Market Stability Research Articles

Incentive-compatible primary frequency response ancillary service market mechanism for incorporating diverse frequency support resources

Frequency vulnerability will be prominent in future low-inertia power systems with high renewable penetration, which calls for primary frequency response (PFR) services from a wide range of entities. The challenge, however, is to design effective and fair market mechanisms to incentivize diverse PFR resources. To this end, this paper proposes a PFR ancillary service market mechanism to ensure the security of frequency nadir and quasi-steady-state (QSS) frequency while providing equitable settlements to multiple PFR providers. First, bidding rules are designed for accurate depictions of dynamic performances from diverse PFR resources. Then, a PFR market-clearing model, incorporating frequency security constraints that explicitly express PFR providers' contributions, is developed to deploy sufficient PFR resources while maximizing social welfare. Finally, two unified marginal PFR prices are derived to reflect the scarcity of frequency support capabilities for maintaining frequency nadir and QSS frequency security, enabling fair settlements to successful bidders based on their contributions. Moreover, the pricing and settlement mechanism is theoretically proven incentive-compatible, ensuring the PFR market stability. Case studies verify the proposed PFR market's effectiveness in ensuring frequency security, providing fair incentives to diverse PFR providers, maintaining market stability, and supporting scalable implementations.

A hierarchical game framework for peer-to-peer energy trading in distribution networks considering the participation of prosumers

The advent of the peer-to-peer energy trading has dramatically altered the conventional dynamics of distribution networks. Prosumers, managing independently and engaging in peer-to-peer (P2P) energy exchanges, introduce critical challenges for the economical and secure operations of these networks. This research presents a hierarchical framework designed to manage P2P energy interactions between prosumers and to facilitate flexible operation within the distribution network at the substation level. The upper layer of the model aims to stabilize market prices within the distribution framework, while the lower layer establishes a P2P energy trading platform that upholds fairness and safeguards the privacy of the prosumer participants. A fixed-point mapping approach is utilized to assess the interactions between market stabilization efforts and prosumer bidding strategies within this framework. Through simulations, we illustrate the logical soundness and effectiveness of our proposed model and approach. The findings indicate that the proposed model and the energy trading framework could substantially improve the overall welfare of all stakeholders involved.

The Role of Information Governance in Mitigating Financial Crime Risks in Stablecoin Transactions

This study investigates the role of information governance in mitigating financial crime risks in stablecoin transactions. Using a variety of analytical techniques, including simple linear regression, sentiment analysis with NLP tools, logistic regression, and machine learning models, the research evaluates the impact of information governance on innovation, user trust, financial crimes, and the effectiveness of combined compliance measures. The findings indicate that strict information governance regulations reduce innovation but enhance market stability and user trust. Robust governance correlates strongly with increased user adoption, while higher anonymity features in stablecoins are linked to a higher incidence of financial crimes. Integrating KYC/AML compliance with transaction monitoring significantly improves the detection and prevention of financial crimes compared to standalone approaches. These insights provide valuable guidance for policymakers, regulatory authorities, and financial institutions to develop strategies that balance innovation with enhanced security and compliance in the stablecoin market.

Short-Term Accommodations and Long-Term Housing Challenges in the Margaret River Tourist Destination: A Perspective of Population Movement and Pricing

This study aimed to investigate the impact of short-stay accommodation (SSA) on housing dynamics, community welfare, and economic development in the Margaret River regional area. Grounded in an exploratory research paradigm, qualitative methods were used to gather insights from key stakeholders such as property owners, realtors, and council officials. Purposive sampling was utilized to select participants with diverse experiences and perspectives on SSA. Semi-structured interviews were conducted, totaling 21 interview sessions spanning almost 600 min, to capture in-depth and nuanced perspectives on SSA’s impact and regulatory landscape. Thematic analysis of the interview data, which was divided into two segments, revealed significant concerns regarding housing affordability, community well-being, and regulatory effectiveness. Additionally, the study uncovered a complex relationship between SSA and population dynamics, highlighting implications for the local housing infrastructure and market stability. The findings underscore the urgency of collaborative policy interventions to address the housing crisis and mitigate the adverse effects of SSA on local communities. Policymakers and stakeholders can utilize these insights to develop holistic strategies that prioritize equity, inclusivity, and shared prosperity in shaping the future of housing in regional areas such as Margaret River. This study contributes original insights by providing a nuanced understanding of the multifaceted implications of SSA on housing dynamics and community welfare in a regional context. By using qualitative methods and engaging key stakeholders, the research offers unique perspectives on the challenges and opportunities associated with the proliferation of SSA, thereby advancing scholarly discourse, and informing evidence-based policymaking in the field of housing studies.

Understanding Investment Decision-making: A Qualitative Inquiry into High-Frequency Trading, Investment Strategies, and Portfolio Performance in the Financial Market

This qualitative study explores investment decision-making in the context of high-frequency trading (HFT), investment strategies, and portfolio performance within the financial market. The research aims to provide insights into the complex dynamics influencing investment decisions and their implications for market participants. Adopting a qualitative research design, the study conducts a comprehensive review and analysis of existing literature from academic journals, books, and conference proceedings. The data collection process involves synthesizing insights from diverse sources to uncover underlying themes, patterns, and contradictions surrounding investment decision-making. Through thematic analysis and constant comparison, the study identifies key findings related to the role of HFT, diversity of investment strategies, and evaluation of portfolio performance. The results highlight the transformative impact of HFT on market liquidity, efficiency, and stability, while also raising concerns about market fragmentation and systemic risks. Additionally, the study explores the evolution of investment strategies, ranging from traditional approaches like fundamental analysis to emerging techniques such as algorithmic trading and quantitative strategies. It underscores the importance of tailoring investment strategies to individual preferences and market conditions for optimizing portfolio performance. Furthermore, the study evaluates alternative frameworks such as post-modern portfolio theory (PMPT) and factor investing, offering promising avenues for enhancing portfolio resilience and risk-adjusted returns. Overall, the research contributes to a deeper understanding of investment decision-making processes and informs stakeholders in the financial industry about effective strategies for navigating the dynamic landscape of the financial market.

Connectedness between Sustainable Investment Indexes: The QVAR Approach

We studied the relationship between sustainable investment indexes and examine whether this relationship varies in bullish, bearish, and stable financial markets. To understand this issue more deeply, we analyzed the connectedness between three indexes—the Sustainable Impact investments, Paris-aligned stocks, and green bonds indexes—using the daily closing prices from 1 June 2017 to 15 April 2024, encompassing 1793 observations. We used a quantile vector autoregressive (QVAR) model to understand the dynamic relationship among the considered indices. The findings indicate that sustainable investments are strongly interconnected in both high and low quantiles, but this connection weakens significantly during periods of market stability. The Sustainable Impact investments and Paris-aligned stocks indexes are net transmitters of impacts to other sustainable alternatives, while the green bonds index is a net receiver. We also observed an increase in interconnectedness across all quantiles during the pandemic, the Russia–Ukraine military conflict, and changes in the European Union and the United States’ monetary policies.

Strategies for mitigating cybersecurity challenges to fund management in the digitalized real estate industry

Fund management (FM), a critical managerial aspect of the real estate (RE) industry, is increasingly threatened by cybersecurity challenges. This study examines the challenges and proposes technology-based and conventional (non-technology-based) strategies for mitigating them efficiently and sustainably, emphasizing the application of the former. The study relied on secondary data besides participant observation and introspection on experiential learning. Qualitative method was employed. Systematic review and content and thematic analyses were deployed for synthesis and analysis of data. The analysis shows that artificial intelligence (AI), smart technologies, new media and other 21st century cutting edge technologies have the capacity to significantly mitigate the cybersecurity challenges confronting FM in the RE industry. The study concludes that as the challenges increasingly emerge with the digitalization of RE, viable conventional and technology-based strategies should be devised and deployed significantly to mitigate them. By so doing, digitally secured financial transactions, effective FM, cash flow control, market stability, profit maximization, etc. would be attained at a high extent.

Study on the Stability of Complex Networks in the Stock Markets of Key Industries in China.

Investigating the significant "roles" within financial complex networks and their stability is of great importance for preventing financial risks. On one hand, this paper initially constructs a complex network model of the stock market based on mutual information theory and threshold methods, combined with the closing price returns of stocks. It then analyzes the basic topological characteristics of this network and examines its stability under random and targeted attacks by varying the threshold values. On the other hand, using systemic risk entropy as a metric to quantify the stability of the stock market, this paper validates the impact of the COVID-19 pandemic as a widespread, unexpected event on network stability. The research results indicate that this complex network exhibits small-world characteristics but cannot be strictly classified as a scale-free network. In this network, key roles are played by the industrial sector, media and information services, pharmaceuticals and healthcare, transportation, and utilities. Upon reducing the threshold, the network's resilience to random attacks is correspondingly strengthened. Dynamically, from 2000 to 2022, systemic risk in significant industrial share markets significantly increased. From a static perspective, the period around 2019, affected by the COVID-19 pandemic, experienced the most drastic fluctuations. Compared to the year 2000, systemic risk entropy in 2022 increased nearly sixtyfold, further indicating an increasing instability within this complex network.

법인 거래량 비율이 아파트 가격에 미치는 영향

This study focused on the steadily increasing proportion of corporate transactions in the total apartment transaction volume. It also investigated the correlation between this proportion and apartment prices. The analysis confirmed a positive relationship between the corporation's share in apartment transaction volume and the apartment sales index. In particular, the direction of this relationship varied depending on the corporation's market participation status. When a corporation participated as a seller (buyer), it positively (negatively) correlated with the apartment sales index. This study has implications for achieving the policy goal of curbing speculative demand from corporations. However, the system must be restructured to incentivize corporations to actively engage in real estate transactions as sellers to ensure price stability in the real estate market.

The Moderating Role of Institutional Quality in the Relationship between Foreign Capital Inflows and Stock Market Development: A Panel Data Analysis

The study examines the impact of foreign capital inflows (FCI) on stock market development (SMD), with a specific focus on the moderating role of institutional quality (IQ). The study uses a panel dataset of 28 emerging economies for the period of 1998 to 2022. The findings reveal that both international remittances (REM) and foreign portfolio investment (FPI) have a significant positive impact on SMD. These findings imply that REM inflows enhance the availability of financial resources in the economy, promoting stock market growth and stability. Similarly, FPI increases market liquidity and fills the saving-investment gap in the host country, thereby increasing SMD. However, the results show that foreign direct investment (FDI) has a significant negative impact on SMD. This finding implies that FDI could negatively affect SMD in the host country due to the diversion of investments from the stock market to other business ventures, profit repatriation, and crowding-out effects on domestic investment by creating strong competition in the input market, making it difficult for listed domestic firms to operate. Moreover, the study reveals two unique and interesting findings. First, official development assistance (ODA) has a significant negative impact on SMD, suggesting that ODA reduces SMD due to the misallocation of resources due to aid conditions and economic instability, and the crowding-out effect on private investments. Second, IQ positively moderates the relationship between all forms of FCI and SMD in the sampled countries, implying that host countries with a good institutional framework and high IQ tend to experience high SMD.

Long Run and Short Run Relationships Between Sensex Macro Economic Variables

This study delves into the intricate relationships between the Sensex, India's premier stock market index, and key macroeconomic variables, highlighting both long-term and short-term interactions. Macroeconomic variables such as GDP, inflation, interest rates, and foreign exchange reserves are analysed to understand their impact on the Sensex. Additionally, the study considers microeconomic variables, providing a comprehensive view of economic dynamics. By utilizing econometric methods like Vector Auto regression (VAR) and Johansen co integration tests, the research aims to distinguish between immediate economic shocks and sustained economic trends affecting the Sensex. The investigation focuses on Aditya Birla Money as a case study to explore financial market dynamics. The identified research gap emphasizes the need to consider the influence of emerging digital financial assets and fin tech innovations on traditional macroeconomic variables and market stability. By addressing this gap, the study aims to provide a deeper understanding of how technological advancements and digital transformation interact with established economic indicators to affect financial markets. The primary objectives include examining the long-term and short-term relationships between the Sensex and key macroeconomic indicators, identifying the most significant factors influencing Sensex performance, and assessing the predictive power of these variables. Data collection involves both primary sources, such as interviews with financial experts, and secondary sources, including financial databases. The study's findings are expected to offer valuable insights for investors, policymakers, and financial analysts, aiding in informed decision-making and enhancing strategies for risk management in the ever-evolving economic landscape.

Advanced AI Solutions for Securities Trading: Building Scalable and Optimized Systems for Global Financial Markets

Integrating Artificial Intelligence (AI) into securities trading software has revolutionized the financial markets by enhancing scalability, efficiency, and optimization. This paper explores the historical evolution and advancements in AI-driven trading systems, emphasizing their impact on global financial markets. The study investigates how machine learning, deep learning, and other AI technologies enable sophisticated trading strategies, improve market liquidity, and reduce transaction costs. It also addresses the challenges AI integration poses, including decision-making opacity, bias, increased market volatility, and data privacy concerns. The paper argues for the need for scalable architectures, optimization algorithms, and transparent governance to mitigate these issues. Additionally, human oversight remains crucial for evaluating AI outputs and maintaining accountability. This research aims to provide a comprehensive analysis of advanced AI systems in securities trading, highlighting their potential to enhance market efficiency and stability.

Financial Crisis Management from the Perspective of national MPs: A Qualitative Assessment

Background: Financial crises have characterized economic history since the Roman Empire. Despite intensive political debate and extensive scientific research, parliaments in their role as legislators have failed to develop effective protection mechanisms. The example of the financial crisis of 2008 showed a major lack of political foresight with regard to the long-term consequences of decisions. Aim: The paper aims to provide insights into how financial politicians use their individual knowledge in policymaking and how knowledge management tools can help achieve financial market stability. Methods: Seven qualitative interviews with Members of national Parliaments in Europe were conducted in mid-2023. The evaluation was carried out using qualitative content analysis. Results: The results show that while the majority have the skills and understanding, the topic itself is underrepresented in everyday parliamentary life. The article concludes with a discussion of the need to introduce knowledge management systems in the parliamentary context. Practical relevance: This paper helps to uncover structural knowledge deficits among MPs. Knowledge management instruments could provide easy-to-implement support.

Інноваційні стратегії сталого розвитку підприємств в умовах мінливого ринку

The article analyzes various approaches to innovation development for enterprises operating in volatile markets. It explores critical innovation strategies, including proactive, reactive, imitative, niche, mergers and acquisitions (M&A), open innovation, incremental, and radical strategies. The proposed utilization of these strategies aims to ensure sustainable development for enterprises, considering their specific activities and market conditions. Proactive Strategies are characterized by their focus on anticipating and shaping market trends—proactive strategies position companies as market leaders by developing new products and services ahead of market demand. Analyzing technological trends and innovations is highlighted, enabling enterprises to maintain a competitive edge by staying ahead of competitors. Reactive strategies, however, adapt to changes in market and consumer demand. This approach involves responding swiftly to market shifts and competitive innovations. Imitative Strategies involve replicating or adapting innovations introduced by other companies. Niche Strategies concentrate on serving narrow market segments or specific technological niches. Companies utilizing niche strategies aim to become specialists in their chosen fields, offering unique solutions tailored to specific customer needs. This approach requires deep understanding, specialization, and expertise, allowing enterprises to command premium prices due to the distinctiveness of their products or services. This approach accelerates innovation processes by integrating external capabilities while reducing competitive pressures. However, successful implementation of M&A strategies demands meticulous planning and effective management to achieve synergy between organizations. In conclusion, the article offers a comprehensive framework for selecting and implementing innovative strategies tailored to enterprises’ specific needs and conditions in dynamic market environments. By strategically applying these approaches, enterprises can enhance their innovation capabilities, adapt to market changes effectively, and achieve sustainable development in the long term. Keywords: innovation strategies, sustainable development, dynamic market, proactive strategies, reactive strategies, imitative strategies, niche strategies, mergers and acquisitions, open innovation, incremental strategies, radical strategies, university partnerships, R&D, competitive advantage, market stability.

Does economic and climate policy uncertainty matter the oil market?

In the context of addressing climate change and promoting the energy transition, economic policy uncertainty (EPU) and climate policy uncertainty (CPU) have become significant factors increasing fluctuations in the oil market. This research investigates whether EPU and CPU exert an influence on the oil market by using the wavelet-based quantile-on-quantile approach. Our findings demonstrate that the effect of EPU and CPU on oil prices (OP) varies across different frequencies. Specifically, high EPU aggravates investors' pessimism sentiment and dampens companies’ willingness to invest in the short run. As a result, the decrease in investment by market participants in oil-related products causes OP to decline. In the medium- and long-horizons, low levels of EPU can stimulate consumer oil consumption and drive OP higher. Moreover, the uncertainty posed by CPU in the short run increases the risk of fossil fuels becoming stranded assets and negatively impacts the stability of the oil market. In the medium to long-term perspective, CPU leads investors to increase their consumption of fossil fuels due to cost-efficiency considerations, thereby positively influencing oil demand. These results can provide decision-making support for governments to formulate effective oil market development strategies and for investors to optimise risk management.

Stock price crash risk research: current trends and future directions

PurposeUnderstanding and mitigating stock price crash risk is vital for investors and regulators to ensure financial market stability. This study aims to unveil significant research trends and opportunities.Design/methodology/approachThis study adopts the bibliometric and systematic review approach to analyse 485 Scopus-indexed articles through citation, keyword co-occurrence, bibliographic coupling, and publication analyses and delve into the depth of crash risk literature.FindingsThis bibliometric review reveals not only a surge in crash risk publications over the last decade but also delineates several emerging thematic threads within this domain. We identify seven distinct themes that have gained prominence in recent literature: bad news hoarding, board characteristics, capital market factors, corporate policies, ownership impact, corporate governance, and external environmental influences on crash risk. This thematic analysis provides a comprehensive overview of the evolving landscape of crash risk research and underscores the multifaceted nature of factors contributing to market instability.Practical implicationsThis study makes a substantial contribution by furnishing a thorough examination of existing studies, pinpointing areas where knowledge is lacking, and shedding light on emerging trends and debates within the crash risk literature.Originality/valueThis study identifies current research trajectories and propels future exploration into agency perspectives, audit quality, and corporate disclosures within crash risk literature.

The Role of European Supervisory Authorities in Consumer Protection Standard Setting on the Financial Services Market – Based on the Example of the European Banking Authority

The purpose of the article is to present the genesis of the emergence and the scope of powers of the European Supervisory Authorities (ESAs) (the EBA, ESMA, and EIOPA), with particular reference to the EBA as regards the building of its supervisory normative standard and the protection of the consumer of financial services. The authors will propose de lege ferenda postulates which, in their view, would allow for an improvement in the quality of the financial services offered to consumers and ensure a higher level of protection of their interests and, at the same time, legal certainty for their providers. Increasingly sophisticated and complex financial products cause interpretation difficulties for both the courts and consumer protection authorities, but above all for consumers themselves, which consequently poses a challenge for both sides of the market (supply and demand). It is also a challenge for the post-crisis ESAs as the EU bodies not only designated to monitor and manage both the stability and security of the financial market, along with the actual level of consumer protection within it. In the preparation of the article, the legal-dogmatic and legal-theoretical method, which is standard for such studies, was applied, which allows for an analysis of the provisions of EU law and the identification of the norms stemming from them using interpretation and the assessment of the content of the provisions through the prism of the principle of consumer protection from Articles 12 and 169 TFEU and the EBAs’ competence provisions. Due to the fact that, in principle, the powers and competences of all three ESAs are analogous and only differ in terms of the scope of their application (i.e., financial institutions operating in the relevant financial market sectors – banking, insurance, and pension and investment), the authors will present their considerations with reference to the European Banking Authority (EBA), which is an exemplification of the powers of the other supervisory authorities. Thus, the secondary piece of EU legislation to be considered in this article will be the Council and European Parliament Regulation, hereinafter known as “EBA Regulation” and the actions taken by the EBA on that basis.

Inheritance dynamics and housing price fluctuations: Evidence from the China household finance survey

The demographic shift towards an older population has a profound impact on the economy, particularly in the real estate sector. The evolving housing demand, shaped by changing family structures and financial circumstances, is influenced by inheritance considerations, which in turn affect investment decisions and market dynamics. This study uses data from the China Household Finance Survey (2013–2019) to explore the impact of aging on housing prices, with a focus on inheritance motives and the influence of male descendants. While ageing tends to decrease prices, inheritance motives, particularly those of male heirs, tend to offset this effect. The geographical distribution of this impact varies, with the level of education also playing a role. It is therefore vital to address demographic shifts and cultural norms in order to maintain stability in the housing market.

The Impact of Central Bank Policy on Aspects of Bank Sharia Financial Behavior in the Money Market

Central bank policy has an important role in influencing the behavior of banks in the money market. This is important because banking movements can affect market stability and the economy as a whole. Therefore, analysis of the impact of central bank policy on bank behavior is very important to expand understanding of how monetary policy can influence the actions of banks participating in money markets. The research results show that central bank policies such as changes in interest rates, mandatory reserve policies, and market intervention have a significant impact on bank behavior. Interest rates set by the central bank can affect bank lending and investment interest, while mandatory reserve policies can affect banks' liquidity and their risk management strategies in the money market. This study also emphasizes the importance of transparency and communication from central banks in implementing policies. Clarity in policy can indirectly help in managing market expectations and help banks respond to changes in monetary policy. This research can be the basis for further research exploring how central bank policies can improve risk and liquidity management, as well as the stability of money markets and the economy. In conclusion, central bank policy has a significant impact on bank behavior in the money market, and policy communication and transparency are important factors in bank risk and liquidity management in order to maintain money market stability in the future.

Insider Trading Analysis of the Indonesian Capital Market

Insider trading is one of the crucial issues in the capital market that can have a significant impact on market integrity and stability. In Indonesia, the practice of insider trading not only causes losses for investors who do not have access to insider information but can also reduce investor confidence in the capital market as a whole. Research This article will analyze and explain Insider Trading in the Indonesian Capital Market. This study uses notative juridical methods or normative law. The results of this study explain that Insider Trading in the Indonesian Capital Market is contained in Articles 95, 96, 97, 98, 99, and Article 104 which explain that insiders from an issuer of public companies that have inside information are prohibited from buying or selling affects, or companies that make transactions with issuers where they work. The prohibition on the use of insider information is more due to unfair actions against others who are completely unaware of the existence of the information. Investor protection is one very important way because if investors do not get enough protection, they are reluctant to make transactions on the exchange. Without a large number of investors, capital market activities will be weak, and the function of the capital market will not develop, the principle of openness as one of the efforts to protect investors. Such protection efforts will be realized if the implementation of information transparency or full disclosure obligations containing material facts in activities that take place in the capital market in accordance with the purpose of the principle of openness itself, namely to create a fair, efficient and orderly market that protects Investors and helps determine accurate market prices which are all intended for the benefit of Investors or potential Investors.