Investment Income Research Articles

Study of multinational currency co-movement and exchange rate stability base on network game

Complex network analysis of the correlation of exchange rate fluctuations shows that the co-movement of global exchange rate fluctuations is a small-world network. Through the income function of currency issuance and circulation, we build a two countries’ currency network model, and then extend it to multi-countries model, within the evolution network game simulation method. We find that multi-countries exchange rate co-movement gradually shapes an stabilize exchange rate co-movement region. The more random the currency co-movement relationship among multi-currency countries is, the easier it is to stabilize exchange rate co-movement relationships; and the higher the proportion of investment income to total income is, the easier it is to shape a multi-currency co-movement exchange rate stability relationship.

Money funds manage returns

Daily returns at quarter end are above the average by 12% for a sample of stable-NAV money market funds (MMFs) in China from 2011 to 2017. Crucially, quarter-end returns are significantly driven by the deviations between market-based and accounting-based NAVs. Further analyses indicate that returns are intentionally managed upward through NAV deviations to influence fund flows, with the important implication of wealth transfers among exiting, remaining and incoming investors. To the extent that wealth transfers are undesirable from a public policy perspective, our finding lends further support to recent reforms to institute floating-NAV MMFs in various countries including the United States and China.

Strategic Assessment of the Efficiency of Diversification of the Industry Investment Portfolio

One of the effective special tools used to achieve the least risk and sustainable income of investment in enterprises is the investment portfolio. At the same time, one of the simplest and most effective strategies to minimize investor risk is its diversification.The article presents the results of the performed strategic financial analysis of the effectiveness of diversification of the formed sectoral investment portfolio using the example of large enterprises of the metallurgical industry. The choice of industry was determined by the fact that metallurgy is one of the fastest growing industries in the world economy.The article analyzes the strategic development trends of the metallurgical industry and considers the three largest companies in this industry (“MMK”, “Severstal”, “NLMK”). Their activity was analyzed in dynamics based on financial reporting data presented on company websites.Comparative analysis was carried out on such indicators of financial analysis as current liquidity ratios, equity and financial leverage concentration ratios, as well as interest-to-payment ratios, turnover of reserves and funds in turnover, profitability of the companies under consideration.In the resulting formation of the investment portfolio, correlation coefficients between the returns of the shares of these companies were calculated. It was established that the financial situation, as well as the low correlation coefficient between the assets of the reviewed companies, allow us to form from their shares an industry investment portfolio that minimizes the risks of a potential investor.

Life Insurance Companies: Determinants of Cost Efficiency and Profitability

One of the most important aspects of measuring a firm’s performance is its efficiency, through which the firm is expected to envisage effective cost reductions, thereby enhancing profitability. However, most studies conducted to explore the determinants of insurance companies’ performance has concentrated on the accounts earnings information and its components which are known to explain a small proportion of a firm’s performance. Also, studies on insurance either lump all the insurance companies together or pay more attention to non-life insurance, making it difficult to evaluate the fast growing life insurance industry in Ghana. Therefore, this study examines the efficiency of life insurance companies in Ghana utilising data from twelve life insurance companies for a period of 2013-2017. The efficiency scores were calculated using Efficiency Measurement System software. The fixed effect panel regression results show that, the significant determinants of both cost and profit functions are: price of labour, commission, gross premium and net investment income. It was also revealed that, on the average, the life insurance companies were about 71.2% cost efficient and 41.7% profit efficient. Further analysis reveals that, both profit and cost efficiency changes have statistically significant positive effect on firms’ Return on Asset. Policy-makers should institute policies that encourage these companies to operate efficiently in order to make effective capital allocation decisions to avoid collapse.

An Integrated DEA and PROMETHEE II Method for Complete Ranking: An Application in Life-Insurance Sector

Globally, insurance and takaful companies play a crucial role in economic and financial development of a country. Malaysia’s insurance sector has undergone substantial changes compared to two decades ago. Due to intense competition observed in Malaysian insurance industry, efficiency measurement and a complete efficiency ranking of insurance companies are very important for the decision makers so that necessary changes and improvement can be made. Data Envelopment Analysis (DEA) is a non-parametric method that has been acknowledged as an effective method to measure the efficiency of homogeneous decision-making units (DMUs). The main advantage of DEA is its ability to handle multiple inputs and outputs. However, standard DEA has poor discrimination power since it generates too many efficient units especially when the number of DMUs under study is insufficient in comparison to number of inputs and outputs. It cannot discriminate efficient units and therefore unable to give a complete ranking of DMUs. This study aimed to overcome the ranking problem found in standard DEA by integrating DEA and Preference Ranking Organization Method for Enrichment Evaluations (PROMETHEE) II. The hybrid method was applied to evaluate the efficiency and ranking of 22 life insurance and takaful companies in Malaysia from the period of 2017 to 2018. Input variables used in this study comprised of fees and commission, and management expenses. Meanwhile, output variables were net premium and generated investment income. The proposed method involved two stages. In the first stage, DEA was applied to obtain the efficient scores for the DMUs. In the second stage, PROMETHEE II was implemented to rank the efficient units. This hybrid method has successfully obtained full ranking of all the insurance companies under study. The inefficient companies can learn strategies and practices from efficient companies to enhance their services. It is recommended for future research to integrate DEA with other Multi Criteria Decision Making (MCDM) methods such as TOPSIS and VIKOR to fully rank the DMUs.

Pengaruh Investasi, Tenaga Kerja Dan Pengeluaran Pemerintah Terhadap Pertumbuhan Ekonomi di Provinsi Jawa Tengah

The average economic growth of Central Java Province is still low and it is in the fourth lowest rank of the six provinces in Java. This study aims to analyze the effect of investment, labor and government spending on economic growth in Central Java Province for the period 2014 - 2019. The data analysis technique used is multiple linear regression with a panel data approach. The results show that investment, labor and government spending have a positive and significant effect on economic growth in Central Java Province in 2014 - 2019. The implications of this study are 1) retaining incoming investors by providing services in accordance with the development of their respective needs and providing services. incentives so that investors feel comfortable investing their capital and attracting potential new investors to be willing to open a business in Central Java Province 2) increase employment returns, hold apprenticeship projects for prospective workers, improve workforce welfare, and improve the quality of the workforce so that labor productivity employment will increase 3) increase and maximize the allocation of government expenditure funds for potential sectors.

Efficiency Analysis of Malaysian General Insurance Companies Using Data Envelopment and Super-efficiency Approach

Due to the phenomenal growth of the insurance sector, extensive research has been conducted to evaluate the insurers' efficiency at both domestic and international levels. Thus, this paper illustrates the applications of Data Envelopment Analysis (DEA) to measure the relative efficiency of 18 general insurance companies that were operating in Malaysia in the year 2018. The inputs included in this study are fees, commission, and management expenses while the outputs are net premium and generated investment income. The results reveal that the four general insurance companies can be identified as efficient units. The standard DEA method cannot discriminate efficient units. This study employs the super-efficiency DEA model to select the most efficient unit among them. This study makes a significant contribution to the financial industry especially for matters concerning insurance, as there is a lack of studies on exclusive efficiency analysis of general insurance companies in Malaysia. In addition, it has major implications for insurance decision makers, government agencies and emerging insurance markets. The information obtained from this study will benefit the insurance company’s top management in devising viable strategies to enhance the efficiency of the company.

WAYS OF DEVELOPMENT OF INVESTMENT LIFE INSURANCE IN RUSSIA

The declining state of the financial market in recent years has strengthened the population's distrust of various financial instruments. Many continue to keep money in cash and in bank deposits, but this does not generate income, or it only covers inflation. The state strives to create new investment solutions that will contribute to attracting money from the population to the economy. Investment life insurance is a significant factor in the development of the national economy, since insurers' funds are directed to investments in government securities and shares and bonds of Russian companies. The mandatory risks included in the ILI agreement are the survival of the insured person, as well as his death. The sum insured upon the occurrence of the risk is paid in 100% of the insurance premiums paid, plus the investment income accumulated by the time of the death of the insured is charged. The article discusses the main problems of reducing the demand for investment life insurance, as well as the ways of its development. Including the main problem with not receiving income from investments. It is proposed to introduce a minimum rate of return, which will have a positive effect on the credit of trust of the insurance company.

Customer preferences for wood-based houses in Slovakia

Housing is one of the basic needs of every person. Most people usually encounter the problems of the availability of financial resources and real construction costs. The objective of this paper is to present customer preferences for the construction of family houses in Slovakia with the assessment of possible perception disproportions regarding economic characteristics in the context of interest and reality. A specific part of this paper includes the presentation of interest in the construction of wood-based houses. The questionnaire survey show that, in the target group (respondents aged 26 to 50 years), significant dependencies were found between the monitored traits and the amount of planned investment. For each dependence, possible disproportions were also revealed, which could lead to an overall threat of the plans for the construction of a family house. The disproportions, which were associated with 25 to 30% of respondents, depended on the amount of investment and net household income as well the outlay and usable floor area. This is an original survey in the field, the benefit of which should be its use for a comparison of similar research.

The Applications and Complexity Analysis Based on Supply Chain Enterprises’ Green Behaviors under Evolutionary Game Framework

Green behaviors adopted by supply chain companies are conducive to resource conservation and environmental protection and enhancing their core competitive advantages. By constructing a game model of green behavior of supply chain companies, this research deeply analyzes the main influencing factors of green behaviors adopted by supply chain companies. It uses dynamic evolution game analysis and simulation experiment methods to explore the path evolution direction and dynamic convergence process of green behavior strategy choices of these companies, so as to provide reference value for green behavior decision-making of supply chain enterprises. The research results show that the probability of supply chain enterprises choosing green behavior strategies is related to factors such as enterprise green investment income and costs, co-benefits, spillover benefits, greenness and output of raw materials or products, government green subsidy coefficients, and fines. Supply chain enterprises should reduce the cost of green investment, maximize the profit of green investment, and increase the greenness of raw materials or products; the government should increase the coefficient of green subsidies and encourage supply chain enterprises to actively participate in the collaborative management of the green supply chain.

ЗЕМЛЯ СІЛЬСЬКОГОСПОДАРСЬКОГО ПРИЗНАЧЕННЯ В УКРАЇНІ ТА МОНЕТИ КРИПТОВАЛЮТ: МОЖЛИВОСТІ РЕАЛЬНОГО ІНВЕСТУВАННЯ

In the absence of real objects for investment, the ability of economic entities to effectively distribute existing limited financial assets and form a quality investment portfolio is a guarantee for the investor not only to ensure high return on investment, but also to reduce investment risk. The emergence of cryptocurrencies in the second decade of the XXI century and the opening of the land market in Ukraine in mid-2021 for agricultural purposes have created new opportunities for investors to form highly liquid and highly profitable investment portfolios, using investment opportunities to buy farmland and cryptocurrencies. Together with the potentially high profitability of the investment portfolio formed from cryptocurrencies and agricultural land, there is no risk of complete depreciation of own savings in the future. The main purpose and task of the article is to study the theoretical and practical aspects of the current state and prospects of Ukrainian citizens' investment in agricultural land in Ukraine and cryptocurrency. In the process of research,, the following methods were used: analysis – to study the object and subject of research; abstract-logical (theoretical generalizations and formulation of conclusions on the formation of the investment portfolio of cryptocurrencies and agricultural land). Agricultural land has been found to be a valuable limited resource that currently has a potentially low price, but will continue to rise in price and generate stable income and will never depreciate. Although investing in cryptocurrencies is associated with significant risks, cryptocurrency coins have the potential to significantly increase their value and limits of use, so investing in coins can bring significant returns in the long run. It is proposed for economic entities in Ukraine to form an investment portfolio for medium and long-term investment and periodic passive income, which will include Ukrainian agricultural lands and cryptocurrency coins. The formation of an investment portfolio of agricultural land in Ukraine and cryptocurrencies, in our opinion, is effective and appropriate, however, requires further research because agricultural land and cryptocurrencies as objects of investment in Ukraine are relatively new.

A Rising Tide Lifts All Boats: Influencing Mechanism of Rising Housing Prices on Corporate Financial Business

Entrusted loans reflect the “siphon effect” of the virtual economy on the real economy, which affects the allocation efficiency of financial resources and the high-quality development of the whole economy. Entrusted loans are one of the important components of shadow banking in China. Enterprises engaged in entrusted loan business is based on their own and market environment to make decisions. To provide the in-depth understanding of the logic behind the supply of entrusted loans and help to formulate economic policies, this paper examines the market factors that drive enterprises to issue entrusted loans. It first makes a theoretical comparative analysis of the changes of non-financial corporate entity investment income and financial investment income caused by the rise of housing prices. Then, using the manually collected transaction data disclosed in the entrusting loan announcements issued by A-share listed companies in Shanghai and Shenzhen Stock Exchanges and the sales price data of commercial housing in prefectural-level cities during 2007−2015, this paper empirically tests the impact of housing prices on non-financial enterprises engaging in entrusted loan financial business and its mechanism path. It is found that the housing price in the city where the loan enterprise is located increases the probability and quantity of entrusted loans issued by local enterprises. The entrusted loans interest rate is negatively correlated with the housing price in the city where the loan enterprise is located, but positively correlated with the housing price in the city where the borrowing enterprise is located. Further analysis shows that: First, “housing prices go up → corporate profitability falls → the amount of entrusted loans issued by enterprises increases” constitutes a transmission path for housing prices to influence enterprises to issue entrusted loans. Second, enterprises with more investment property assets issue more entrusted loans during the period of rising housing prices. Third, more entrusted loans flow to real estate enterprises during the period of rising housing prices. The above results show that the increase in business costs, the appreciation of real estate mortgage assets, and the high yields of the real estate industry, together boost the development of corporate financial business represented by enterprise entrusted loans.The contributions of this paper mainly include three aspects: First, it studies the entrusted loan behavior of enterprises from the perspective of housing prices, which proves that high housing prices increase the proportion of financial assets in the total assets of enterprises, and cause the distortion of non-financial enterprise entity investment and financial investment. Second, it discusses the influence of the real estate industry from the field of informal finance, which provides empirical evidence for the influence of high housing prices on the allocation of financial resources, helps to fully understand the influence of the real estate industry on all areas of the national economy, and expands the field of real estate economics. Third, it discusses the influencing mechanism of housing prices on the entrusted loans of enterprises, and proves that the rapid rise of housing prices will affect the financial investment behavior of enterprises by increasing the operating burden of enterprises and accelerating the flow of funds from the real economy to the real estate industry. In general, there is a linkage effect between entity enterprises, real estate industries and the shadow banking represented by entrusted loans, which suggests that government departments should be committed to slowly absorbing the bubbles in the real estate economy through the accelerated development of the real economy and the macro-control of the virtual economy.

Private Enterprise Identity and Corporate Financialization

As an important part of China’s national economic development, the private economy has played a relatively important role in promoting high-quality economic development, promoting scientific and technological innovation, and increasing employment opportunities. However, while the private economy is developing steadily and well, it also faces many pain points that need to be solved urgently. The identity problem is an important problem that has been troubling some private entrepreneurs for a long time. The so-called “private enterprise identity” mainly refers to the state-owned private enterprises whose initial property rights are owned by the state or the collective, and then privatized by private entrepreneurs through various ways such as equity acquisition. Compared with the self-employed private enterprises established by private entrepreneurs from the ground up, due to the high political cost and the pressure of public opinion, there are certain obstacles to their self-identity. This paper focuses on the specific impact of private enterprise identity on their micro-financialization decisions. Intuitively, due to the high political cost and public opinion pressure of state-owned private enterprises, the future operation risks of enterprises are exacerbated to some extent. In order to appropriately transfer risks, these private entrepreneurs have the motivation to strengthen financial asset allocation and thus increase the financialization degree of state-owned private enterprises. At the same time, due to certain obstacles to their own identity, state-owned private enterprises are more inclined to increase investment in the financial sector to deal with adverse situations such as the decline in the performance of their main business, which will also aggravate their financialization degree. Based on the above considerations, this paper takes the Shanghai and Shenzhen A-share private companies whose actual controllers are natural persons or families during the period of 2007-2018 as the research sample, manually collects the initial property rights acquisition methods of private enterprises, and divides them into state-owned transformation private enterprises with serious identity problems and self-employed private enterprises without identity problems. It investigates the specific impact of private enterprise identity issues on their financial decision-making. The study finds that compared with self-employed private enterprises, state-owned transformation private enterprises with identity issues are more inclined to engage in financial behavior, which is reflected in a larger proportion of financial asset allocation and a higher proportion of financial investment income. Cross-sectional analysis shows that the positive impact of private enterprise identity issues on financial decision-making is more significant in the samples with poorer performance in the main business, greater operating risks, and lower degree of regional marketization. Further research finds that the financial behavior caused by private enterprise identity is mainly real estate investment, and also promotes the excessive financialization of enterprises. The research conclusion not only enriches the related literature on the influencing factors of corporate financialization and the economic consequences of private enterprise identity recognition, but also has certain reference significance for better exerting private entrepreneurship in the new era to promote the vigorous development of private economy. It also provides effective policy inspiration to properly manage and deal with the historical problems left over by some private enterprises in the process of property right transformation during the 14th Five-Year Plan period and the new normal stage of economy.

Incorporating Fuzzy Logic in Harrod’s Economic Growth Model

This paper suggests the possibility of incorporating the methodology of fuzzy logic theory into Harrod’s economic growth model, a classic model of economic dynamics for studying the growth of a developing economy based on the assumption that an economy with only savings and investment income is in equilibrium when savings are equal to investment. This model was the first precursor to exogenous growth models, which in turn gave rise to endogenous growth models. This article therefore represents a first step towards introducing fuzzy logic into economic growth models. The study concerned considers consumption and savings to depend on income by means of uncertain factors, and investment to depend on the variation of income through the accelerator factor, which we consider uncertain. These conditions are used to determine the equilibrium growth rate of income and investment, as well as the uncertain values for these variables in terms of fuzzy numbers. As a result, the new model is shown to expand the classical model by incorporating uncertainty into its variables.

Optimization Analysis Of Regional Resources Potential In Kphl Ternate-Tidore North Maluku

KPHL must have managerial capabilities, to make optimal use of the assets owned in their area, KPHL in carrying out management activities to generate income must be as an independent unit (self-financing management unit), so that the legality of ensuring investment activities and income management can be done independently. The potential of the Ternate-Tidore KPHL area is very large with a land cover dominated by forest, very diverse non-timber forest products, high potential for environmental services and natural tourism. This study aims to analyze the optimization of the natural resource potential of the Ternate-Tidore KPHL area. The research was conducted by processing map image data for land cover and field surveys using tracking lines to determine locations that have potential for environmental services and nature tourism as well as direct measurement observations in the field for potential timber and non-timber products, then processed the data and performed a SWOT analysis. Based on the results of the analysis, it was found that the potential of NTFPs with a volume of 410,253.22 Ha, the diverse potential of NTFPs was dominated by bamboo with production (5,500 stems/year) with a total distribution area in the forest class of 3,723.63 Ha, and the mixed garden class of 4,273.43 Ha. The results of the SWOT analysis resulted in an optimization strategy, namely (1). Institutional and human resource development strategy, (2). Strategy of cooperation with relevant stakeholders in the processing of potential resources and (3). Marketing strategy of the results of potential resources with innovative technology creatively.

Artificial intelligence applied to investment in variable income through the MACD (moving average convergence/divergence) indicator

PurposeThis study aims to determine whether, by means of the application of genetic algorithms (GA) through the traditional technical analysis (TA) using moving average convergence/divergence (MACD), is possible to achieve higher yields than those that would be obtained using technical analysis investment strategies following a traditional approach (TA) and the buy and hold (B&H) strategy.Design/methodology/approachThe study was carried out based on the daily price records of the NASDAQ financial asset during 2013–2017. TA approach was carried out under graphical analysis applying the standard MACD. GA approach took place by chromosome encoding, fitness evaluation and genetic operators. Traditional genetic operators (i.e. crossover and mutation) were adopted as based on the chromosome customization and fitness evaluation. The chromosome encoding stage used MACD to represent the genes of each chromosome to encode the parameters of MACD in a chromosome. For each chromosome, buy and sell indexes of the strategy were considered. Fitness evaluation served to defining the evaluation strategy of the chromosomes in the population according to the fitness function using the returns gained in each chromosome.FindingsThe paper provides empirical-theoretical insights about the effectiveness of GA to overcome the investment strategies based on MACD and B&H by achieving 5 and 11% higher returns per year, respectively. GA-based approach was additionally capable of improving the return-to-risk ratio of the investment.Research limitations/implicationsLimitations deal with the fact that the study was carried out on US markets conditions and data which hamper its application in some extend to markets with not as much development.Practical implicationsThe findings suggest that not only skilled but also amateur investors may opt for investment strategies based on GA aiming at refining profitable financial signals to their advantage.Originality/valueThis paper looks at machine learning as an up-to-date tool with great potential for increasing effectiveness in profits when applied into TA investment approaches using MACD in well-developed stock markets.

Kinerja keuangan perusahaan asuransi jiwa di Indonesia berdasarkan tingkat profitabilitas

This study investigates the main determinants of the profitability of life insurance companies in Indonesia. It examines the relationship between the profitability of insurance companies, namely investment income, underwriting profit, and overall net profit. The annual financial reports of ten life insurance companies in Indonesia covering ten years (2010-2019) were sampled and analyzed through panel regression. The findings indicate that gross written premium has a negative effect on overall net profit, yet a positive impact on the underwriting profit of insurance companies. Furthermore, there is a positive relationship between claim payments and the overall net profit of life insurance companies. Further research revealed a positive relationship between total assets and indicators of profitability. The policy implications of this study for insurance industry stakeholders are far-reaching. This study fulfills an urgent need to investigate issues critical to life insurance companies' sustainability, growth, and profitability in developing countries.

The prohibition of speculation in Islamic finance: fairness and framing

PurposeThis paper aims to present a simple behavioural explanation of the prohibition of speculation in Islamic finance.Design/methodology/approachThis paper proposes a theoretical model that describes how investors from low income strata of the society may be prone to make sub-optimal decisions when they compare their outcome from a speculative trading activity to that of the counterparty to the trade and perceive inequity to exist.FindingsWhen individuals from low income strata of the society compare their current situation with the average income of the society, they perceive themselves to be in a loss. This creates a loss frame within which they then evaluate all future outcomes. When such individuals invest in speculative trading activities and incur a loss, they compare their outcome from the trade to that of the counterparty to the trade. As speculative trades are a zero sum game, the counterparty makes an equivalent gain from the trade. Thus, the comparison leads to a perception of inequity. This perception of inequity is aggravated by the loss frame within which the investor is operating. The aggravated inequity aversion may then motivate the investor to make further sub-optimal decisions like repeated speculative trading activities. The Islamic prohibition on speculative trading activities may serve to protect low income investors from entering into such cycles of sub-optimal decisions.Originality/valueThis paper offers a unique explanation of why day trading and short selling may be prohibited in Islamic capital markets.

Measurement and Analysis of Total Local Production Effect on Investment Spending in Iraq from 1990-2018

Investment is one of the important economic activities that occupies fundamental place in the priorities of economic studies because the size of investment determines the volume of production and income and then the rate of economic growth and contributes to pushing the wheel of economic growth, so this research tries to measure the function of investment spending in the Iraqi economy during the extended period From 1990-2018, using the ARDL model, the results of this study showed that there is a long-term equilibrium relationship between income and investment spending and that investment spending depends largely on income, meaning that the relationship between investment spending and income is positive, and the marginal propensity to invest is 0.13.

Research on Improving the Precision Investment Level of Distribution Network Based on the Whole Process Control Means of Big Data

With the continuous and stable growth of China’s national economy, the demand of the whole society for the total power supply is higher and higher, which requires the power enterprises to continuously improve the power supply. However, if the total power supply is increased, the power enterprises need to invest a lot of power transmission facilities, which requires a huge investment in the distribution network. Therefore, different economic development levels among regions will lead to the difference of distribution network investment, which is also an important content of distribution network investment decision. Therefore, we must control the whole process through big data, which will provide a better evaluation system of distribution network investment benefits. Through the whole process management and control mode, the State Grid can build a systematic and complete distribution network investment decision-making system, which will improve the accuracy of distribution network infrastructure project investment. By analyzing the income ratio, the power grid can get scientific economic investment analysis report. Through big data technology, the power grid can realize a variety of data of distribution network operation, such as maintenance plan optimization, distribution network operation process optimization, project investment income, equipment health status analysis, etc., which can provide auxiliary decision support. Through the three aspects of technical benefit, social benefit and economic benefit, we can evaluate the operation efficiency of equipment, which can construct the index system of project investment benefit. Firstly, this paper constructs the whole process management and control system of distribution network based on big data. Then, this paper constructs the accurate investment index system of distribution network. Finally, some suggestions are put forward.