Traditional Financial System Research Articles

Digital assets for digital natives: Exploring familiarity and preference for cryptocurrency among millennials and Gen Z

<p>Cryptocurrency has gained significant attention and popularity in recent years, leading to increased awareness and preference among individuals worldwide. This study explores the intertwined concepts of awareness and preference and reasons for buying cryptocurrencies among Chennai city’s Millennials and Gen Z. This study did two things: a comprehensive but detailed systematic literature review on cryptocurrency and then conducted a survey, the study got 252 valid responses. After analysis, it has been observed that majority of the respondents are aware of cryptocurrencies and only a less percentage respondents own cryptocurrency. As individuals learnt about cryptocurrencies, their preference for these digital assets begins to take shape. Decentralized & transparent transactional system and financial inclusion and security & privacy emerge as significant factors driving preference, as individuals seek to escape the constraints of traditional financial systems and exercise direct control over their assets. Additionally, the potential for high returns attracts investors, drawing attention to the volatile but potentially rewarding nature of the cryptocurrency market. Global accessibility & speed and media & publicity are vital in promoting a sustainable and well-informed approach to the adoption and affinity for cryptocurrencies. This study holds the promise of exerting a positive influence on society by enabling better-informed decision-making, fostering greater financial and technological literacy, mitigating risks, and actively contributing to the responsible development of the digital asset industry.<strong></strong></p>

Enhancing urban water efficiency through digital financial inclusion: Evidence from China

Traditional finance exhibits several limitations in its capacity to drive the advancement of the green economy. In contrast, emerging Digital Inclusive Finance (DIF) uses digitization as a tool to address these shortcomings inherent in traditional financial systems. This research employs panel data encompassing 275 cities in China over the period from 2011 to 2021 to examine the relationship between DIF and Urban Water Efficiency (UWE). The findings of this study demonstrate a compelling positive association between DIF and the enhancement of UWE, intensified by significant spatial spillover effects. These results remain robust across a range of tests. It's worth noting that DIF primarily boosts pure technical efficiency, rather than scale efficiency, which are two important aspects of UWE. Delving deeper into the mechanisms that clarify how DIF reinforces green innovation and enhances the green total factor productivity, thereby contributing to UWE. Further exploration indicates that DIF has a more significant impact on UWE in cities with populations exceeding 5 million, no water resource tax, and strict environmental regulation. The combined efforts of financial and environmental regulation by the Chinese government play a key role in strengthening the positive relationship between DIF and UWE. Consequently, this research provides stronger evidence that financial development enhances environmental efficiency and offers new insights for urban water resource management.

Tokenization: Overview and Financial Stability Implications

In this paper we outline tokenization, which is a new and rapidly growing financial innovation in crypto asset markets, and we discuss potential benefits and financial stability implications. Tokenization refers to the process of constructing digital representations (crypto tokens) for non-crypto assets (reference assets). As we discuss below, tokenizations create interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto asset markets to the markets for the crypto token’s reference assets.

Charting the Financial Landscape: ECU, SDR, BRICS, and Cryptocurrencies - Addressing Challenges and Paving the Path Forward

Currently, the financial landscape is evolving very quickly, new technologies and changes in customer wishes and fulfillment time make currencies take on different forms and functions, each presenting unique challenges and opportunities. This article explores the historical development and contemporary meaning of currencies, ranging from traditional units of account such as the ECU and the SDR to the emerging association of economic power, the BRICS and the disruptive force of cryptocurrencies. The article begins by tracing the historical evolution of these currencies, shedding light on their origins and roles in international finance. It examines the influence of the ECU, SDR and BRICS and their potential in reshaping the global financial order. The rise of cryptocurrencies, their underlying technology (blockchain), and their transformative impact on traditional financial systems are also explored in depth. Common challenges and issues facing these forms of currency are identified, including regulatory complexities, volatility, security concerns, and barriers to adoption. The article examines the integration of traditional coins, simple or composite, into the cryptocurrency ecosystem, offering insights into potential solutions to address these challenges. Regarding the future, in its dynamics, the article offers a forward-looking perspective on the evolving role of these currencies in a globalized economy, highlighting opportunities for adaptation, cooperation, and resettlement of geopolitical and financial grace. The paper concludes with a call to navigate the complexities of the modern financial landscape with flexibility, innovation and attention to socio-economic impact. This article serves as a comprehensive resource for economists, policymakers, investors, companies, and individuals seeking to understand the dynamic interplay of currencies in the ever-changing world of finance.

The impact of digital inclusive finance on the growth of the renewable energy industry: Theoretical and logical Chinese experience

The development of renewable energy is the key to tackling climate changes and ensuring energy security. Meanwhile, the process is usually associated with a huge investment and financing gap, especially for transitional countries like China. Hence, developing and innovating the traditional financial system is urgent. However, existing studies have mainly focused on traditional financial perspectives, and few papers have critically examined how digital financial inclusion affects the growth of renewable energy industries. To this end, using Chinese provincial data from 2011 to 2020 and applying Feasible Generalized Least Squares (FGLS) method, this study explores the effect of financial inclusion on renewable energy and its underlying mechanisms from the production and consumption perspectives. It is found that the impact of financial inclusion on the production side of the renewable energy industry is significantly better than on the consumption side, and there is heterogeneity effect in different energy resource varieties, different regional locations, and different financial regulation intensities. The financial inclusion on renewable energy has a significant pulling effect in photovoltaic and wind provinces, but not in large hydropower provinces. Then, its driving effect is particularly pronounced in the northern region. Nonetheless, it is not significant for renewable energy consumption in the southern region. Besides, this positive effect cannot be achieved without stronger financial regulation. The mechanism of action assessment finds that optimizes the consumption pattern, increase the competition of commercial banks, and improve technological innovation all contribute to the positive effect whereas, FDI shows the negative effect. This study provides new evidence on China's achievement of the energy transition, suggesting the need to further improve incentives for FDI firms and to strengthen consumption-side guidance.

Predictors of financial sustainability for cryptocurrencies: An empirical study using a hybrid SEM-ANN approach

Cryptocurrencies stand as a significant financial innovation, poised to transform traditional financial systems by facilitating faster, cost-efficient, and inclusive value transfers. Understanding their sustainability is essential in comprehending their potential to reshape established financial frameworks. Hence, this study aimed to identify the factors predicting the financial sustainability of cryptocurrencies. The study proposed a model based on the “Expectation Confirmation Theory” (ECT) and tested the model using a multi-analytical approach by combining “Structural Equation Modeling” (SEM) and “Artificial Neural Network” (ANN). The sample of the study included 1649 participants, ranging in age from 17 to 70. Results indicated that perceived risk, regulation, price volatility, innovativeness, and confirmation of expectations significantly predicted perceived usefulness, which in turn significantly predicted satisfaction with cryptocurrencies. The findings highlighted that users' degree of confirmation of expectations significantly influenced their satisfaction with and perceived usefulness of cryptocurrencies. The specified paths within the model accounted for 61 % and 74 % of the variance in perceived usefulness and financial sustainability, respectively. In comparison to the results obtained through SEM analysis, the deep ANN multi-layer perceptron displayed superior performance in predicting perceived usefulness. This was evident from its enhanced predictive accuracy, achieving averages of 87.34 % for training and 87.76 % for testing.

Tokenization: Overview and Financial Stability Implications

In this paper we outline tokenization, which is a new and rapidly growing financial innovation in crypto asset markets, and we discuss potential benefits and financial stability implications. Tokenization refers to the process of constructing digital representations (crypto tokens) for non-crypto assets (reference assets). As we discuss below, tokenizations create interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto asset markets to the markets for the crypto token’s reference assets.

Risk of digital assets: Developments in regulation and implementation

The normative narrative about ‘crypto’ or ‘digital assets' as potential substitutes for the traditional financial systems has the downside that such a new system could present new types of risk, thus requiring dedicated risk management. But is this narrative justified by reality? Actual implementations with a trend to centralisation, generic features of blockchain-based systems to be exploited by new types of intermediaries and recent events (including the collapse of the Terra ecosystem and the bankruptcy of FTX), triggered feedback from central banks and banking supervisors. Recently, the current development of regulations was toughened with a proposal that ‘trading in unbacked digital assets should be treated by regulators like gambling’. This paper avoids any normative discussion of how crypto or digital assets should look theoretically, but focuses on the actual developments. An analysis of the whole stack of layers of blockchain platforms, from influencer marketing to features such as ‘maximum extractable value’, can be condensed to the litmus test of ‘`Cui bono`?’ (‘to whom is it a benefit?’). This perspective reveals that blockchain-based systems are determined by the objectives and intentionality of the (new) intermediaries and are typically a mixture of gaming, gambling and scam. Consequently, the revised high-level recommendations of the Financial Stability Board for ‘global stablecoin’ arrangements, the European MiCA regulation and the amended capital requirements to the Basel framework are benchmarks for the treatment of crypto and digital assets. These are based on the economic objectives: from E-money-like instruments on the balance sheet of (new) intermediaries via traditional securities (equity or credit) to native digital assets, which resemble gambling according to ‘same business, same risk, same regulation’.

Assessing the organizational and ecosystem factors driving the impact of transformative FinTech platforms in emerging economies

The financial market has been transformed by FinTech platforms, which offer innovative products and services. FinTech platforms use a combination of technologies to digitalize processes and introduce new business models with unique characteristics. The benefits of FinTech initiatives are not limited to boosting the economic development of emerging economies; they also have a transformative impact on society and stakeholders. The transformative impact enables the democratization of digital services, making them accessible to marginalized groups that the traditional financial banking system has excluded. Our study theorizes how FinTech organizational capabilities (digital technologies, digital infrastructures, and talented employees) and FinTech ecosystem conditions (competitors, regulations, digital gender gaps, and institutional gaps) impact inclusion, transparency, and market expansion inspired by transformative entrepreneurship. We tested it through a multilevel analysis using data from 333 worldwide large FinTech platforms combined with secondary data at the country level. Results provide insights into how digital infrastructure, a skilled workforce, and closing the gaps for disadvantaged groups are crucial determinant factors for increasing FinTech impacts in emerging economies. Several implications for entrepreneurs, society, and policymakers emerge as a call for fostering digital societies and FinTech industry in emerging economies.

Analyzing Bitcoin's Decentralization: Coefficient of Variation Approach and 21 Million Divisibility

Bitcoin, a decentralized digital currency, has received a lot of interest due to its potential to challenge the traditional financial system. This study applies a coefficient of variation analysis with an emphasis on the idea of dividing the entire supply by 21 million to determine the degree of decentralization for Bitcoin. The coefficient of variation is a statistical indicator of diffusion, making it possible to analyze how many Bitcoins different stakeholders hold. We can learn more about the degree of wealth concentration or distribution among Bitcoin users by examining the degree of decentralization using this method. This research calculates the coefficient of variation using publicly available information on Bitcoin addresses and the holdings linked to those addresses. The findings will contribute to the ongoing discourse on Bitcoin's decentralization and shed light on the potential impact of the fixed supply of 21 million Bitcoins on wealth distribution within the Bitcoin network.

Impact of Cryptocurrencies on Traditional Financial Systems

Impact of Cryptocurrencies on Traditional Financial Systems

Application of Association Rule Mining Algorithm based on 5G Technology in Information Management System

In this paper, an application method of association rule mining algorithm based on 5G technology in information management system is proposed to solve the problems of long running time and low processing efficiency in traditional financial information processing system. The association rule mining algorithm's employment in information management systems is the main topic of this research study, which is based on 5G technology. The efficiency and efficacy of information management systems have a lot of room to grow with the introduction of 5G. Large datasets may be mined for patterns and associations using the potent approach known as association rule mining. We want to improve the performance of information management systems by fusing association rule mining with the capabilities of 5G technology. The experimental findings indicate that in the first group of trials, the traditional system’s time for information mining is identical to that of the developed system, which is around one minute. The typical system's time to mine financial information, however, steadily grows with the amount of experimental data. The difference between the two is most obvious in the sixth experiment. Because the design system can delve deeply into the financial information, the overall information mining time of the financial information management system based on the association rule mining algorithm of the design is shorter. It is confirmed that the system for automatically processing financial information described in this study has a high level of processing accuracy and a positive processing outcome.

Tracing Knowledge Diffusion Trajectories in Scholarly Bitcoin Research: Co-Word and Main Path Analyses

In the burgeoning field of bitcoin research, a cohesive understanding of how knowledge and insights have evolved over time is lacking. This study aims to address this gap through an exploration of 4123 academic articles pertaining to bitcoin. Utilizing co-word analysis and main path analysis (MPA), it uncovers key themes and seminal works that have substantially influenced the field’s progression. The identified clusters, including safe haven, internet of things (IoT), proof of work (PoW), market efficiency, sentiment analysis, digital currency, and privacy, shed light on the multifaceted discourse surrounding bitcoin. The MPA, incorporating both forward and backward local paths, traces an evolving narrative, starting from an in-depth exploration of bitcoin’s structure, anonymity, and contrasts against traditional financial assets. It tracks the shift in focus to broader market dynamics, volatility, speculative nature, and reactions to economic policy fluctuations. The analysis underscores the transformation of bitcoin research, from its beginnings as a decentralized, privacy-oriented currency to its role in global economics and green financing, revealing a complex narrative of an innovative financial instrument to a multifaceted entity. Implications drawn from this analysis include the need for further research on the potential integration of bitcoin within emerging technologies like AI and cybersecurity, the implications of bitcoin’s interplay with traditional financial systems, and the environmental impacts of bitcoin and blockchain utilization. Overall, the current study not only enhances our understanding of the bitcoin field but also charts its dynamic evolution and stimulates further academic inquiry.

Why You Should Be Able to Make Your Own Individualized, Digital Nano-Currency

Increasing opportunities for access to traditional financial systems.

How can digital finance boost enterprises' high-quality development?: evidence from China.

As a new industry derived from the traditional financial system and enhanced by emerging technologies, digital finance is significant in microenterprise development. Based on the 2011-2018 Digital Inclusive Finance Index of Peking University, we examine the mechanism-inventory optimization and incremental innovation. We use the data of small and medium-sized enterprises to reveal the effect of digital finance-mismatch correction and defect improvement. The study results show that digital financing significantly improves enterprises' high-quality development. Further research has revealed that digital finance can effectively correct scale, attribute, phase, and industry mismatches. Digital finance alleviates financing constraints, solves the expensive financing problem, and pushes enterprises to deleverage in the economic development process. However, digital finance is still limited for companies with high financing constraints and leverage. Moreover, financial regulation can significantly improve the economic performance of digital finance. The findings provide reliable empirical evidence and policy inspiration for promoting digital finance development, deepening the supply-side structural reform of finance, better serving the real economy, and achieving high-quality economic development.

Dark side whitewashes the benefits of FinTech innovations: a bibliometric overview

Purpose The current study focuses on many risk categories that have emerged in the digital ecosystem of the financial technology industry, which has dramatically changed traditional financial systems as a result of innovations in financial technology.Design/methodology/approach The Web of Science Core Collection database was used to find a data set of 719 pertinent papers on the subject encompassing the year 2015–2023. The sample procedure was carried out utilising the PRISMA approach. The keywords were first gathered relating to technological risks in banking sectors and after confirming the keywords, the authors performed the search by the “topic” which covers “title” in the search bar. On February 15, 2023, the Web of Science database was searched using the terms “Cyber security risk OR data theft OR financial crimes OR financial stability risk OR operational risk OR default risk OR money laundering OR financial terrorism AND FinTech AND banking sector”. Two-step approach is applied in this study. First, descriptive analysis is applied using RStudio to highlight prominent authors, countries and affiliations. Furthermore, relationship among authors, countries and keywords is shown by using three fields plot. Second, using VOSviewer, co-occurrence of keyword analysis is used to determine the most influential themes.Findings The findings show that 2,611 documents have been published from 2016 to 2023. Year 2021 is the most productive year in terms of number of publications. The results also show that WANG XC is tied for the position of most prolific contributing author. In a similar vein, the United States leads the world in publication output. Furthermore, Southwestern University of Finance and Economics in China is leading the list with 15 articles. The results from the co-occurrence of keywords reveal that “default risk”, “operational risk”, “money laundering”, “credit risk”, “corporate governance”, “systematic risk”, “financial stability risk”, “risk management” and “crises” are the frequently keywords.Originality/value The results of this study are beneficial to academia and industry in order to advance their current understanding of FinTech and associated concerns. This work expands the understanding of the technology hazards facing the banking industry from a broad perspective.

Prospects for the use of digital financial assets in the Russian Federation

Aim. The study of the prospects for the use of digital financial assets in the Russian Federation, as well as the justification of their advantages and disadvantages.Tasks. Determination of the essence and types of digital financial assets, the study of foreign experience of their use by different states; justification of the legal status of the digital ruble, analysis of it as a new form of national currency, including the history of its development; identification of problems, prospects for digital financial assets and description of proposed models for the implementation of the digital ruble.Methods. The study uses systematic and logical approaches, general scientific methods with the use of methods of comparative, economic and financial analysis.Results. The trends in the use of digital assets in the financial system of the Russian Federation, as well as the step-by-step process of their introduction in the payment turnover of the economies of different countries are considered. The typology of financial assets by issuers, forms, availability and technology is given. The growth of the market capitalization of cryptocurrencies in 2015-2023 is shown. The prospects for the use of digital financial assets in Russia are determined. As part of the concept of digital ruble in its implementation, the process of using different models is described.Conclusions. Digital financial assets based on blockchain technology can be used to bypass traditional financial systems and banking institutions. Therefore, a fundamentally new approach can be taken in the field of monetary circulation when introducing cryptocurrencies. Due to the fact that cryptocurrency, having significant advantages over traditional payment solutions, is gaining popularity every year, exponential growth in the market capitalization of cryptocurrencies in 2015-2023 is shown. The establishment of prospects for the use of cryptocurrencies in Russia allowed us to determine that one of the main advantages of the digital ruble is the ability to accelerate and simplify the payment process. The introduction of digital ruble can lead to increased transparency, security of financial transactions and generally become a significant step in the development of the economy of the Russian Federation. However, according to the author’s position, all aspects and risks associated with this process should be carefully considered. There should be broad public support and openness. The digital ruble is intended to be a substitute for paper money, which cannot be traced in the “gray zone” of the economy. Unlike conventional cryptocurrencies, which are not tied to a company or a country, national cryptocurrencies have a clear framework of circulation: only within the country in which they are created. At the same time, the formation of a legal framework will make the process of implementation of digital financial assets more transparent and accessible for understanding and further use.

Microfinance, an Alternative for Financing Entrepreneurship: Implications and Trends-Bibliometric Analysis

Microfinance has become one of the most important financing alternatives for business start-ups, especially for vulnerable groups in poor regions. Microfinance provides access to financial products, especially to people who have been excluded from the traditional financial system. However, the mainstream literature on microfinance shows its impact on poverty alleviation, but it is not yet well developed to understand its dynamizing role in the entrepreneurial sector. There is still a large gap in the literature on analyzing microfinance as a financing alternative, so this paper seeks to find this relationship in the literature. A bibliometric analysis is applied, both of the performance of the publications and a word co-occurrence analysis during the period 2017–2022. The articles indexed in the Web of Science have been considered and systematized through the SCIMAT software v1.1.04, developed by the Soft Computing and Intelligent Information Systems Research Group, University of Granada, Granada, Spain. Microfinance institutions, education, entrepreneurship, organizational performance, business microcredits, and women microentrepreneurs have been identified as driving themes to be considered in future analyses. At the end of the document, the proposed future lines of research are presented. In addition, the results show the growing interest of the academic community in the topic, with 2022 being the year with the highest number of articles published on the topic.

Deciphering the Blockchain: A Comprehensive Analysis of Bitcoin’s Evolution, Adoption, and Future Implications

This research paper provides a comprehensive analysis of Bitcoin, delving into its evolution, adoption, and potential future implications. As the pioneering cryptocurrency, Bitcoin has sparked significant interest and debate in recent years, challenging traditional financial systems and introducing the world to the power of block chain technology. This paper aims to offer a thorough understanding of Bitcoin’s underlying cryptographic principles, network architecture, and consensus mechanisms, primarily focusing on the Proof-of Work model. We also explore the economic aspects of Bitcoin, examining price fluctuations, market trends, and factors influencing its value. A detailed investigation of the regulatory landscape, including global regulatory approaches, taxation policies, and legal challenges, offers insights into the hurdles and opportunities faced by the cryptocurrency. Furthermore, we discuss the adoption of Bitcoin in various use cases, its impact on traditional finance, and its role in the growing decentralized finance (DeFi) sector. Finally, the paper addresses the future of Bitcoin and cryptocurrencies, identifying emerging trends, technological innovations, and environmental concerns. We evaluate the potential impact of central bank digital currencies (CBDCs) on Bitcoin’s future, as well as the broader implications of this technology on global finance. By providing a holistic understanding of Bitcoin’s past, present, and potential future, this paper aims to serve as a valuable resource for scholars, policymakers, and enthusiasts alike

The Evolution of Bitcoin: A Historical Analysis and Future Prospects

Bitcoin is the first decentralized digital currency that was introduced in 2009 and has since garnered significant attention from investors, governments, and the general public. This research article provides a comprehensive historical analysis of the evolution of Bitcoin, tracing its roots from its early days as a niche, experimental technology to its current status as a global financial phenomenon. The study explores the key events and milestones in Bitcoin's development, including the creation of the first block chain, the emergence of cryptocurrency exchanges, and the proliferation of Bitcoin mining. It also delves into the economic and social factors that have influenced Bitcoin's growth and adoption over time, including government regulation, market fluctuations, and the rise of alternative cryptocurrencies. Furthermore, the article examines the potential future prospects of Bitcoin, including its potential to disrupt traditional financial systems, its viability as a long-term investment asset, and the emerging trends in the broader cryptocurrency ecosystem. The study concludes by highlighting the significance of Bitcoin as a transformative technology with significant implications for the global financial system. The insights provided by this research can aid policymakers, investors, and researchers in understanding the past, present, and future prospects of Bitcoin and its role in shaping the future of finance.