurs in the tertiary industry and the middle and western regions of China; (3) during the economic recession, the higher the local growth targets, the more bank credit central and local SOEs can obtain, and the more pronounced the expansion‐biased investment. The study shows that apart from the countercyclical fiscal policy implemented by central and local governments, the quasi‐fiscal function of central and local SOE investments is also key for the Chinese economy to quickly recover from recessions.

Deciphering the role of specialist and generalist plant-microbial interactions as drivers of plant-soil feedback.

Feedback between plants and soil microbial communities can be a powerful driver of vegetation dynamics. Plants elicit changes in the soil microbiome that either promote or suppress conspecifics at the same location, thereby regulating population density-dependence and species co-existence. Such effects are often attributed to the accumulation of host-specific antagonistic or beneficial microbiota in the rhizosphere. However, the identity and host-specificity of the microbial taxa involved are rarely empirically assessed. Here we review the evidence for host-specificity in plant-associated microbes and propose that specific plant-soil feedbacks can also be driven by generalists. We outline the potential mechanisms by which generalist microbial pathogens, mutualists and decomposers can generate differential effects on plant hosts and synthesize existing evidence to predict these effects as a function of plant investments into defence, microbial mutualists and dispersal. Importantly, the capacity of generalist microbiota to drive plant-soil feedbacks depends not only on the traits of individual plants but also on the phylogenetic and functional diversity of plant communities. Identifying factors that promote specialization or generalism in plant-microbial interactions and thereby modulate the impact of microbiota on plant performance will advance our understanding of the mechanisms underlying plant-soil feedback and the ways it contributes to plant co-existence.

Socialist Investment, Dynamic Planning, and the Politics of Human Need

Building on the work of Fikret Adaman and Pat Devine, this essay considers the social presuppositions for the construction of a socialist investment function. When it comes to investment, people care about many issues: not only efficiency but also work satisfaction, fairness, sustainability, and so on. Investment decisions therefore need to be structured to make people feel that their voices can be heard across the wide range of their concerns. Facing this complexity and potential for conflict, socialist investment would likely be structured as a negotiated political-planning process in which not only workers take part but also individuals organized into a variety of civic associations, including political, cultural, scientific, and religious. This essay questions how such associations would acquire the resources needed to carry out their activities and proposes a possible solution in social provisioning.

Systems estimation of a structural model of distribution and demand in the US economy

Abstract This paper investigates non-cyclical, short-run relationships between income distribution and the components of aggregate demand in the US from 1963–2016. Previous studies using this ‘structural’ methodology have typically found that demand is wage-led in most large, advanced economies. However, these studies have been criticised for treating total output and the wage share as exogenous, potentially leading to simultaneity bias. This paper corrects for such possible bias as well as common shocks to the equations by using systems GMM. Surprisingly, these estimates imply that private-sector aggregate demand is more, rather than less, wage-led (or in some cases, less profit-led) compared with OLS estimates of identically specified models. This paper is also the first to provide separate estimates of non-residential and residential investment functions and to distinguish the effects of shocks to different underlying determinants of the wage share (unit labour costs and firms’ monopoly power), finding that these differ qualitatively.

Dynamics of Information Acquisition: Does Investment in Information Technology Matter?

The purpose of the study is to develop a theoretical model to ascertain if the IT investment in the banking sector is capable of generating a new equilibrium with increased efficiency. The empirical strategy is to seek an indirect test for Jordanian banking sector by looking at the time profile of banking profits as a temporal function of IT investment. The study enquires if the banking sector, as an iterative process of credit allocation and information acquisition through IT investment, lead to a stable equilibrium? Does IT investment ensure stable market shares for Jordanian banks in the long run? The study finds that investment in IT has led the banking system in Jordan away from an efficient equilibrium. We also find that the banks in Jordan directly interact with each other, although they may have collusive arrangements with some of their rivals, this means the banking market is not fragmented.

СТАТИСТИЧЕСКИЙ АНАЛИЗ ИНВЕСТИЦИОННОЙ АКТИВНОСТИ КАК ФАКТОРА СОЦИАЛЬНО-ЭКОНОМИЧЕСКОГО РАЗВИТИЯ РЕГИОНА

The article discusses and defines the concept, essence and functions of investment as an economic category, determines the relationship between investment in fixed capital and gross domestic (regional) product, and conducts correlation and regression analyzes to prove the relationship between GDP (GRP) growth rates and investment in fixed assets

Life insurance as a tool to increase the welfare of the russian population

Life insurance has been the driving force behind the development of the Russian insurance market in recent years. The types of life insurance that are significant insurers in Russia include not only insurance protection for the population, but also compliance with the requirements for increasing financial resources, and thus high economic indicators of human welfare. The article provides a statistical analysis of the development of insurance in Russia on a special rise, which showed a progressive increase in insurance premiums and international agreements to identify risks. Also, it was found that the predominant types are accumulative and investment life insurance, which allow not only to provide insurance protection, but also implement accumulative and investment functions. At the same time, a significant territorial differentiation of insurance premiums for life insurance in Russia and a low level of its penetration were determined. The work systematized the studies of economists devoted to the indication of the determinants of the development of life insurance. An attempt was made to estimate the determinants according to Russian data. The authors built econometric models that allowed to determine the main factors influencing the development of life insurance as a way to strengthen the financial position of an individual in Russia. As a result of the study, it was revealed that at the level of the constituent entities of the Russian Federation, the determinants of demand are both social and economic factors. The stable regressors, significant in all constructed models, were the gross regional product per capita, the average monthly accrued wages, the female population and the number of unemployed. Also significant in some models were the population size and the level of education of the able-bodied population.

Intellectual Property Investment Functions and the Legal Characteristics of Privatization

Intellectual Property Investment Functions and the Legal Characteristics of Privatization

Factors Affecting Innovation Performance in Establishing a Generic Plan in the Pharmaceutical Industry

Background: The pharmaceutical industry has a significant impact on the promotion of health and safety indicators in society. In this knowledge-based industry, the development of companies in complex environments is a function of innovative research, investment, and government regulation to maintain and survive. Given the technical knowledge and specific supportive laws (e.g., patents), being active in such an industry is one of the important criteria in developing countries. Therefore, the generic plan was implemented in Iran with the prospect of taking practical steps toward achieving drug self-sufficiency and acquiring the rank of manufactured pharmaceutical raw materials and branded drugs. Objectives: This study, therefore, aimed to investigate factors affecting innovation performance in establishing a generic plan in the pharmaceutical industry of developing countries. Methods: The statistical population in this descriptive survey consisted of PhD experts involved in the Iranian pharmaceutical industry. To this end, 42 standard questionnaires were distributed based on the conceptual model of the research. Next, the effects of the research variables were analyzed using partial least squares (PLS) structural equations. Results: According to the results, research and development (R&D), product innovation, process innovation, and organization size significantly positively affected innovation performance. In comparison, knowledge management did not substantially affect innovation performance in the Iranian pharmaceutical industry. Conclusions: Due to the introspective developmental approach and the lack of effective communication, a major failure of the generic plan is witnessed within the pharmaceutical industry.

Bifurcations and Arnold Tongues of a Multiplier-Accelerator Model

Abstract In this paper, we investigate the bifurcations of a multiplier-accelerator model with nonlinear investment function in an anticyclical fiscal policy rule. First, we give the conditions that the model produces supercritical flip bifurcation and subcritical one, respectively. Second, we prove that the model undergoes a generalized flip bifurcation and present a parameter region such that the model possesses two two-periodic orbits. Third, it is proved that the model undergoes supercritical Neimark–Sacker bifurcation and produces an attracting invariant circle surrounding a fixed point. Fourth, we present the Arnold tongues such that the model has periodic orbits on the invariant circle produced from the Neimark–Sacker bifurcation. Finally, to verify the correctness of our results, we numerically simulate an attracting two-periodic orbit, a stable invariant circle, an Arnold tongue with rotation number 1/7 and an attracting seven-periodic orbit on the invariant circle.

Analysis of farmer purposes in raising local beef cattle breed: An Analytical Hierarchy Process (AHP) approach

Farmers raise cattle for various purposes, such as a source of cash income, investment function, and socio-cultural function. The research objective was to analyze farmers’ preferences in raising Peranakan Ongole (PO) as local beef cattle breed based on the purpose of raising livestock. This study involved 8 farmers from Klaten District, Central Java. Klaten Regency was chosen as a research location because it received PO cows as a grant from the Ministry of Agriculture. Respondents were selected purposively according to the criteria of being a livestock group administrator and being experience in raising PO as local beef cattle breed for ≥10 years. Analytical Hierarchy Process (AHP) was applied to determine the priority of beef cattle criteria that are used by farmers to develop their business. There were three criteria and six factors used in this analysis. These criteria were cash income, investment function, and socio-culture function. Whereas, the six factors used were cattle breed, selling price, adaptability, reproductive ability, body size, and the physical appearance of the livestock. The results revealed that the reproductive ability has main preference among farmers due to the investment function was the main purpose in raising PO cattle.

Efficiency of Using Cryptocurrencies as an Investment Asset

The study of the effectiveness of using cryptocurrencies as an investment resource was conducted on the basis of testing the hypothesis that the introduction of leading cryptocurrencies that are components of the CRIX index into the investment portfolio improves its quality (efficiency). Cryptocurrency investment opportunities are explored on the basis of statistics for July 2016-June 2019. An average annual return on investment (ROI), which is adjusted for passive income on an investment asset (PI), is used to evaluate investment performance. In this study, cryptocurrencies are compared with the following alternative investment areas: Forex market, equities (companies with the highest weights in Nasdaq 100, Euro STOXX 50), commodities, government bonds, real estate. The criteria were determined by the increase in the Sharpe ratio of the investment portfolio and its average annual return. Optimization of investment portfolios without cryptocurrencies and with them was performed on the basis of the Markowitz model. The result shows the confirmation of the hypothesis: the introduction of 3 cryptocurrencies – Bitcoin, Ripple, Litecoin – in the proportions of 2.31%, 1%, 1%, respectively, increased the Sharpe ratio of the investment portfolio by 3.29 points, and the coefficient of return by 9.42 percentage points while increasing the risk by only 0.51 percentage points. This result indicates that the quality (increase in efficiency) of the investment portfolio due to the introduction of cryptocurrencies and the ability to control the investment risk of the portfolio despite the high volatility of cryptocurrencies. This proves the investment (speculative) function of crypto-assets, which can be the basis for developing a model of accounting for crypto-assets.

Structural Change in the Investment Function

Structural Change in the Investment Function

일본의 금융정책과 금융중개기능의 변화 - 지역금융과 정책금융의 역할을 중심으로 -

In the wake of the bubble collapse in the 1990s, when the ‘convey-fleet system’ collapsed, the Japanese financial system entered the transition period. The Financial Services Agency (FSA) of Japan emphasized the bad debt treatment based on strict financial inspections, as a result of this policy, the financial instability had been resolved in the mid of 2000s. Since the implementation of Abenomics, when the ‘extinction of local’ emerged as political issue, the government (especially FSA) pushed forward in strengthening the financial mediation function of local financial institutions. In addition, since the late 1990s, the Japanese government (especially MOF) started to push forward to reform the policy finance system. This study analyzes how the change in the financial policy trend and the reformation of the financial system have actually influenced to the financial mediation function of local financial institutions and policy finance. Since the implementation of Abenomics, the local financial institution loan skyrocketed focusing on the local banks, the lending attitude DI of financial institutions improved rapidly. That is, it can be evaluated that the financial mediation function by local financial institutions has been strengthened under Abenomics. On the other hand, the scale of policy finance shrunk comprehensively since the 2000s. However, on a special note, the scale of policy finance expanded under the risk of the global economic crisis in 2008 and the COVID-19 crisis. The investment function also strengthened through policy finances such as government􋹲private fund as a method of policy finance during the peactime economy.

ФУНКЦІЇ СТРАХУВАННЯ ЯК ОБ’ЄКТ ФІНАНСОВО-ПРАВОВОГО РЕГУЛЮВАННЯ

The functions of insurance as an object of financial and legal regulation are considered. Based on the methodology of the system analysis, an analysis of the current legislation in the field of insurance concerning definition of the insurance concept is carried out. It is noted that today a new sub-branch such as financial and legal regulation of insurance business has appeared in the system of financial law as a branch of law. It combines legal norms that regulate (mainly by the method of authoritative provisions) public relations on the formation, distribution and use of insurance funds, exercise of control and supervisory measures. It also includes legal norms regulating involvement of insurance business entities and other participants in public relations in the field of insurance to financial and legal responsibility in order to protect the rights and legitimate interests of insured persons in insured accidents. Insurance functions occupy a special place in the financial legislation. The distributive, preventive, restorative, saving, risk, control, investment functions of insurance are examined. The factors influencing the investment function of insurance are determined; the role of the National Bank of Ukraine in the implementation of this function is demonstrated. It is stated that the function of forming a specialized insurance money fund to maintain the security and stability of the state financial system is one of the specific functions of insurance. Insurance is an integral part of the financial system of the state, which provides the regular functioning of social development; it is an integral function of the state, a necessary condition for the development and stability. Ukraine’s course towards European integration determines the factors of economic and legal transformations in the country, including the further development of insurance activities.