Financial Phenomena Research Articles

Financialization in the Regional Aspect. An Attempt to Measure a Phenomenon.

Abstract The aim of the work was to analyze the possibilities of measuring the phenomenon of financialization on a regional basis. The article attempts the move with the measurement of financialization from the level of countries to the level of regions. In the paper, some variables that can measure financialization at the level of voivodeships were used to create an index of regional financialization. The research proposal was verified empirically, using data from 2005–2015 for 16 Polish voivodeships. The results obtained allowed for the ranking of individual regions of the country, in terms of the degree of intensification of financialization. The regional approach is a subject, which is poorly recognized in the literature on the subject. However, according to the authors of the article, individual regions of the country may have a different degree of intensity of financialization, and knowledge on this subject may form the basis for strategic decisions regarding further development of these regions. The authors of the work wanted to pay attention to this issue and initiate further research in this direction. The presented methodology is only an attempt to measure this phenomenon and can be developed in subsequent studies.

Kapitalizmin Finansallaşma Sürecinde Önemli Bir Sorun Olarak İşsizlik: Tartışma ve Analiz

This study aims at revealing the relationship between unemployment and the phenomenon of financialization which has significantly increased its impact of the 1980s. Within this framework, firstly, the ways which financialization may affect unemployment was discussed and the potential relationship between these two variables was tried to be elicited. In this context, the empirical analysis was conducted by using annual data, obtained confidently, for 1980-2015 period of nine developed OECD countries. Within the scope of the empirical analysis, the homogeneity of slope coefficient of the variables was tested on the basis of delta test, and then cross-sectional dependency test was carried out. After the determination of the order of stationarity of the series by employing unit root-test, the long-term relationship and the causality between the variables was investigated by Westerlund co-integration and Dumitrescu and Hurlin causality analyses. According to the results obtained, there is a long-term co-integration and bi-directional causality between financialization and unemployment. Thus, size of financial activity effects unemployment and changes in unemployment also effects the dependency on financial channels. 

Financial Technology in Banking Industry: Challenges and Opportunities

An overwhelming interest is growing in financial technology (henceforth: FinTech) in recent years. This contemporary financial phenomenon characterized basically by heavy use of technology in communication, some called it network economics. FinTech service encapsulates – but not restricted to – wide range of financial services capitalising from the explosive developments in technology, it includes the payments, clearing and settlement category, followed by credit, deposit and capital raising services. Despite the fact that the FinTech players attract the global attention from the financial industry leaders and legislators, the issue as a subject of study still in infant stage, little scientific research has been conducted yet. The paper aims at first place to shed light on this wave of development in financial industry that combined with high technology, it aims also to clarify the role of FinTech in the financial industry in general and banking sector in particular. The paper obtained its goals in two main phases, firstly; background and definition of the FinTech, in addition to outlining the current FinTech market segments and landscape and some alternative financing FinTech platforms will be discussed. In the second phase, we will identify the influence of FinTech on banking industry and the required response to face it. The paper suggested also some future research proposals about the effect of FinTech on the financial industry and banking sector in the Arab countries.

Option Pricing under the Jump Diffusion and Multifactor Stochastic Processes

In financial markets, there exists long-observed feature of the implied volatility surface such as volatility smile and skew. Stochastic volatility models are commonly used to model this financial phenomenon more accurately compared with the conventional Black-Scholes pricing models. However, one factor stochastic volatility model is not good enough to capture the term structure phenomenon of volatility smirk. In our paper, we extend the Heston model to be a hybrid option pricing model driven by multiscale stochastic volatility and jump diffusion process. In our model the correlation effects have been taken into consideration. For the reason that the combination of multiscale volatility processes and jump diffusion process results in a high dimensional differential equation (PIDE), an efficient finite element method is proposed and the integral term arising from the jump term is absorbed to simplify the problem. The numerical results show an efficient explanation for volatility smirks when we incorporate jumps into both the stock process and the volatility process.

Public Institution Reform in China from the Perspective of Fiscal Logic

The differences between China and the western countries in political and economic systems also lead to the differences in fiscal functions, and public institutions in China is a representative example. Generally, public institutions in China are led by government departments and have strong dependence on fiscal funds, with an obvious official and civilian duality. Public institutions in China can be regarded as a unique financial phenomenon, which requires us to think about the reform of China’s public institution from the perspective of the fiscal logic. This paper constructs a fiscal logic model by integrating five influential fiscal paradigms in China, and systematically discusses the logical relations among such elements as public finance, public needs, human community, nation, public goods, public risks and fiscal risks. The human community is the logic starting point of the model, the human community generates public needs and forms nation. Public needs is the logical core of the model and the origin of public finance. The model enriches the connotation of public needs from the two aspects of affording public goods and preventing public risks, and shows the relationship between nation and public finance in China through national governance. According to the model, this paper analyzes the reform of public institutions in China from the two aspects of public needs and national governance. On the one hand, it emphasizes that the reform of public institutions should be based on public needs. The reform of public institutions should stick to the direction of public service. It presents the classification method of public institutions based on public risks, meanwhile it puts forward that the reform should avoid the monopoly risk of public service; On the other hand, the reform of public institutions should reflect national governance. We can better meet the goal of national governance by establishing multi-center public service mode, innovating fiscal supply mode and setting up capital concept.

Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

The dynamics of confidence affect a plethora of financial phenomena including liquidity hoarding. We present a multiagent model of a financial network in which confidence dynamics are shaped by structural uncertainty—that is, the lack of knowledge about the network of interbank cross‐exposures. During a financial crisis, structural uncertainty makes it difficult for banks to assess the risk of financial contagion and their own health. Under such conditions, banks are more likely to behave conservatively and quickly act on information they receive from their local environment. A sudden financial shock, therefore, can be characterized by high‐intensity local impact on confidence. We find that such local impacts quickly spread throughout the network, causing more damage than a shock that evenly affects all localities in the system; for example, a complete breakdown of the system occurs with a higher probability. The results are explained analytically by linking system performance to the speed of decrease in confidence.

Predicting Stock Market Indices Using Classification Tools

Increasing interest has been shown in the use of classifiers to extract informative patterns from time series data generated by monitoring financial phenomena. This paper investigates data mining and pattern recognition methods in forecasting the movement of the Standard & Poor’s 500 index. We use functional forms of varying classifiers to predict financial time series data and to evaluate the performance of different classifiers. By using the time series ARIMA model, we forecast the Standard & Poor’s 500 index. Additionally, with the AdaBoost algorithm and its extensions, we compare the classifying accuracy rates of bagging and boosting models with several classifiers, such as support vector machines, k-nearest neighbor, the probabilistic neural network, and the classification and regression tree. Results indicate that the boosting classifier with real AdaBoost (exponential loss) best forecast the Standard & Poor’s 500 index movements. This result should be relevant to firms that want to predict the stock prices.

An Empirical Analysis of Investor Confidence Incorporated in Market Prices

Using market prices for an equity index, this research empirically estimates the complex interrelationship between the confidence of informed investors, aggregate market sentiment, and many other variables. The empirical results uncover new insights on investment behavior, including novel evidence on the root causes of various financial phenomena like the momentum and calendar month effects, which themselves appear to be caused by the incentive systems existing among institutional investors. Investor confidence is found to fall (rise) with moderate (large) deviations between market prices and intrinsic values, but only true knowledge of that variable is discovered to enhance investment returns.

The Interdependence between Individual and Group Decision-M aking with Applications in Chinese Stock Market

It seems that understanding how individuals make decision within a group is an attractive and difficult challenge for economists, managerialists and researchers in human and social sciences for a long time, which is closely related to the theoretical development of economics. The rational assumptions of traditional economic theory, which are highly simplified and cannot manifestly illustrate the inherent mechanism for complexities of economic or financial phenomena (from behavioural perspectives). This paper devoted to seek a reasonable theoretical foundation under the framework of game theory and complex network, based on behavioral big data and the establishment of integrated model, to analyze the behavioral compatibility between individuals and collective deeply, which includes their static consistency and dynamic interactive adaptability. In addition, the paper built relevant computational experiment models to further understand the complex macro-phenomena based on real and heterogeneous investor’s behaviors with more extensive applications. Specifically, the paper contains three sections. Firstly, some typical types of relationship are listed for decision-making behaviors between individual and collective; Then, it is discussed to establish more coordinating consistent institutions and rules for understanding the independence between individual and collective decision-making behaviors through introducing virtual public player(s) into collective decision games; At last, by building the integrated ACE/F model of Chinese stock market, we try to clarify the inner relationship between the real investors’ behaviors with heterogeneity, interactions at micro-level and stylized facts at macro-level. Consequently, our theoretic viewpoint, to some extent, is positively supported by empirical evidence.

Analysis Of Individual Investor Behavior At Stock Market Study Group Member Of University In Surakarta Using Analytical Hierarchy Process Method (AHP)

Behavioral finance is a new approach to financial markets. Behavioral finance argues that some financial phenomena can be understood sensibly by using a model in which some agents are not entirely rational. The Market Efficiency Theory or known as the EMH (Efficient Market Hypothesis) was introduced by Fama (1970), on the ground EMH said that in an efficient capital relevant information will be responded quickly, completely and accurately by the market. If the market is efficient, then all information is reflected in the price. The price will adjust quickly and precisely to new information, and no one precedes the market, which means that in an efficient capital market there should be no one getting excessive results because it has better access to information and responds more quickly. The purpose of this study is to determine the factors that most influence the investment decision of individual investors in the universities in Surakarta. This study used the Analitycal Hierarchy Process (AHP) method and distributed questionnaires to individual investors to find out the factors that influence them in trading. This research was conducted at Capital Market Study Group in the Higher Education Area of Surakarta Residence. The population in this research is Stock Market Study Group at Universities in Surakarta, while the affordable population is 5 Universities who have the Capital Market Study Group each taken as many as 20 respondents. The sampling technique used stratified random sampling technique, that is, taking a random sample of proportional from each group in each college in Surakarta.The result shows that Long-Term Investment has 56% priority to be choosen as investment, Short-Term Investment has 29% priority to be choosen as investment, and Mid-Term Investment has 15% priority to be choosen as investment.

Формування і розвиток Національної системи фінансово-кредитного забезпечення аграрного виробництва

The purpose. To raise efficiency of agroindustrial sector of economy of Ukraine due to development of the concept of National system of financial-credit maintenance of agrarian manufacture in view of experience of the developed countries, as well as to determine opportunities of its application in domestic practice. Methods. Technique of researches was based on the system approach and dialectic method of studying financial phenomena and processes in view of monographic method, methods of synthesis and analysis. Results. Means, receptions and methods of system of financial-credit maintenance of agrarian manufacture allowing involving local financial mechanisms effectively are considered. Necessity is substantiated of formation and development of this system for a context of warranting high level of adaptability to changes in external economic environment and internal financial and economic condition, and also stable economic development of agrarian manufacture. Conclusions. Formation and development in Ukraine of National system of financial-credit maintenance of agrarian manufacture is the only comprehensible method of increase of efficiency of agroindustrial sector of economy.

The Financial Transparency Dynamics and Some Proposals on the Matter of Transparency Problem aimed at Developing Countries

In the study, we aimed to present some public budgetary dynamics that would have an impact on structural options in order to address some key structural issues such like transparency in particular developing countries with significant public deficits in the OECD. Transparency, as a financial phenomenon including to place in the objective of the budgeting, is to express the negative financial practices process that cause financial deviations for especially developing countries. Along with being monitored that some financial deflections related to financial transparency are inevitably appeared even after the developed financial formation process appearing from previous years to the current days. Namely, some measures and recommendations to transparency for especially developing countries in OECD countries to prevent central government budget deviations in practices are rather need to some more today's recommendations toward to both budget harmonization and optimal budget balances to present a comprehensive, accurate and reliable account of the public finances. It appears that this recommendations process mean also to identify, assess and manage prudently longer-term sustainability and other fiscal risks. It is understood that this recommendations process in the public budget process are rather meaningful also to identify, assess and manage prudently longer-term sustainability and other fiscal risks due to the fiscal plans and budgetary implementation through rigorous in the Central Budget Authority (CBE).

Three Different Ways to Skin a Cat: Financialization in the Emergence of National e-ID Solutions

The growing phenomenon of financialization influences an array of societal dimensions that go beyond the economic realm, to include public policy-making and information technology (IT). This study presents a cross-country analysis of the emergence of national electronic identification (e-ID) solutions as the result of interaction between the financial and the public sector in Denmark, Norway, and Sweden. Drawing on on-line sources, documents, and interviews with key actors in the three cases, we adopt a cross-disciplinary perspective by applying the lens of collective action theory to identify the role of interests, resources, and governance in the emergence of national e-ID solutions. Findings show that different governance solutions can emerge as the result of the convergence of interests and of interdependency of resources between the actors over time. We contribute to research on financialization and IT by proposing a dialectic process model and identifying five mechanisms that drive the process forward.

Measuring financial contagion between major european stock markets via the regime-switching vine copula model

Using regime-switching copula models, this study investigates co-movements of financial markets, including four major stock markets of European countries (UK, French, Germany, and Italy) in stable, stressful, and extremely stressful market conditions during 2004–2017. We introduce vine copulas to describe high-dimensional dependence structure between markets in modelling. In addition, we integrate copula methods with advanced regime-switching detection to identify different volatility regimes. Because of the characteristics of stock returns, we also release the assumption of joint normality to capture markets' tail dependence. The results show increasing tail dependence and asymmetry during stressful and extremely stressful market conditions, validating the financial contagion phenomenon, the spread of market turmoil. Further, our findings show continuing risk spillover after the 2008 financial crisis. The lasting effects make markets vulnerable for a long time after the crisis, which may be a cause of the decreasing time intervals between financial crises in recent years. Moreover, before the crisis the tail dependence strengthened first in the low volatility regime, followed by joint volatility strengthening between markets. Therefore, observing changes in tail dependence may provide early warnings of the next financial crisis.

The Methodological Rationale of Thomas Sekine

The unique conceptual status of Thomas Sekine’s approach to Marx’s Capital and capitalism, heavily indebted to Kōzō Uno’s work, will be analyzed by setting against its own theoretical counterparts, orthodox dialectical materialism. It will also be shown that Sekine’s critique of dialectical materialism differs from other neo-Hegelian perspectives or Althusser’s anti-Hegelian structuralism. These comparisons unearth Sekine’s concealed epistemological preoccupations: totality, subsumption of labor, self-commodification, historical indeterminacy and the logico-historical error. Last, Sekine also considered neoclassical economics as another form of unfounded orthodoxy both in conceptual and empirical terms, which he emphasizes in his analysis of the current phenomenon of financialization.

Definicje i klasyfikacje kategorii ekonomicznych w badaniach nad współczesnymi zjawiskami finansowymi

Scientific research on contemporary financial phenomena requires the use of information about economic categories, a significant part of which is disclosed in financial statements. High quality research is contingent upon the cohesion of the definitions used and the classification of economic categories. The main purpose of this paper is to draw the attention of theoreticians of finance, law and accounting to the need to intensify research geared to improving or creating a new definition and classification of the economic categories disclosed in the financial statements of accounting entities. To justify this thesis, the paper offers an analysis of the current state of financial statements drawn up according to IFRS and the Polish accounting law. It focuses on information about income and costs as well as the use of the term ”financial activity” at the normative, educational and economic level. The reasons for misunderstandings in this field are discussed, as are the results of those misunderstandings. This may help in the production of research aimed preventing both, and thus at improving the creation of crucial information for the development of theory of law and economic practice.

The financial sector towards efficiency of sustainable development financing in the light of literature review

The paper reveals that the relation between finance and sustainable development (SD) is a relatively novel area. The paper aims to draw attention to the significant gap in the existing research, along with the issues of SD. The concept of SD requires a lot of attention, but seeing the cognitive category from the perspective of the discipline of finance, the latter is unsatisfactory. At the same time, the rank problem, its strategic dimension and the amount of financial resources allocated and disbursed for the purposes of focusing around sustainable development, identification of financial phenomena accompanying this category is seen as a priority. The research methods compose of critical analysis of literature, induction, deduction and reduction, desk research and dependencies and causal analysis. The time of analysis is 2017/2018. The manuscript deals with two main research questions that have been formulated as follows: 1. How to include multidimensional, holistic and long-term perspectives of SD into finance? 2. How SF impacts on efficiency of financing of sustainable development? A few conclusions/suggestions can be made to solve the research problem and include the SD perspective into finance: 1) internalization of externalities in the calculation of an investment (i.e. in a company’s present value); 2) assigning a long-term horizon to investments, also as a necessity for maintaining the prospect of safeguarding financial capital for the future; 3) progressive substitution of financial ratios with sustainability ratios; 4) a changing perspective on the connotation of financial profits.

Household financialization – sense and scale of this phenomenon on the example of poland

Abstract The subject of the study is the phenomenon of household financialization. In the first part of the article a sense of this situation and its influence on the different functioning areas of the households (income, expenses, financial decisions) is described. What is more, the positive and negative effects of this process for the households’ financial stability were defined. The next part of the article contains an analysis of the households financialization processes in Poland in the years 2005-2015. On the side of household savings, the analysis included the level and the structure of financial assets. The second area of evaluation of the household financialization processes was bank debt analysis, including mortgage debt. In the elaboration comparative analysis was used, which means that Polish household structure of financial assets and the level of debt were compared to the European Union countries.

Financialization revisited: the rise and fall of finance-led capitalism

Abstract Financialization, expressing the growing importance of finance in the modus operandi of our capitalist system, has emerged as a key concept in various heterodox approaches over the last dozen years - be they Post-Keynesians (E. Stockhammer, E. Hein), American Radicals (G. Epstein, G. Krippner), Marxists (J. Bellamy Foster, G. Dumenil) or French Régulationists (M. Aglietta, R. Boyer). But until now those various analysts have each looked at this very complex phenomenon from one or the other specific angle. In this article, I am trying to provide a more comprehensive analysis of financialization by tracing its two primary drivers - structural changes making non-financial actors more dependent on debt-financing as well as financial-income sources (“financial centralization”) while also giving increased weight to the financial sector in the economy (“financial concentration”). The complex interaction between financial centralization and financial concentration has yielded a financialized growth dynamic fueling consecutive debt-financed asset bubbles in the center, the United States, that spurs export-led growth in the periphery. Framing this financialized growth dynamic in the Régulationist context as a historically conditioned accumulation regime, finance-led capitalism, I analyze its rise (1982 - 2007) in the wake of key changes in finance and its subsequent structural crisis (2007-2012) to provide a more complete approach to the crucial phenomenon of financialization.

Monetary Policy in a Low Interest Rate Environment

The debate on the underlying causes of the decline of interest rates to historically low levels is ongoing both in academia and among policy makers. Several explanations have been put forward, ranging from those citing real and structural factors to those underscoring the importance of cyclical and financial phenomena. However, the empirical evidence regarding their relative importance is still limited. These different but complementary views can be framed around the concept of the natural rate of interest and the monetary transmission mechanism. The low interest rate environment that still characterizes advanced economies raises important questions regarding the implications for monetary policy in the medium- and long-run. Our work provides a systematic outline of the potential changes to monetary policy strategies that could ensue.