National Financial Market Research Articles

Issues of assessing the FinTech impact on the financial sector's structure

Subject. This article examines the areas of penetration of FinTech and the impact of the expansion of FinTech and BigTech companies on the structure of the financial sector. Objectives. The article aims to analyze the processes of the emergence of the FinTech phenomenon and its growing penetration into all spheres of finance, identify the consequences of these processes for the structure of the financial sector, as well as formulate the principles for the formation of a balanced structure of the financial sector in the context of its ongoing digitalization. Methods. For the study, I used the systems approach, comparative intermarket analysis, impact analysis of the technological component of economic development at the macro level. Results. The article reveals the main forms and manifestations of the impact of digitalization on the structure of the financial sector and the main activities and types of services of FinTech companies. The article also formulates the principles for the formation of a balanced competitive structure of the financial sector. Relevance. The results of the study can be used by the Bank of Russia and other national financial market regulators to improve approaches to building a modern competitive balanced financial structure.

Trust Matters in the Single Market, but How? Analysing Trust Amongst European Financial Supervisors

AbstractEuropean regulatory co‐operation has become essential for the smooth operation of the single market, and this in turn requires trust. In the case of the European Union (EU) ‘Undertakings for Collective Investment in Transferable Securities’ (UCITS) Directive, for example, the member states' financial supervisory authorities rely on each other to provide a harmonised regime for the sale of investment funds across the EU. Funds authorised in one member state can be sold freely in another member state without further authorisation. The national authorities need to trust each other to ensure a consistent application of EU law. Yet we know very little about how trust matters from the perspective of member state regulators. In this article, we provide a better understanding of the relevant components of trust in the single market in financial services through an in‐depth case study of an EU network of national financial market supervisory authorities.

ACTIVITIES OF INSURANCE COMPANIES IN WARTIME

The article examines the functioning of insurance markets, which is based on the role of insurance markets in ensuring the stable functioning of business entities through insurance protection. Insurance also plays an important role in protecting property and personal interests of citizens. In addition, the insurance market is the second largest segment of the national financial market and has a certain influence on the stability of the economic system. The functioning of the insurance market of Ukraine after the introduction of martial law was analyzed, the main trends and problems of its development were determined, and the priority issues that needed to be resolved were outlined. Based on the experience of transformation and adaptation of their activities during the corona crisis, insurance companies have once again demonstrated the ability to fully restore the functioning of the market under force majeure circumstances and already offer modern insurance products with additional coverage of the consequences of war.

Research on the Synthesis of Hong Kong NFT Index Using Principal Component Analysis and Index Prediction Based on LSTM-Modified ARMA-GARCH Model

With the advent of the Web3.0 era, virtual assets have gained prominence in individuals asset portfolios, making Non-Fungible Tokens (NFTs) increasingly significant within the financial trading landscape. To address the issue of multicollinearity in regression analysis, this paper employs Principal Component Analysis (PCA) to perform dimensionality reduction on five correlated foundational sectors. Moreover, to enhance the accuracy and reliability of predictive outcomes, the study combines the Long Short-Term Memory (LSTM) model with the Autoregressive Moving Average-Generalized Autoregressive Conditional Heteroskedasticity (ARMA-GARCH) model. Through the application of these methods and practical implementation, the study forecasts the NFT index of the Hong Kong stock market for the next 30 days. This forecasting of return volatility contributes vital insights for investment decision-making. The research complements and offers application recommendations in financial innovation, deepening, and regulation. By devising novel products and tools to meet investor demands, providing risk management and investment opportunities, the models predictive outcomes can be utilized in regulatory and risk management strategies within the national financial trading market. This study provides regulatory guidance, policy formulation insights, and envisions further refinements of the research methodology by integrating information shock effects.

Russian ecosystems participant banks: specifics of activity, growth and development opportunities

New realities of social development dictate the need to transform established business models into a modern format. This trend has not bypassed the banking sector: a number of credit institutions have outlined a further strategy for their development within the framework of an ecosystem model of doing business, with varying degrees of participation of banks in the activities of such platforms noted.The work examines the main controversial issues about the essence of ecosystems, as well as the prerequisites for their formation in the national financial market, identifies the reasons for the transition of banks from a traditional business model to an ecosystem one, defines specific criteria for classifying organizations as an ecosystem, and identifies the features of the functioning of the largest national ecosystems built with direct participation of Russian commercial banks, their comparative characteristics were made. It is concluded that the transformation of the traditional banking business model into an ecosystem one opens up new opportunities for credit institutions for growth and development.

Provision of rating and analytical products to participants of the Russian corporate bond market as a factor in the development of the national financial market

Subject. The article addresses the prohibition, enshrined in Russian legislation, on preparation and publication of analytical products by appraisers as a factor that reduces the effectiveness and hinders the development of the Russian corporate bond market. Objectives. The aim is to update the problem of unequal conditions and opportunities for participation of credit rating agencies, appraisers, and investment advisors in providing rating and analytical products to the Russian corporate bond market actors. Methods. We employ methods of systematization, comparison, and systems analysis of interactions between subjects of the corporate bond market, which are perceived as unbalanced due to the ban on the preparation and publication of analytical products by appraisers. Results. The paper underpins the economic expediency of lifting the ban on the preparation and publication of analytical products by appraisers that is fixed in the Russian legislation. The suggestion may be of interest to the subjects of the securities market. Conclusions. It is advisable that the basic concepts for the development of the financial market, the securities market, the corporate bond market, would include services of developers of rating and analytical products, i.e. credit rating agencies, appraisers, and investment advisers, in the preparation for the reorganization of the market. Lifting the ban on the preparation and publication of analytical products by appraisers, enshrined in Russian legislation, will have a positive impact on solving the problem of information disclosure in the corporate bond market.

A study into the relationship between the type of Japanese candlesticks of a nationally significant exchange-traded asset and investor sentiment in the national financial market

Subject. This article examines the relationship between the type of Japanese candlesticks of a nationally significant exchange-traded asset and investor sentiment in the national financial market. Objectives. The article aims to determine the relationship between the type of Japanese candlesticks for a nationally significant asset traded on the national stock exchange and the sentiments of financial market participants. Methods. For the study, we used the methods of induction and deduction, statistical methods for processing the results of observations, and the method of physiognomy in determining the emotions of persons making investment decisions. Results. The article determines the type of Japanese candlesticks for a nationally significant asset traded on the national stock exchange and the sentiments of financial market participants. Conclusions. When taking into account new indicators, the analyst has the means to bring the forecast result closer to real conditions, when, in addition to traditional indicators, combinations of technical analysis tools and psychological indicators in the markets give a new interpretation of the events taking place there. This improves the quality of analytical work and its results. The results of the research described in the article can be applied in the work of a market analyst. The use of new indicators complements and expands the classic analytical tools, improves the quality of market forecasts.

Новое в русле совершенствования финансового законодательства

Improving financial legislation, the Parliament of Russia adopted this year, in particular, Federal Laws No. 260-FZ and No. 226-FZ, which are aimed at increasing the level of efficiency and competitiveness of the national financial market.

Автоматизированная информационная система страхования и ее значение для финансового рынка

Improving insurance legislation in the interests of solving the problems of the national financial market, the Rus-sian Parliament at the end of 2022 adopted Federal Law No. 594-FZ, which provides for the creation of an automated insurance information system (hereinafter referred to as AIS insurance).

Financial cycles in Europe: dynamics, synchronicity and implications for business cycles and macroeconomic imbalances

Using dynamic factor models and state-space techniques we quantify financial cycles for twenty European countries over the period 1960Q1–2015Q4 capturing imbalances across credit, housing, bond and equity markets. The paper documents the existence of slow-moving and persistent financial cycles, as well as cross-country synchronicity patterns in Europe. Spillover analysis points at the significant role the global financial cycle and the regional European financial cycle play in shaping national financial market dynamics. Quarterly Bayesian panel VAR estimations suggest that financial cycles influence business cycles and public debt dynamics, with stronger shock transmission observed in the euro area and systemic European economies.

ГЛОБАЛЬНА НЕСТАБІЛЬНІСТЬ КРІЗЬ ПРИЗМУ ФІНАНСОВОГО, ФІСКАЛЬНОГО І МОНЕТАРНОГО ДОМІНУВАННЯ: ДИЛЕМИ РЕГУЛЯТОРНОЇ ПОЛІТИКИ В МІЖНАРОДНИХ МАСШТАБАХ

The article argues that the uniqueness of the manifestations of global instability in 2023 lies in the combination of challenges facing regulators in the monetary, fiscal and financial spheres, caused by a set of measures to stimulate economic activity countercyclically in response to the pandemic, which had a significant and unconditionally systemic effect, which affected on the growth of inflationary pressure on the world economy and the formation of signs of a recession in the leading centers of economic power. Despite the fact that as the crisis worsens, more and more attention will be paid to the activities of SIFI, it will not be possible to shift responsibility for the stability of the global financial system solely to financial regulators, because the easing of monetary and fiscal policies in recent years has created the basis for exacerbating the problem of dominance in three dimensions at once - monetary, fiscal, financial. In the context of the study of the phenomenon of financial dominance, the policy of financial repression aimed at facilitating the servicing of public debt, which allows the government to receive additional funds, but slows down economic growth, is considered. Financial repression is a manifestation of regulatory competition that can affect how the market handles economic shocks. The analysis of global instability through the prism of the phenomena of financial, fiscal and monetary dominance made it possible to characterize the problems of regulatory policy on an international scale. The analysis carried out will contribute to the formation of a consensus position on the way that can help to structure the various institutional and managerial mechanisms associated with macroprudential policy. The study will contribute to the solidarity of views on the independence, accountability and transparency of macroprudential regulators, as well as issues that should be dealt with by fiscal and monetary authorities in an attempt to reach a compromise in determining the objectives of economic policy on the part of the Central Bank and the government, depending on the level of its debt and fiscal load, and also depending on the structure of its national financial market. Keywords: macroprudential policy, fiscal policy, monetary policy, financial market, financial dominance, fiscal dominance, monetary dominance, Central Banks

Финансирование низкоуглеродного развития России: подходы и приоритеты текущего этапа

An economy with a low level of greenhouse gas emissions is presented today both as a tool for achieving the goal of structural transformation of the economy and its technological modernization, and as a factor of economic growth. But to date, the process of transition to a low-carbon economy in Russia has not yet been launched, since the formation of the institutional environment of the carbon market has not been completed and the mechanism for financing low-carbon development projects has not been determined. The subject of the study is the formation of a stable segment of the national financial market, which is reflected in the ongoing and planned expenditures of the state in accordance with budget plans. The purpose of the work is to form an objective opinion on the actions taken at the national level to form a new sustainable segment of the national financial market, which is designed to accumulate national climate finance. The study revealed a problematic situation: the perception of low-carbon development as a tool for solving accumulated problems, contributing to structural adaptation and technological re-equipment, is constrained by the politicization of the climate agenda, which slows down the process of forming a national carbon market and using its opportunities for the benefit of the national economy. It is concluded that Russia has prospects for achieving national priorities of socio-economic development through the possibilities of financing low-carbon development, but for this it is necessary to complete the formation of an institutional framework for the national carbon market and coordinate its development strategy with the national investment policy.

Digital transformation of banking services: development scenarios and management mechanisms

The search for new economic tools, technologies, and directions for the development of banking services in the context of increased competition is caused by the presence of several problems, which are outlined in the following way. First, the developing Kazakh banking services market is very attractive for foreign financial institutions, whose entry into the financial markets of leads to an increase in market concentration, and, as a result, an increase in competitive pressure. Secondly, the recent trend of growth of the Kazakh economy and the development of its real sector led to a decrease in the profitability of speculative instruments, which traditionally served as the main source of profit for banks. Third, during the reform of the Kazakh economy, there was a significant change in the value system of consumers of banking services, a shift in emphasis from the price characteristics of the product to the service ones, which increases the importance of developing and implementing modern technologies to meet customer demand. Fourth, under the current circumstances, it is important to identify the prospects for banks to maintain strategic competitive advantages in the national financial market, despite the increased presence of foreign companies. This requires studying the country features of the formation of the banking services market, identifying the main development trends, justifying a set of technologies to improve the efficiency of working with clients in a competitive environment. As a result of the author's research, the practical aspects and significance of banking services management are substantiated, based on which the corresponding conclusions are made

VULNERABILITY TO THE CURRENCY CRISIS: THE CASE OF SERBIA

The aim of this paper is to assess the external liquidity and currency stability of the Serbian economy. For this purpose, the following indicators were used: coverage of short-term external debt by foreign exchange reserves, coverage of imports by foreign exchange reserves and the exchange market pressure (EMP) index of the Republic of Serbia. Global events such as the coronavirus pandemic and the crisis in Ukraine have also affected the national financial market, so it is important to investigate this impact and compare it with the previous crisis of 2008-2009. The research shows that the Republic of Serbia has an optimal level of foreign exchange reserves in order to preserve the stability of the exchange rate and finance the balance of payments deficit, as well as a relatively low degree of vulnerability to the currency crisis. Based on that, it can be assessed that the monetary policy was conducted adequately in the previous period of the health crisis. However, some caution is needed due to the growing value of the EMP index as a result of increased demand for foreign exchange due to market panic, global uncertainty and the current geopolitical situation.

Modelling the Performance of the Financial Market

The intensification of globalization processes, the desire to integrate into the European financial and economic system, and the merger of national markets into one international financial system create preconditions for the emergence and intensification of processes and phenomena negatively affecting the level of development of the country’s financial system and the national financial market, where the mechanism of redistribution of capital between creditors and its suppliers functions on the basis of indicators of supply and demand. Effective organization of the financial market contributes to the financial system’s stability and meeting the economy’s needs in investment resources through the accumulation of temporarily free financial resources. The purpose of the research lies in analyzing the effectiveness of the financial market of Ukraine and identifying the impact of indicators of banking, insurance, and securities markets on its importance. The method of economic analysis, synthesis, comparison, analogies, classification, systematization, generalization and method of modelling the effectiveness of the financial market based on the construction of equations of dynamic programming has been used in the research. As for the results of the study of modeling the performance of the financial market, it has been established that the results of the banking, insurance and stock markets have a decisive influence on the analysed indicator. During 2017‒2020, the number of banks in Ukraine has significantly decreased (by 10,98 %), including the number of banks with foreign capital by 13,16 % and the volume of loans provided to customers (by 7,63 % in 2019 and 13,87 % in 2020 compared to 2018), which proves a decrease in customers’ confidence in the banking system. At the same time, the activity of the market of banking services is assessed as effective. As for the market of insurance services, in the period under review, a decrease in the number of insurance companies by 28,57 % is observed, and there is an instability of its functioning. The results of the activities of securities’ market also show instability, in particular, in 2020 the number of shares decreased by 88,23 % compared to their volume in 2017. It has been substantiated that the modelling changes in the performance indicator of the financial market should be carried out by establishing interdependencies between its structural components, and the dominant influence of managerial actions and decisions made regarding financial resources has been proved.

Closed-end mutual funds investing in real estate. Development prospects

The article deals with topical issues of the development of such significant representatives of the collective investment segment of the national financial market as closed-end mutual funds investing in real estate. The author, investigating the problems of the functioning of mutual investment funds of this group, analyzes the changes proposed by the Bank of Russia regarding the expansion of the range of objects allowed for investment funds focused on unqualified investors. The article gives an assessment of the prospects for the development of this segment of the collective investment industry, considers measures the implementation of which could stimulate the development of funds of this group and ensure a large-scale arrival of retail investors.

Pandemic Bonds Issued by the Chinese Government Supported Post-Disaster Recovery from COVID-19 Pandemic

During the SARS-CoV-2 (COIVD-19) outbreak, China repeatedly stressed that the response to the pandemic required action at all levels of government, including the issuance of Pandemic Bonds to help the country return to work and production. However, studies on the effectiveness of Pandemic Bonds during that period are rare. Starting with China's national financial bond market data after COVID-19 in 2020, this paper focuses on the correlation between the Credit Spreads of the relevant bonds and the corresponding bond market rate of return, based on the Copula model. The empirical analysis is also carried out for multiple dimensional groupings such as enterprises, industries, provinces, and bond maturities. The results show that there is a significant positive correlation between the Credit Spreads of Pandemic Bonds and market returns. In addition, the market correlation is higher for Pandemic Bonds issued in Hubei Province, which is at the center of the 2020 pandemic, and the shorter the maturity of the Pandemic Bond issued, the stronger the relationship with market returns. Finally, this paper provides recommendations for financial regulators and policy makers to consider in their decisions on how to build a more resilient financial system under heavy economic, fiscal, and social pressures.

Cognitive model of the national financial market: creating process and prospects for assessing the security of its functioning

The subject of the research is the Russian financial market. The aim of the study is to develop a cognitive model of the Russian financial market to assess the security of its functioning. The relevance of the study is due to the need to assess the reaction of the national financial market to various exogenous and endogenous stressors in the face of growing geopolitical tensions and the emergence of new artificial restrictions on the access of domestic investors to foreign sources of capital. The belonging of modern financial markets to complex adaptive systems consisting of elements and relationships, the formal description of the dynamics of which is very problematic, determines the advisability of using cognitive analysis and modeling methods in the process of assessing the safety of their functioning. A feature of the study is that when building a cognitive model of the national financial market, the author uses as the main elements not individual actors of the financial market, but macroeconomic aggregates that characterize the state of the financial market and the economy as a whole. The actor-network structure of the national financial market presented in this way makes it possible to consider the high degree of interpenetration of the financial and real sectors, which is characteristic of the modern economy. The novelty of the paper lies in the development of tools for analyzing the dynamics of the financial market as a result of constructing a methodological framework for studying the security of its functioning based on cognitive modeling. The developed cognitive model shows how the identified macro-aggregates change as a result of the spread of a positive or negative impulse, allowing to highlight the critical factors ensuring the sustainable functioning of the financial market. The author concludes that in the case of a balanced state of the considered macroeconomic aggregates, the existing hierarchical structure of the Russian financial market makes it possible to localize and neutralize crisis phenomena of an endogenous nature. At the same time, within the framework of the existing networks of the interaction of the financial market, exogenous stress impulses will intensify and lead to a violation of its effective performance of the function of capital circulation. The practical significance of the research results lies in the ability to determine the stabilizing processes and mechanisms operating in the economy as a whole and in the financial sector in particular, and in their absence, to identify the possibilities for their design that can increase the systemic security of the functioning of the country’s financial market.

ФИНАНСОВЫЙ РЫНОК РОССИИ: ПРОБЛЕМЫ И ПЕРСПЕКТИВЫ РАЗВИТИЯ

The article examines the state, problems and prospects of development of the modern financial market in Russia. The types of financial organizations that carry out their activities in the national financial market of Russia are considered. The problems of institutional segmentation, unification of the rules for the implementation by financial organizations of the functions of trading platforms, financial intermediaries, management companies are identified.

Improvement of the Adaptive Properties of the National Financial Market to Respond the Globalization Risks

In the era of globalization the issues of ensuring economic and national security are still relevant for discussion. Financial markets, being one of the driving forces for the global economic development, are sensitive to changes in the socio-economic and political situations. In the rapidly changing world, the security of the national financial market can be ensured by increasing its adaptability, which is, in the general case, the market ability to adapt to stressful events, while working in adverse conditions. The article discusses the features of the national financial market in the context of financial globalization. Using the complex adaptive theory, the main ways of the national financial market development to enhance its adaptability are presented. Keywords. Globalization, financial market, financial security, financial market adaptability, institutional environment.