Financial Trading Research Articles

Transnational trade union strategies in the context of market integration: The case of company union clubs in the Nordic finance sector

The creation of a common European market for financial services has significantly altered the strategic edifice for banks, as well as for the trade unions representing their employees. In the Nordic countries, where regulation of the labour market has long relied on multiemployer bargaining and strong sector-level actors, this has led to a strategic realignment. Faced with mergers and acquisitions, the potential for delocalization and an increasing amount of directly applicable EU-regulation in the sector, Nordic finance trade unions have supported the creation of company-level trade union alliances within MNCs, while still building upon resources and repertoires stemming from Nordic ‘comparative institutional advantage’. Our ‘extended case study’ of three such alliances in the finance sector, called ‘Nordic company clubs’, concludes that, while trade unions there still benefit from strong, typically Nordic institutional and associational power resources, important actor-centred variables and capabilities such as narratives, scaling, resourcefulness and institutional experimentation complement and strengthen our understanding of trade union strategies and institutional change in the context of market integration.

Data depth and core-based trend detection on blockchain transaction networks

Blockchains are significantly easing trade finance, with billions of dollars worth of assets being transacted daily. However, analyzing these networks remains challenging due to the sheer volume and complexity of the data. We introduce a method named InnerCore that detects market manipulators within blockchain-based networks and offers a sentiment indicator for these networks. This is achieved through data depth-based core decomposition and centered motif discovery, ensuring scalability. InnerCore is a computationally efficient, unsupervised approach suitable for analyzing large temporal graphs. We demonstrate its effectiveness by analyzing and detecting three recent real-world incidents from our datasets: the catastrophic collapse of LunaTerra, the Proof-of-Stake switch of Ethereum, and the temporary peg loss of USDC–while also verifying our results against external ground truth. Our experiments show that InnerCore can match the qualified analysis accurately without human involvement, automating blockchain analysis in a scalable manner, while being more effective and efficient than baselines and state-of-the-art attributed change detection approach in dynamic graphs.

The Role of an Active Portfolio in the Exchange Traded Funds Era: Understanding Outperformance and Underperformance with the Jensen's Alpha Model

This research aims to analyze the role of active portfolios in the Exchange Traded era Funds (ETFs) and to understand the outperformance and underperformance phenomena that may occur in this context. In the era of ETFs, investors have easier access to a variety of investment portfolios that cover a variety of assets and investment strategies. Therefore, it is important to understand how active portfolios perform in this environment. The research method used in this research is the use of Jensen's model Alpha, which is used to measure portfolio performance by taking into account systematic risk factors. Stock price data, ETFs, and market indices will be analyzed to identify outperformance (above average performance) and underperformance (below average performance) of active portfolios. It is hoped that the results of this research will provide a deeper understanding of the extent to which active portfolios are able to outperform market indices in the era of ETFs. In addition, this research can help investors and fund managers make smarter and more effective investment decisions in an ever-evolving investment environment. It is hoped that this research will make an important contribution to the understanding of investment strategies in the era of ETFs, as well as provide valuable insight for investors and financial professionals interested in active portfolios.

Supply Chain Management in Agriculture using Blockchain

Block chains are now firmly established as a digital technology that combines cryptographic, data management, networking, and incentive mechanisms to support the verification, execution, and recording of transactions between parties. While block chain technologies were originally intended to support new forms of digital currency for easier and secure payments, they now hold promise as a new foundation for all forms of transactions. Agribusiness stands to become a key beneficiary of this technology as a platform to execute ‘smart contracts’ for transactions, particularly for high-value produce. First it is important to distinguish between private digital currencies and the distributed ledger and block chain technologies that underlie them. The distributed and cross- border nature of digital currencies like Bit coin means that regulation of the core protocols of these systems by central banks is unlikely to be effective. Monetary authorities are focused more on understanding ‘on-ramps’ and ‘off-ramps’ that constitute the links to the traditional payments system rather than being able to monitor and regulate the currency itself. In contrast to the digital currency feature of block chain, the distributed ledger feature has the potential for widespread use in agribusiness and trade financing, especially where workflows involve many different parties with no trusted central entity

Article: Digitalizing the End-to-End International Trade Finance Process and the Law: A Mission for the Entire Ecosystem

This article considers the digitalization of the end-to-end trade finance process. Given that the emergence and adoption of innovative technologies in trade finance have made full digitalization possible, this article argues that digitalizing the entire trade finance process is a mission for the entire trade finance ecosystem: to successfully digitalize the full trade finance process, one would need to get all the parties involved on board. It also argues that innovation is only one piece of the puzzle and supporting legal frameworks and recognized standards are essential to accelerate the digitalization journey. Divided into seven parts, the article outlines the development of the trade finance industry, focusing on the main challenges and the legal responses to digitalization, before assessing why digitalization the entire process is hard to scale. It discusses disruptive technologies in trade finance, concluding that collaboration between the trade finance industry parties and removing legal uncertainty can assist in accelerating the digitalization transformation. Digitalizing the end-to-end process, trade finance, disruptive technologies, blockchain, standardisation and harmonisation, MLETR, URDTT

Improving Cointegration-Based Pairs Trading Strategy with Asymptotic Analyses and Convergence Rate Filters

AbstractA pairs trading strategy (PTS) constructs a mean-reverting portfolio whose logarithmic value moves back and forth around a mean price level. It makes profits by longing (or shorting) the portfolio when it is underpriced (overpriced) and closing the portfolio when its value converges to the mean price level. The cointegration-based PTS literature uses the historical sample mean and variance to establish their open/close thresholds, which results in bias thresholds and less converged trades. We derive the asymptotic mean around which the portfolio value oscillates. Revised open/close thresholds determined by our asymptotic mean and standard derivations significantly improve PTS performance. The derivations of asymptotic means can be extended to construct a convergence rate filter mechanism to remove stock pairs that are unlikely to be profitable from trading to further reduce trading risks. Moreover, the PTS literature oversimplifies the joint problem of examining a stock pair’s cointegration property and selecting the fittest vector error correction model (VECM). We propose a two-step model selection procedure to determine the cointegration rank and the fittest VECM via the trace and likelihood ratio tests. We also derive an approximate simple integral trading volume ratio to meet no-odd-lot trading constraints. Experiments from Yuanta/P-shares Taiwan Top 50 Exchange Traded Fund and Yuanta/P-shares Taiwan Mid-Cap 100 Exchange Traded Fund constituent stock tick-by-tick backtesting during 2015–2018 show remarkable improvements by adopting our approaches.

Decentralized Data and Artificial Intelligence Orchestration for Transparent and Efficient Small and Medium-Sized Enterprises Trade Financing

The complexities arising from disparate data sources, conflicting contracts, residency requirements, and the demand for multiple AI models in trade finance supply chains have hindered small and medium-sized enterprises (SMEs) with limited resources from harnessing the benefits of artificial intelligence (AI) capabilities, which could otherwise enhance their business efficiency and predictability. This paper introduces a decentralized AI orchestration framework that prioritizes transparency and explainability, offering valuable insights to funders, such as banks, and aiding them in overcoming the challenges associated with assessing SMEs’ financial credibility. By utilizing an orchestration technique involving symbolic reasoners, language models, and data-driven predictive tools, the framework empowers funders to make more informed decisions regarding cash flow prediction, finance rate optimization, and ecosystem risk assessment, ultimately facilitating improved access to pre-shipment trade finance for SMEs and enhancing overall supply chain operations.

Blockchain Technology in International Trade: A Catalyst for Efficiency and Revenue Generation

Background and Aim: The advent of blockchain technology has brought about a significant transformation in the realms of finance and international trade, primarily through the implementation of a decentralized ledger system for conducting transactions. The present study aims to assess the efficacy and economic advantages of employing blockchain technology in the context of international trade financing. Specifically, it focuses on the potential decrease in transaction time and cost savings that Chinese domestic banks may experience as a result of adopting this technology. Materials and Methods: This research employs a quantitative methodology to assess the efficacy of blockchain technology in the context of international trade, with a specific emphasis on banking professionals. The study utilizes a cost-benefit analysis approach to maximize advantages and minimize drawbacks. Results: The research revealed that the implementation of blockchain technology has the potential to improve operational efficiency and mitigate transaction risks. However, it is important to note that this comes at the expense of increased costs, rendering it unsuitable for widespread adoption due to its unfavorable net benefit. Conclusion: The findings of the study indicate that the use of blockchain technology leads to enhanced operational efficiency and decreased transactional risks. However, it is important to note that this implementation also entails elevated costs, rendering it impractical for widespread adoption due to its unfavorable net benefit. The report posits that the advantages of operational efficiency offered by blockchain technology are overshadowed by the accompanying expenses, thereby advocating for a prudent approach to its implementation in the realm of international trade. The recommendations encompass many strategies such as the implementation of trial projects, conducting thorough cost-benefit analyses, using hybrid techniques, ensuring ongoing monitoring, and maintaining strict adherence to legal regulations.

Craving money? Evidence from the laboratory and the field.

Continuing to gamble despite harmful consequences has plagued human life in many ways, from loss-chasing in problem gamblers to reckless investing during stock market bubbles. Here, we propose that these anomalies in human behavior can sometimes reflect Pavlovian perturbations on instrumental behavior. To show this, we combined key elements of Pavlovian psychology literature and standard economic theory into a single model. In it, when a gambling cue such as a gaming machine or a financial asset repeatedly delivers a good outcome, the agent may start engaging with the cue even when the expected value is negative. Next, we transported the theoretical framework into an experimental task and found that participants behaved like the agent in our model. Last, we applied the model to the domain of real-world financial trading and discovered an asset-pricing anomaly suggesting that market participants are susceptible to the purported Pavlovian bias.

Multi-level deep Q-networks for Bitcoin trading strategies

The Bitcoin market has experienced unprecedented growth, attracting financial traders seeking to capitalize on its potential. As the most widely recognized digital currency, Bitcoin holds a crucial position in the global financial landscape, shaping the overall cryptocurrency ecosystem and driving innovation in financial technology. Despite the use of technical analysis and machine learning, devising successful Bitcoin trading strategies remains a challenge. Recently, deep reinforcement learning algorithms have shown promise in tackling complex problems, including profitable trading strategy development. However, existing studies have not adequately addressed the simultaneous consideration of three critical factors: gaining high profits, lowering the level of risk, and maintaining a high number of active trades. In this study, we propose a multi-level deep Q-network (M-DQN) that leverages historical Bitcoin price data and Twitter sentiment analysis. In addition, an innovative preprocessing pipeline is introduced to extract valuable insights from the data, which are then input into the M-DQN model. A novel reward function is further developed to encourage the M-DQN model to focus on these three factors, thereby filling the gap left by previous studies. By integrating the proposed preprocessing technique with the novel reward function and DQN, we aim to optimize trading decisions in the Bitcoin market. In the experiments, this integration led to a noteworthy 29.93% increase in investment value from the initial amount and a Sharpe Ratio in excess of 2.7 in measuring risk-adjusted return. This performance significantly surpasses that of the state-of-the-art studies aiming to develop an efficient Bitcoin trading strategy. Therefore, the proposed method makes a valuable contribution to the field of Bitcoin trading and financial technology.

Selected Non – Funded Products and Trade Finance Income among Commercial Banks in Kenya

This study was aimed at determining the effect of selected non-funded products on trade finance income among commercial banks in Kenya. The selected non- funded products investigated in the study included: Guarantees; letters of credit and documentary collections. The research design for the study was descriptive with a target population, hence unit of analysis, comprising of 39 commercial banks in Kenya licensed and regulated by Kenya’s Central Bank in the year 2021. The respondents (unit of observation) were 39, representing a trade finance manager from each of the commercial banks. Therefore, the respondents provided data that was analysed using various statistical tools. The study found a substantial association between these products and Trade Finance income using inferential analysis, which included correlation analysis and regression analysis. Piloting of the study was undertaken using 10% of the sample size. These was important in establishing both the validity and reliability of the data collection instruments. The Cronbach alpha scores were above 0.70, hence, giving confidence that the data collection instrument was reliable. The results of the study show that a component of trade finance revenue is affected by the issuance, handling or management of trade finance instruments. The majority of commercial banks’ non-funded bank products, which include letters of credit, guarantees, and documentary collections, are classified as trade finance solutions in the study’s descriptive analysis. Commercial banks in Kenya are urged to expand their trade finance solutions offerings to electronic trade finance products such as electronic letters of credit and electronic guarantees in order to keep up with international best practices

ЦИФРОВИЗАЦИЯ ТОРГОВОГО ФИНАНСИРОВАНИЯ

Trade finance plays an important role in achieving the Sustainable Development Goals set out in the UN program for the period 2015–2030 and aimed at solving the following tasks: stimulating sustainable economic growth, productive employment and job creation, strengthening and reviving international cooperation, etc. Cross-border trade finance is based on the general principles and documents developed by the Wolfsberg Group, the International Chamber of Commerce and the International Association of Banks for Finance and Trade, which became the sources of information for the article. Its purpose is to assess the current state of trade finance, identify trends in its digital transformation and justify the advantages and limitations of using smart contracts in the field. Currently, efforts to digitalize trade finance are fragmented due to the scale and complexity of the issue. At the same time, by using innovative digital technologies, it is possible to achieve a significant reduction in the transaction costs of financial institutions, and thereby increase the availability of trade finance for applicant companies. Authors substantiate the advantages of using digital technologies for the development of the trade finance market, describe the stages of using smart contracts for those purposes and indicate the current limitations of digital trade finance solutions.

Trading in Foreign Exchange and its Influence on Trade Finance Income Among Commercial Banks in Kenya

This study sought to determine the effect of trading in foreign exchange on trade finance income among commercial banks in Kenya. Hence, the unit of analysis for the research were all the registered and fully operational 39 commercial banks in Kenya. The participants for the study were each trade finance manager for the 39 commercial banks. Data was collected using structured questionnaire which were distributed through the emails and followed by telephone calls from the researcher in order to expedite the response process. These resulted in a response rate of 77%, which is considered good enough for such a study. The research adopted a descriptive research design with data being analysed using the statistical package for social sciences ( SPSS) and the results represented as percentages, mean, median and variances. The study’s inferential analysis, which included correlation analysis and regression analysis, led to the conclusion that there is a significant correlation between trading in foreign exchange and trade finance income. Based on these conclusions, commercial banks are advised to concentrate on trade financing and trade facilitation since foreign exchange will be required at the time that settlement must be carried out. Banks should be aware that fees gained from trading in foreign exchange are in addition to whatever fees they may have earned from other trade finance activities

Da Vinci Medal Address: Material Political Economy.

On the occasion of the award of the author's da Vinci Medal in 2022, this article sketches a perspective, material political economy, employed by the author, explaining it by drawing on Marc Bloch's classic account of the dispute in European feudalism between milling grain on watermills or windmills controlled by feudal superiors, who could exact fees, and common people's use of hand mills. It considers the material political economy aspects of two modern technologies. The first is automated high-frequency trading in finance, where there are typically conflicts with incumbents and material efforts to favor "market-making" over "aggressive" algorithms. The second is the automated auctioning of digital display advertising opportunities, showing tension between two forms of these auctions' material organization: centralized auctioning via Google's systems and decentralized "header bidding."

Application of blockchain technology in trade finance

Application of blockchain technology in trade finance

Application of blockchain technology in trade finance

Application of blockchain technology in trade finance

Imputing Mutual Fund Trades

Imputing Mutual Fund Trades

절충교역 관점에서 본 한국의 방위산업 및 무기체계 국제거래 현황과 과제

South Korea has established the base for self-reliant defense and grown into an emerging defense exporter in 40 years since it first introduced a offset trade system in 1983, and aims to become the world's fourth-largest defense exporter by 2027. The purpose of this study is to draw implications for the development of Korea's defense industry and the expansion of defense exports from the perspective of offset trade. To this end, (1) the development process and status of Korea's defense industry were examined based on recent statistical data, and (2) the status of Korea's overseas purchase of weapons systems and defense exports were examined. Also, (3) after examining the current status of Korea's offset trade system, implications for the development of defense industry and the expansion of defense exports were drawn. In import offset trade, it is necessary to re-apply offset trade obligation to overseas purchase through FMS from the U.S.A., settle down the banking system, expand the offset value multiplier for SMEs, and strengthen the industrial cooperation quota system. In export offset trade, it needs to establish a cooperation system between government ministries by a strong control tower, form a consortium of government-defense companies for a proactive response system, introduce a mandatory reporting system for export offset trade, expand the policy support for defense export such as trade finance, and introduce a value offset system (SWAP).

Blockchain technology and international countertrade

We illustrate the concept of using a Turing complete consortium blockchain (TCCB) to facilitate international countertrade. Physical goods and services would be linked to the blockchain by associating them with corresponding non-fungible tokens (NFTs). TCCBs could help small or new companies, particularly those in less developed countries, reduce the counterparty risk and transaction costs related to logistic chain management and contract arbitration. They could also supplement trade financing that often requires a mature banking system and developed financial market. We analyze the concept using a hypothetical example to illustrate the potential efficiencies over traditional countertrade transactions.

Trade finance evolution: a comparative study of regulatory reforms in factoring policies for SMEs in India and China

This paper evaluates the effectiveness of the Factoring Regulation (Amendment) Bill 2021 in stabilizing the economic situation of micro, small, and medium-sized enterprises (MSMEs) in India using doctrinal research methods and comparative study. It compared the factoring regulations of India and China. The authors analyse the ramifications of the recent amendments to the Factoring law via a comprehensive literature review, legal frameworks, and comparative analysis of India and China. This study seeks to cast light on the potential of the Factoring Law in addressing the financial challenges encountered by SMEs in India. The findings provide policymakers, stakeholders, and researchers with vital insights into the regulatory framework's effectiveness and potential improvement areas. The research concluded that factoring is an important worldwide trade financing tool for economic development and financial inclusion since it promotes entrepreneurship, private enterprise, and supply chain finance. In order to raise its standing, India may consider adopting features from the Chinese Civil Code, setting regulations for factoring rights transfer, and prioritising creditor interests.