Market Collapse Research Articles

2008's mistrust vs 2020's panic: can ESG hold your institutional investors?

PurposeThe authors compare two market collapse incidents, focusing on their role as turning points for ESG considerations among investors that do not fall under the SRI class. The authors draw from the signaling theory to posit that ESG performance acts as a buffer to retain institutional shareholders under stress conditions.Design/methodology/approachThe authors collect extensive data on institutional shareholdings and corporate performance during the pandemic and the 2008 financial crisis to examine the potential of ESG to act as a downward risk hedging mechanism. The authors test whether superior ESG scores function as insurance and resilience signals that lock investors in through times of high probability of divestments.FindingsFindings indicate that ESG weighs in investment decisions during economic downturn and poor returns. The nature of this positive relationship is not static but dynamic contingent on overall risk materiality considerations.Research limitations/implicationsThe authors update regulators, firms, investors and academics on ESG, risk and crisis management. The shifting materiality and the altering impact of ESG practices is our core implication, as well as limitation, in terms of metrics, temporal evolution and interaction with institutional factors, along with portfolio alpha and safe haven potential in ESG asset classes.Originality/valueThe authors extend current literature focusing on portfolio returns and firm valuations to highlight the role of ESG in shareholder retention during poor return periods. The authors further add to existing studies by examining the shifting materiality of ESG pillars during different crisis settings.

Technological intelligence for circular supply chain: a co-citation analysis approach

Purpose The COVID-19 pandemic has disrupted the supply chains, and this brought researchers and practitioners to think about more on circular supply chains (CSC). The CSC concept has been discussed in the literature more than a decade. This study aims to find out the theoretical roots of CSC by analyzing scholarly articles in literature. Design/methodology/approach This paper uses document cocitation analysis for reaching this aim. After retrieving data from Web of Science database, this paper explores data set by considering used references of these publications and clusters them based on their title terms and visualizes them by using cosine similarity index. Findings This paper concludes that CSC is mainly discussed along with sustainability, sustainable supply chains and green supply chains, where the focus is integrating circular economy principles to supply chain management (SCM). On the other hand, although resiliency is an essential characteristic of SCM, contribution of CSC to supply chain resilience is neglected in the literature. Research limitations/implications CSC will gain importance in near future to increase national/firm productivity, and findings of this paper will give researchers insights for furthering their studies. Social implications To avoid supply chain and market collapse caused by natural disruptions, supply chain resilience is of paramount importance. According to the findings of this paper, the authors believe that business resilience in COVID-19-restricted environment may have exit point by using circular perspective. Originality/value The importance of CSC has increased due to the disruptions caused by the COVID-19 pandemic. Therefore, this unique study was undertaken to investigate the evolution of this crucial topic with evidence from the literature through a cocitation analysis.

China's SMEs Developed Characteristics and Countermeasures in the Post-epidemic Era.

Due to the COVID-19 outbreak, a series of chain reactions, like international trade breakdown, stock market collapse, and crude oil's collapse, have adversely affected the global economy, particularly small and medium-sized enterprises (SMEs). As a result, the Chinese government issued many fiscal and financial policies to support SMEs. This paper analyzes SMEs' coping methods and conceptual changes affected by the epidemic and distinguishes “victims” and “beneficiaries.” Subsequently, based on extensive international experience and local government experience, it provides effective suggestions for the Chinese government to deal with the post-epidemic era's economic changes, policy suggestions, and coping strategies for SMEs' short-term and long-term sustainable development.

A Novel Scheme for Malicious Nodes Detection in Cloud Markets Based on Fuzzy Logic Technique

Cloud security vulnerabilities have recently become more prevalent around the world, posing a threat to cloud service providers' (CSPs) ability to respond to client demands. In cloud market, the requests are announced by the client nodes to their CSP. A malicious node can alter a client's request, resulting in the next cloud market collapse, decreased reliability, and data leaking.To identify malicious nodes in the cloud market, a novel fuzzy multiple criterion decision making scheme is suggested. Authentication test, trust level, traffic size, and node activity levels are all taken into consideration simultaneously as the major criteria for identifying malicious nodes. For each node, the CSP uses fuzzy Integral to generate a composite value based on these criteria. The malicious node is then removed from the cloud market using this composite value. The simulation results demonstrated the potential of the proposed method to prevent nodes in the cloud market from running malware or software that can be used to degrade quality of service by exhausting resources in the cloud market.

The Perception of Filipinos on the Advent of Cryptocurrency and Non-Fungible Token (NFT) Games

Purpose – This study aims to shed light on the rise of play-to-earn games in the Philippines alongside cryptocurrency. The lack of research and public understanding of its benefits and drawbacks prompted the researchers to investigate its market. As such, the study tried to look into the risks and benefits of crypto gaming if it would be regulated by the government, and how market volatility influences the churn rate of crypto games. Method – The research used a descriptive study to determine the perception of people who are engaged in playing “Axie Infinity”. The research also used non-probability sampling using the snowball method. The only tool used to collect data was Google Forms. Furthermore, the study used Statistical Package for Social Science (SPSS) to analyze the descriptive data. Result – The results showed that most players spend their time playing Axie Infinity for about 1 to 4 hours a day. Predominantly, the return of investments for playing the game will take about 1 to 3 months. It also showed that these players agreed that there is a possible financial instability in a volatile market. With this, they have a high trust issue in terms of price manipulation, privacy and security, and its design and usability. Conclusion – Understanding the cryptocurrency market requires comprehending the perspective of the people who are engaged in a play-to-earn game, and their concerns are critical for any government actions aimed at regulating self-employed income earners playing (Non-fungible Tokens) NFT games in the Philippines. Recommendations – It is suggested that further research must be conducted to understand how self-employed Filipino income earners comprehend NFT gaming and cryptocurrency, impacting their level of interest and participation. Research Implications – Taxing NFT games without sound regulatory frameworks may result in the disarray of this alternative income source. Therefore, the government must tread carefully to avoid a market collapse or other unfavorable outcomes.

Study of machine learning algorithms for potential stock trading strategy frameworks

Abstract: Purpose: This paper discusses major stock market trends and provides information on stock market forecasting. Stock market forecasting is essentially an attempt to forecast the future value of the stock market. Doing this manually can be a strenuous task, and thus we need some software and algorithms to make our task easier. This paper also lists a few of those algorithms, formulas, and calculations associated with them. These algorithms and models primarily revolve around the concept of Machine Learning (ML) and Deep Learning. Research Methodology: This study is based on descriptive, quantitative, and cross-sectional research design. We used a multivariate algorithm model and indicators to examine stocks for investing or trading and their efficiency. It concludes with the recommendations for enhancing trading strategies using machine learning algorithms. Results: This study suggests that after comparing and combining the various algorithms using experimental analysis, the random forest algorithm is the most suitable algorithm for forecasting a stock's market prices based on various data points from historical data. Limitations: The applicability of the study was only hampered by unforeseeable tragic events such as economic crisis, market collapse, etc Contribution: Successful stock prediction will be a substantial benefit for stock market institutions and provide real-world answers to the challenges that stock investors face. As a result, gaining significant knowledge on the subject is quite beneficial for us. Keywords: 1. Algorithms 2. Algo-trading 3. Deep learning 4. Machine learning 5. Price prediction 6. Stock market 7. Trading 8. Trends

Art in the Time of Pandemic: Elisabetta Sirani, Artistic Agency, and Capitalist Social Reproduction

Art in the Time of Pandemic: Elisabetta Sirani, Artistic Agency, and Capitalist Social Reproduction

Geometric Brownian motion under stochastic resetting: A stationary yet nonergodic process.

We study the effects of stochastic resetting on geometric Brownian motion with drift (GBM), a canonical stochastic multiplicative process for nonstationary and nonergodic dynamics. Resetting is a sudden interruption of a process, which consecutively renews its dynamics. We show that, although resetting renders GBM stationary, the resulting process remains nonergodic. Quite surprisingly, the effect of resetting is pivotal in manifesting the nonergodic behavior. In particular, we observe three different long-time regimes: a quenched state, an unstable state, and a stable annealed state depending on the resetting strength. Notably, in the last regime, the system is self-averaging and thus the sample average will always mimic ergodic behavior establishing a stand-alone feature for GBM under resetting. Crucially, the above-mentioned regimes are well separated by a self-averaging time period which can be minimized by an optimal resetting rate. Our results can be useful to interpret data emanating from stock market collapse or reconstitution of investment portfolios.

Scenario archetypes reveal risks and opportunities for global mountain futures

Mountain social-ecological systems (MtSES) are transforming rapidly due to changes in multiple environmental and socioeconomic drivers. However, the complexity and diversity of MtSES present challenges for local communities, researchers and decision makers seeking to anticipate change and promote action towards sustainable MtSES. Participatory scenario planning can reveal potential futures and their interacting dynamics, while archetype analysis aggregates insights from site-based scenarios. We combined a systematic review of the global MtSES participatory scenarios literature and archetype analysis to identify emergent MtSES archetypal configurations. An initial sample of 1983 rendered 42 articles that contained 142 scenarios within which were 852 ‘futures states’. From these future states within the scenarios, we identified 59 desirable and undesirable futures that were common across studies. These ‘common futures’ were grouped into four clusters that correlated significantly with three social-ecological factors (GDP per capita, income inequality, and mean annual temperature). Using these clusters and their associated significant factors, we derived four MtSES scenario archetypal configurations characterized by similar key adaptation strategies, assumptions, risks, and uncertainties. We called these archetypes: (1) “revitalization through effective institutions and tourism”; (2) “local innovations in smallholder farming and forestry”; (3) “upland depopulation and increased risk of hazards”; and (4) “regulated economic and ecological prosperity”. Results indicate risks to be mitigated, including biodiversity loss, ecosystem degradation, cultural heritage change, loss of connection to the land, weak leadership, market collapse, upland depopulation, increased landslides, avalanches, mudflows and rock falls, as well as climate variability and change. Transformative opportunities lie in adaptive biodiversity conservation, income diversification, adaptation to market fluxes, improving transport and irrigation infrastructure, high quality tourism and preserving traditional knowledge. Despite the uncertainties arising from global environmental changes, these archetypes support better targeting of evidence-informed actions across scales and sectors in MtSES.

Adaptive capacities and social resilience on Kangaroo Island: Beyond the staples trap

AbstractThis article uses the lens of evolutionary economic geography to consider adaptive capacities and forms of social resilience that manifest in rural, primary commodity‐dependent regions in the face of structural forces to which such regions seem predisposed. Using a case study of Kangaroo Island, South Australia, the article explores the demographic and social impacts that a sudden and dramatic commodity market collapse in the 1990s had on this rural economy and community and on its regional development. During late 2017 and early 2018, semi‐structured interviews were conducted with six representatives of the Kangaroo Island business community, including those from the farm, tourism, and small business sectors (three interviews) and from local government (one interview), as well as with a former rural financial counsellor and the former Commissioner for Kangaroo Island. Although the collapse of the wool market and of a flawed managed investment scheme for agroforestry had dramatically negative impacts on local economic and social systems, the Island's subsequent demographic recovery and Islanders' ongoing commitments to their sporting clubs both point to considerable adaptive capacities and social resilience. The research highlights what can be achieved by people with high levels of place attachment and commitment, as individuals and as collectives also able to draw on support scales beyond the local.

Firm efficiency and stock returns during the COVID-19 crisis

We investigate the relationship between firm efficiency and stock returns during the COVID-19 pandemic. We find that highly efficient firms experienced at least 9.44 percentage points higher cumulative returns during the market collapse. A long-short portfolio consisting of efficient and inefficient firms would have also yielded a significantly positive weekly return of 3.53% on average. Overall, our results show that firm efficiency has significant explanatory power for stock returns during the crisis period.

Schumpeter’s creative destruction and the credit crunch of 2007–2008: an Islamic banking perspective

PurposeThis paper aims to compare products traded in secular and Islamic banking environments prior to the credit crunch of 2007–2008; to locate the comparison in a Schumpeterian model of creative destruction of dynamic innovation in the capital markets; and to evaluate the implications for diversity of investor product choice.Design/methodology/approachFinancial products are critiqued using qualitative criteria, including underestimation of risk implicit in mortgage-backed securities and securitisation, excessive speculative activity in credit default swaps and the magnification of leverage and volatility. Comparable Islamic products are considered for the extent to which they facilitate the same precursors of market crises.FindingsInnovation in secular financial markets has traditionally led to asset bubbles, underestimation of risks and market exuberance. Islamic banking constrains creativity by prohibiting risk transference and disconnection of financing activity from social context and economic purpose. As such, the latter reduces Schumpeterian creative destruction but at the cost of reduced investor choice and market liquidity. Restriction of the reallocation of risk between those who do not wish to hold it and those who do dampens innovation but would have prevented the trading of products which contributed to the credit crunch.Originality/valueThe constraining effect of Islamic banking upon creativity and innovation is considered alongside its capacity to reduce market volatility, speculation and systemic instability. Schumpeterian theory deepens the analysis in terms of the drivers of innovation and market collapse.

Stimulating Domestic Demand as a Key Factor of Economic Growth

World economy shows a high level of uncertainty. There are considerable risks of economic slowdown and stock market collapse. For many years, the Russian economy has been dependent on external factors. Recently, when anti-Russian sanctions are imposed, it is particularly important to find internal sources of growth, including domestic demand as the most significant factor. However, environment for the development of the Russian economy remains unfavourable due to high interest rates, volatile exchange rate, increasing tax rates, and ambiguous economic policy. Based on the analysis of regional statistics (including some regions of the Central Federal District), we confirmed the weak relationship between investments and gross regional product (GRP) revealed by other scientists. This may be the result of poor investment efficiency and its low multiplier effect. In this situation, the right choice of sectors with high multipliers and investment efficiency creates the potential for increasing domestic demand. Simultaneously, mechanisms for the expansion of resources ensuring regional economic growth play an important role. In this regard, we developed approaches aimed at the creation of conditions for the expansion of regional financial resources to support economic activity, domestic demand and economy in general, considering a social aspect of these processes. Some of the proposed mechanisms stimulate the participation of banks in financing economic processes, federal or regional bond issuance (the Bank of Russia would be the main buyer), etc. These proposals consider the experience of other countries in stimulating economic growth, including at the regional level. Financial regulators and relevant regional agencies can use the research results for developing economic policies.

Bail-in and Bailout: Friends or Foes?

This paper analyzes the effects of bail-in and bailout policies on banks’ funding costs, incentives for loan monitoring, and financing capacity. In a model with moral hazard and two investment stages, a full bail-in turns out to be, ex post, the optimal policy to deal with a failing bank. Unlike a bailout, it allows the government to recapitalize the bank without resorting to distortionary taxes. As a consequence, however, investors expect bail-ins rather than bailouts. Ex ante, this raises banks’ cost of debt and depresses bankers’ incentives to monitor. When moral hazard is severe, this time inconsistency leads to a credit market collapse in which productive projects are not financed, unless the government precommits to an alternative resolution policy. The optimal policy is either a combination of bail-in and bailout—in which the government uses a minimal amount of public transfers to lower banks’ cost of debt—or liquidation, depending on the severity of moral hazard and the shadow cost of the partial bailout. This paper was accepted by Gustavo Manso, finance.

Investors’ Perception of Business Group Membership during An Economic Crisis: Evidence from the COVID-19 Pandemic

This paper examines how investors perceive business group membership in Korea during the COVID-19 pandemic. Evidence of a time-varying and heterogeneous value of affiliation emerges from stock price performance analysis. I find that investors discount business group affiliation during a market collapse, but are willing to pay a premium for affiliation during market recovery. Overall, this pattern is more pronounced for financially weak affiliates and large business groups. Results also show that business group membership alleviates investors’ concerns regarding financial flexibility highlighting the role of internal capital markets as a substitute to external finance.

Analysis of the Spanish real estate market as investment opportunity

After the bubble burst, the real estate sector has become a very attractive market for funds or large investors. Financial entities were going through a very difficult situation and these opportunistic funds found the best time to invest in real estate. One of the most important funds in this market is Blanckstone, it has a large portfolio of assets and is considered the largest landlord in Spain. At the end of 2013, several indicators were favorable for the real state sector. However, since the last quarter of 2019, this recovery already showed signs of exhaustion and the contraction was greater this year since productive activity in most sectors was paralyzed. However, several authors agree that a market collapse will not occur, since they are since current conditions are better compared to those that occurred during the bursting of the bubble, for example the private sector presents a better financial position and there is no excessive building.

COVID-19 related TV News and Stock Returns: Evidence from Major US TV Stations

We investigate a novel dataset of more than half a million 15 second transcribed audio snippets containing COVID-19 mentions from major US TV stations throughout 2020. Using the Latent Dirichlet Allocation, an unsupervised machine learning algorithm, we identify seven COVID-19 related topics discussed in US TV news. We find that daily changes in airtime corresponding to certain COVID-19 related topics, such as a public health and a stock market topic, predict significant and economically meaningful market reactions in the next day. Consistent with models of investor sentiment, we find that the stock market topic induces temporary upward price pressure followed by returns reversals in subsequent days. This effect, however, is specific to the stock market topic since we find no evidence of return reversals for other COVID-19 topics. Further analyses suggest that this effect is moderated by current market levels, more pronounced after the market collapse in March 2020, and concentrated in telecommunication, wholesale/retail, health, and financial industry portfolios. In summary, these findings are in line with a behavioral “Fear Of Missing Out”-narrative reinforced by TV news about the stock market that draws investor attention to rising stock prices, fueling fears of missing out on gains ensuing from the COVID-19 stock market turmoil in March 2020.

A REVIEW OF THE METHODS OF ECONOMIC AND MATHEMATICAL MODELING BASED ON THE PRINCIPLES OF ECONOPHYSICS. PART 2

A review of theoretical and applied results obtained in the framework of the scientific direction in econophysics at the Department of information systems and mathematical methods in economics is given. The first part gives the concept of a financial bubble and methods for finding them. At the beginning of the article, the development of econophysics is given. Therefore, using the research of physicists as a model, econophysics should begin its research not from the upper floors of an economic building (in the form of financial markets, distribution of returns on financial assets, etc.), but from its fundamental foundations or, in the words of physicists, from elementary economic objects and forms of their movement (labor, its productivity, etc.). Only in this way can econophysics find its subject of study and become a "new form of economic theory". Further, the main prerequisites of financial bubble models in the market are considered: the principle of the absence of arbitrage opportunities, the existence of rational agents, a risk-driven model, and a price-driven model. A well-known nonlinear LPPL model (log periodic power law model) was proposed. In the works of V.O. Arbuzov, it was proposed to use procedures for selecting models. Namely, basic selection, "stationarity" filtering, and spectral analysis were introduced. The results of the model were presented in the works of D. Sornette and his students. The second part gives the concept of percolation and its application in Economics. We will consider a mathematical model proposed by J.P. Bouchaud, D. Stauffer, and D. Sornette that recreates the behavior of an agent in the market and their interaction, geometrically describing a phase transition of the second kind. In this model, the price of an asset in a single time interval changes in proportion to the difference between supply and demand in this market. The results are published in the works of A.A. Byachkova, B.I. Myznikova and A.A. Simonov. There are two types of phase transition: the first and second kind. During the phase transition of the first kind, the most important, primary extensive parameters change abruptly: the specific volume, the amount of stored internal energy, the concentration of components, and other indicators. It should be noted that this refers to an abrupt change in these values with changes in temperature, pressure, and not a sudden change in time. The most common examples of phase transitions of the first kind are: melting and crystallization, evaporation and condensation. During the second kind of phase transition, the density and internal energy do not change. The jump is experienced by their temperature and pressure derivatives: heat capacity, coefficient of thermal expansion, or various susceptibilities. Phase transitions of the second kind occur when the symmetry of the structure of a substance changes: it can completely disappear or decrease. For quantitative characterization of symmetry in a second-order phase transition, an order parameter is introduced that runs through non-zero values in a phase with greater symmetry, and is identically equal to zero in an unordered phase. Thus, we can consider percolation as a phase transition of the second kind, by analogy with the transition of paramagnets to the state of ferromagnets. The percolation threshold or critical concentration separates two phases of the percolation grid: in one phase there are finite clusters, in the other phase there is one infinite cluster. The key situation to study is the moment of formation of an infinite cluster on the percolation grid, since this means the collapse of the market, when the overwhelming part of agents for this market has a similar opinion about their actions to buy or sell an asset. The main characteristics of the process are the threshold probability of market collapse, as well as the empirical distribution function of price changes in this market. Keywords: econophysics, behavior of agents in the market, market crash, second-order phase transition, percolation theory, model calibration, agent model calibration, percolation gratings, gradient percolation model, percolation threshold, clusters, fractal dimensions, phase transitions of the first and second kind.

Aye Corona! The contagion effects of being named Corona during the COVID-19 pandemic

In the midst of the 2020 global COVID-19 pandemic and subsequent financial market collapse, corporate entities have to navigate a number of truly unforeseen contagion risks. However, one such group included those who shared their corporate identity with aspects of the rapidly evolving coronavirus. Our results indicate the existence of sharp, dynamic and new correlations between companies related to the term ‘corona’, outside of pre-existing interrelationships. We provide a number of observations as to why this situation occurred.

The End of Leisure and Retirement, Covid-19: Innovations, Jobs, pensions, and Keynes: Guaranteed Income or Future Poverty and Redundancy?

The history of the support by society of the aged is discussed in cross cultural and historical context. Various cultural traditions are compared with the forms developed in complex societies from ancient Egypt and Greece and Rome, to China, the Aztec, Inca and Maya, to those of religious organizations, or those developed under different modern ideological systems like capitalism and communism as well as social democratic nations. It is found that the way a society values the aged and views their contribution to society determines largely their willingness to provide for their support. An increasing number of companies have gone bankrupt in recent years following the 2007 credit crisis and stock market collapse. More have raided their pension funds to stay afloat or have closed them and transferred liability to the federal Pension Benefit Guaranty Corporation. Major changes to federal law concerning pensions and the responsibility of corporations to fund them has made under the Pension Protection Act of 2006. World wide workers’ retirement payments are under assault as are investments by pension funds due to laws governing priority of payment in different countries concerning stock holders vs bondholders and liability for pension funds. The need for retirement of some kind in the post-Covid-19 world will require new forms as well as recovery of pre-Covid-19 savings and investments. Changes in the law are proposed to increase the stability of pensions and reliability to workers of pension payments.