Search results

Purpose – The purpose of this chapter is to investigate the relationship between emotion and European energy forward prices of oil, gas, coal and electricity during normal times and periods of extreme price movements.

Methodology/Approach – We use a biorhythm approach characterized by the seasonal affective disorder (SAD) variable to study the impact of emotion on energy markets. Normal times and periods of extreme price movements are approximated by OLS and quantile estimations, respectively.

Findings – We use European energy forward prices of oil, gas, coal, and electricity. European equity future index (Dow Jones Euro Stoxx 50) and euro/dollar US exchange rate are used as control variables for economic and financial environment. Estimating OLS and quantile regressions, we find that seasonal patterns have a significant impact during extreme volatility periods only. Further investigations reveal that the SAD effect is significant during periods of price decrease, but insignificant during price increase times. The out-of-sample predictive ability properties show that our “SAD model” outperforms significantly the pure “macroeconomic” one.

Originality/Value of chapter – This topic is novel in energy finance since I use psychological background theory to understand energy price dynamics. I illustrate the relevance of our approach by comparing the out-of-sample predictive ability of our model against macroeconomic one. My results could be considered to improve energy porfolio allocation.

The purpose of this paper is to examine the financial risks posed by energy and environmental markets and how these risks are addressed by current regulatory regimes and legislation. This assessment should be of interest to academics, practitioners, regulators and policymakers.

The first half of the paper provides a theoretical conceptualisation of the financial risks energy and environmental markets pose by drawing on established academic literatures on financial regulation and energy markets. The second half of the study provides a legislative analysis of the evolving approach to the financial regulation of energy and environmental markets. Drawing on “grey” literatures, this assessment critically appraises the array of current policy initiatives that have the potential to affect the financial regulation and operation of energy and environmental markets.

The theoretical conceptualisation of financial risks identified macroeconomic and energy systemic as the principal risks posed by energy and environmental markets. The legislative analysis contains various conclusions, prominent amongst which are: that the EU will play an increasingly important role in the financial regulation of energy and environmental markets through bodies such as ACER and ESMA; and that it is essential the boundaries of regulatory responsibility between energy and financial regulators are assessed to ensure activities leading to risk do not fall between the remits of responsibility.

There is a dearth of academic work on the financial regulation of energy and environmental markets, while prior policy and regulatory analyses have focussed on specific markets or products. This belies the interrelationships and, in some cases, the integration of these risks and the nature of financial crises. To amend for this omission we provide a holistic assessment of these legislative and policy developments.

This paper aims to investigate the effect of monetary policy indicators on Latin America’s renewable energy development. The authors conduct several regressions as well as a Principal Component Analysis (PCA) to unveil relationships among possible driving factors among others the current account balance, interest rates, money flow and energy trade balance for Latin America’s energy mix.

The analysis was a two-part process. First, the authors used multiple regression to identify if monetary policy affects the development of renewable energy usage at all. To investigate the singular effects of each of the nine macro-economic variables and four energy indicators, collected from the World Bank (2017) database, several regressions were run where the authors regressed each economic indicator on each energy variable. Then, the authors conducted a principal component analysis with all 13 variables.

The authors found a significant relationship between the clean energy share and governmental spending boosting GDP as well as a significant relationship between governmental spending and the amount of foreign exchange reserves. Declining net energy imports indicate that countries in Latin America are getting more and more energy autonomous for the price of building up huge amounts of foreign exchange reserves.

Renewable energy indicators are not always available for all Latin American countries. Data tend to be scattered. However, sources such as the International Renewable Energy Agency and the World Bank database can be complementary.

The understanding of the effects and impacts of some of the monetary policy related indicators can provide insights for improving renewable energy financing policies. In turn, such policies can have increased influence on renewable energy sustainability and potentially contribute to improving environmental policies.

The specific impact of the selected variables on renewable energy has not been studied. This study attempts to discern the impact of such variables to understand how they influence the renewable energy mix. The insights can in turn inform and modify existing policies and guidelines as well as advise new policy.

The purpose of this paper is to examine the pricing efficiency of the Malaysian crude palm oil (CPO) market before and after the structural break. This study uses the daily closing price of CPO and CPO futures (CPO-F) for the period ranging from June 2009 to August 2016 while taking structural breaks into account.

In this study, symmetric and asymmetric long-run relationship model are employed, such as the Johansen cointegration, VECM, TAR and M-TAR models, to examine the impact of structural breaks on the pricing efficiency of the Malaysian CPO market.

This finding establish that Malaysian CPO price is efficient before and after the structural break. The consistent efficiency of the Malaysian CPO market supports the trading of the CPO-F in Globex and the use of Malaysian CPO pricing as the reference price. This study establishes that a structural break in the Malaysian CPO price series does not affect the pricing efficiency of the market.

This study shows that using Malaysian CPO price as a reference price is sustainable even in the event of a structural break. Therefore, market participants in the Malaysian CPO market have less to worry about the CPO price as it supports the weak form of efficiency. Price deviation in the short run may not lead to arbitrage profit as transaction cost may not be covered.

This study implies that if there is distortion in the price due to shocks, both manufacturers and producers need to hedge their positions in the futures market (subject to their positions in the underlying market). By entering into the futures market, pricing is locked in advance; hence, price risk is eliminated. Such a distortion could also affect the efficiency of the CPO price, therefore this study also addresses the issue of efficiency of the local CPO market.

Previous studies on Malaysian CPO pricing efficiency did not take the effect of structural break into consideration, making it difficult for these studies to show consistency in the efficiency of the Malaysian CPO market.

The purpose of this paper is to examine the impact of the Goods and Service Tax (GST) implementation on Malaysian stock market index.

This study used daily closing prices of the Malaysian stock index and futures markets for the period ranging from June 2009 to November 2016. Empirical estimation is based on the generalised autoregressive conditional heteroscedasticity (1, 1) model for pre- and post-announcement of the GST.

Result shows that volatility of Malaysian stock market index increases in the post-announcement than in the pre-announcement of the GST which indicates that educative programs employed by the government before the GST announcement did not yield meaningful result. The volatility of the Malaysian stock market index is persistent during the GST announcement and highly persistent after the implementation. Noticeable increase in post-announcement is in support with the expectation of the market about GST policy in Malaysia.

The finding of this study is consistent with expectation of the market that GST policy will increase the price of the goods and services and might reduce standard of living. This is supported by a noticeable increase in the volatility of the Malaysian stock market index in the post-announcement of GST which is empirically shown during the announcement and after the implementation of GST. Although the GST announcement could be classified as a scheduled announcement, unwillingness to accept the policy prevails in the market as shown by the increase in the market volatility.

Past studies on Malaysian stock market index volatility focus on the impact of Asian and global financial crisis whereas this study examines the impact of the GST announcement and implementation on the volatility of the Malaysian stock market index.

Briefly reviews previous literature by the author before presenting an original 12 step system integration protocol designed to ensure the success of companies or countries in their efforts to develop and market new products. Looks at the issues from different strategic levels such as corporate, international, military and economic. Presents 31 case studies, including the success of Japan in microchips to the failure of Xerox to sell its invention of the Alto personal computer 3 years before Apple: from the success in DNA and Superconductor research to the success of Sunbeam in inventing and marketing food processors: and from the daring invention and production of atomic energy for survival to the successes of sewing machine inventor Howe in co‐operating on patents to compete in markets. Includes 306 questions and answers in order to qualify concepts introduced.

This chapter focuses on the common occurrence of wholesale electricity prices that fall below the cost of production. This “negative pricing” in effect represents payment to high-volume consumers for taking excess power off the grid, thus relieving overload. Occurrences of negative pricing have been observed since the wholesale electricity markets have been operating, and occur during periods of low demand, while generators are being kept in reserve for rapid engagement when demand increases (it is expensive and time-consuming to shut down generators and then restart them, so they are often kept in “spooling mode”). In such situations power production may temporarily exceed demand, potentially overloading the system. When the federal government began subsidizing the construction of wind generation projects, with regulations in place requiring transmission grids to accept all of the electricity produced by the wind generators, negative pricing became more frequent.

Contemporary literature reveals that, to date, the poultry livestock sector has not received sufficient research attention. This particular industry suffers from unstructured supply chain practices, lack of awareness of the implications of the sustainability concept and failure to recycle poultry wastes. The current research thus attempts to develop an integrated supply chain model in the context of poultry industry in Bangladesh. The study considers both sustainability and supply chain issues in order to incorporate them in the poultry supply chain. By placing the forward and reverse supply chains in a single framework, existing problems can be resolved to gain economic, social and environmental benefits, which will be more sustainable than the present practices.

The theoretical underpinning of this research is ‘sustainability’ and the ‘supply chain processes’ in order to examine possible improvements in the poultry production process along with waste management. The research adopts the positivist paradigm and ‘design science’ methods with the support of system dynamics (SD) and the case study methods. Initially, a mental model is developed followed by the causal loop diagram based on in-depth interviews, focus group discussions and observation techniques. The causal model helps to understand the linkages between the associated variables for each issue. Finally, the causal loop diagram is transformed into a stock and flow (quantitative) model, which is a prerequisite for SD-based simulation modelling. A decision support system (DSS) is then developed to analyse the complex decision-making process along the supply chains.

The findings reveal that integration of the supply chain can bring economic, social and environmental sustainability along with a structured production process. It is also observed that the poultry industry can apply the model outcomes in the real-life practices with minor adjustments. This present research has both theoretical and practical implications. The proposed model’s unique characteristics in mitigating the existing problems are supported by the sustainability and supply chain theories. As for practical implications, the poultry industry in Bangladesh can follow the proposed supply chain structure (as par the research model) and test various policies via simulation prior to its application. Positive outcomes of the simulation study may provide enough confidence to implement the desired changes within the industry and their supply chain networks.

Midwest Independent Transmission System Operator, Inc. (MISO) is a nonprofit regional transmission organization (RTO) that oversees electricity production and transmission across 13 states and 1 Canadian province. MISO also operates an electronic exchange for buying and selling electricity for each of its five regional hubs.

MISO oversees two types of markets. The forward market, which is referred to as the day-ahead (DA) market, allows market participants to place demand bids and supply offers on electricity to be delivered at a specified hour the following day. The equilibrium price, known as the locational marginal price (LMP), is determined by MISO after receiving sale offers and purchase bids from market participants. MISO also coordinates a spot market, which is known as the real-time (RT) market. Traders in the RT market must submit bids and offers by 30minutes prior to the hour for which the trade will be executed. After receiving purchase and sale offers for a given hour in the RT market, MISO then determines the LMP for that particular hour.

The existence of the DA and RT markets allows producers and retailers to hedge against the large fluctuations that are common in electricity prices. Hedge ratios on the MISO exchange are estimated using various techniques. No hedge ratio technique examined consistently outperforms the unhedged portfolio in terms of variance reduction. Consequently, none of the hedge ratio methods in this study meet the general interpretation of FASB guidelines for a highly effective hedge.