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1 – 10 of over 11000Sung Suk Kim, Vina Nugroho and Liza Handoko
This study aimed to explore the determining factors for green bond markets in ASEAN plus three countries. In contrast to previous publications that primarily examined the…
Abstract
Purpose
This study aimed to explore the determining factors for green bond markets in ASEAN plus three countries. In contrast to previous publications that primarily examined the incentives for green bonds and institutional differences among economies, the analysis focused on the role of competition among sub-financial sectors in fostering the growth of green bond markets.
Design/methodology/approach
This study adopted Driscoll and Kraay fixed effect panel methods to account for country-level heterogeneity and enhance efficiency, using quarterly data from 2016 to 2022.
Findings
The findings showed that healthy competition among sub-financial sectors was crucial for the growth of green bond markets. Growth in specific sub-financial sectors such as brown corporate bond and stock markets as well as banks contributed positively to these markets. Variables related to market microstructure also had no significant impact on green bonds but macroeconomic factors did.
Practical implications
The findings suggested that governments should promote healthy competition among sub-financial sectors and implement diverse policies to ensure the sustainable growth of green bond markets.
Originality/value
This study further pioneered the importance of competition among sub-financial sectors for the development of green bond markets.
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Aritra Ganti and Shubham Singhania
While being integrated together conceptually and practically, the literature on game theory in the context of financial markets lacks a cohesive understanding. This study aims to…
Abstract
Purpose
While being integrated together conceptually and practically, the literature on game theory in the context of financial markets lacks a cohesive understanding. This study aims to systematically scrutinize and analyse the literature of game theory in the context of financial markets, through a systematic literature review.
Design/methodology/approach
A systematic literature-based approach, through the theories, context, characteristics and methodology (TCCM) framework has been applied to 97 articles, extracted and filtered from two databases, Scopus and Web of Science, for a comprehensive review and understanding of the intellectual development in the domain of game theory and financial markets.
Findings
The review highlighted the most utilitarian theories within the literature, the context of research in terms of countries and industries, four themes which characterize the literature, as well as the methodologies and research designs used in this research domain. The paper also uncovered certain essential areas that present scope for further research.
Research limitations/implications
While two of the largest indexation databases have been used, some relevant articles may have been excluded due to the restriction of databases and screening criteria, which may lead to the less exploration of several facets of the domain.
Practical implications
Practically, the paper has implications for multiple stakeholders including traders, businesses and governments. For traders, this paper acts as a guide to entering and understanding the dynamics of financial markets. The review also covers decision-making from the perspective of firms, including venture capitalists. This paper would allow firms to understand how game theory can help influence or analyze the strategic interactions between their stakeholders in terms of information disclosure, or consumers and their behavior to stimuli from the firm’s actions.
Originality/value
To the best of the authors’ knowledge, this study is the first of its kind that attempts to comprehensively provide an overview of the literature on game theory in financial markets. In doing so, this study shall help assess the current state of knowledge in the said field and locate gaps in the literature to propose new research directions.
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Rexford Abaidoo and Elvis Kwame Agyapong
The study examines the impact of macroeconomic risk and volatility associated with key macroeconomic indicators on financial market uncertainty; and the extent to which governance…
Abstract
Purpose
The study examines the impact of macroeconomic risk and volatility associated with key macroeconomic indicators on financial market uncertainty; and the extent to which governance and institutional structures moderate such relationships.
Design/methodology/approach
The study employs data from 33 countries in Sub-Saharan Africa (SSA) for the period between 1996 and 2019. Variable derivation techniques such as the generalized autoregressive conditional heteroskedasticity (GARCH) for deriving volatility data, and the principal component analysis (PCA) for index construction were employed. The data is examined using the two-step system generalized method of moments (TS-SGMM) technique.
Findings
Empirical results suggest that macroeconomic risk and exchange rate volatility heighten financial market uncertainty among economies in the sub-region. Further empirical estimates show that institutional quality and government effectiveness have a negative moderating effect on the nexus between macroeconomic risk, inflation uncertainty, GDP growth, exchange rate, and financial market uncertainty.
Practical implications
The key macroeconomic conditions with the propensity to foment financial market uncertainty are worth monitoring with adequate buffers to mitigate their impacts on the financial market.
Originality/value
Compared to related studies, this study focuses on uncertainty associated with financial markets among emerging economies in sub-Saharan Africa (SSA) instead of the performance of the financial markets or specific financial market indicators such as the stock market; and the extent to which a host of macroeconomic conditions influence such uncertainty. For instance, Abaidoo and Agyapong (2023) focused on the impact of macroeconomic indicators or conditions on the performance of the financial market and the efficiency of financial institutions respectively instead of the uncertainty or risk associated with the financial market as pursued in the current study. This differing approach is pursued with the goal of proffering appropriate strategies for policy makers towards assuaging the financial market risk (uncertainty) due to macroeconomic dynamics. We further examine how the various fundamental relationships may be moderated by effective governance and institutional quality.
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Suhaib Al-Khazaleh, Dr Nemer Badwan, Ibrahim Eriqat and Zahra El Shlmani
The purpose of this study is to evaluate the linkage between stock markets in Middle Eastern countries before and during the COVID-19 pandemic by using daily and monthly data sets…
Abstract
Purpose
The purpose of this study is to evaluate the linkage between stock markets in Middle Eastern countries before and during the COVID-19 pandemic by using daily and monthly data sets for the period from 2011 to 2021.
Design/methodology/approach
The multivariate BEKK-GARCH model was computed to evaluate the existence of non-linear linkage among Middle Eastern stock markets. A correlation approach was used in this study to determine the type of linear connectivity between Middle Eastern stock markets. The study used monthly and daily data sets covering the years 2011 to 2021 to investigate the linkage between stock returns and the volatility spillover between the stock markets in Palestine, Jordan, Syria and Lebanon, both before and during COVID-19. To understand the types of relationships between markets before and during COVID-19, the daily data set was split into two periods.
Findings
Results from the pre-COVID-19 suggest that the Syria stock market is not related to any stock market in the Middle East markets; the Palestine and Lebanon stock markets exhibit a weak relationship, but Jordan and Palestine stock markets are strongly linked. Conversely, results from COVID-19 evince a very strong bidirectional volatility spillover between Middle East stock markets. Overall, the results indicate the existence of increased linkage during the COVID-19.
Research limitations/implications
The data collection on a daily and monthly basis, both before and during COVID-19, presents certain limitations for the paper. Another limitation is that the data cannot be generalized to all other Middle Eastern countries; rather, the conclusions drawn can only be applied to these four countries. This is especially true if the scholars collected most of the necessary data but were unable to obtain certain data for various reasons.
Practical implications
These findings have implications for risk management, market regulation and the growth of local stock markets. Facilitating the growth of smaller, more specialized markets to improve integration with other Middle Eastern markets is one of the goals of the domestic stock market development policy. To ensure financial stability, Middle Eastern stock market linking policies should consider spillover risk and take steps to minimize it. Enhancing the range of investment opportunities accessible to shareholders and functioning as confidential risk-sharing mechanisms to facilitate improved risk management in Middle Eastern stock markets will not only significantly influence the mobilization of private capital to promote investment and local economic growth but also lay groundwork for integrated market platforms.
Originality/value
This paper adds to the body of literature by demonstrating the nature of the connections between these small markets and the larger markets in the Middle East region. Information from the smaller markets provides institutional insights that enhance the body of existing research, guide the formulation of evidence-based policies and advance financial literacy in these markets. This study contributes by comparing data from different stock markets to better understand the type and strength of the link and relationship between Middle Eastern stock markets, as well as any underlying or reinforcing factors that might have contributed to the relationship and the specific types of links that these markets shared prior and during COVID-19.
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Gaurav Dawar, Ramji Nagariya, Shivangi Bhatia, Deepika Dhingra, Monika Agrawal and Pankaj Dhaundiyal
This paper presents a conceptual framework based on an extensive literature review. The aim of this study is to deepen understanding of the relationship between carbon performance…
Abstract
Purpose
This paper presents a conceptual framework based on an extensive literature review. The aim of this study is to deepen understanding of the relationship between carbon performance and the financial market by applying qualitative research approaches.
Design/methodology/approach
The investigation has identified 372 articles sourced from Scopus databases, subjecting the bibliographic data to a comprehensive qualitative–quantitative analysis. The research uses established protocols for a structured literature review, adhering to PRISMA guidelines, machine learning-based structural topic modelling using Python and bibliometric citation analysis.
Findings
The results identified the leading academic authors, institutions and countries concerning carbon performance and financial markets literature. Quantitative studies dominate this research theme. The study has identified six knowledge clusters using topic modelling related to environmental reporting; price drivers of carbon markets; environmental policy and capital markets; financial development and carbon emissions; carbon risk and financial markets; and environmental performance and firm value. The results of the study also present the opportunities associated with carbon performance and the financial market and propose future research agendas on research through theory, characteristics, context and methodology.
Practical implications
The results of the study offer insights to practitioners, researchers and academicians regarding scientific development, intricate relationships and the complexities involved in the intersection of carbon performance and financial markets. For policymakers, a better understanding of carbon performance and financial markets will contribute to designing policies to set up priorities for countering carbon emissions.
Social implications
The study highlights the critical areas that require attention to limit greenhouse gas emissions and promote decarbonisation effectively. Policymakers can leverage these insights to develop targeted and evidence-based policies that facilitate the transition to a more sustainable and low-carbon economy.
Originality/value
The study initially attempts to discuss the research stream on carbon performance and financial markets literature from a systematic literature review.
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Bilgehan Tekin and Nemer Badwan
The purpose of this study is to examine the long- and short-term relationships between the BIST100, RSC index, the EURO/TRY exchange rate, bank loans provided to the private…
Abstract
Purpose
The purpose of this study is to examine the long- and short-term relationships between the BIST100, RSC index, the EURO/TRY exchange rate, bank loans provided to the private sector, imports and exports, and nonperforming loans (NPLs) with the autoregressive distributed lag (ARDL) bound, Johansen co-integration and vector error correction model (VECM) causality tests. Political developments, pandemics, conflicts between countries, trade chains and general economic and financial problems that have frequently occurred worldwide in recent years have significantly affected the Turkish economy as well as all other countries. Türkiye's economy is intricately linked with global financial markets, and understanding the dynamics between domestic macroeconomic variables and external financial indicators can provide insights into the country's economic resilience and vulnerabilities to external shocks.
Design/methodology/approach
Two distinct models are used in the analysis, with the Borsa Istanbul 100 (BIST100) Index and the Real Sector Confidence (RSC) Index serving as the dependent variables. This study examines the long- and short-term relationships between the BIST100, RSC index, the EURO/TRY exchange rate, bank loans provided to the private sector, imports and exports, and nonperforming loans (NPLs) with the ARDL bound, Johansen cointegration and VECM causality tests. The study uses monthly data spanning from December 31, 2002, to July 29, 2022, offering a comprehensive perspective on the dynamics of the Turkish economy.
Findings
The findings reveal significant long-run relationships between the BIST100 and the exchange rate, imports and exports. Short-run dynamics indicate the importance of changes in these variables, as well as NPLs and RSC, in affecting the BIST 100. The model captures the impact of economic indicators such as imports, NPLs and exports on RSC. In addition, it underscores a long-run equilibrium relationship, suggesting a responsive RSC to deviations. There is a strong positive relationship between BIST100 and the RSC. Causality tests reveal temporal relationships and causal links, with evidence of bidirectional causality for some variables, providing comprehensive insights into the short-term dynamics and adjustment mechanisms influencing RSC in the Turkish economic context.
Practical implications
Amidst global economic uncertainties and fluctuations, particularly in emerging markets such as Türkiye, understanding the relationships between financial market indicators and macroeconomic variables may help policymakers formulate effective monetary and fiscal policies aimed at stabilizing the economy, promoting sustainable growth and mitigating financial risks. In addition, these insights have practical implications for investors, regulators and other financial market participants seeking to make informed decisions in an increasingly interconnected and dynamic global economy.
Originality/value
This study uniquely examines a wide range of macroeconomic variables and financial indicators specific to Türkiye, including both traditional and nontraditional factors. This study also offers unprecedented insights into the unique characteristics and dynamics of the Turkish economy and provides valuable insights for businesses, investors and policymakers to consider Türkiye’s economic environment more effectively.
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Akansha Mer, Kanchan Singhal and Amarpreet Singh Virdi
In today's advanced economy, there is a broader presence of information revolution, such as artificial intelligence (AI). AI primarily drives modern banking, leading to innovative…
Abstract
Purpose
In today's advanced economy, there is a broader presence of information revolution, such as artificial intelligence (AI). AI primarily drives modern banking, leading to innovative banking channels, services and solutions disruptions. Thus, this chapter intends to determine AI's place in contemporary banking and stock market trading.
Need for the Study
Stock market forecasting is hampered by the inherently noisy environments and significant volatility surrounding market trends. There needs to be more research on the mantle of AI in revolutionising banking and stock market trading. Attempting to bridge this gap, the present research study looks at the function of AI in banking and stock market trading.
Methodology
The researchers have synthesised the literature pool. They undertook a systematic review and meta-synthesis method by identifying the major themes and a systematic literature review aided in the critical analysis, synthesis and mapping of the body of existing material.
Findings
The study's conclusions demonstrated the efficacy of AI, which has played a robust role in banking and finance by reducing risk and operational costs, enabling better customer experience, improving regulatory complaints and fraud detection and improving credit and loan decisions. AI has revolutionised stock market trading by forecasting future prices or trends in financial assets, optimising financial portfolios and analysing news or social media comments on the assets or firms.
Practical Implications
AI's debut in banking and finance has brought sea changes in banking and stock market trading. AI in the banking industry and capital market can provide timely and apt information to its customers and customise the products as per their requirements.
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Muhammad Umar Boodoo, Laurence Booth, George J. Georgopoulos and Walid Hejazi
Cross-border mergers and acquisitions (CBM&As) are a significant component of foreign direct investment (FDI), which in turn is at the heart of the international business strategy…
Abstract
Cross-border mergers and acquisitions (CBM&As) are a significant component of foreign direct investment (FDI), which in turn is at the heart of the international business strategy of multinational enterprises (MNEs). Given that CBM&As involve both a scale and an immediacy to raising financing that greenfield investments often lack, financially constrained firms are inhibited from undertaking CBM&As. The authors go further and show that these financing constraints impact the markets where MNEs target firms for CBM&A transactions. In the presence of such financing constraints, the determination of which markets are targeted by MNEs is directly related to the supply of capital in the target market and the institutional distance between the home and host markets. Evidence in support of the hypotheses is documented using firm-level data on CBM&As from Organization for Economic Co-operation and Development (OECD) countries as well as Brazil, Russia, India, China, South Africa (BRICS) into every country globally for which data exist. The main implication of the research is that not only are financial constraints at the firm level important, but also that these constraints have a significant impact on the location of an acquisition target.
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Oli Ahad Thakur, Matemilola Bolaji Tunde, Bany-Ariffin Amin Noordin, Md. Kausar Alam and Muhammad Agung Prabowo
This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market…
Abstract
Purpose
This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market development on the relationship between goodwill assets and capital structure.
Design/methodology/approach
This research applied a quantitative method. The article collects large samples of listed firms from 23 developing and nine developed countries and applied the panel data techniques. This research used firm-level data from the DataStream database for both developed and developing countries. The study uses 4,912 firm-level data from 23 developing countries and 4,303 firm-level data from nine developed countries.
Findings
The findings reveal a significant positive relationship between goodwill assets and capital structure in developing countries, but goodwill assets have a significant negative relationship with capital structure in developed countries. Moreover, financial market development positively moderates the relationship between goodwill assets and the capital structure of firms in developing countries. The results inform firm managers that goodwill assets serve as additional collateral to secure debt financing. Moreover, policymakers should formulate a debt market policy that recognizes goodwill assets as additional collateral for the purpose of obtaining debt capital.
Research limitations/implications
The study has several implications. First, goodwill assets are identified as a factor of capital structure in this study. Fixed assets have been identified as one of the drivers of capital structure in previous research, although goodwill assets are seldom included. Second, this article shows that along with demand-side determinants, supply-side determinants also play an important role in terms of the firms' choice about the capital structure. Therefore, firms should take both the demand-side and supply-side factors into consideration when sourcing for external financing (i.e. debt capital).
Originality/value
The study considered goodwill as a component of capital structure. The study analysis includes a large sample of enterprises, including 4,912 big firms from 23 developing countries and 4,303 large firms from nine industrialized or developed countries, which adds to the current capital structure information. Furthermore, a large sample size increases the results' robustness and generalizability.
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The crude oil market plays a key role in addressing the issue of energy economics. This paper aims to detect the causality relationship between the crude oil market and economy…
Abstract
Purpose
The crude oil market plays a key role in addressing the issue of energy economics. This paper aims to detect the causality relationship between the crude oil market and economy based on the financial system.
Design/methodology/approach
This paper used the static and dynamic Hatemi-J Bootstrap Toda–Yamamoto and Diebold–Yilmaz connectedness index. The Hatemi-J Bootstrap Toda-Yamamoto approach allows researchers to use nonstationary data and that method is robust to nonnormal distribution and heteroscedasticity. The Diebold–Yilmaz connectedness index model provides researchers to detect the power of connectedness besides linkage direction. The analyzed period is the span from January 3, 2005 to October 3, 2022.
Findings
The results show bidirectional causality in the full sample but unidirectional causality before and after the 2008 financial crisis. During the 2008 financial crisis period and the COVID-19 period, there was a bidirectional and unidirectional causality, respectively. The connectedness approach indicates that the crude oil market affects financial stress through investors’ risk preferences.
Research limitations/implications
The Diebold–Yilmaz spillover index model is based on vector autoregression methods with a stationarity precondition. However, some of the five dimensions that constitute the financial stress index (FSI) are nonstationary in level. Therefore, the authors takes the first difference of the nonstationary data.
Practical implications
The linkage between the crude oil market and the FSI provides useful information for investors and policymakers. For instance, this paper indicates that an investor wanted to forecast future value of the crude oil (financial stress) should consider the current and past values of financial stress (crude oil). Moreover, policymaker should consider the crude oil market (FSI) to make a policy proposal for financial system (crude oil market).
Originality/value
Recently, indicators of economic activity levels (economic policy uncertainty, implied volatility index) have begun to be considered to analyze the relationship between energy and the economy but very little is known in the literature about the leading and lagging roles of data in subsample periods and the linkage channel. The other originality of this research is using the new econometric approaches.
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