Outflow Of Funds Research Articles

Devil in FIPA: the motivations and consequences of frequent inter-industry portfolio adjustments in the Chinese mutual fund market

ABSTRACT Based on the equity asset allocation of Chinese open-end active funds, we examined the potential motivations and economic consequences of frequent inter-industry portfolio adjustments (FIPA) by funds. The research findings indicate that the fund tournament effect compels managers to engage in FIPA. Funds with higher managerial ownership exhibit lower levels of FIPA, suggesting that managers themselves do not favour FIPA. Instead, evidence suggests that fund managers cater to investors’ preferences for FIPA, but there exists an asymmetric effect between top-performing and underperforming funds. Specifically, top-performing funds attract more capital inflows after engaging in FIPA, while underperforming funds tend to engage in more aggressive FIPA, leading to net outflows of funds. Furthermore, the results exclude the motive of funds engaging in FIPA for risk hedging purposes. Finally, we explored the impact of FIPA on the stock market, revealing that fund FIPA delays the incorporation of negative company-specific information into stock prices, ultimately reducing stock price information efficiency.

Corporate SDG performance and investor trading behavior

This paper employs a novel sustainability rating from Robeco to examine the response of investors to firms’ SDG performance. We explore the underlying mechanism from the perspective of corporate reputation and financial performance. Our finding suggests that better SDG performance leads to a net outflow of funds, especially from individual investors. Such implication may be due to the existence of greenwashing behaviors by management, as firms’ sustainability performance in the society dimension significantly improves its reputation, but not its financial performance. Furthermore, the negative impact of SDG performance on individual investors’ fund flows becomes markedly pronounced in state-owned, heavily polluting, Northwest region enterprises and after the introduction of the “dual carbon” targets.

Criticism of the short-term event analysis method in evaluating the effectiveness of mergers and acquisitions

The article presents the analysis of the contemporary theoretical and empirical research devoted to evaluation of the effectiveness of mergers and acquisitions by means of short-term event analysis method, managers’ motivation in making decisions on the acquisition of other companies from the perspective of the timing of the expected effect; it adduces and systematizes the limitations of the cumulative abnormal returns (or CARs) method. The authors carry out scientific synthesis of the limitations of the method of capabilities of accurate prediction of the final results of transactions. In particular, the following problems of the CARs method have been identified: determining the date of the event, determining the event window, inconsistencies in research results, outflow of funds from purchasing companies during mergers and acquisitions, arbitrage trading strategies, the lack of long-term predictive value of the method of accumulated excessive profitability, efficient market hypotheses, overcharging of the purchasing company shares. The authors have made a conclusion about possible inaccuracy of the method if used to evaluate the effectiveness of mergers and acquisitions.

TRANSFORMATIONS OF THE RESOURCE MANAGEMENT STRATEGY OF UKRAINIAN BANKS

This article examines the peculiarities of the management of assets and liabilities of Ukrainian banks in the conditions of significant structural transformations of the resource base during the period of martial law. The analysis is carried out at the level of homogeneous structural and functional groups of banks (SFGBs), which are formed using published reporting data and the application of Kohonen's self-organizing map (SOM). Accumulation of statistical data has been carried out for 5 years, special attention is paid to structural changes in the resource base and directions of placement of bank assets over the past two years.Over the past two years, the bank has been under the influence of shock factors affecting assets and liabilities. At the beginning of 2022, there was an outflow of funds from bank accounts, which was gradually compensated by the inflow of current funds from corporations and the population of individuals. In 2023, the National Bank of Ukraine actively stimulated the development of the term resource base, the basis for ensuring the growth of credit operations. Transactions with state securities continue to grow in the structure of bank assets. The priority task of the banking system remains the financial support of business, but in the conditions of a full-scale war, such development of credit operations is limited. It is expedient to study the strategy of banks by combining the structure of assets and liabilities according to similar characteristics and analyzing the dynamics of groups. Observation of homogeneous groups confirms their stable nature, features of strategy, risk profile and development priorities. It has been proven that banks within homogeneous SFGBs demonstrate similar behaviour in the formation of management strategies and reactions to internal and external shocks. At the macro level, the SOM structure allows you to quantitatively assess the main processes taking place in the banking system, conduct comparisons with maps, and identify problems and priorities in the management of bank assets and liabilities. The SFGB method allows you to evaluate the trajectory of individual banks on the map and develop recommendations for improving the strategy of managing assets and liabilities.

ИСПОЛЬЗОВАНИЕ МЕТОДОВ МЯГКИХ ВЫЧИСЛЕНИЙ ДЛЯ ПРОГНОЗИРОВАНИЯ ДЕНЕЖНЫХ ПОТОКОВ

This article is devoted to the study and application of soft computing methods in the context of cash flow forecasting. Soft computing is an approach that allows for the uncertainty, fuzziness, and ambiguity in data that often characterizes financial forecasts. The authors consider the stages of forecasting, including calculations of cash inflows, determination of possible outflows of funds, and sensitivity analysis to changes in assumptions. The application of soft computing in this context can improve the accuracy of forecasts, taking into account various factors and uncertainties, which is critical in a rapidly changing economic environment.

Влияние бизнес-модели коммерческого банка на организацию работы с корпоративными клиентами

The study focuses on a business model that fully defines the approaches and methods of work of a commercial bank with corporate customers. The customer base of particular credit institutions changed considerably in 2022–2023, while the structure of the cumulative balance did not experience profound changes. Thus, PJSC JSCB Avangard’s focus on corporate services led to substantial changes in the liability structure, causing an outflow of funds from individuals. The authors analyzed the business model of Avangard in comparison with the activities of banks operating under the Tochka brand. The financial strategy of Avangard is to increase risk-free (transaction) income and liquid assets on the balance sheet while reducing the accepted credit risk. A special feature of the business model of Avangard is the fact that the majority shareholder takes an active part in resolving not only strategic but also major operational issues. Avangard is a member of a large financial group, which includes organizations in the agricultural, industrial, economic, and investment sectors and services their functioning, without placing much emphasis on attracting clients external to the group. According to the study, the business model of working with corporate customers of the classical bank PJSC JSCB Avangard has the main advantage of maintaining its traditionalism, while also being flexible in digital development, immediately adapting to the turbulence of the financial market, and developing its technological effectiveness. This model of a classic bank, focused on the quality of cash services, will be in demand among corporate customers in the coming years, and, perhaps, even more viable than the Tochka ecosystem models. The shortcomings of the business model of Avangard are the low level of involvement in the competition for servicing small and medium-sized businesses corporate segment, which is reflected in unfavorable tariffs, underdeveloped affiliate programs and digital areas of banking business, in comparison with the activities of Tinkoff Bank JSC, VTB Bank (PJSC), Alfa-Bank JSC and Sberbank PJSC.

International labor migration policy of the European Union

The cross-border movement of labour is associated with an objective need for the host country to accept and comply with the relevant rules. This problem has always existed for the European Union and its member states due to the attractiveness of the region for migrant workers, relatively high standard of living and the widely diversified sectoral structure of the economy. Based on the analysis of the relevant directives, the article chronologises the stages of regulation of international labour migration in the EU with an emphasis on the present. Close attention is given to the EU regulatory practice of the issues of attracting highly qualified and seasonal labour third-countries workers, students and researchers, facilitating intra-corporate transfers. In this context the regulatory vector in the area of international labour migration to the EU is aimed at obtaining benefits from the influx of the necessary labour force through the creation of favorable conditions for its integration into European society. The implementation of Directive on the conditions of entry and residence of third-country nationals for the purpose of highly qualified employment will depend on the applicable practices of the EU member states. The study reveals the dualism of the economic effects of international labor migration received by the EU at present: positive in the form of a relative reduction in unit costs due to labor components, the flow of technological knowledge and negative ones associated with the displacement of part of local labor resources, the outflow of funds from foreign workers, changes in the structure of aggregate demand, the impact on the level of wages, aggravation of interethnic and interfaith conflicts against the background of a low level of integration of foreigners into local society.

Analyzing the performance of mutual funds in 2021–2022

Subject. The article investigates the effectiveness of mutual funds in 2021–2022. Objectives. The study of the mutual fund market to determine changes in the securities market due to the new political situation in 2021–2022. Methods. The study employs methods of descriptive statistics and comparative analysis. I carried out a thorough literature review. The independent data source for a private investor in Russia, i.e. Invesfunds, served as an information base of the study. Results. The descriptive analysis helped reveal that due to the high degree of uncertainty, increased market and infrastructure risks, there was not only an outflow of funds, but also the closure of a huge number of exchange-traded funds. At the same time, the structure of the inflow changed significantly – it was fully secured by the issuance of shares of closed-end investment funds. In 2022, open-ended mutual funds showed practically no excess profitability, compared to 2021. The key observation of the mutual fund market in 2022 was the influx of investors. Conclusions. The conducted research enables private investors to assess the current situation on the securities market, and, as a result, make a decision on the profitability of investing money. Legal entities, building an investment portfolio, should take into account the difficulties in dealing with foreign assets and, possibly, reconsider the direction of investment towards domestic assets.

The Global Effect of Fed Rate Hikes: Stocks, Bonds, and Foreign Exchange Markets

On 23rd March 2023, the Federal Reserve has once again increased its federal funds rate. The policy is published aim for reduce the high inflation rate in the US and prevent once again getting into a recession just like in 2008. This brings both advantages and disadvantages to both the domestic and foreign economies. In this paper, some basic impacts are explained including effects on consumption and investment decisions, stocks and bonds markets, and international relations. As the rise in interest rate increases cost of borrowing and discourages speculation, generally, economic activities are reduced. At the same time, this gives foreign countries heavy pressure by creating outflows of investment funds. Looking forward to the future, it is still possible for the Fed to keep raising its interest rate. To prevent further damages, foreign countries may use expansionary fiscal policy as it can stimulate consumption and investment, and most importantly, bring possibilities of improved economy potential.

Predicting the outflow of household deposits based on the intensity of search queries

The subject of the study is the intensity of targeted search queries as a leading indicator of bank deposits outflow. The goal is to propose a mechanism for accounting information about the dynamics of search queries, able to signal changes in the volumes of deposits of individuals. The study was conducted using time series analysis models. Statistical data of Rosstat, Bank of Russia, searches in Yandex wordstat, Google Trends for the period from February 2009 to May 2022 were used. The relationship between the intensity of targeted search queries and household decisions to withdraw money from deposits and bank accounts was revealed. An assessment of the short-term predictive ability of search queries on dynamics of deposits was carried out. The use of statistical indicators on the dynamics of targeted search queries as a leading indicator of the outflow of funds of the population from deposits in commercial banks is substantiated. It was revealed that the use of the intensity index of targeted search queries as a signal indicator of the outflow of the placed funds by the population increases the accuracy of forecasting on the horizon in 1 month by 0.15–0.25 p.p. to assess the dynamics of ruble deposits and by 0.20–0.35 p.p. to assess the dynamics of foreign currency deposits. The use of information from search queries for the management of commercial banks is especially useful in the event of a threat of a sharp outflow of deposits of the population. The obtained results indicate the prospects of using textual information, including targeted search queries in order to form leading indicators of deposits outflow of the population. Preventive identification of negative trends associated with the outflow of deposits of the population can ensure the credit institution’s stability against negative macroeconomic influences.

Liquidity management by mutual funds

PurposeThe paper examines how equity mutual funds manage their liquidity. Specifically, the authors investigate what strategies fund managers use to meet investor redemption demand, whether these strategies vary over time, whether different type of funds employ different liquidation practices in response to fund outflows, and whether liquidity strategies impact fund performance.Design/methodology/approachThis study uses a sample of U.S. actively managed equity funds over the period 1990–2019. The authors use three different measures to capture funds' liquidity management practices. The authors examine the relationship between fund liquidity measures and net flow by estimating panel regressions over the entire sample period, on 2 sub-sample periods of different market conditions measured by the magnitude of implied market volatility (VIX), and on 2 sub-samples of funds with different liquidity profiles. The authors also examine the relationship between funds liquidity status and near-term performance through both a portfolio approach and regression analysis.FindingsThe authors find that on average, mutual funds reduce their cash position and the most liquid asset holdings to meet investor redemption demand. Furthermore, the authors find that fund managers choose different liquidity strategies under different market conditions. During highly volatile markets, mutual funds use cash and their most liquid assets to meet redemption demand while maintaining their portfolio liquidity. During low volatility markets, mutual funds rely heavily on cash but less on liquidity assets and tend to increase their portfolio illiquidity. Upon further examination of funds across portfolio liquidity profiles, the authors find that liquid funds increase portfolio liquidity when facing outflows, whereas illiquid funds maintain their portfolio liquidity position. The different liquidity strategies have significant impact on funds' near-term performance. Specifically, liquid funds underperform illiquid funds following the increase in their portfolio liquidity.Originality/valueThis paper contributes to the literature on liquidity management by asset managers by taking a holistic approach to examine funds liquidation practice at the portfolio holdings level. Considering the recent increase in market volatility, mutual fund liquidity management has drawn an increasing share of interest and attention from policy makers, investment professionals, and academia. This study covers both uncertain and stable market states during a long sample period and provides empirical evidence on the flow-induced liquidation decisions by equity mutual funds. In addition, this paper also contributes to the literature on mutual fund performance by providing evidence that funds' liquidity strategies significantly impact their near-term performance.

Транснационализация экономики: теоретико-методологический аспект

The purpose of this article is to study theoretical and methodological foundations of the economy’s transnationalism. The study of the transnationalism of the world economy is carried out at different levels in order to combine micro, macro, and global levels of analysis. The article examines the methodological foundations of transnationalism; identifies theoretical approaches to the study of the process of transnationalism; systematizes the results of research by domestic and foreign scientists devoted to approaches to the definition of the concept, principles, factors of transnationalism. Theories of international capital movement are systematized, the classification of theories of international production and FDI is presented. A large number of factors contribute to the appearance of transnationalism theories. The main obstacle to the consolidation of scientific views is the dynamic change in the way of transnationalism and comprehensive nature of the activities of TNCs (presence in most sectors of the economy). In 2021, global FDI flows recovered to pre-pandemic levels and reached $1.6 trillion US dollars. Cross-border transactions and international project finance were particularly active because of free financing terms. In 2022, however, the global environment for international business and crossborder investment changed radically. The global environment for international investment changed dramatically with the launch of a special military operation in Ukraine, which began at a time when the world was still recovering from the pandemic effects. The direct impact of special military operation on investment flows in the Russian Federation is the suspension of existing investment projects, the outflow of funds from the Russian Federation, the spread of asset value, losses and sanctions. These facts make the study of theoretical and methodological foundations of the transnationalism of economy relevant.

АНАЛИЗ ДЕНЕЖНЫХ ПОТОКОВ ОРГАНИЗАЦИИ

This article is devoted to the evaluation of the organization’s cash flow management based on cash flow analysis. The existing system of organization of cash flows of the enterprise is considered, the reasons for changes in inflows and outflows of funds are revealed, various approaches are given to assess the effectiveness of cash flows.

К ВОПРОСУ О ТРАНСФОРМАЦИИ РОССИЙСКОЙ ЭКОНОМИКИ В УСЛОВИЯХ ИЗМЕНЕНИЯ ГЕОПОЛИТИЧЕСКОЙ СИТУАЦИИ НА ПРИМЕРЕ ТРАНСГРАНИЧНЫХ ПЕРЕВОДОВ МЕЖДУ ФИЗИЧЕСКИМИ ЛИЦАМИ В СТРАНАХ СНГ

The article discusses the comparative dynamics of cross-border money transfers between individuals from the Russian Federation, the Republic of Armenia, the Kyrgyz Republic and the Republic of Kazakhstan in 2021-2022. The issue of determining the volume of transfers between individuals in the CIS space is touched upon. Particular attention is paid to the ratio of inflow and outflow of funds to the listed countries. The article allows assessing the scale of inflow and outflow of funds through the prism of cross-border transfers between individuals. According to many experts, the inflow of funds from individuals from the Russian Federation and the relocation of Russian business in general can significantly affect the growth of the economies of the CIS countries. The uniqueness of the article lies in the fact that such an analysis has not been carried out before, and the data on cross-border transfers of funds between individuals from the above countries are taken from the official data of the central (national) banks of the states. At the time of this writing, only the data of the above-mentioned countries were in the public domain, data for other countries are closed and not published.

Методика анализа и управления денежными потоками коммерческой организации

Subject. This article discusses the concept of cash flows, existing methods of analyzing their movement in the organization. In modern conditions, such an analysis is an important source of information about the solvency and liquidity of the company. Goal. The main purpose of this scientific work is to study the concept of cash flow and the methodology of cash flow analysis. Method or methodology. The research is based on the basic methods of scientific cognition: dialectical, analysis and synthesis, generalizations, comparison. The results of the work. Methodological approaches to defining the concept of «cash flow» were considered. In economic analysis, the inflow and outflow of funds from operating, investment and financial activities over a certain period of time are distinguished. Analysis by operating activity is carried out by direct and indirect methods. Each of them has its own advantages and disadvantages. Thus, the direct method of analysis is more accurate and detailed, since it allows you to consider the cash flow in the context of each type of activity, while the indirect method allows you to see what factors influenced the net profit of the enterprise. Attention is paid to cash flow management and the importance of planning in this process. Conclusion. Cash analysis is an important component of the analysis of accounting financial statements and business activities of the enterprise as a whole. With its help, it is possible to assess the efficiency of the enterprise and its availability of monetary resources, as well as liquidity, solvency and financial stability.

Modelling Outflow Remittances in the Digital Era: A Subnational Analysis of Russia

Relevance. The outflow of funds from the Russian economy, including remittances, can have a significant impact on the country's economic development. The influence of digital technologies and the heterogeneity of Russian regions further complicate the study of factors affecting remittance outflows. This study aims to address this research gap by examining the spatial effects of remittance outflows from Russia at the regional level within the context of digital transformation. Research Objective. The primary objective of this paper is to investigate whether spatial effects exist in the outflow of remittances from Russia at the regional level and how digitalization affects this phenomenon. By exploring spatial autocorrelation and fitting spatial models, we aim to understand the mutual influence and interdependence of regions in cross-border remittances. Data and Methods. The study utilizes open annual data from the Bank of Russia on cross-border remittances and data from the Federal State Statistics Service of the Russian Federation. The research methodology includes spatial autocorrelation estimation and the application of spatial models. Results. Our findings indicate that the digitalization of business transactions leads to a decline in cross-border remittances that do not involve payment systems. This finding primarily relates to the relatively low share of non-resident remittances within formal remittances. The results underscore the importance of considering spatial differentiation among regions in terms of remittance volume when formulating regional policies. Furthermore, the study reveals a shifting trend towards the emergence of major centers for outgoing transfers in the Far Eastern part of Russia and an increase in remittance volumes from border regions in the European part of Russia. Conclusions. The policy implications of this study highlight the need to encourage the participation of the population's savings in the domestic economy. This can be achieved through measures aimed at facilitating internal investment and financial inclusion.

ANALYTICAL RATING MONEY FLOWS

This article is devoted to drawing up a cash flow report in international practice. The relevance of the research topic of the scientific work is that in modern economic conditions cash flows play a key role in the management of the firm. Money movement of streams is change remnants cash on hand and funds on accounts companies in process implementation activities. The amount of the balance is formed by obtaining differences between the sum of all income and all payment plus the balance, which was at the time of starting the calculation. Cash flows circulate through all business processes within the organization, continuously providing its divisions with the necessary resources. Currently, a comprehensive system of methodical support for the analysis of cash flows, based on the interrelation of its methodology with management and forecasting processes, has not been sufficiently developed. In modern scientific literature, there are quite a few works devoted to the study of flows of funds in different countries. An analysis of the need for a cash flow report is also provided. Cash flow (English cash flow), or flow of money, flow of payments, cash flow, cash flow – a set of time-distributed receipts (inflow) and payments (outflow) of funds generated by the cash flow of an enterprise is the movement of monetary resources in the process of economic activity of an enterprise, connected with the receipt of revenue from the sale of goods, works and services, financing of current and investment activities, with cash and non-cash payments for various obligations of the enterprise. Him appearance conditioned the existence of money and the performance of its functions means of payment, means circulation and means accumulation. Pecuniary circulation those dreams connected with such economic ones categories such as money, price, profit, finance, credit. The essence of cash flow is manifested in two him functions: provision movement cost social capital and incentives economic activity subjects management about the economic activities of the enterprise, regardless of the sources of their formation.

CURRENCY SECURITY FOR SMALL ENTERPRISES IN UKRAINE

The work is devoted to the analysis of threats to the currency security of small businesses in Ukraine, which is a component of the financial security of Ukraine. A full-scale war in Ukraine requires a review of approaches to the formation of monetary policy in the sphere of state regulation of the financial system and the search for new effective methods of state management. The main challenges for the current financial system of Ukraine are a decline in production, an increase in the number of unemployed, a weakening of the stability of state finances, and threats to the stability of the currency. It has been proved that today the currency security of Ukraine is under the influence of a large number of internal and external threats, including the growth of the foreign debt, the outflow of funds abroad, the high degree of dollarisation of the economy, the inefficient structure of gold and foreign currency reserves, the imperfection of the currency and exchange rate policy, the presence of currency risks, the conduct of illegal currency transactions, the intervention of international financial organisations, foreign advisers and consultants in the currency policy of Ukraine. The conducted monitoring of the financial activity of a small enterprise is aimed at making certain effective management decisions providing the enterprise with currency and financial security in the modern conditions of the financial system of Ukraine as a whole. The current state of currency security of small businesses of Ukraine is analysed in terms of the need for a deeper study of it in order to solve existing problems related to its provision. As a result of the study of this problem, it is proposed to take measures to ensure the currency security of the country's small businesses and to support the long-term stability of the national monetary unit. The role of state banks in the implementation of state programmes for the support of small business should be strengthened, and for the safety of their activities a comprehensive system of state banks should be created, including highly specialised state commercial banks, state banks of a broad profile, state development banks, partner financial institutions, regional funds, insurance organisations.

ВИЗНАЧЕННЯ РИНКОВОЇ МОДЕЛІ ВІТЧИЗНЯНОГО ДЕПОЗИТНОГО РИНКУ: АНАЛІЗ КОНЦЕНТРАЦІЇ

The effective functioning of the domestic deposit market presupposes the presence of positive dynamics regarding the equal placement of free funds of legal entities and individuals in the accounts of all functioning banks at the optimal level of the interest rate on deposits. It is under such conditions that the studied market would present a model of perfect competition. However, the conducted research confirmed the fact that the domestic deposit market is not an example of a model of free (unrestricted) competition. With the use of official NBU data and well-known methods for determining the level of market power (concentration coefficient, Herfindahl-Hirschman index), we found a generally "moderate concentration" of the studied market, which allows us to characterize it as a market model of monopolistic competition, despite the fact that over the past four years state banks in Ukraine demonstrated significant (in their favor) differences in the share of population deposits compared to private and foreign banks. In the Ukrainian deposit market, in general, there is an outflow of funds from deposit accounts, which is explained, first of all, by low interest rates on deposits. In this context, it is extremely important for banks to intensify efforts to introduce new deposit products, thereby creating opportunities to increase term deposits, which, among other opportunities for accumulating funds, are relatively stable. They are one of the important sources of financing assets, increasing the liquidity and solvency of banks, intensifying credit and investment activities and, in general, supporting the financial stability of the country's banking system.

Bond Mutual Fund and Exchange-Traded Fund Flows in Stressed Markets: Empirical Evidence on the Destabilization Hypothesis

The proposed mechanism for what we term the destabilization hypothesis<i></i>is that an exogenous shock triggers large redemptions by fund investors, requiring fund managers to sell securities to raise cash, leading to further drops in security prices and increased systemic risk. Although a large body literature finds little evidence of fund-driven fire-sales in bond markets, the destabilization hypothesis has seen renewed interest among academics and policymakers in the context of bond funds. We examine the impact of shocks on US bond fund flows by sub-asset class and by type of investment vehicle. The time-series analysis we conducted shows that a risk-off shock to markets does not necessarily result in large bond fund outflows. Accordingly, we conclude that there is little evidence that bond funds are a source of systemic risk, particularly bond exchange-traded funds. We also find no evidence of a non-linear response of flows to large shocks.