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Article
Publication date: 18 November 2013

Duccio Martelli

This paper aims to understand whether the initiative of financial education through the use of simulations effectively teaches participants to operate in the markets in a…

Abstract

Purpose

This paper aims to understand whether the initiative of financial education through the use of simulations effectively teaches participants to operate in the markets in a profitable manner, while avoiding some cognitive biases.

Design/methodology/approach

The use of simulations and computer applications in financial markets is now recognized as effective teaching methodology in the field of financial education, thanks to the active involvement of the participants in the learning process. This paper analyses a case study, taking into consideration from a qualitative point of view transactions made in the financial markets, with real money, by a group of teams composed of university students.

Findings

The first results of the analysis show how the simulation does not allow for a significant improvement in the performance of the teams over the course of the game; on the contrary, most of the teams seem to show increasingly speculative, and indeed opportunistic, behavior as the end of the competition approaches. These conclusions can be extended to most simulations carried out in the financial markets that, as with the game studied in this analysis, demonstrate an asymmetry in the final phase and the remuneration of the participants.

Originality/value

This contribution is therefore unique due to the subject of the analysis: up to this point there have not been any other trading simulations at the international level where the money invested was actually real.

Details

Qualitative Research in Financial Markets, vol. 5 no. 3
Type: Research Article
ISSN: 1755-4179

Keywords

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Book part
Publication date: 29 December 2016

Alberto Burchi and Duccio Martelli

The recent 2008–2009 financial crisis has led international financial authorities to review the existing regulation; the Basel Committee on Banking Supervision has been…

Abstract

The recent 2008–2009 financial crisis has led international financial authorities to review the existing regulation; the Basel Committee on Banking Supervision has been thus induced to review the pillars of the Basel Accord (Basel II) in order to strengthen the risk coverage of capital framework (Basel 2.5 and III). These reforms will help to raise capital requirements for the trading book, which represents a major source of losses for internationally financial institutions, especially during crisis periods. In particular, the Committee has introduced a Stressed Value-at-Risk (SVaR) capital requirement, as a new methodology to evaluate market risk.

This chapter aims to shed some lights on the issues major banks have to face when calculating SVaR in the context of emerging markets, pointing out the differences in adopting an estimation model with respect to another one. Our results show a considerable increase in capital requirements especially when new rules are applied to financial markets with high-risk parameters, such as emerging markets are. The increased cost due to higher capital requirements could be a disincentive to investment in markets with higher risk profiles than the developed markets, taking also into account that diversification benefits deriving from investing in emerging economies have shown a decrease over time. The reduction of institutional investors can thus represent a brake on the process of innovation and evolution of emerging markets.

Details

Risk Management in Emerging Markets
Type: Book
ISBN: 978-1-78635-451-8

Keywords

Content available
Book part
Publication date: 29 December 2016

Abstract

Details

Risk Management in Emerging Markets
Type: Book
ISBN: 978-1-78635-451-8

Content available
Article
Publication date: 18 November 2013

Bruce Burton

Abstract

Details

Qualitative Research in Financial Markets, vol. 5 no. 3
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 4 February 2021

Dario Salerno

The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect…

Abstract

Purpose

The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect initial public offering (IPO) firms’ profitability and risk of financial distress.

Design/methodology/approach

Using a sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, this paper applies probit model and ordinary least squares regression to examine which cross-country characteristics could affect the decision to go public and how cultural values affect the profitability and risk of IPO firms.[AQ1] In addition, to overcome multicollinearity concerns caused by the use of Global Leadership and Organizational Behavioural Effectiveness culture dimensions, this paper factor analyses the dimensions using principal component analysis.

Findings

The results are as follows. First, this paper finds that firms in tradition-oriented countries are less likely to go public, while firms in result-oriented countries are more likely to hold an IPO. Second, this paper finds that country characteristics (i.e. financial deepening and taxation) affect the going-public decision. Third, this paper documents that IPO firms in traditionally and result-oriented countries have positive profitability and less risk of financial distress.

Practical implications

This study is intended for all those European and Asian policymakers and managers who want to improve their knowledge about what different indicators can establish the decision of firms that going-public facing different stages of their lifecycle. Specifically, policymakers wishing to promote IPO-activity in their countries may find it useful to strengthen the set of formal-institutions both to reduce corporate-taxation and to reduce the uncertainty associated with first-time share issuance and investment in such initiatives. This study is also intended for managers of companies that are not yet publicly-traded on their national stock-markets to be helpful to their decision-making processes.

Originality/value

This paper aims to extend the growing literature on the effects of cross-country factors on economic decision-making in finance and particularly adds to research that investigates the influence of these factors on the IPO decision of European and Asian firms.

Details

Journal of Asia Business Studies, vol. 15 no. 3
Type: Research Article
ISSN: 1558-7894

Keywords

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