Margin Trading Research Articles

Firm Heterogeneity and India’s Manufacturing Exports: Lessons on Protection and Trade Theory

ABSTRACT Empirical examinations of heterogeneity among Indian manufacturing firms provide helpful lessons for trade theories and policies. Using descriptive statistics of cross-section data for 2011, 2015, and 2019, the asymptotic Wilcoxon-Mann-Whitney test, and regression analysis, the study reveals that firms are heterogeneous within each 4-digit National Industrial Classification (NIC) category, exporting firms are more productive than non-exporters, and exporter premia decline with trading activities. The study concludes that recent protectionist policies reduced extensive trade margins, firm heterogeneity, and productivity in the Indian manufacturing sector.

Gendered differences in trade margins: evidence from grain value chains in Nigeria

ABSTRACT Male resellers in Nigeria make significantly higher trade margins than their female counterparts, especially in the Northern regions of the country. This is likely due to predefined gender roles and relationships that result in inequalities in market information, access to customers and access to suppliers. Our finding is based on an extensive survey of traders, covering the key grains markets of Nigeria.

Do controlling shareholders' equity pledges exacerbate the stock price crash risk? -A study based on margin trading and securities lending transactions in China's securities market

It clarifies the influence mechanism of controlling shareholders' equity pledges, margin trading and securities lending, and stock price crash risk from the perspective of corporate governance, etc. This paper establishes a main and interaction effect regression model to empirically test the impact mechanism of controlling shareholders' equity pledge on stock price crash risk and the moderating effect of margin trading and securities lending in the process of this impact based on the measures of stock price crash risk, controlling shareholders' equity pledge level, as well as margin trading and securities lending transaction size, using China's A-share listed companies from 2010 to 2020 as the sample. It finds that: (i) The higher the controlling shareholder's equity pledge ratio of listed companies, the lower the stock price crash risk. (ii) There is no significant effect of margin trading and securities lending transactions on stock price crash risk. (iii) Securities lending transactions have a positive moderating effect in the impact of controlling shareholders' equity pledges on stock price crash risk, but the moderating effect of margin trading transactions is insignificant.

Margin Rules and Margin Trading: Past, Present, and Implications

AbstractMargin—collateral or funds that investors deposit with their counterparties—is a crucial component of the practice of borrowing money to fund investment. While margin offers the potential for enhanced returns, it also exposes investors to the risk of escalated losses, thereby necessitating stringent regulatory oversight. Delving into the regulatory framework governing margin trading, we provide historical insights into the origins and dynamics of various margin requirements, and we review academic studies that illuminate the implications of these regulations for asset pricing, financial stability, and the design of margin rules. With an eye to the future, we also outline recent advancements in the evolving landscape of margin rules, such as portfolio margin and central clearing.

Fly the unfriendly skies: The role of transport costs in gravity models of trade

We exploit exogenous shocks to flight distances over time to estimate the distance effect in airborne trade within panel regressions. We find a negative distance effect, which we interpret as evidence of a link between transportation costs and airborne trade. Notably, this relationship is driven almost entirely by changes at the extensive margin. Specifically, trade in HS 6 product categories with intermittent trading histories becomes dormant when flight distances increase. Conversely, the intensive margin of trade remains largely unaffected.

Information, sentiment, and margin trading of Chinese stock market

AbstractThis paper examines whether information or sentiment drives margin trading in the Chinese stock market. At the aggregate level, no conclusive evidence indicates a dominance of either information‐driven or sentiment‐driven margin trading activities. However, at the individual firm level, we observe both types of margin trading, underscoring the need to consider the heterogeneity of margin trading when reconciling previous research findings. Moreover, we find that the likelihood of sentiment‐driven margin trading significantly declined following regulators' implementation of stricter rules for margin trading in 2015.

The impacts of lockdown policies on trade margins in the Philippines

The Philippines was among the most infected countries in Southeast Asia at the onset of the COVID-19 outbreak. This study analyzes how the export and import trade margins (extensive and intensive) of the Philippines were affected by the lockdown policies of trading partners. Using a quarterly series of product-by-country data for 20 quarters (quarter one of 2018-quarter four of 2022) and an event-study design, the paper shows that lockdown measures did not affect or mildly affected the intensive margin of exports and the import margins. Instead, the extensive margin of exports was most affected. It declined by 27% in the first quarter and by an average of 46% between the fifth and eleventh quarters of the lockdown. This was largely influenced by the closure of workplaces, stay-home requirements and controls on international travel. Export and import margins of intermediate goods were more resilient to the lockdown shocks. Overall, preventing disruptions in the supply chain networks can help countries adjust better and contribute to a speedy recovery and possible resilience to future shocks.

VI. Zur ambivalenten Rolle des Telefons beim Waren-Terminhandel

Summary This contribution discusses the ambivalent role of the telephone in commodity futures trading. On one hand, the telephone proved to be useful in commodity futures trading since it was easier to use than the telegraph; on the other, it helped to spread prejudices about the commodity futures business. Indeed, this became a political issue in the 1890s as reforms were demanded. The large agrarians of Prussia in the East were particularly interested in these reforms. Above all, the marginal trading deriving from commodity futures was accused of being ‘unfair business’ and provoked great controversy among jurists before 1891. The prevailing view was that marginal trading ‘was the equivalent of a lottery contract’ and thus could not be litigated in court. Max Weber argued forcefully against this view in his work on stock markets, and the view was eventually rendered obsolete by a judgement from the Supreme Court of the Reich, which prompted law makers to act. Although the telephone benefited commodity trading, it also aroused perceptions of unproductive activity which were easy to associate with the view of commodity futures trading as a form of lottery. This was particularly the case because the self worth of workers rested at the end of the 19th century on ‘hard physical labour’, so that the impression of idleness was not tolerated. This is supported by Popitz’s essay “Was tun wir, wenn wir spielen” from 2000: ‘The actions of gamblers do not [leave behind] a product. [Rather], when they play, they are being creative in an unproductive way.’ As such, the telephone helped commodity futures trading to communicate quickly, but at the same time it was also a symbol of unproductive activity and thereby fed the widespread mistrust of the commodity futures business and its associated marginal trading.

Margin trading, short selling, and information asymmetry

We investigate the impact of margin trading and short selling (MTSS) on information asymmetry using data from a unique Chinese pilot program that permits MTSS for a specific list of stocks. We establish a theoretical framework indicating that MTSS enhances the pricing system’s informativeness, leading to reduced information asymmetry. Motivated by this theoretical framework, we design a quasi-experiment to analyze data from 2013 to 2016. We find that indeed MTSS weakens information asymmetry. Furthermore, the reduction of information asymmetry can be attributed to both margin trading and short selling.

How does the balance of securities lending affect investors’ sentiment in the securities margin trading market?——An Empirical Study Based on Impulse Response Function

How does the balance of securities lending affect investors’ sentiment in the securities margin trading market?——An Empirical Study Based on Impulse Response Function

Aid for trade and export performance of recipient countries: The moderating role of institutions

Using bilateral trade and aid for trade (AfT) data for a sample of 155 countries over the period 2002-2019, we implement a gravity analysis to assess whether bilateral aggregate AfT and various AfT categories have stimulated exports of AfT-recipient countries to donors, and to examine if the institutional distance between recipients and donor countries affected the efficacy of AfT in promoting the former's bilateral exports. We show that AfT flows tend to foster exports of recipients, both at the extensive margin and intensive margin. Moreover, the trade-stimulating effect of AfT for trade policy and regulation is more pronounced than that of other AfT flows. Finally, institutional disparities between trading partners dampen the effectiveness of AfT in promoting exports at both margins of trade; and certain regions and income-based groups have managed to benefit more than others from AfT. Increasing the amount of disbursed aid flows is likely to speed-up the insertion of developing countries into world markets; strengthening governance in AfT-beneficiary countries and closing their institutional gap with donors would enhance the effect of AfT on their exports; and tying AfT flows to governance-related reforms in recipients can be an option to consider by donors.

Research on the Impact of Financing and Short selling System on Audit Quality

The margin trading and securities lending system, as a new type of financial tool, has a significant impact on the Chinese capital market, affecting audit quality from the perspective of credit information disclosure. This article selects A-share listed companies in Shanghai and Shenzhen from 2007 to 2023 as samples and uses a double difference model to study the impact of margin trading and securities lending on audit quality. Research has found that after the implementation of the margin trading and securities lending system, the audit quality of margin trading and securities lending target enterprises has significantly improved compared to non-margin trading and securities lending target enterprises. Therefore, while improving the margin trading and securities lending system, we should leverage the combined efforts of internal control and audit supervision to improve audit quality.

Trading Analysis Of The Kopay Chili

Chili is one of the horticultural crops with the most market demand. One of the local varieties that originated from Payakumbuh is Kopay chili. The trading process of the product can influence the fluctuating price. The trading channel is efficient if the system uses the minimum possible cost to distribute the product to consumers. This study aims to describe the trading channels and functions and analyze the trading margins and efficiency of the Kopay chili in Kelurahan Koto Panjang Dalam. This study used a survey method with deep interviews and questionnaires. The number of samples interviewed was 16 farmers, 7 retailers and 10 consumers. The analysis used is descriptive qualitative and quantitative. The result showed two trading channels: channel one (farmers – final consumers) and channel two (farmers – retailers – final consumers). The functions of the trading system are exchange function (purchase and sale), physical function (storage and transportation),and support function (standardization and risk management). The trading margin of channel one is IDR 8.500/kg, while channel one does not have a trading margin because farmers sell the chili directly to consumers. Both trading channels of Kopay chili in Kelurahan Koto Panjang Dalam are efficient, with an efficiency level of 0.37% and 4.19%, respectively.

Measuring DeFi risk

Decentralized finance (DeFi) lending has grown from nonexistent in 2017 to nearly $45 billion in total value locked across the three largest protocols in December 2021 before falling to roughly $15 billion in July 2023. The platforms use cryptocurrencies as collateral, matching speculative margin traders with yield-seeking depositors. Depositors receive claims guaranteed by a basket of collateral. We develop a framework that requires only knowledge of total deposits and borrowings to measure the total protocol risk to lenders and borrowers. Using data from major protocols, the risk measures show that system fragility increased beyond reasonable levels around mid-2021, and we identify time periods exposing lenders to a potential collateral loss conditional on continuing extreme fluctuations in coin prices. Moreover, our results indicate that the liquidation process, a risk mitigation strategy, is not timely and is less effective when risk levels are high. Overall, the model provides two easily implementable aggregate risk metrics that capture the perspectives of synthetic investors and provide early warning signals as the industry moves from collateral-guaranteed deposits to fiat money.

Leveraged trading and stock returns: Evidence from international stock markets

Are margin traders as well-informed as short sellers when it comes to leveraged investing? Our paper, utilizing a unique dataset on stock-level short selling and margin trading from three international stock markets, reveals that while short selling has cross-sectional return predictability, margin trading does not. In comparison to short selling, margin-trading activities demonstrate a stronger correlation across stocks and weakly predict firm fundamentals. This suggests that margin traders are less likely to possess a firm-specific information advantage. Our findings at the investor account level also indicate that margin traders are less sophisticated than short sellers.

Exports, productivity and capital intensity: Evidence for Brazilian firms

Engaging in export activities is a key factor influencing firm performance. This paper explores the export-productivity and export-capital intensity relationship using firm-level data from the Brazilian manufacturing industry over the period 2007–2014. The empirical strategy combines Propensity Score Matching (PSM) and Differences in Differences (DD) methods and explores the fact that firms enter the external market at different moments, generating a variation in the period and permanence in international trade. We find static and dynamic effects on labor productivity, total factor productivity, and capital intensity. Firms that start exports experience an average productivity growth of about 5% and a 2% decrease in capital intensity compared to non-exporting firms. The permanence in the activity magnifies these impacts. After three periods, the growth (reduction) in productivity (capital intensity) is around 10.5% (4.7%). We identify heterogeneous effects, leading to variations in magnitude across dimensions such as technological intensity, size, age, ex-ante levels of productivity and capital intensity, and intensive margin of trade. We also show that firms become more labor intensive by demanding more skilled workers.

Manajemen Rantai Pasok Produk Beras di Penggilingan Padi Sumber Baru Kecamatan Sidoarjo, Kabupaten Sidoarjo

Research Objectives 1) To analyze the institutions and supply chain members of the rice commodity in the New Sumber Padi Mill; 2) Analyze the supply chain management of rice commodities at the New Sumber Padi Mill; 3) Analyze supply chain trading margins and value chain analysis at the New Source Rice Mill. The analytical method used is descriptive qualitative analysis, quantitative descriptive analysis, and qualitative design. The institutions and supply chain members involved in the rice supply chain at the Sumber Baru Rice Mill are farmers, middlemen, rice millers, retailers, and consumers. The supply chain channel pattern has three supply chain channel patterns. The product flow occurs from farmers selling grain to rice in the hands of consumers. The financial flow of the two-channel patterns is equally profitable. Then the information flow occurs because each has a two-way flow of information between institutions and supply chain members. The trading system margin for each trading system channel is different. The highest added value is in the rice mill.

Regional resilience during COVID-19: evidence from Colombian exporting clusters

ABSTRACT This study characterises the geography of Colombian exporters and their response to the COVID-19 crisis. We define exporting clusters within departments using bipartite network analysis and community detection tools. The methodology empirically detects product communities – groups of products that are strongly related – which are compared with an alternative taxonomy of industrial clusters, and clusters exporting firms by considering their exports within these taxonomies. We define these groups of specialised firms localised in departments as exporting clusters. We then examine whether belonging to an exporting cluster can enhance firms’ trade margins. We find that clusters do not automatically improve firms’ trade margins and that there are differences in how firms react to a crisis within clusters. Our analysis contributes to regional studies by shedding light on the potential of exporters’ agglomerations to navigate and recover from crises and outlining critical firm characteristics that can strengthen regional resilience.

Decomposition of Extensive and Intensive Trade Margin Impacts of Chinas Agricultural OFDI

Economic theory indicates that some ambiguity in the relationship between outward foreign direct investment (OFDI)and trade. This paper estimate the impact of OFDI on the extensive and intensive agricultural import margins of at HS 6-digit commodity level over the sample period from 2012-2020 with the top ten trade partners. We find that standard gravity variables provide good explanatory power for bilateral trade on extensive margin. The empirical results show that the scale of OFDI has a positive impact on the total imports of agricultural products by diversifying product varieties rather than increasing the price of agricultural products, i.e. the impact of OFDI is concentrated exclusively on the extensive margin of China agricultural imports rather than intensive margin. Importantly, based on specific categories of agricultural products, our results suggest that OFDI almost works on food processing and animal products. Additionally, in order to further investigate the motivation of China`s agricultural OFDI, we construct expanded gravity model. The empirical results show that agricultural-related OFDI exhibits characteristics of seeking labor-intensive factors. Overall, our results support that OFDI promotes the diversification of China`s agricultural imports and contributes to the improvement of the welfare of Chinese residents.

SHALLOTS PRICE PARADIGM IN INDONESIA AND ITS INFLUENCED FACTORS

Shallot is a horticultural commodity that, although it is minor, works as a culinary flavor enhancer in Indonesia. The fluctuations and dynamics of shallot prices contribute to the inflation rate in the Republic of Indonesia. Consequently, the government includes this commodity in the national strategic food group. This study aims to examine the factors that influence the dynamics of shallot prices in Indonesia. It analyzes the causes and provides alternative solutions to stabilize the shallot price. This research is a systematic literature review, which utilizes secondary data available on government information/data websites and several supporting articles. It used descriptive and explanatory methods to analyze the qualitative and quantitative components. The research also used the statistical regression methods, anova by Excel, and R software as differential analysis. This study shows that the most significant factors in determining shallot price are trade margin and transportation margin. Meanwhile, production factors have almost no effect regionally. The consumption factor and the length of the supply chain considerably affect certain areas. Expansion of the planting area, especially in the northern part of Indonesia, can be used as a complementary means to meet the demand for shallots on an ongoing basis. This research is a compilation of advanced analyses of reports on the performance of departments in the government of the Republic of Indonesia, taking into account and referring to the results of research by other academics.