Market Transparency Research Articles

Prospects for digitalization of sustainable development projects in the Russian Federation

Green bonds have become the most notable innovations in the field of sustainable financing over the past 10 years. The article discusses the problems of issuing and circulation of such financial market instruments, examines the opportunities that modern financial technologies provide for the development of this market segment. Technologies for investing in green bonds and sustainable development bonds remain burdensome and technologically complex, as they involve going through many stages and attracting a significant number of participants. In addition, to date, there has not been a liquid and transparent market for retail investors, and economic sanctions against Russia cut off the country from the financial markets of other countries for an indefinite time. However, the tools of sustainable development can now be successfully applied if innovative technologies such as blockchain technologies, smart contracts, the Internet of things and digital assets are used. The purpose of the study is to formulate recommendations for the progress of the sustainable development system in Russia, as well as to propose a mechanism for the tokenization of sustainable development bonds to attract and place funds from small investors in order to solve social and environmental problems of the Russian economy.

In the Name of Transparency: Organizing European pharmaceutical markets through struggles over transparency devices

The controversies surrounding the heavily redacted contracts between the European Commission and Covid-19 vaccine producers have highlighted ‘transparency’ as a hotly debated concept in the pharmaceutical market. We combine research on transparency with literature on the organization of markets to investigate how such struggles over competing visions of transparency end up shaping markets and their politics. Focusing on the case of the European pharmaceutical market, we demonstrate how market transparency was implemented through devices that enacted specific visions of transparency and produced distinct market organizations over time: transparency for states (until about 1990), transparency for corporations (ca. 1990 to 2010) and transparency for state coalitions (since 2010). We discuss how the specific instrumentations and materializations of such visions of transparency play a crucial role in market politics. This debate also highlights why engaging in controversies over transparency has become increasingly important for those contesting the market status quo – in pharmaceutical markets and beyond.

Royal family board directors and the level of ESG disclosures in GCC listed firms

PurposeThis study aims to examine the role of royal family members’ board of directors, as a specific aspect of corporate governance, on the firm’s environmental, social and governance (ESG) disclosures. Many firms in the world enjoy special political connections, benefit from tax exemptions and favorable treatments that are largely responsible for their economic endurance and strong performance.Design/methodology/approachThe authors collect data from Thomson Reuters database on Gulf Cooperation Council (GCC)-listed firms for 2010–2018. Royal family board directors’ data is manually collected using a systematic approach to ensure accuracy. Fixed effects’ panel regression model is used to estimate relationships. The authors interact variables to test the moderating effect of board independence and sustainability committee on the influence of royal family board directors.FindingsThis study finds that royal family directors on GCC boards negotiate fewer ESG reporting in firms. While board independence, board gender diversity, sustainability committee and governance committee increase the level of ESG-disclosures in the traditional way of reducing agency costs to stakeholders, this study finds that royal family board members convey beneficial consequences on firms without perceiving the need to disclose their ESG activities. Additionally, these firms do not show a spillover effect from the royal family members on the board’s independence or the existence of a sustainability committee; rather these members use a different channel for protecting and building the business value. These results are robust with respect to controls for company size, leverage, return on assets and growth. Instrumental variables are then introduced in the analysis to perform a sensitivity test.Originality/valueThe study results indicate the need to improve GCC market transparency over supplementary limitations that exist on their corporate governance condition. This may be consequential to regulators, lenders and investors. The results suggest the need to raise awareness of the importance of governance and balancing firms’ financial and social performance in the presence of royal family board directors. Policymakers and governance agencies are responsible for promoting the importance of forming sustainability committees and having a set of performance indicators that measure the effectiveness of their actions.

Imaging-assisted Raman and photoluminescence spectroscopy for diamond jewelry identification and evaluation.

Jewelry identification and evaluation are limited owing to interference from the surrounding metal mount and adjacent gemstones. To maintain transparency in the jewelry market, this study proposes imaging-assisted Raman and photoluminescence spectroscopy for jewelry measurement. The system can automatically measure multiple gemstones on a jewelry piece sequentially, using the image as a reference for alignment. The experimental prototype demonstrates the capability of noninvasive measurement for separating natural diamonds from their laboratory-grown counterparts and diamond simulants. Furthermore, the image can be used for gemstone color evaluation and weight estimation.

Transparency and Information Asymmetry in Financial Markets

Abstract The paper deals with the application of aspects of behavioral finance in the context of investor protection reflected in EU financial regulation which puts an emphasis on disclosure requirements. Traditionally, financial regulatory frameworks maintain a status que assumption of “rational investors” contained within neoclassical economic theory, however reoccurring financial incidents have exposed a critical flaw in this understanding, consequently requiring a further examination of behavioral aspects within the context of financial regulation. It remains ambiguous how regulators may best use findings from behavioral finance to address flaws in their investor protection tools. Furthermore, neither expanding disclosure obligations nor enforcing a tougher paternalistic approach may suffice in their intent.

Role of green finance in renewable energy development in the tourism sector

The primary purpose of this paper is to evaluate the impacts of green finance on green energy deployment in China's tourism industry. To this end, the annual data over 1992–2021 through the ARDL (Autoregressive Distributed Lag) approach for the case of China are analyzed. The findings confirm that the issued green bonds positively impact the green efficiency of China's tourism industry in the long term. In contrast, the coefficient of issued green bonds is insignificant for the short-term approach. In addition, in the short and long term, the consumer price index also has a significant adverse effect on the green efficiency of China's tourism industry. The recommended practical policies are improving executive regulations and transparent market information, implementing green fiscal policies, green construction in hotels and tourist accommodations, green globalization, operational phases of innovation, adaptation, and stabilization (IAS), and eco-tourism regionalism.

Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets

The European carbon emission trading market is the largest and most mature market, while China’s carbon market has a short history. Institutionally, cross-market transaction is infeasible between the two markets. This paper investigates the long-run trend between the two markets as well as the price dynamics. Results show that a long-run trend exists between the Chinese and European carbon markets. Both markets possess self-correction capability in reducing price deviations, signaling a certain level of market efficiency. However, both markets also exhibit pricing inefficiency as historical price movements are able to impact prices. The European market informationally leads the Chinese market. Policy implications are that China should further upgrade its information disclosure system, such as unifying information disclosure standards across industries, and further develop its carbon derivatives markets to improve market transparency and market competition.

PROSPECTS FOR THE APPLICATION OF A SPECIAL TAX REGIME FOR TRANSACTIONS WITH VIRTUAL ASSETS

The article studies the prospects of applying a special tax regime for transactions with virtual assets in Ukraine. Applying existing tax conditions to the virtual asset market will lead to the opposite effect – the complete shadowing of the industry. That is why there is now an urgent need for delayed adoption of the relevant bill, which should ensure the launch of a completely legal and transparent market for virtual assets. Based on the results of the research, a general conclusion was made that applies to both individuals and legal entities – a single tax rate on transactions with virtual assets, in the amount of 5% – even if on the general taxation system, even if on the simplified taxation system – which levels out separately a special tax regime for operations with virtual assets declared and regulated by Law No. 7150.

Intermediary or no intermediary in the electronic markets: The case of the U.S. airlines distribution industry

After 25 years into the airlines distribution industry's aggressive middleman bypass, the disruption generated by disintermediation must have reduced costs and increased efficiency as current unbiased information aggregators are proliferated and the number of retailing intermediary are at a historical low. The objective of this study is to understand whether industry disintermediation has served its purpose of reducing distribution reliance on intermediaries. This study applies Data Envelopment Analysis and Tobit Regression to analyze 28 years' operating data from 16 major airlines. Results reveal, contrary to all predictions, that relying on a retailing intermediary still produces a positive impact on the distribution efficiency. This conclusion is drawn from the following findings: 1) a shorter chain produces better efficiency; 2) the more market transparency, the worse efficiency; 3) the more retailing locations, the better efficiency and 4) the direct distribution, the retailing agency's total sales and the commission removal has no impact on the distribution efficiency. The study also attempts to explain why these findings support the conclusion that a retailing intermediary is still essential. Findings provide a guideline for airlines on how they should position themselves as a “governance structure” relying on middlemen instead of transforming into “firm as a production function” to bypass agents.

Стійкі фінанси як фактор трансформації фінансових відносин

The purpose of the article is to consider the transformation of financial relations, which occurs as a result of the active development of sustainable finance. The business’ awareness of the importance of sustainable ESG financial strategies (environment, social sphere, corporate governance) is becoming increasingly significant for assessing the efficiency of the global economy, markets, industries and business models. The development of sustainable finance transforms financial relations: on the one hand, enterprises are obliged to adhere to certain social and environmental standards, but on the other hand, enterprises themselves revise their strategy and improve it to become more sustainable and competitive. Sustainable finance provides a more transparent market, which forces enterprises to take into account the social and environmental aspects of their activities, as this affects the availability of «green» financing, including through government subsidies and tax rebates. To increase the scale of the sustainable finance market, governments and international organizations develop regulatory policies and provide financial support to businesses through a variety of programs and initiatives. The expediency of developing strategies and programs aimed at attracting international and national sustainable investments to support post-war economic recovery in Ukraine at different levels (international, national, regional, local) has been determined. Institutionalizing the sustainable finance market and increasing demand for personalized sustainable product portfolios will increase the profitability of sustainable projects, which will be beneficial for international business in the long term in view of sustainability and competitiveness. The interest of international business to various fintech projects with ESG capabilities will grow. At the same time, it is important not to overregulate the industry, as many international companies wishing to switch to sustainable financing simply will not be able to achieve global or European standards.

Issues of stock price manipulation and solutions for Vietnam's stock market

Stock price manipulation is a widespread issue globally, but it becomes particularly acute in emerging markets due to severe information asymmetry. This harmful practice has significant adverse effects on society, the economy, and investors, driven primarily by the pursuit of economic gain. Stocks of small companies with limited liquidity and transparency are particularly vulnerable to manipulation. Although institutional investors may engage in stock price manipulation at times, they also have the potential to enhance transparency and reduce such activities in the market. To identify instances of manipulation, economists have developed advanced models utilizing machine learning, artificial neural networks, support vector machines, and decision trees. In light of previous studies, the author proposes several solutions to curb stock price manipulation in Vietnam. These include raising awareness among investors, providing professional ethics training for employees in the financial industry and government, enhancing market transparency and integration, strengthening supervision, and imposing strict sanctions on individuals and organizations violating securities regulations.

Characteristic features of the operation of the insurance market of Ukraine in the conditions of martial law

The purpose of the article is to analyze the current state of the insurance market of Ukraine and highlight the peculiarities of its functioning. The relevance of the research is driven by the changes in the structure and functioning mechanisms of this market, associated with the introduction of a new model of its regulation.
 The article defines the essence of the insurance market and its main functions. The current state of the insurance market of Ukraine was reviewed, the main indicators of its development were analyzed with the determination of the reasons for their changes for the period 2019­2022. The most significant trends in the market of insurance services were characterized, among which the follo wing are highlighted: a decrease in the volume of gross insurance premiums; reduction of the number of insurers; increase in the level of insurance payments; decrease in the insurance penetration rate.
 Market problems were identified, the main ones being the low solvency and liquidity of insurers; imperfection of insurers’ business models; lack of market transparency andproblems in corporate governance; lack of a mechanism for guaranteeing insurance payments under long-term life insurance contracts; low demand for insurance services due to distrust in the opaque insurance market and low solvency of the population.
 The peculiarities of the insurance market of Ukraine related to the change of the regulator and the beginning of reform are characterized. The main elements of the new insurance market regulation model, built on the principles of the International Association of Insurance Supervisors (IAIS) and the provisions of the European Union directives, are reviewed.
 The basic norms of the new Law of Ukraine “On Insurance”, which will come into effect on January 1, 2024, have been considered. It was concluded that the preparation of the law took into account numerous proposals of scientists to increase the efficiency of the functioning of the insurance market. It was emphasized that the introduction of a new model of regulation and supervision of the insurance market and improvement of the legislative support for reforms will allow solving a number of existing problems in domestic insurance.

Developing Policy Instruments to Reduce Inequality of Land Ownership

This research is motivated by the inequality of land ownership and policies regarding restrictions on land ownership. However, existing policies have not been able to resolve the problem of inequality in land ownership. The study was conducted using a qualitative approach with a perspective theoretical instrument policy. Primary data was obtained from observation during three months of study fields and interviews with a profound amount of key informants, the head of Government, the village chief, local peasants/local people, and communities. Research results show that the instrument policy of land that is used is not using a practical instrument such as land value reference, added value capturing, and land taxation. Land value reference, added value capturing, and land taxation can be used to reduce land inequality in Bandung Regency. Land value reference will create land market transparency, added value capturing will reduce the appearance of land speculators, and land taxation will effectively deter the person ruling the land. Instruments policy of land practically contributes to reducing idle lands, increasing the growth of the economy, creating field jobs, adding state income, reducing inequality in the economy, and improving the well-being of people.

Blockchain Based Hydrogen Market (BBH2) - A Paradigm-Shifting, Innovative Solution for a Climate-Friendly and Sustainable Structural Change

Until now, there is no flawless tamper-proof verification of climate-friendly "green" hydrogen and the resulting possible tracking of its origin from the renewable energy producer to the end user, so that the entire supply chain of "green" hydrogen cannot be represented in terms of economic, ecological and social sustainability and mapped in a secure and transparent market. This problem can be solved with a suitable blockchain, which also offers further unprecedented added value for the supply chain of the "green" hydrogen market and for sustainable structural change as a whole, and whose development will soon be funded as part of the funding call "Hydrogen Technology Offensive" within the research funding of the Federal Ministry of Economics and Climate Protection in the 7th Energy Research Program of the Federal Government.

Stock exchange price currents, financial information and market transparency: an introduction

Financial markets derive their political and societal legitimacy from their ability to produce fair and accurate prices. However, reviewing the literature on how stock exchanges price securities, we find an inherent tension between market organization and price disclosure, which is borne out by this special issue's historical case studies.

Market access and transparency: the Genoa and Milan stock exchanges from Italian Unification to World War I

This article focuses on the conflicts over market access rules on the two primary Italian stock exchanges, Milan and Genoa. These conflicts disrupted the quality of information produced by the two markets. Official brokers aimed to defend their monopoly on brokerage and capture rents by limiting market access. Banks wanted wider access so as to avoid paying these rents, create an opaque market and maximize the benefit from their informational advantage. At the turn of the twentieth century, the Milan Exchange implemented a transparent market organization while the Genoa Exchange remained opaque, creating a complementarity between them which fostered the development of the securities market overall. When in 1907 a violent crisis erupted in the dominant Genoa Exchange, legislation was adopted to harmonize the organization of the Italian exchanges.

Constructing a House Price Index for Saudi Arabia

House price movements have a significant influence on the economy. These movements can dramatically affect household wealth and shift consumer spending. Unfortunately, the house price index development in Saudi Arabia is fragile, and data quality suffers from severe errors due to administrative negligence. Therefore, the k-means clustering algorithm technique was used to correct these errors and appropriately redefine the property type. This study attempts to overcome these severe errors to improve transparency and support literature in the Saudi Arabian real estate market as well as the Middle East and North African real estate markets. I compared the official real estate price index of the General Authority for Statistics GASTAT with the proposed mix adjustment and repeat-sales index I constructed from the same transaction data. I conclude that there are considerable concerns regarding the GASTAT index’s credibility and accuracy. This study is the first attempt to construct sophisticated indices for Saudi Arabia on citywide and national levels. I also provide stratification and repeat sales indices for Saudi Arabia. They illustrate the real estate business cycle for the first time and adequately measure the pure house price movements in Saudi Arabia.

ОСОБЛИВОСТІ ДОСЛІДЖЕННЯ БІДНОСТІ У КРАЇНАХ СВІТУ

The article attempts to generalize some features of the study of poverty in the modern world. The use of various indicators that demonstrate the level of poverty has been shown. It has been explained that GDP per capita is one of the most accurate ways of assessing the economic development of the state. It has been demonstrated that all the poorest countries are located on the African continent. Almost all of them used to be colonies of European empires, and now they face political instability, civil wars, natural disasters, etc. These problems have been considered on the examples of Niger and Egypt. Another indicator of poverty is the percentage of people living below the poverty line. The difficulty of using this indicator is that national poverty lines in different countries can differ significantly. According to this indicator, 8 African and 2 Latin American countries (Guatemala and Haiti) are in the top ten. The Global Hunger Index (GHI) has been considered, according to which African countries and Syria are among the top ten starving countries. It should be noted that for some countries there is very little data on the number and share of the hungry. When studying the situation in some countries (North Korea, Turkmenistan, Somalia, etc.), it should be borne in mind that the governments of these countries do not always publish real official statistics, and those data that get into the mass media are not always true. It has been proven that the Human Development Index (HDI) is an integrated indicator that can be used to study the problem of poverty. It has been shown that 10 countries with the lowest HDI are located in Africa. Their place in this ranking is influenced not only by material factors, but also by the average life expectancy and education. Africa is still a continent with a large number of illiterate people. The Corruption Perceptions Index is also important for the study of poverty, because corruption slows down reforms and harms transparent market relations. Therefore, it becomes one of the factors of poverty. Using the statistics provided by Transparency International, we have found out that the most corrupt countries are more evenly distributed around the globe, among them are not only African ones, but also Asian and Latin American states. It can be summarized that the nature of poverty is different in the developed and developing countries. In the developing countries, natural conditions, peculiarities of the organization of socioeconomic life, the political system and even the personality of political leaders are important. In the developed countries, poverty is mostly a consequence of individual psychological characteristics, behaviour, specific life circumstances, etc. In these countries, poverty can be easily overcome.

Strategic trading with information acquisition and long-memory stochastic liquidity

This paper investigates the strategic interaction of information acquisition, information-based dynamic trading, and noise trading patterns, as well as its significant implications on market equilibrium outcomes. We consider a market where the strategic trader can dynamically acquire costly information about an asset’s payoff via private signals instead of endowing him with its full information. The noise trading, which provides necessary liquidity for the market, has the feature of long-range dependence. The risk-neutral market maker then sets the equilibrium price for the asset based on information gleaned from the market total order flow. We characterize the equilibria for both opaque and transparent markets depending on whether or not the trader’s order flow is disclosed. In particular, closed-form solutions are obtained for two special cases and associated financial interpretations are provided. We find that: (1) the endogenous information acquisition and information-based trading help improve the price informativeness over time, while the information efficiency could be decreasing; (2) long-memory stochastic liquidity leads to an excessive price volatility; and (3) in a transparent market, the trader should adopt a mixed strategy by adding an additional noise term to the trading strategy to prevent rapid information leakage.

Rockets and Feathers Revisited: Asymmetric Retail Gasoline Pricing in the Era of Market Transparency

In this paper, we revisit the empirical observation that prices rise like rockets when input costs increase but fall like feathers when input costs decrease. The analysis draws on a novel data set that includes daily retail prices of gasoline from 12,804 stations in Germany from January 1, 2014 to December 31, 2018. Our findings based on pooled-panel asymmetric error correction models indicate that the pattern of rockets and feathers is the norm rather than the exception. Our results further show that temporal aggregation of station-level price data leads to inaccurate inferences and could account for the inconclusive findings in the literature.