Journal of Risk and Financial Management

Research

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20 pages, 452 KiB

Open AccessArticle

Change Point Analysis of Time Series Related to Bitcoin Transactions: Towards the Detection of Illegal Activities

by Ourania Theodosiadou, Alexandros-Michail Koufakis, Theodora Tsikrika, Stefanos Vrochidis and Ioannis Kompatsiaris

J. Risk Financial Manag. 2023, 16(9), 408; https://doi.org/10.3390/jrfm16090408 - 13 Sep 2023

Viewed by 1136

Abstract

This paper proposes a unified framework for the detection of statistically significant changes in time series related to Bitcoin transactions. The time locations of these changes are linked to the occurrences of events which could be further investigated aiming to reveal potential illicit [...] Read more.

This paper proposes a unified framework for the detection of statistically significant changes in time series related to Bitcoin transactions. The time locations of these changes are linked to the occurrences of events which could be further investigated aiming to reveal potential illicit activity. The proposed framework includes: (a) the extraction of 28 features of interest in the form of time series from the Bitcoin transaction history; (b) the selection of features among the extracted ones based on the Partition Around Medoids clustering approach; and (c) the change point analysis of the multivariate time series which is formulated by the medoid time series of each cluster. This analysis enables the identification of structural breaks in the underlying behavior of the time series of interest at certain time points. The proposed framework is applied on the Bitcoin transactions of two entities that have been involved in illicit activities, namely Pirate@40, who orchestrated a high-yield investment programme, and the MintPal Bitcoin exchange platform that was hacked. The analysis results indicate that the estimated change points can be linked to certain event occurrences which may affect the transaction activity and could be further investigated for potential links to illicit actions. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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17 pages, 930 KiB

Open AccessArticle

The Drivers of Successful Crowdfunding Projects in Africa during the COVID-19 Pandemic

by Lenny Phulong Mamaro and Athenia Bongani Sibindi

J. Risk Financial Manag. 2023, 16(7), 332; https://doi.org/10.3390/jrfm16070332 - 13 Jul 2023

Cited by 1 | Viewed by 1657

Abstract

The challenge of accessing finance by entrepreneurs from traditional financial sources is pervasive. The COVID-19 pandemic further exacerbated the problem of limited access to finance from banks. Against this backdrop, the objective of the study was to determine the factors driving crowdfunding success [...] Read more.

The challenge of accessing finance by entrepreneurs from traditional financial sources is pervasive. The COVID-19 pandemic further exacerbated the problem of limited access to finance from banks. Against this backdrop, the objective of the study was to determine the factors driving crowdfunding success during the COVID-19 pandemic in Africa. The ordinary least squares (OLS) and probit regression models were estimated to analyse 215 crowdfunding projects in Africa. The results of the study documented that targeted amounts (TA), comments (CMM), and the COVID-19 pandemic were negative and significant drivers of crowdfunding success. Furthermore, duration (DRN) was negative and significantly affected crowdfunding success. Conversely, images (IM), videos (VD), backers (BCK), and updates (UPD) were positive and significantly affected crowdfunding success. The study contributes to the body of knowledge by investigating the drivers of crowdfunding success during the COVID-19 pandemic period, which hitherto had not been extensively researched. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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21 pages, 703 KiB

Open AccessArticle

Global Anti-Money Laundering and Combating Terrorism Financing Regulatory Framework: A Critique

by William Gaviyau and Athenia Bongani Sibindi

J. Risk Financial Manag. 2023, 16(7), 313; https://doi.org/10.3390/jrfm16070313 - 28 Jun 2023

Cited by 2 | Viewed by 4331

Abstract

Money launderers prefer to use financial services as the ideal medium for laundering. This study aimed to provide an overview of the global AML/CFT regulations, application and how they should evolve in this dynamic environment. To gather more insight, a qualitative study was [...] Read more.

Money launderers prefer to use financial services as the ideal medium for laundering. This study aimed to provide an overview of the global AML/CFT regulations, application and how they should evolve in this dynamic environment. To gather more insight, a qualitative study was undertaken with relevant documents analysed. The main finding was that country implementation of the global AML/CFT regulations differed due to political and economic factors, amongst others. While the various AML/CFT enforcements done by sampled countries were mainly cease and desist orders and monetary penalties that were publicised, the drawbacks of global AML/CFT regulations centred on the application of these regulations and emerging trends. These include, among other definitions of money laundering, reference to the three stages of money laundering, the link between penalty and violations, technological innovations and regulation paradigm shift, cyber-attacks, and data privacy. This study contributes to the application and growing body of knowledge in that the advent of technology has resulted in better consumer experiences, new payment platforms, products and services. However, these innovations have broadened emerging money laundering risks and risks to the financial system in general. Hence, there is a need to conduct research-based FATF recommendations, as risk is dynamic and not static. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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14 pages, 921 KiB

Open AccessArticle

Phishing Attacks on Cryptocurrency Investors in the Arab States of the Gulf

by Marwa Alyami, Reem Alhotaylah, Sawsan Alshehri and Abdullah Alghamdi

J. Risk Financial Manag. 2023, 16(5), 271; https://doi.org/10.3390/jrfm16050271 - 13 May 2023

Cited by 3 | Viewed by 1867

Abstract

With the rapid development of technology in all fields, including the financial field, people have flocked to invest in cryptocurrencies, sometimes without prior knowledge or experience. This has prompted hackers to prey on inexperienced investors through many types of fraud and attacks, especially [...] Read more.

With the rapid development of technology in all fields, including the financial field, people have flocked to invest in cryptocurrencies, sometimes without prior knowledge or experience. This has prompted hackers to prey on inexperienced investors through many types of fraud and attacks, especially phishing attacks. Cryptocurrency investment transactions take place without intermediaries such as banks and monetary institutions. Investing in cryptocurrencies is a form of peer-to-peer transaction and takes place without the involvement of physical wallets. This study addresses cases where people may become victims of phishing attacks due to the nature of cryptocurrency investments. The aim of this study was to understand the concepts of various phishing attacks on cryptocurrencies and to measure the awareness of cryptocurrency investors in the Arab Gulf countries regarding the security risks associated with cryptocurrency investments. This research was conducted by distributing a questionnaire among cryptocurrency investors and collecting and analyzing all the survey responses. The results reveal a lack of awareness about how to deal with the security risks associated with cryptocurrency investments. The research concludes that the majority of cryptocurrency investors are unaware of how to deal with phishing attacks. Finally, we address future research directions and recommend actions that can be taken to increase investors’ awareness of this issue. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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14 pages, 1410 KiB

Open AccessArticle

Reputation as Capital—How Decentralized Autonomous Organizations Address Shortcomings in the Venture Capital Market

by Wulf Kaal

J. Risk Financial Manag. 2023, 16(5), 263; https://doi.org/10.3390/jrfm16050263 - 5 May 2023

Cited by 2 | Viewed by 1576

Abstract

Venture capital (VC) models can be optimized with emerging decentralized technology. There are many disadvantages that come with traditional VC fundraising including illiquidity and ownership struggles, as well as timing. This paper will discuss alternative funding mechanisms that may be available and advantageous [...] Read more.

Venture capital (VC) models can be optimized with emerging decentralized technology. There are many disadvantages that come with traditional VC fundraising including illiquidity and ownership struggles, as well as timing. This paper will discuss alternative funding mechanisms that may be available and advantageous to emerging businesses. After discussing the shortcomings of the existing VC market and the rise of alternative early round funding mechanisms, the paper highlights the evolution of VC businesses that are operated by a Decentralized Autonomous Organization (DAO). More specifically, models discussed in this article contribute to the much-needed experimentation with venture capital reputation models. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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12 pages, 1459 KiB

Open AccessArticle

Do Automated Market Makers in DeFi Ecosystem Exhibit Time-Varying Connectedness during Stressed Events?

by Bikramaditya Ghosh, Hayfa Kazouz and Zaghum Umar

J. Risk Financial Manag. 2023, 16(5), 259; https://doi.org/10.3390/jrfm16050259 - 28 Apr 2023

Cited by 2 | Viewed by 2205

Abstract

We investigate the connectedness of automated market makers (AMM) that play a pivotal role in liquidity and ease of operations in the decentralized exchange (DEX). By applying the TVP-VAR model, our findings show higher level of connectivity during periods of turmoil (such as [...] Read more.

We investigate the connectedness of automated market makers (AMM) that play a pivotal role in liquidity and ease of operations in the decentralized exchange (DEX). By applying the TVP-VAR model, our findings show higher level of connectivity during periods of turmoil (such as Delta, Omicron variants of SARS-Covid, and the Russia Ukraine conflict). Furthermore, risk transmission/reception is found to be independent of the platform on which they typically run (Ethereum based AMMs were both emitters as well as receivers). Pancake (a Binance based AMM) and Perpetual Protocol (Ethereum based AMM) emerged as moderate to high receivers of risk transmission, whereas all of the other AMMs, including Ethereum, were found to be risk emitters at varying degrees. We argue that AMMs typically depend on the underlying smart contracts. If the contract is flexible, AMMs can vary (either receiver or emitter), otherwise AMMs behave in tandem. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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15 pages, 1690 KiB

Open AccessArticle

Enablers for Growth of Cryptocurrencies: A Fuzzy–ISM Benchmarking

by Santosh Kumar, Sujit Kumar Patra, Ankit Kumar, Kamred Udham Singh and Sandeep Varshneya

J. Risk Financial Manag. 2023, 16(3), 149; https://doi.org/10.3390/jrfm16030149 - 23 Feb 2023

Cited by 1 | Viewed by 2299

Abstract

Cryptocurrencies and their market capitalisation have experienced vibrant growth in the last few years. Their total market cap is more than USD 858 billion as of the date of writing and is growing, with nearly 21,984 tradeable cryptos in 530 exchanges. It is [...] Read more.

Cryptocurrencies and their market capitalisation have experienced vibrant growth in the last few years. Their total market cap is more than USD 858 billion as of the date of writing and is growing, with nearly 21,984 tradeable cryptos in 530 exchanges. It is emerging as one of the biggest threats to the traditional fundraising market. The issue of the industry’s long-term viability and steady expansion is of paramount importance. Even though unsustainable and uneven growth could help boost economic activity in the short term, it would be detrimental in the long run because of the risk of extinction. This paper is one of the first attempts to identify the factors contributing to the growth of the cryptocurrency market and their effects. This paper is based on the hybrid MCDM methodology of research and uses fuzzy–ISM (interpretive structural modelling). This method is divided into three phases: identification, expert opinion, and interpretation. Sixteen factors were chosen from the previous literature and suggestions from industry professionals. Seven barriers have been framed based on the fuzzy–ISM analysis to better understand the impacts of and interrelationships among the identified barriers. The factors are further classified using fuzzy MICMAC into four major categories based on the drive power and dependence power extracted from the fuzzy matrix. This paper explains the importance of all identified factors as enablers of the acceptance of cryptocurrencies for investment and fundraising. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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20 pages, 1412 KiB

Open AccessArticle

A Mathematical Formulation of the Valuation of Ether and Ether Derivatives as a Function of Investor Sentiment and Price Jumps

by Rebecca Abraham and Hani El-Chaarani

J. Risk Financial Manag. 2022, 15(12), 591; https://doi.org/10.3390/jrfm15120591 - 8 Dec 2022

Cited by 1 | Viewed by 1180

Abstract

The purpose of this study was to create quantitative models to value ether, ether futures, and ether options based upon the ability of cryptocurrencies to transform existing intermediary-verified payments to non-intermediary-based currency transfers, the ability of ether as a late mover to displace [...] Read more.

The purpose of this study was to create quantitative models to value ether, ether futures, and ether options based upon the ability of cryptocurrencies to transform existing intermediary-verified payments to non-intermediary-based currency transfers, the ability of ether as a late mover to displace bitcoin as the first mover, and the valuation of ether in the context of investor irrationality models. The risk-averse investor’s utility function is a combination of expectations of the performance of ether, expectations of cryptocurrencies’ transformative power, and expectations of ether superseding bitcoin. The moderate risk-taker’s utility function is an alt-Weibull distribution, along with a gamma distribution. Risk-takers have a utility function in the form of a Bessel function. Ether price functions consist of a Levy jump process. Ether futures are valued as the combination of current spot prices along with term prices. The value of spot prices is the product of a spot premium and a lognormal distribution of spot prices. The value of term prices is equal to the product of a term premium, and the Levy jump process of price fluctuations during the delivery period. For ether options, a less risky ether option portfolio offsets ether’s risk by a fixed-income trading strategy. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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Review

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24 pages, 3622 KiB

Open AccessReview

Not So New Kid on the Block: Accounting and Valuation Aspects of Non-Fungible Tokens (NFTs)

by Dulani Jayasuriya and Alexandra Sims

J. Risk Financial Manag. 2023, 16(11), 465; https://doi.org/10.3390/jrfm16110465 - 25 Oct 2023

Cited by 1 | Viewed by 2154

Abstract

Aggregated trading volume in February 2023 across the leading six NFT marketplaces totalled USD 1.89 billion. This reflects a continuing positive trajectory, marked by a 91.9% month-on-month (MoM) growth from January 2023, where NFT trading volume amounted to USD 987.9 million. This study [...] Read more.

Aggregated trading volume in February 2023 across the leading six NFT marketplaces totalled USD 1.89 billion. This reflects a continuing positive trajectory, marked by a 91.9% month-on-month (MoM) growth from January 2023, where NFT trading volume amounted to USD 987.9 million. This study conducts a systematic review and textual analysis of industry and academic articles on NFTs primarily related to Accounting, Finance, and Information Systems where the NFT is treated as a tradable digital asset. The sample period spans 2012 to 30 June 2023, using an initial set of 5549 and a final set of 146 articles. In addition, the authors develop an NFT valuation framework, using Scopus bibliometrics data and public domain materials, that can aid in the fair valuation of NFTs and understanding their accounting implications. We further examine the accounting implications of NFTs in terms of international accounting standards, fair value recognition, taxation, auditing, and the metaverse. NFTs have the potential to become a cross-technology and cross-field topic, attracting interest from auditors, accountants, financial institutions, accounting professional bodies, regulators, governments, and investors. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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23 pages, 5742 KiB

Open AccessReview

What Do We Know about Crowdfunding and P2P Lending Research? A Bibliometric Review and Meta-Analysis

by Mustafa Raza Rabbani, Abu Bashar, Iqbal Thonse Hawaldar, Muneer Shaik and Mohammed Selim

J. Risk Financial Manag. 2022, 15(10), 451; https://doi.org/10.3390/jrfm15100451 - 9 Oct 2022

Cited by 11 | Viewed by 3674

Abstract

In the era of fintech, businesses using technology other than traditional banks are providing financial services. Crowdfunding and peer-to-peer (P2P) lending are two of the most exciting financial innovations of the twenty-first century. In this paper, we use a bibliometric review and meta-analysis [...] Read more.

In the era of fintech, businesses using technology other than traditional banks are providing financial services. Crowdfunding and peer-to-peer (P2P) lending are two of the most exciting financial innovations of the twenty-first century. In this paper, we use a bibliometric review and meta-analysis to understand the academic research on crowdfunding and P2P lending. Our findings show that the research on this topic has grown a lot in terms of publications since 2013 and the maximum mean total citations were observed in the year 2014. We provide the details about the most influential authors based on total citations, authors with the greatest number of publications, the most influential documents, significant journal sources, highest single country production, multiple country production, and important affiliations. We further apply the network analysis and visualisation techniques wherein we provide the details of the citation analysis of documents, co-citation analysis of authors, and co-occurrence analysis of author keywords. Finally, we provide the future directions of the research on this burgeoning topic. Full article

(This article belongs to the Special Issue FinTech, Blockchain and Cryptocurrencies)

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