Potential Financial Risks Research Articles

Variations in Cost and Readmissions of Patients in the Bundled Payment for Care Improvement Bundle for Hip and Femur Fractures.

IntroductionThe Bundled Payment for Care Improvement (BPCI) for hip and femur fractures is an effort to increase care quality and coordination at a lower cost. The bundle includes all patients undergoing an operative fixation of a hip or femur fracture (diagnosis-related group codes 480-482). This study aims to investigate variance in the hospital cost and readmission rates for patients within the bundle.Materials and MethodsThe study is a retrospective analysis of patients ≥65 years old billed for a diagnosis-related groups 480-482 in 2016 in the National Readmission Database. Cost of admission and length of stay were compared between patients who were or were not readmitted. Regression analysis was used to determine the effects of the primary procedure code and anatomical location of the femur fracture on costs, length of stay, and readmission rates.ResultsPatients that were readmitted within 90 days of surgery had an increased cost on initial admission ($18,427 vs $16,844, P < .0001), and an increased length of stay (6.24 vs 5.42, P < .0001). When stratified by procedure, patients varied in readmission rates (20.7% vs 19.6% vs 21.8%), initial cost, and length of stay (LOS). Stratification by anatomical location also led to variation in readmission rates (20.7% vs 18.3% vs 20.6%), initial cost, and LOS.ConclusionThe hip and femur fractures bundle includes a great number of procedures with variance in cost, readmission, and length of stay. This amount of variation may make standardization difficult and may put the hospital at potential financial risk.

Multidimensional KNN algorithm based on EEMD and complexity measures in financial time series forecasting

Stock time series forecasting is a universal purpose of academic researchers, even a slight improvement in the accuracy of the forecast may have a fabulous impact on participants’ trading decisions. An appropriate forecasting method will help investors to obtain a reasonable portfolio, to some extent avoid potential financial risks, which makes our research more profound. To provide stock market participants and researchers with better prediction results, in this paper, a modified modeling procedure is proposed which aims to heighten the function of the k-nearest neighbors (KNN) method in financial time series prediction. The key idea is to combine Ensemble empirical mode decomposition (EEMD) method with Multidimensional k-nearest neighbors-time series prediction with invariance (MKNN–TSPI). This new time series forecasting framework is called EEMD–MKNN–TSPI. Take note of the facilitation of the experiment, we present an example of two-dimensional stock series, the modified method is utilized to forecast the opening and closing prices of NAS, DJI, S&P 500, Russell 2000 and other stocks simultaneously. Besides, we compare our method with EEMD–MKNN and MKNN–TSPI, the experimental results indicate that the proposed model outperforms EEMD–MKNN model and MKNN–TSPI model. At the end of the paper, we select some stock sequences and traffic sequences to conduct a series of experiments, the purpose is to explore the impact of data types and complexity on the prediction results about the EEMD–MKNN–TSPI method.

How Venture Capitalists Bet: Evidence from Two Randomized Controlled Trials

Understanding the importance of both human and non-human assets in firms' early-stage financing process is crucial to examining theories of the firm. However, it is difficult to empirically generate causal evidence due to data limitations and the lack of exogenous variations. This paper uses two randomized controlled trials with real venture capitalists mainly from the U.S. to identify characteristics of both the project and their teams that causally affect venture capitalist funding. Specifically, I also check their relative importance on investors' decisions. I find that multiple team characteristics (i.e. founder's educational background and previous entrepreneurial experiences) and project characteristics (i.e. traction, business model, location, comparative advantages, etc.) causally affect investors’ contact and investment interests by influencing their evaluation of startups' potential financial returns, risk, and loyalty. Although project traction matters the most in my experimental setting, it is fundamentally the investors' belief in the startup’s profitability that matters the most. I also find the traditional correspondence test method, to an extent, inappropriate in testing the significance of project characteristics in virtue of the different signal-to-noise ratio problem.

국내 물 산업체의 기후변화 대응현황과 재무적 리스크 분석

This study investigated the private sector’s climate change risk, focusing on the financial sector and its risk management, specifically the case of the water industry in Korea. The water industry tends to be particularly vulnerable to climate change and requires adaptation strategies to address potential risks. This study quantified the potential financial risk to the water industry from four extreme weather events: heat waves, cold waves, heavy rain and heavy snow. These events are classified according to the Intergovernmental Panel on Climate Change (IPCC) scenarios, RCP 4.5 and RCP 8.5, using a business decision supporting tool, the Climate Change Risk Assessment System (CRAS), which was developed by Korea Environment Institute. The results of analysis revealed that small- and medium-sized enterprises (SMEs) are more vulnerable in responding to climate change risk than large enterprises, that SME manufacturers in particular are the most vulnerable in responding to climate change risk. Of heat waves, cold waves, heavy rain and heavy snow, the greatest climate change-related financial risk was from heat waves. Lost sales due to climate change risk ranged from 152.9 to 210.7 billion won per year on average, according to the RCP 4.5 scenario. Furthermore, when the RCP 8.5 scenario was considered, the scale of financial risk increased to between 250.9 and 345.8 billion won per year. This study provides quantitative information that helps to increase awareness on the financial risks of the water industry from climate change and to explore measures for business adaptation.

Delinquent Events Prediction in Temporal Networked-Guarantee Loans.

Under debt obligation promises, small- and medium-sized enterprises (SMEs) can guarantee each other to enhance their financial security to get loans from commercial banks. When the economy rises, the banks may reduce the threshold to some extent, which may introduce default risk during the economy down period, especially when many SMEs bind together and form complex networks. The risk may diffuse across the guarantee network and may result in a financial crisis. Macroprudential oversight of the guarantee network to eliminate any potential systematics financial risk is the central task of the regulatory commission and the commercial banks. Based on our observation, the delinquent probability of an SME depends not only on self-financial status but also highly related to its temporal behaviors and structural position in networks. The classic approach for loan assessment criteria face challenges in extracting temporal and structural patterns from dynamic networks. To address these issues, we propose a temporal delinquent event prediction (TDEP) framework that preserves temporal network structures and credit behavior sequences in an end-to-end model. In particular, we first employ a graph attention layer to learn the representation of nodes in temporal guarantee networks. We then design a recursive and self-attention mechanism to integrate both credit behavior and network structure information. The learned attentional weights are leveraged to uncover high-risk guarantee patterns that effectively accelerate the risk assessment process. Afterward, we conduct extensive experiments in a real-world guaranteed-loan data set to evaluate its performance. The results show the effectiveness of our proposed approach compared with the state-of-the-art baselines. Finally, we integrate the proposed model in a real-world loan risk management system. We present the implementation details of each subcomponent of the system and report out the performance after online deployment.

Financial Risk Control of Sports Industry Based on Big Data

With the widespread use of Internet big data, all walks of life are developing rapidly, among which the sports industry has also encountered new development opportunities and challenges. Based on the background of big data era, this paper studies the financial risk control of sports industry in the era of big data. This paper will first give readers a specific introduction to what is big data and let them know the main characteristics of the era of big data; then, it will analyze and further discuss the potential financial risks in the sports industry; finally, it will study the development of sports industry and how to control financial risks in the era of big data. In the analysis, this paper through the investigation of the development trend of the fitness industry, shows that there are risks in the fitness industry, and this risk is fatal to the fitness industry. Then, based on the background of big data, this paper puts forward corresponding suggestions on the risk control of the fitness industry, hoping that this study can provide certain reference for the healthy development of the fitness industry.

Under what management and policy scenarios can alley cropping be a competitive alternative in the United States Southeast?

Despite statements that it can mitigate financial risk through farm diversification, alley cropping in the United States Southeast has not been comprehensively modeled to estimate potential financial returns and risks. We used a Monte Carlo method to model stochastic financial returns to monocropping agriculture, loblolly pine plantation, and loblolly pine alley cropping in North Carolina, USA, plotting the results from 25,000 iterations to understand financial risk. Under certain scenarios and assumptions, alley cropping did have financial returns comparable to, or potentially higher than, monocropping agriculture, but did not lower overall risk, as measured by the spread of the distribution of financial returns. Pine plantations, on the other hand, did have lower risk than both alley cropping and monocropping. Alley cropping with wider 24.4-m alleys performed better than narrow 12.2-m alleys. Allowing the producer to choose a timber rotation length that optimizes financial returns generated the best financial returns for alley cropping, but this assumes perfect knowledge of the manager and is unrealistic. Current policy programs of government payments for commodity crops and cost-share for tree planting, tend to favor monocropping over alley cropping or pine plantation. A hypothetical system of payments for carbon sequestration does increase pine plantation and alley cropping financial returns, but not to the extent that commodity crop programs currently increase monocropping financial returns, and does not reduce risk significantly. Overall, on average agricultural land in North Carolina, alley cropping may be of value to certain producers, but we find those possibilities to be somewhat limited.

Research on external financial risk measurement of China real estate

AbstractThis study applies the method proposed by Diebold and Yilmaz to construct a spillover effect index with which we compare the bilateral information spillover effect and time‐varying characteristics of China's real estate markets to those of representative international financial markets from July 2005 to March 2018 to measure the financial risks in China's real estate markets. The empirical results show the following. (a) There is a significant information spillover effect between China's real estate markets and related stock markets, and China's real estate is in a net information receiving position. (b) After 2016, China's real estate financial risks entered a downward adjustment cycle, and financial risks have gradually declined. These results suggest that Chinese real estate markets' “de‐inventory” has achieved remarkable results and that real estate financial risks have been significantly reduced. However, due to China's limited real estate financial investment channels, the nation's real estate markets should still be cautiously controlled and regulated to respond to potential real estate financial risk.

Business connectedness or market risk? Evidence from financial institutions in China

We utilize the spectral representation of generalized forecast error variance decomposition to investigate the frequency dynamics of volatility connectedness and systemic risk of financial institutions in China from 2011 to 2018. We find that, first, high-frequency components account for the largest part of volatility connectedness (48.33%), followed by low-frequency components, and finally the medium-frequency components. Second, the low-frequency components reflect the business connectedness among financial institutions, while the high-frequency components capture the market risk. Third, the business connectedness among financial institutions will lead to a rise in overall connectedness as well as the accumulation of potential risks. Further, once a crisis breaks out, the potential risks have realized and the business connectedness among institutions declines; while market risk increases rapidly, which helps systemic financial risk stay at a high level. Lastly, among the financial sectors, the banking sector possesses a relatively higher level of business connectedness which plays an important role in the accumulation of potential financial risks; the securities sector features with higher market risk; while the insurance sector has both comparatively lower business connectedness and market risk.

Fintech and Payments Regulation

Financial technology (Fintech) has prompted authorities to consider their potential financial stability benefits, risks, and effective regulation. Recent developments suggest that regulatory approaches and their legal foundations need to augment entity-based regulation with increasing focus on activities and risks as market structure changes. This paper draws on recent international experiences in modernizing legal and regulatory frameworks for payment services. An analytical framework based on a four-step process is proposed—(i) identifying payment activities; (ii) licensing entities and designating systems; (iii) analyzing and managing risks, and (iv) promoting legal certainty. As payment activities evolve and potential systemic risks heighten, adherence to international standards and additional regulatory requirements should be warranted.

Editorial Introduction: Governance, Citizenry, and Methodological Advancement in Policy Research

Editorial Introduction: Governance, Citizenry, and Methodological Advancement in Policy Research

Tradeoffs in Supplier Attribute Ratings in Supplier Selection across Strategic versus Non-Strategic Purchases

ABSTRACT Purpose: This research identifies a customer perspective that is often ignored, neglected, or undervalued in B-to-B sales – the nature of the product itself. The pivot point is whether the product/service desired is strategic (critical to the company’s mission) or non-strategic (not critical to the company’s mission). Methodology/Approach: A conjoint analysis was conducted for both types of purchases (strategic and non-strategic), assessing the tradeoffs and espoused preferences of four key attributes involving both the supplier and the product across three performance levels – (1) stability of the supplier, (2) reliability, (3) competitive pricing and (4) product quality. Findings: The results indicate that B-to-B customers do make tradeoffs between suppliers based on stability, reliability, pricing and product quality. The direction of the tradeoffs depends on whether the purchase is a strategic or non-strategic acquisition. The results suggest that suppliers would benefit from understanding the relationship of their products and services to the B-to-B customer’s mission when the supplier is deciding how to improve performance. Research implications: Too often there is a disconnect between B-to-B salespeople and their customers resulting in suppliers failing to reach performance goals. The research focuses on the importance of B-to-B salespeople uncovering whether or not the customer considers the nature of the product being considered as strategic or non-strategic to their business. The research helps to explain some of the mixed findings in the supplier selection literature. Practical implications: The research points to the fact that customers analyze and make decisions differently depending on the type of product. Additionally, the research highlights the importance to customers of understanding the potential legal and financial risk of suppliers. This is important in that traditionally suppliers tend to focus on product features and benefits in their selling efforts. These results indicate that they should spend significant time discussing factors that illustrate legal and financial risk reduction to the customer of dealing with their companies. Originality/Value/Contribution: The study offers a new look at an age-old problem of enhancing sales performance through a new lens by considering the nature of the product (strategic versus non-strategic) through the perspective of the customer. The findings help to explain the mixed results of previous research. To date, the nature of the product and tradeoffs of attributes that customers are willing to make depending on that product classification have not been the focus, though the results suggest that understanding customer decision-making through this lens may enhance supplier success.

FUZZY DECISION MAKING METHOD BASED ON COCOSO WITH CRITIC FOR FINANCIAL RISK EVALUATION

The financial risk evaluation is critically vital for enterprises to identify the potential financial risks, provide decision basis for financial risk management, and prevent and reduce risk losses. In the case of considering financial risk assessment, the basic problems that arise are related to strong fuzziness, ambiguity and inaccuracy. q-rung orthopair fuzzy set (q-ROFS), portrayed by the degrees of membership and non-membership, is a more resultful tool to seize fuzziness. In this article, the novel q-rung orthopair fuzzy score function is given for dealing the comparison problem. Later, the and operations are explored and their interesting properties are discussed. Then, the objective weights are calculated by CRITIC (Criteria Importance Through Inter-criteria Correlation). Moreover, we present combined weights that reflects both subjective preference and objective preference. In addition, the q-rung orthopair fuzzy MCDM (multi-criteria decision making) algorithm based on CoCoSo (Combined Compromise Solution) is presented. Finally, the feasibility of algorithm is stated by a financial risk evaluation example with corresponding sensitivity analysis. The salient features of the proposed algorithm are that they have no counter-intuitive case and have a stronger capacity in differentiating the best alternative.

What are the Financial Systemic Implications of Access and Non-access to Federal Reserve Deposit Accounts for Central Counterparties?

In this working paper, I examine the interconnections between designated derivatives central counterparties (CCPs) with Federal Reserve deposit accounts and non-designated CCPs and the potential financial stability implications. This working paper notes the interconnections between the non-designated and designated derivatives CCPs through their clearing members and the commercial custodial banks they utilize to hold and transfer collateral. The paper then identifies additional potential contagion risks and financial stability risks, including liquidity risk, market risk, concentration risk, and loss of confidence more broadly. Although there are a number of research articles addressing these topics with respect to designated CCPs or OTC derivatives, this working paper includes the perspective looking at U.S. futures CCPs and non-designated CCPs.

Сравнительная характеристика бизнес-моделей лидеров фармацевтического производства: финансовый анализ

Introduction. Earlier, the comparative analysis of the commercial and investment activities of the companies that play the key roles in the investment processes in the Russian pharmaceutical industry and operate within the four main business models (biotechnological, generic, specialized pharmaceutical companies, active pharmaceutical ingredient (API) manufacturers) has been conducted. No full assessment of the companies’ activitiesis conceivable without a financial analysis of their activities to identify the risks of investment activities. Objective of the study. A detailed comparative analysis of the financial standing of domestic pharmaceutical manufacturers operating within the selected business models for further identification of potential financial risks for investors. Research procedure and article structure. Analysis of RAS statements (forms 1 and 2) of 72 over 500 million revenue companies grouped together as selected business models for the period from 2015 to 2019. Results. The researchers provided a detailed description of the commercial activities of domestic pharmaceutical companies within the business models under consideration. The companies within various business models showed positive revenue growth rates over the past five years. All business models demonstrate consistently high business profitability and a significant share of own capital in the asset profile. Conclusion. The results of the study show the stable financial standing of the pharmaceutical companies within various business models. The biotechnology sector companies that are the most attractive for investments have the highest quality financial standing. The specialized and generic companies show similar consistently strong performance. API manufacturers that the companies with relatively small revenues are actively developing and are attractive to restrained budget investors.

China's Digital Economy: Opportunities and Risks

China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.

China’s Digital Economy: Opportunities and Risks

China's digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.

Stability, efficiency and financial risks of islamic banks in conditions of instability of global financial system

In modern conditions of implementation Islamic model of banking, the issues of increasing efficiency of its activities and ensuring the long-term stability of Islamic banks come to the fore. Article analyzes the activities of Islamic banks in the post-crisis period, both in the global Islamic banking sector as a whole, and in the context of individual countries in which Islamic banks are predominantly or significantly represented, as well as financial risks that pose a threat of losses for Islamic banks. It has been concluded that the Islamic financial system is becoming one of the most important components of the international financial system, and Islamic banks within the global financial system are becoming more recognized and competitive, as they demonstrate a sufficiently high efficiency and stability of activity, a positive trend of development. Analysis found that Islamic banking has demonstrated its reliability and stability in the post-crisis period and continues to be a viable and effective mechanism of financial intermediation in the conditions of global financial system instability. The differences in the functioning and performance of Islamic banks in different countries within a single consolidated Islamic banking system have been revealed, a comparative analysis effectiveness of banking sectors a number of Muslim countries has been given, the directions of development of Islamic banking in them have been shown. Conclusions have been drawn on the need for Islamic banks to introduce effective mechanisms for monitoring and managing financial and investment risks in order to increase their ability to withstand adverse external factors, since in the future, despite the positive trends in the activities of Islamic banks, there are potential financial risks due to the growth of their current costs associated with the possibility of potential deterioration in the quality of assets and reduction in the level of profit.

Local Government Debt, Financing Platform and Fiscal Risk

The excessive expansion of local financing platform as a substantive medium for local government borrowing has aggravated local government financial risks, which may induce systemic financial risks. Based on the current debt situation of the central and provincial governments, this paper uses different measurement models to calculate debt balance and default risks of the financing platforms. The results show that nearly one-third of the provinces may have potential financial risks, therefore the central government and local governments should work together and keep four kinds of balances in order to prevent and defuse risks.

China's Digital Economy

China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.