Financial Market Regulation Research Articles

Multidimensional Impact Analysis of Public Policies on the European Economy: Taking EU Member States as an Example

Since modern times, with the close trade relations between European countries, they have begun the process of integration in order to strengthen economic cooperation and political unity. In the process of integration, problems such as economic inequality, political differences, and external interference continue to emerge. In the process of solving these problems, public policy plays a crucial role. The European Union promotes cooperation and coordination among member states by formulating and implementing a series of public policies, and promotes the deep development of European integration. This enables European countries to smoothly navigate through various crises. This article mainly discusses the impact of European public policies on the Eurozone economy, including problems in the European economic governance system, exploration and analysis of fiscal integration implementation, policies proposed in response to the rigidity of the Italian labor market, the impact of EU data privacy and financial market regulation policies, and future prospects.

Innovative policy of WTO on trade in the global financial services market

The World Trade Organization (WTO) has been actively working to address the various challenges facing the global financial services market and is of great importance for the regulation of trade in general, including trade in financial services. This is done through the WTO’s guidance in the conclusion of trade agreements containing provisions on financial services, such as the General Agreement on Trade in Services (GATS). The main goal of the GATS is to create conditions for legalizing and regulating trade in financial services between member countries. It promotes the creation of a legal framework for trade in services, including financial services, and establishes principlesand procedures to be followed by market participants. In addition, the WTO facilitates the exchange of information and best practices between countries to promote innovative development of the financial sector (FSC), Trade Facilitation Agreement (TFA), and stimulates competition, which can foster innovation. However, specific policies on innovation in the financial sector are usually determined by national governments and regulators, and the WTO helps to create a general framework for their development. However, it should be noted that ongoing efforts are needed to address the remaining challenges and to promote a more efficient and accessible global financial services market. The article examines the key features of the regulatory framework for modern financial instruments in individual countries, as well as the mechanisms of WTO regulation of the global financial services market.

Reputation, commitment, and financial market regulation

This paper explores the interplay between reputation mechanisms, pre-commitment strategies, and financial market regulation. Through a theoretical model, we analyze how repeated interactions between market participants, combined with regulatory oversight, can lead to improved compliance and market efficiency. The study demonstrates that reputation mechanisms serve as powerful self-regulatory tools, as negative reputational feedback exerts a stronger influence on market behavior than positive feedback, particularly when the cost of non-compliance is high. Additionally, we investigate the role of pre-commitment in promoting market cooperation and separating equilibria, where high-quality suppliers distinguish themselves from lower-quality competitors. However, in the absence of stringent regulatory enforcement, pre-commitments may be exploited by low-quality suppliers, leading to market inefficiencies. Our findings suggest that a reputation-based, tiered regulatory framework can optimize resource allocation and enhance the effectiveness of financial market regulation. The paper concludes with policy recommendations for integrating these mechanisms into current regulatory practices and outlines areas for future research.

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.

What Is the International Best Practice for Regulation of Financial Markets? From A Legal and Practical Perspective

What Is the International Best Practice for Regulation of Financial Markets? From A Legal and Practical Perspective

Critical Analysis of The Law on Purchasing Gold on Credit

This study aims to understand the legal background of gold credit in Indonesia, we can explore more deeply how this product contributes to the development of Islamic banking, consumer protection, and financial market regulation more broadly. It also helps in identifying the challenges and opportunities faced in the implementation of Islamic financial practices in Indonesia. This writing uses a normative method where in this writing a literature search is conducted. Peter Mahmud stated that Legal Research must find a coherent truth, namely legal rules in accordance with legal norms or are there norms in the form of commands or prohibitions that are in accordance with Legal Principles and whether a person's actions are in accordance with Legal Principles or Legal Norms. Legal analysis of gold credit shows that this transaction involves various aspects that need to be considered, including the legal basis, sharia aspects (if applicable), financial risks, and legal treatment. It is important for financial institutions and customers to clearly understand their rights and obligations in gold credit contracts, and to comply with all applicable regulations to minimize risk and maintain fairness in this transaction.

Can local government implicit debt raise regional financial market spillover? Evidence from China

This paper investigates how local government implicit debt influences regional financial market spillovers. Utilizing the volatility spillover network of Diebold and Yilmaz (2014), we demonstrate that financial distress stemming from implicit debt can trigger regional financial market spillovers. Further analysis reveals that credit expansion amplifies the impact of local government implicit debt on cross-province volatility spillovers, while an improved financial situation lessens this impact. Moreover, this effect is more prominent in provinces with a higher foreign trade dependency and greater industrial structural change.

Theory of Regulation of Financial Markets: Reasons and Methods

Financial market regulation serves stability and protection. The purpose of risks and risk management is to prevent the phenomena of too big to fail, too interconnected to fail, and moral hazards at the micro and macro levels that could lead to a cascading impact. Consumer protection is addressed through disclosure requirements and educational initiatives, shielding consumers from predatory practices. The regulations extend to environmental and societal impacts, promoting sustainable and ethical finance, encouraging environmental practices transparency and incentivising green finance. Ethical finance aligns with global ethical standards and religious principles, shaping financial practices. Governments and international bodies collaboratively establish a multi-level regulatory framework, including national, supranational, and international levels. On the one hand, the different levels and binding rules provide flexibility, but at the same time, this makes uniformity difficult; harmony and consistency require careful supervision and oversight. Regional and national variations may exist in regulatory structures.

Особенности регулирования финансовых рынков в условиях цифровизации

The article is devoted to the peculiarities of financial market regulation in the context of digitalization, as well as the peculiarities of the influence of digital instruments on various segments of the financial market. The paper examines new trends and transformations in the credit, monetary, stock and insurance markets; provides examples of indicators for analyzing the effectiveness of its regulation, as well as examines in detail the impact of digitalization on the insurance market and the banking system (within the credit market) and the main risks arising in digital financial services. To assess the effectiveness of financial market regulation, the author proposed to apply an individual and comprehensive approach.

Greenwashing Risk and Its Mitigation for Sustainable Finance

Greenwashing presents a significant risk to sustainable financing, prompting researchers to investigate its impact on investors. In response to the urgency of combating this deceptive practice, financial market regulators have increasingly adopted ESG (environmental, social, governance) criteria. This study aims to comprehensively understand the effects of greenwashing by employing a mixed-method approach. Initially, a survey was conducted among participants to analyze their perspectives. The findings reveal a prevailing trend among individuals who seek to optimize investment returns, with a remarkable 50% of respondents demonstrating familiarity with greenwashing tactics. Notably, upon becoming aware of greenwashing practices, a substantial proportion of participants express a strong inclination to revise their investment strategies accordingly. Further exploration into the phenomenon uncovers a combination of factors contributing to greenwashing, including ambiguous legislation, stakeholder pressures, organizational qualities, and individual mindsets. Respondents emphasize the critical importance of enhanced transparency, a heightened emphasis on quality standards, and the enforcement of stringent regulations as key measures to mitigate the prevalence of greenwashing. This study sheds light on investors' sentiments regarding greenwashing, providing valuable insights into the impacts of this unethical practice on sustainable financing. Additionally, it offers practical recommendations to effectively combat greenwashing. By implementing suggested measures such as promoting transparency, prioritizing quality, and enforcing robust regulations.

The working principles of Open Banking and its benefits for Financial Institutions and Startups

The development of open banking is equally beneficial for consumers, traditional banks and FinTech companies. The attitude of traditional banking along with the growing importance of open banking is discussed in terms of the growing role of FinTech companies, including possible collaborations that should ultimately help banks and consumers. The current structure of the banks' business models may prove unsustainable in the future under the increasing pressure of customers to offer them innovative and convenient mobile products; Bank-FinTech Collaboration Shifting further collaboration will help banking institutions successfully embrace the transformative nature of open banking. With the development of open banking, banks can make better informed decisions, ensure improved resilience and systemic stability. The Fin Tech industry is evolving to meet their needs based on collaboration, reduced systemic costs, increased innovation and sufficient regulation. Financial market regulators must constantly refine relevant regulations to keep up with the rapid innovations to come. from FinTech companies. Keywords: Open Banking, Bank, Fin, Tech, API provider, Open API. Open data, Payment Services provider (PSP), Open Banking ecosystem

A research proposal to examine psychological factors that influence financial planning for retirement in China

The life expectancy rate of individuals worldwide has risen, and China is not excluded. Combined with an aging population, increasing pressure on the pension fund system, and a lack of savings, it poses a significant challenge to financial security unless measures are taken to improve individuals’ planning and financial well-being in retirement. This study aims to examine the psychological factors that influence individuals' FPR, thereby expanding the explanatory models for retirement savings decisions and behaviors. Using the CWO Model and supported by image Theory and the 3M Model, this research focuses on how the interaction between future time perspective, risk tolerance, retirement goal clarity, subjective financial literacy and objective financial literacy as psychological characteristics influence individuals' FPR. To obtain meaningful results, back translation was used to check the accuracy of the preliminary translation of research instruments. This translation method was also combined with the pretest method of expert reviews and cognitive interviews to increase the validity of the survey questionnaire. A purposive sampling technique will be applied to collect data from adults who are over 23 years old and have a certain income stream in six cities in China. The Structural Equation Modelling software will be used to examine the hypotheses of direct and mediating effects. This study has implications for financial market regulators, policy makers, and consumers. Keywords: CWO model; decision-making; financial planning; financial literacy; psychological factors; retirement

Financial market regulation and private law: a new frontier of transnational commercial law

Abstract Global financial markets are among the most extensively regulated markets in the world economy. This poses significant challenges from a private law perspective when regulatory rules interfere with private rights and obligations. This article examines the potential of transnational commercial law (TCL) to provide for a private law framework suited to the regulatory reality in global financial markets. The article finds that, while regulatory aspects are generally excluded from TCL instruments, notable exceptions to this general rule occur. Based on an analysis of the approaches undertaken in the Unidroit Convention of Substantive Rules for Intermediated Securities (Geneva Convention), including the accompanying Legislative Guide, the Unidroit Principles on the Operation of Close-Out Netting Provisions and the UNCITRAL Model Law on Secured Transactions, the article maps out three methods that allow for a reconciliation of private and regulatory rules: (i) the adoption of a flexible private law system including default and conflict rules; (ii) the use of opening clauses to allow deviations from TCL rules in accordance with international regulatory standards; and (iii) a codificatory approach through the development of a comprehensive and systematic legal framework consisting of both private law and regulatory rules. Finally, the article addresses potential obstacles and objections that future TCL instruments will face when addressing regulatory aspects. Overall, the article argues that an efficient financial market requires a foreseeable set of private law rules that—considering the continuous expansion of regulatory law—must address the pressing issues deriving from the interrelation of regulation and private law. However, the adaption of TCL instruments should be limited to common-sense financial market regulation that, even if differing from State to State, generally follows globally shared regulatory goals.

Computing the impact of central clearing on systemic risk.

The paper uses a graph model to examine the effects of financial market regulations on systemic risk. Focusing on central clearing, we model the financial system as a multigraph of trade and risk relations among banks. We then study the impact of central clearing by a priori estimates in the model, stylized case studies, and a simulation case study. These case studies identify the drivers of regulatory policies on risk reduction at the firm and systemic levels. The analysis shows that the effect of central clearing on systemic risk is ambiguous, with potential positive and negative outcomes, depending on the credit quality of the clearing house, netting benefits and losses, and concentration risks. These computational findings align with empirical studies, yet do not require intensive collection of proprietary data. In addition, our approach enables us to disentangle various competing effects. The approach thus provides policymakers and market practitioners with tools to study the impact of a regulation at each level, enabling decision-makers to anticipate and evaluate the potential impact of regulatory interventions in various scenarios before their implementation.

СТРУКТУРНІ ЗМІНИ НА РИНКУ ФІНАНСОВИХ ПОСЛУГ УКРАЇНИ: ВПЛИВ ВІЙНИ

Purpose. The purpose of the paper is to characterize the structural changes in the financial services market caused by war and identify the main trends and mechanisms for ensuring the stability of the market under martial law in Ukraine. Design/methodology/approach. We used the data from the financial market regulators to analyze the impact of a full-scale invasion on financial institutions’ activity and operations as well as to compare the contemporary trends in different sectors of the financial market in Ukraine. Findings. Our research examines the financial landscape in 2022, revealing a marked decline in the presence of financial intermediaries, notably in insurance companies and credit unions. Concurrently, there has been a substantial reduction in the number of bank branches. The sharp decline in the number of financial institutions can be attributed to multiple factors, including some institutions operated in regions occupied by Russia, preventing continuity after the invasion, and others involved in high-risk activities facing NBU scrutiny revealing violations. The war intensified liquidity and solvency issues, with numerous failed institutions lacking a safety margin and unable to attract resources amid economic deterioration. Despite these structural shifts, the overall assets of financial institutions have not decreased. The analysis showed the redistribution of assets in favor of banks. The market share of financial companies and pension funds experienced a slight decrease, with insurers and credit unions facing more significant losses. Practical implications. The high level of digitalisation of financial services in Ukraine allowed for ensuring an adequate level of access to financial services in the first months of the war when it was critical to maintaining customer confidence in the financial sector. Accordingly, further digitisation of financial transactions and improvement of regulatory approaches to the use of digital financial instruments can be seen as priority areas for the development of Ukraine’s financia sector. Originality/value. The research is an attempt to assess the extent of the impact of critically negative external factors on the financial sector in Ukraine, in particular, to identify structural changes caused by the war. Prospects for further research are related to the study of the medium- and longterm aspects of this impact

Digital banking ecosystems: Comparative analysis and competition regulation in Russia

Digital ecosystems allow banks to expand their offerings of financial and non-financial services, and thereby raise the quality and speed of customer service. Yet the broader range of banks’ non-financial services increases the size of their non-core assets and affects their financial stability. This creates certain complexities to ecosystems’ management both at the level of a bank and at the level of financial market regulation. The study covers theoretical and practical aspects of setting up and developing ecosystems in the Russian banking industry. The theory of industrial organisation and the ecosystem concept constitute the methodological basis of the research. The study adopts comparative and structural analysis methods. The evidence comes from public and internal reporting of PAO Sberbank, AO Tinkoff Bank, VTB Bank (PAO). The research found that banking ecosystems differ in the key area of activities (for instance, the Tinkoff Bank’s ecosystem focuses on investment and education, whereas VTB Bank’s one concentrates on a housing programme), nature of interaction between their participants, and the method of creation (universal, niche, outsourcing, insourcing). The development specifics of digital banking ecosystems depend on their specialisation, structure of immobilised assets, customer base, and level of business processes’ digitalisation. The value of the research comes from the revealed structural and functional peculiarities of digital ecosystems in the banking industry, as well as in the proved necessity to further refine the methods for accounting and assessing immobilised assets of banks.

The Application of the Capital Asset Pricing Model (CAPM) in China's Financial Market: An Analysis of Regulatory Impact and International Comparison

Indentation of Abstract should be left 0.53"/1.35cm. As the world's second largest economy, China is also one of the world's biggest emerging economies; The Capital Asset Pricing Model (CAPM) is one of the most classic pricing models, and China's asset pricing model has gained a lot of experience from it. This research investigates the application of the CAPM in China's financial market, focusing on the influence of financial market regulation and conducting a comparative analysis with international markets. CAPM is a fundamental asset pricing model used to estimate asset expected returns and risks based on their covariance with the overall market portfolio. The study aims to analyze the practical implementation of CAPM in China's financial market, considering the impact of financial market regulation on the model's effectiveness. Key variables such as market data, risk-free rates, and stock returns are utilized, with specific adjustments made to accommodate China's unique regulatory environment. The research's significance lies in providing valuable insights into asset pricing and risk assessment in China's financial market, as well as implications for investors and policymakers. By comparing the results with international markets, this study contributes to a broader understanding of the CAPM model's applicability and effectiveness in diverse regulatory settings.

‘Datafying’ Financial Market Regulations: A RegTech Experiment with the FINRA Rulebook

‘Datafying’ Financial Market Regulations: A RegTech Experiment with the FINRA Rulebook

Decentralized Finance Unmasked Behavioral Finance and Public Policy Insights on Financial Market Regulation

Decentralized Finance Unmasked Behavioral Finance and Public Policy Insights on Financial Market Regulation

Модель взаємодії структурних елементів фінансового ринку України

The aim of the article is to improve the methodology of studying the financial market of Ukraine, analyzing the interaction between the components of the financial market, studying the reaction of the components of the financial market to sudden changes and forecasting the behavior of the structural elements of the financial market. The financial market plays a decisive role in the modern market economy of Ukraine, providing a mechanism for the redistribution of capital between creditors and investors through intermediaries based on the principles of supply and demand. The development of the financial market and the interaction of its components is the subject of research by many scholars, whose works laid the foundation for a modern understanding of how financial markets function and how they affect the economy as a whole. Despite a significant number of studies on the functioning and development of financial market infrastructure, many aspects of the interaction of market entities in Ukraine remain unexplored, especially in changing external and internal conditions. To model the interaction of market participants in the financial market of Ukraine, an algorithm has been developed, on the basis of which the interaction of structural elements of the financial market of Ukraine has been analyzed, the reaction of the components of the financial market to sharp changes has been studied, and forecasts of the behavior of its structural elements have been made. The study uses a combination of fundamental conceptions of the financial market and the methodology of expert evaluation to determine the most significant statistical indicators that characterize its constituent components. The cause-and-effect relationships between these components are analyzed, the nature of their mutual relationship is revealed. ARIMA models were used to forecast key indicators of the financial market. On the basis of vector auto-regressive models, the dynamic adaptation of market components to shocks is analyzed. The study showed that the credit and interbank markets show less susceptibility to external factors and can even serve as impetus for changes in other structural elements of the financial market. The results of the study can be used for: development of a more effective policy of financial market regulation; development of new methods and tools of influence on the functioning of financial market entities.