Traditional Finance Research Articles

How does digital inclusive finance influence non-agricultural employment among the rural labor force? ——Evidence from micro-data in China

In the context of the integration and development of inclusive finance and digital technology, exploring the relationship between digital inclusive finance and non-farm employment of rural laborers is of great significance in promoting rural economic development and realizing common prosperity for all. Based on data from the 2018 and 2020 China Family Tracking Survey (CFPS) and Peking University's Digital Financial Inclusion Index, this paper investigates the impact of digital inclusive finance on the non-farm employment of rural labor and its transmission mechanism. The results of the study show that both digital inclusive finance and its sub-dimensions can promote the non-farm employment of rural laborers, and have stronger inclusion and inclusiveness compared with traditional inclusive finance. Mechanism analysis shows that both Internet use and social trust can positively moderate the relationship between digital inclusive finance and non-farm employment of rural laborers, and that digital inclusive finance can promote non-farm employment of rural laborers by alleviating financing constraints and enhancing risk preferences. Further heterogeneity analysis shows that digital inclusive finance promotes employed non-farm employment more significantly than entrepreneurial non-farm employment, and on this basis, there are also differences for different employment groups and different regions. The findings of this study aim to provide theoretical reference and support for relevant departments to formulate policies to realize higher quality full employment of rural labor.

Navigating climate challenges: Focusing on the effectiveness of natural resource rents, fintech, green finance, environmental quality, and digitalisation

China indeed has made great efforts to maintain environmental quality. However, it should be noted that climate challenges normally emerge when certain nations heavily depend on non-renewable resources to meet energy demands. It is quite difficult to reduce the dependency because such economies are ranked as a major importer of fossil fuel resources. This means, pollution and emission rates in subsequent economies are increasing with the passage of time. The spontaneous fintech growth and financial inclusion, natural resource volatility and increasing economic activities in China have triggered vicious climate challenges. Therefore, the study intends to explore the relationship between fintech, financial inclusion, green finance, natural resource rent and environmental quality in China over the time period of 1998–2022. Using ARDL technique, it was found that fintech, financial inclusion and green finance enhance environmental quality, whereas natural resource rents are responsible of degrading environmental quality. Therefore, Chinese authorities should use resources related to green finance to facilitate fintech industry. Besides, blending fintech solutions such as NFTs and cryptocurrencies with traditional financing for environmental sustainability, there is also a need to establish standard laws and procedrues for these products.

Navigating Growth: The Nexus of Supply Chain Finance, Digital Maturity, and Financial Health in Chinese A-Share Listed Corporations

As a derivative of traditional finance, supply chain finance plays a crucial role in facilitating the sound and stable operation of enterprises. This paper investigates the impact of supply chain finance on corporate sustainable growth. The findings reveal that supply chain finance not only fosters sustainable growth but also amplifies this effect through digital technology integration. Moreover, for firms and service-oriented businesses located in the central region, supply chain finance exerts a more pronounced positive influence on sustainable growth. In addition, the impact of supply chain finance on firm sustainable growth can be stage-specific depending on the financial situation.

Behavioral Biases in Investment Decisions: An Extensive Literature Review and Pathways for Future Research

In the realm of investment decisions, the influence of behavioral biases has emerged as a captivating area of exploration. This article embarks on a comprehensive journey through the landscape of behavioral biases in investment choices, delving into their profound impact on financial markets. Contrary to traditional finance theories assuming rationality, a multitude of empirical evidence attests to the pervasive effects of cognitive and emotional biases. Through an extensive literature review, this article elucidates the intricacies of key biases such as overconfidence, loss aversion, anchoring, confirmation bias, herding behavior, disposition effect, framing effects, and regret aversion. By examining the distinct ways these biases distort investors' judgment and decision-making processes, we unveil the often unexpected deviations from rationality. Each bias, rooted in human psychology, can lead to suboptimal investment behaviors, portfolio misalignments, and heightened market volatility. However, recognizing the impact of these biases provides opportunities for transformative insights. As investment professionals, policymakers, and individuals alike comprehend the subtle nuances of behavioral biases, tailored interventions, educational initiatives, and adaptive strategies can be devised to mitigate their adverse effects. This article not only synthesizes the prevailing research but also charts a course for future investigations. The implications of understanding and addressing behavioral biases extend beyond financial realms, offering a bridge between finance and psychology. As interdisciplinary collaboration gains momentum, pathways for future research become evident, beckoning scholars to delve deeper into the uncharted territories of human behavior and its intricate relationship with investment decisions. Through the exploration of these biases and their potential remedies, this article illuminates the evolving landscape of investment decision-making in a world where cognitive fallacies intersect with financial choicest.

Research on trust mechanism of supply chain finance under Industrial Internet embedded with blockchain.

In traditional supply chain finance, the financing of enterprise mainly relies on the credit segmentation of the core enterprise, resulting in a short trust transmission radius and poor financing ability. The development of Internet technology, while expanding financing channels, has also seen an increasing severity in issues such as information fraud and data breaches, which has further aggravated the trust crisis in supply chain finance. This paper integrates blockchain technology into the industrial internet platform and analyzes the applicability of both in empowering supply chain financial trust. Then a supply chain financial trust framework, which emphasizes information sharing, data security, and trust circulation, is proposed. Furthermore, combined with the theories of Funk-SVD and entropy value, this paper designs a global trust evaluation mechanism that facilitates the trust circulation in supply chain finance and proposes a recommendation algorithm for global trust. With the testing conducted using the Epinions dataset, it is found that the algorithm proposed in this paper has a strong data dimensionality reduction and concentration ability, especially for large sample data, it can obtain more accurate evaluation values with less space occupation, thus enhancing the trust circulation ability of supply chain finance. Finally, the paper puts forward specific policy recommendations for the implementation of the supply chain finance information mechanism, aiming to better improve the financing accessibility of enterprises in supply chain, particularly small and medium-sized enterprises.

LONG-TERM EQUILIBRIUM RELATIONSHIPS BETWEEN THE STOCK AND CRYPTOCURRENCIES MARKETS

This study investigates the long-term equilibrium relationships between the stock market, represented by the Dow Jones Industrial Average (DJIA), and a comprehensive range of 401 cryptocurrencies traded on Binance. Employing Johansen cointegration tests on data from January 2018 to May 2024, we examine pairwise relationships between 30 DJIA components and cryptocurrencies across various categories. Our findings reveal varying degrees of integration, with some stocks like Visa and Walt Disney Company showing strong cointegration with numerous cryptocurrencies. Sector-specific patterns emerge, such as significant links between technology stocks and platform tokens, and between financial services and DeFi tokens. Platform tokens exhibit the highest overall integration with stocks, followed by DeFi and NFT/Gaming domains. Notably, some cryptocurrencies, including major ones like Ethereum and Bitcoin, show high levels of cointegration, while others display independence. Stablecoins demonstrate strong cointegration with all stock prices. These results provide nuanced insights into the complex interactions between traditional and digital finance, contributing to our understanding of market integration, diversification strategies, and the evolving financial ecosystem.

Financing Challenges and Strategies for Small and Medium Enterprises in China

This study provides a comprehensive analysis of small and medium-sized enterprises' (SMEs) financing in China, highlighting their critical role in the national economy by contributing significantly to GDP, tax revenue, job creation, and exports. Despite their importance, SMEs face substantial financing challenges due to traditional banking systems' risk assessments, leading to a significant financing gap. The COVID-19 pandemic has exacerbated these challenges, threatening the survival of many SMEs. This research explores both traditional and innovative financing channels, including bank loans, equity financing, and digital platforms like Microconnect and Meituan. The difficulties SMEs face are also discussed, such as high loan rejection rates and the limitations of collateral-based financing which often push these enterprises towards high-cost alternatives or limit their access to necessary funds which hinder SMEs’ daily operation. It assesses the role of government policy and inclusive finance in supporting SME financing and examines the effectiveness of current financial support mechanisms while identifying ongoing gaps and challenges. It argues that while digital platforms like Microconnect and Meituan offer valuable insights and solutions, the complexity of China's financing ecosystem and regional disparities present ongoing challenges. The study ends by highlighting the importance of SMEs to China’s economy and the appeal for continued innovation and policy support to improve SMEs financing.

Blockchain Metamorphosis: Transforming Traditional Finance through Decentralization and Transparency

Blockchain Metamorphosis: Transforming Traditional Finance through Decentralization and Transparency

The Crowdfunding Application by Blockchain and ThirdWeb Hybrid Model

Abstract: The advancement of Web3 and blockchain is happening rapidly in various fields, including healthcare, social services, and electronic voting. Blockchain technology is being used by crowdfunding platforms to combine its benefits of speed and low fees with traditional finance, creating a new way of raising money. By integrating Reacts user-friendly interface, Solidity smart contracts, Meta-Mask wallet integration and Hardhat development and testing capabilities, it forms a versatile and secure platform. This project aims to find out how much money is missing in the current crowdfunding market and offer them smart contracts and tools that use Ethereum to create their own application businesses. Hybrid Model Platform is a ThirdWeb tool that allows for easy and flexible scaling and visibility. this new crowdfunding app is a major leap in fundraising, fulfilling numerous customer requirements and poised to revolutionize crowdfunding with its fresh and inventive strategy.

Research on the Impact of Digital Finance on the High-Quality Development of Regional Economy: An Empirical Analysis Based on Provincial Panel Data

As a product of the combination of digital technology and traditional finance, the vigorous development of digital finance in the context of the digital economy era will certainly have a great impact on the high-quality development of the economy. Based on the panel data of 31 provinces from 2011 to 2020, this paper adopts the entropy value method to determine the economic development index of the region, and applies the two-way fixed effect model to explore the impact of the development of digital finance on the regional economic development. It is found that the rapid development of digital finance has a positive role in promoting the economic development of the region and changes with the level of openness to the outside world as well as the level of human capital, and that the innovation effect update of the region plays an intermediary role as an intermediary variable in the impact of digital finance on the economic development of the region. There is significant heterogeneity in the economic development of digital finance on different regions, with the highest in the east and the lowest in the center. Reasonable suggestions are made for the better development of the economy of each region, thus promoting the high-quality development of the economy of each region.

Crowdfunding in Portugal—Using the Raize Platform to Ensure the Sustainability of Companies and Projects

This study aims to analyse the reasons why entrepreneurs choose to use collaborative financing through the Raize platform to finance their companies or projects through peer-to-peer crowdfunding (loans). This study is pertinent because it deals with an innovative, differentiated topic that presents itself as a possible disruptive form of financing and an alternative to traditional bank financing. Its use and significant take-up and the rapid and continuous growth of users on this type of crowdfunding platform is a strong sign of the need to better understand and study this phenomenon, its benefits, weaknesses, gaps and future mutations. Based on a comprehensive literature review and sound research methods such as exploratory qualitative multiple-case analysis, the aim is to gain a comprehensive understanding of the reasons why entrepreneurs and businesses choose crowdfunding through the Raize platform as a financing alternative. The aims of this study are to understand how financial accessibility, trust in the investor community, ease of use of the platform, competitiveness of fees and preference for crowdfunding over bank financing influence entrepreneurs’ decision to fund themselves through the Raize platform. The results reveal that entrepreneurs opt for the Raize platform due to a combination of factors. These reasons, clearly highlighted, provide a deeper understanding of entrepreneurs’ decision making in relation to financing their projects through crowdfunding. This study not only contributes to the literature on crowdfunding and entrepreneurship, but also offers practical pointers for entrepreneurs looking to obtain funding through a new financing system that is offered through the Raize platform, as it continues to support innovation and business growth in Portugal. Such funding contributes to and enhances the sustainability of companies in terms of their funding profile and attractive positioning in the market.

Nonbank Financial Intermediation: Stock Take of Research, Policy, and Data

This article reviews research and policy work on nonbank financial intermediation (NBFI), taking a financial stability perspective. It first documents the growth in NBFI, reviews its possible drivers, and documents recent instability episodes. NBFI now often surpasses traditional bank financing, and research on it has increased, including research on its financial stability characteristics. Given NBFI's many forms and dimensions, the article focuses on its market-based forms. Taking a cross-country perspective, it reviews the benefits of NBFI, in terms of access to finance and economic impact, and its risks, specifically those related to interconnections, interactions between liquidity and leverage, and procyclicality. It describes policy steps—underway and possible—to reduce these risks, highlights outstanding issues, and suggests further analytical work. It also considers the current state of available data and the means to address remaining gaps.

Speaking truth to funders: Alternative accountabilities in the voluntary and community sector during the COVID‐19 pandemic

AbstractThis paper studies grassroots organizations that provide various forms of support to vulnerable local communities in the United Kingdom in a context of increasing austerity, public sector drawbacks, a lack of funding and extensive monitoring, and evaluative requirements. We focus on the COVID‐19 pandemic, which challenged traditional funding relationships. We analyze lived experiences of trust, emotion, and suffering to understand the politics of accountability across the diverse economy. We draw on Gibson‐Graham's post‐capitalist framework, which insists on the politics of language, the subject, and collective action. In the setting we study, the language of crisis reshaped funding, vulnerable subjectivities emerged to support vulnerable communities, and fragmenting accountabilities were met with attempts to promote collective action and solidarity. We, therefore, contribute to literature in critical accounting and literature focused on the voluntary and community sector by studying a landscape of diverse accountability practices to explore the possibilities that they offer in terms of accounting for non‐capitalist organizing.

A Study on Behavioural Finance

This research paper delves into the intriguing field of behavioral finance, exploring how psychological factors influence financial decision-making processes. Behavioral finance seeks to understand why people make irrational financial decisions despite being aware of the consequences. It bridges the gap between economics and psychology, offering insights into human behavior that traditional finance models often overlook. The study examines various aspects of behavioral finance, including cognitive biases, market anomalies, and investor behavior under different market conditions. Through a comprehensive review of existing literature and empirical studies, this paper aims to shed light on the complex interplay between human emotions, cognitive limitations, and financial markets. The findings contribute to a deeper understanding of investor behavior, potentially informing strategies for financial advisors and investors alike. This research underscores the importance of incorporating psychological principles into financial analysis, highlighting the potential for improved investment outcomes through a more nuanced understanding of human behavior.

Success factors of real estate crowdfunding projects: Evidence from Spain

AbstractReal estate crowdfunding is a relatively new alternative financing and investing method. This research aims to identify factors which might increase investors' willingness to participate in real estate crowdfunding campaigns. We analyse 195 lending-based real estate crowdfunding campaigns from four Spanish platforms. Project success is measured by duration, i.e. the time required to reach the funding target. We assess the impact of the funding target, the annual return, the loan duration, several risk-related metrics and the minimum investment amount. We find that the higher the funding target and the minimum investment amount, the longer it takes to reach the target. We document that investors prefer projects where the maturity of the loan is shorter. We also find that construction-type projects reach the funding target faster than other type of fundraising goals. At the same time, we do not find any association between the annual return or risk-related metrics and project success. To assure successful fundraising, real estate crowdfunding platforms should prioritize those real estate projects which are highly popular among investors (i.e. construction-type projects with short maturity). Real estate developers, in turn, should crowdfund projects which are demanded by the crowdinvestors and use their traditional financing methods for the remaining projects.

An Application of Multi-Factor Model on Anomaly in China Stock Market

An Application of Multi-Factor Model on Anomaly in China Stock Market

Exploring the Relationship between Digital Inclusive Finance and Traditional Finance in China

Since 2016, China has incorporated the development of digital inclusive finance (DIF) into its national strategic plan and supported it with favorable policies. These policy changes not only promote the sustainable development of finance but also provide an opportunity to examine the relationship between DIF and traditional finance. This study utilizes panel data from China's prefecture-level cities spanning 2011 to 2019 and employs the generalized difference-in-difference method to analyze the impacts of relevant policies. The findings indicate a positive correlation between the level of traditional finance and the successful implementation of policies that promote DIF, suggesting a complementary relationship between traditional finance and DIF. Additionally, analysis reveals that in regions with more favorable financial and technological conditions, traditional finance plays a prominent supportive role in facilitating DIF. Therefore, policies promoting DIF should consider local financial and technological landscapes while developing tailored strategies based on the maturity level of traditional finance.

Intricacy of cryptocurrency returns

This paper quantifies the intricacy, i.e., non-linearity and interactions of predictor variables, in explaining cryptocurrency returns. Using data from several thousand cryptocurrencies spanning 2014 to 2022, we observe a notably high level of intricacy. This provides a quantitative measure why linear models are often outperformed by machine learning algorithms in predicting cryptocurrency returns. Furthermore, we document that the intricacy in these predictions is considerably larger compared to stocks. Our analysis reveals that interactions are gaining importance over time, while individual non-linearity of the drivers is diminishing. This adds to the emerging literature on spillover effects between cryptocurrencies, traditional finance and the economy. This finding is important for investors as well as regulators as the high intricacy proposes challenges to both actors in the market.

From pixels to production: the impact of digital finance on the industrial fabric of rural China

PurposeThe aim of this study is to discern the role of digital finance in driving rural industrial integration and revitalization. Specifically, it intends to shed light on how the deep development of digital finance can contribute to the optimization and transformation of the rural industrial structure. The research further explores the particular effects of this financial transformation in the central and western regions of China.Design/methodology/approachThis research studies the influence of digital finance on rural industrial integration across 30 Chinese provinces from 2011 to 2020. Utilizing the entropy weight method, a comprehensive evaluation index system is established to gauge the level of rural industrial integration. A two-way fixed effects model, intermediary effect model, and threshold effect model are employed to decipher the relationship between digital finance and rural industrial integration.FindingsFindings reveal a positive relationship between digital finance and rural industrial integration. A single threshold feature was identified: beyond a traditional finance development level, the marginal effect of digital finance on rural industrial integration increases. These effects are more noticeable in central and western regions.Originality/valueEmpirical outcomes contribute to policy discourse on rural digital finance, assisting policymakers in crafting effective strategies. Understanding the threshold of traditional finance development provides a new perspective on the potential of digital finance to drive rural industrial integration.

The financialisation of Crypto: Designing an international regulatory consensus

Bitcoin was presented in 2008 as a technology-driven alternative to the weaknesses of the traditional monetary, payment and financial systems dramatically highlighted by the Global Financial Crisis of 2008. The underlying technology – blockchain and distributed ledger technology – was posed as a technological solution to the problems of trust, confidence, transparency and behaviour traditionally addressed in finance through a framework of law, regulation and institutions (including markets and the state). Cryptocurrencies, blockchain, distributed ledger technology and decentralised finance were designed to address the weaknesses and risks in traditional finance. Yet fifteen years of evolution culminating in the Crypto Winter of 2022–23 have demonstrated that crypto is neither special nor immune and has come to feature all the classic problems of traditional finance. As the crypto ecosystem has evolved, the market failures and externalities of traditional finance have emerged – a process we term the ‘financialisation’ of crypto. These include conflicts of interests, information asymmetries, centralisation and interconnections, over-enthusiastic market participants, plus agency, operational and financial risks. We argue that (a) in order to develop successfully going forward, the crypto ecosystem needs to assimilate the centuries of experience of underpinning traditional finance with law and regulation, and (b) in the aftermath of the Crypto Winter, an international consensus is crystalising in respect of the regulation of the crypto ecosystem. We argue regulatory systems are now being instituted to ensure the proper functioning of crypto and its interconnections with traditional finance. The lessons of the financialisation of crypto also apply more broadly: appropriately designed regulatory systems are central to financial market functioning and development.