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Int. J. Financial Stud., Volume 6, Issue 4 (December 2018)

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Open AccessArticle The Behaviour of the Equity Yield and Its Relation with the Bond Yield: The Role of Inflation
Int. J. Financial Stud. 2018, 6(4), 99; https://doi.org/10.3390/ijfs6040099
Received: 19 September 2018 / Revised: 10 December 2018 / Accepted: 10 December 2018 / Published: 18 December 2018
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Abstract
Understanding the behaviour of the equity yield and its relation to the bond yield is important for portfolio managers and those engaged in modelling the interaction between asset classes. During the mid-1900s, the equity yield—which was previously greater than the bond yield—declined, while [...] Read more.
Understanding the behaviour of the equity yield and its relation to the bond yield is important for portfolio managers and those engaged in modelling the interaction between asset classes. During the mid-1900s, the equity yield—which was previously greater than the bond yield—declined, while the bond yield rose and became higher. Research, seeking to understand this, put forward the view that stock and bond return volatility is key. Evidence from the 2000s suggest that the relative values of the equity and bond yield have flipped again, with the former now greater. Empirical evidence presented here shows that during such periods, the hypothesised relation between the equity yield and the bond yield and the two volatilities also changes, with the signs reversed. Moreover, there is noticeable variation in the coefficient values. This paper argues that the relative equity and bond yield values are, to a large extent, driven by inflation volatility. High inflation volatility persisted during the first half of the twentieth century when the equity yield was higher. This was followed by more benign inflation volatility when the bond yield became higher. Evidence for a long span of US data, and shorter German, Japanese, and UK data, suggests the recent rise in the equity yield is accompanied by an uptick in inflation volatility relative to its recent tranquillity. Full article
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Open AccessArticle Analysis of Bankruptcy Threat for Risk Management Purposes: A Model Approach
Int. J. Financial Stud. 2018, 6(4), 98; https://doi.org/10.3390/ijfs6040098
Received: 30 October 2018 / Revised: 13 November 2018 / Accepted: 12 December 2018 / Published: 17 December 2018
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Abstract
In previous works, the importance of risk management implementation was addressed with regard to the problem of bankruptcy threat, with the explanation of risk impact on higher bankruptcy costs or the underinvestment problem. However, the evaluation of the impact of risk outcomes is [...] Read more.
In previous works, the importance of risk management implementation was addressed with regard to the problem of bankruptcy threat, with the explanation of risk impact on higher bankruptcy costs or the underinvestment problem. However, the evaluation of the impact of risk outcomes is technically linked to risk frequency and risk severity as the two dimensions of the risk map. The purpose of our study is to advocate two additional dimensions that incorporate liquidity and/or debt capacity constraint in the aftermath of risk occurrence. In the conceptual dimension, we propose a model that may support the appropriate design of risk management methods, by scaling a company’s ability to self-resist the risk outcomes. The study provides the empirical illustration of the frequency of the distinguished patterns of risk self-resistance. It was found that most frequently companies face the limited ability to self-resist risk outcomes, due to high debt capacity and high liquidity constraints. We also found statistically significant interdependencies between the company’s sector and the risk self-resistance. It supports the conclusion that the level of liquidity and debt capacity constraints and thus the ability to retain risk outcomes is sector-specific. It has important implications for the effective design of risk management methods. Full article
(This article belongs to the Special Issue Bankruptcy Prediction)
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Open AccessArticle European Club Football after “Five Treatments” with Financial Fair Play—Time for an Assessment
Int. J. Financial Stud. 2018, 6(4), 97; https://doi.org/10.3390/ijfs6040097
Received: 8 October 2018 / Revised: 4 December 2018 / Accepted: 6 December 2018 / Published: 13 December 2018
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Abstract
UEFA’s Club Licensing and Financial Fair Play Regulations (FFP) have impacted European club football. After five distinct applications of the break-even requirement, which represents the cornerstone of these regulations, it is time for an assessment. How has the situation in European top-division football [...] Read more.
UEFA’s Club Licensing and Financial Fair Play Regulations (FFP) have impacted European club football. After five distinct applications of the break-even requirement, which represents the cornerstone of these regulations, it is time for an assessment. How has the situation in European top-division football changed since the FFP regulation? The most recent financial data show that European club football is characterized by significant financial recovery and further polarization. How has the FFP regulation presumably affected this development? This article discusses plausible reasons why FFP has contributed to financial recovery but has not aggravated polarization. Understanding the drivers of polarization is essential before taking further regulatory steps. Full article
(This article belongs to the Special Issue Sports Finance 2018)
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Open AccessArticle Risk Management for the Optimal Order Quantity by Risk-Averse Suppliers of Food Raw Materials
Int. J. Financial Stud. 2018, 6(4), 96; https://doi.org/10.3390/ijfs6040096
Received: 27 September 2018 / Revised: 17 November 2018 / Accepted: 3 December 2018 / Published: 5 December 2018
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Abstract
In uncertain food safety environments, the suppliers of food raw materials (FRM) are facing crucial food safety issues. Therefore, this article aims to probe the risk-averse attitude of FRM suppliers in the face changing marketing environments, in order to establish a decision-making theory [...] Read more.
In uncertain food safety environments, the suppliers of food raw materials (FRM) are facing crucial food safety issues. Therefore, this article aims to probe the risk-averse attitude of FRM suppliers in the face changing marketing environments, in order to establish a decision-making theory as a standard reference for optimization methods to satisfy the maximum expected profit and utility function for the optimal order quantity of FRM suppliers’ decision-making. We assume that urgent orders are permitted when products are out of stock, and surplus products will be sold at discounted prices, as based on the food safety circumstances and the differences of market acceptance (optimistic/normal/pessimistic), in order to affect the procurement costs and selling prices. The results of sensitivity analysis for the maximum expected profit show that the probability of imported FRM having no food safety problems when the external environment has no food safety problems is the most important parameter, with the importers fulfilling their responsibility for FRM source quality control. Meanwhile, a responsible attitude toward handling a crisis will reduce losses, transform the crisis into an opportunity, and win the trust of consumers, thereby, fostering corporate sustainability. Sensitivity analysis identifies the significant parameters that influence suppliers’ maximum utility function, and provides a reference by which food-related companies may formulate sustainable business policies. Full article
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Open AccessArticle Many Are Never Too Many: An Analysis of Crowdfunding Projects in Brazil
Int. J. Financial Stud. 2018, 6(4), 95; https://doi.org/10.3390/ijfs6040095
Received: 26 October 2018 / Revised: 15 November 2018 / Accepted: 16 November 2018 / Published: 23 November 2018
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Abstract
This paper analyzed the most important aspects for the success of crowdfunding projects observing the Kickante platform, an important crowdfunding Brazilian platform. We found that the total value per project increased with the number of investors. The value per investor increased with the [...] Read more.
This paper analyzed the most important aspects for the success of crowdfunding projects observing the Kickante platform, an important crowdfunding Brazilian platform. We found that the total value per project increased with the number of investors. The value per investor increased with the minimum value invested with rewards and with certain types of promoters (like informal groups or new companies) or with startups. Full article
Open AccessArticle Corporate Social Responsibility and Rule 144A Debt Offerings: Empirical Evidence
Int. J. Financial Stud. 2018, 6(4), 94; https://doi.org/10.3390/ijfs6040094
Received: 28 September 2018 / Revised: 15 November 2018 / Accepted: 15 November 2018 / Published: 20 November 2018
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Abstract
Rule 144A allows a firm to issue securities without a public registration statement with the Securities and Exchange Commission, and only qualified institutional investors can purchase such securities. In this study, focusing on corporate bonds issued under Rule 144A, we empirically investigate the [...] Read more.
Rule 144A allows a firm to issue securities without a public registration statement with the Securities and Exchange Commission, and only qualified institutional investors can purchase such securities. In this study, focusing on corporate bonds issued under Rule 144A, we empirically investigate the relationship between the corporate social responsibility (CSR) of issuing firms and the bond yield spread at issuance. We document a significant and positive relation between CSR concerns, whereas CSR strengths seem to play an insignificant role in determining bond yield spread. Our main findings are robust to the instrumental variable approach and simultaneous equation estimation to address the potential endogeneity issues. We further explore the time-series changes in issuing firms’ CSR profiles, and report that institutional investors demand a higher bond yield spread when issuing firms’ exposure to higher social, environmental, and stakeholder concerns. Our analyses reveal that the main sources of such risk exposure are stakeholder conflict and concerns from primary stakeholder groups. Full article
(This article belongs to the Special Issue Sustainability and Corporate Financial Environment)
Open AccessArticle Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market
Int. J. Financial Stud. 2018, 6(4), 93; https://doi.org/10.3390/ijfs6040093
Received: 29 August 2018 / Revised: 3 November 2018 / Accepted: 14 November 2018 / Published: 20 November 2018
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Abstract
This study analyzes the firm-specific factors affecting the dividend payout decisions of the companies whose shares are traded on the Borsa Istanbul stock exchange. To this end, the dynamic panel regression is applied to 853 observations of yearly average of 106 companies listed [...] Read more.
This study analyzes the firm-specific factors affecting the dividend payout decisions of the companies whose shares are traded on the Borsa Istanbul stock exchange. To this end, the dynamic panel regression is applied to 853 observations of yearly average of 106 companies listed on the Borsa Istanbul between 2009 and 2015. According to results from the Arellano–Bover/Blunder-Bond two-step system generalized method of moments, a statistically significant positive effect on dividend payout was found in the relationship between the dividend payout of the previous year, the company’s return on equity and the market value/book value ratio, liquidity and the company’s size. The demonstration of a positive relationship between dividend payout and return on equity supports the free cash flow hypothesis and the positive relationship with the previous year’s dividend payout ratio supports the dividend smoothing hypothesis for Turkey. Full article
Open AccessArticle The Impact of Union of European Football Associations (UEFA) Financial Fair Play Regulation on Audit Fees: Evidence from Spanish Football
Int. J. Financial Stud. 2018, 6(4), 92; https://doi.org/10.3390/ijfs6040092
Received: 19 September 2018 / Revised: 7 November 2018 / Accepted: 7 November 2018 / Published: 13 November 2018
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Abstract
This paper analyzes whether the Financial Fair Play (FFP) regulations set by Union of European Football Associations (UEFA) have influenced the auditing fees charged to football clubs. In addition, it explores the determinants of audit fees. We used a two-sample t-test with equal [...] Read more.
This paper analyzes whether the Financial Fair Play (FFP) regulations set by Union of European Football Associations (UEFA) have influenced the auditing fees charged to football clubs. In addition, it explores the determinants of audit fees. We used a two-sample t-test with equal variances to determine whether differences are present. After this, we carried out a panel data regression with the clubs fix effect to estimate the determinants of audit fees in football clubs. Our findings revealed an increase of audit fees after the implementation of FFP regulations. On top of that, audit fees were explained by the presence of foreign investors if the audit firm was one of the Big 4 and if the auditor was a woman. The regulation change has had an impact on the audit fees charged by auditors for their services. However, this increase may be compensated over future years given the improving financial situation of clubs; therefore, the auditors’ risk diminishes and subsequent audit fees may be reduced. UEFA should monitor audit fees as well as the quality of the audit reports, which have become crucial to obtaining the license to participate in UEFA competitions. Full article
(This article belongs to the Special Issue Sports Finance 2018)
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Open AccessArticle Financial and Sporting Performance in French Football Ligue 1: Influence on the Players’ Market
Int. J. Financial Stud. 2018, 6(4), 91; https://doi.org/10.3390/ijfs6040091
Received: 3 October 2018 / Revised: 31 October 2018 / Accepted: 3 November 2018 / Published: 8 November 2018
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Abstract
Despite the globalisation of European soccer, each professional league exhibits specificities. French Ligue 1 sometimes contends with the trading-off of financial performance against sporting performance of its teams in European soccer competitions, and its inner auditing body, the Direction Nationale du Contrôle de [...] Read more.
Despite the globalisation of European soccer, each professional league exhibits specificities. French Ligue 1 sometimes contends with the trading-off of financial performance against sporting performance of its teams in European soccer competitions, and its inner auditing body, the Direction Nationale du Contrôle de Gestion (DNCG), is in charge of controlling clubs’ financial accounts. Moreover, Ligue 1 operates with one of the best competitive balances in the Big Five, which is detrimental to its clubs’ success at the European level. However, the league and a number of clubs have not been able to curb payroll inflation and have not avoided being recurrently run in a deficit and accumulating debts, in particular payment arrears and player transfer overdue. Lax management occurs, since very few clubs have been sanctioned by a payment failure, even fewer by liquidation, and there has been no bankruptcy. The concept of a soft budget constraint theoretically encapsulates such empirical evidence. The novelty of the paper is to establish a link between the soft budget constraint and the players’ labour market where it crucially triggers market disequilibria: an excess of demand for superstars’ talents and an excess of supply for journeymen players are modelled. Data paucity about player individual wages hinders econometric testing of the aforementioned link and the model. However, a look at transfer fees that concentrates on a few of the top European soccer clubs provides a first insight into the arms race for talent that fuels an excess of demand for superstars and dips a number of clubs’ finance into the red. Full article
(This article belongs to the Special Issue Sports Finance 2018)
Open AccessFeature PaperArticle “After End-2008 Structural Changes in Containership Market” and Their Impact on Industry’s Policy
Int. J. Financial Stud. 2018, 6(4), 90; https://doi.org/10.3390/ijfs6040090
Received: 20 September 2017 / Revised: 11 April 2018 / Accepted: 20 June 2018 / Published: 1 November 2018
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Abstract
The inability of carriers to forecast “demand for containerships” led them to order larger ships. Maritime economists were also unable to forecast it. The new-buildings cut cost per TEU, but “estimated economies of scale” are exhausted with ships beyond 21,000 TEUs, higher than [...] Read more.
The inability of carriers to forecast “demand for containerships” led them to order larger ships. Maritime economists were also unable to forecast it. The new-buildings cut cost per TEU, but “estimated economies of scale” are exhausted with ships beyond 21,000 TEUs, higher than the present. As average cost-AC was not at minimum, carriers did not produce at minimum efficient scale (MES). As larger ships are more competitive, smaller ships led to laid-up, and eventually scrapped. This strategy, however, did not bring the desirable balance between demand and supply. Due to falling demand, following the meltdown at the end of 2008, carriers priced their services at marginal cost-MC, and thus they accumulated losses. As a result, carriers resorted to frequent GRIs (freight rate increases). Supply exceeded demand and average distances fell after 2008. Containership market will remain depressed if economies of scale lead carriers to shipyards. Scrapping—the last hope—removed only 1/7 of the oversupply. Revenue, operating profits, and net profits, due to increased financial expenses, were lower than in the past. Aggressive ship-building programs could not be carried-out, because the depression meant that there are available only limited funds. The estimated funds required for new buildings were as high as $4 billion per carrier. So, the sector is in a vicious circle. The only helpful sign was the reduction in fuel prices after 2011 from $800/ton to $278 (2015). We also showed that ports and canals, through their traditional charging policy on size, penalized containerships for their efficiency—if volume discounts are not provided. Port dues and container handling and canal dues account for as much as 40% of the annualized containership cost. Finally, to study the relationship between concentration (market share) and revenue, operating profit and net profit, we ran three regressions; but only one gave a high correlation coefficient (0.97). This suggests that the containership market is purely competitive. We also showed that the Herfindahl index was 683 units (i.e., <1000) and Lerner’s index was 0.55—both indicating oligopolistic trends. Our model shows that containership market is either oligopolistic or purely competitive. This finding shows the double face of containership markets, which so much confused maritime economists. Full article
(This article belongs to the Special Issue Alliances, Mergers and Acquisitions in the Shipping Sector)
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Open AccessReview The Lead–Lag Relationship between Oil Futures and Spot Prices—A Literature Review
Int. J. Financial Stud. 2018, 6(4), 89; https://doi.org/10.3390/ijfs6040089
Received: 22 September 2018 / Revised: 21 October 2018 / Accepted: 26 October 2018 / Published: 31 October 2018
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Abstract
Crude oil is the dominant energy resource worldwide. The focus of this paper is on its historical behaviour and subsequent implications for the global economy with an emphasis on the lead–lag relationship between spot and future prices. The paper examines the behaviour of [...] Read more.
Crude oil is the dominant energy resource worldwide. The focus of this paper is on its historical behaviour and subsequent implications for the global economy with an emphasis on the lead–lag relationship between spot and future prices. The paper examines the behaviour of oil spot and future prices and their determinants during periods of market uncertainty, particularly in the context of economic and financial crises. The analysis highlights a key controversy within the extant literature, as to whether spot or futures prices are the main crude oil price indicator. The literature review indicates that the lead–lag relationship is a dynamic one, especially during periods of sustained uncertainty, which leads to significant disagreements and incongruities among researchers regarding the price that plays a dominant role. Full article
(This article belongs to the Special Issue Energy Finance)
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Open AccessArticle The Relationship between Technology Life Cycle and Korean Stock Market Performance
Int. J. Financial Stud. 2018, 6(4), 88; https://doi.org/10.3390/ijfs6040088
Received: 5 August 2018 / Revised: 22 October 2018 / Accepted: 25 October 2018 / Published: 29 October 2018
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Abstract
Through the three industrial revolutions, technology has enabled rapid changes in society. In a capitalist society, capital is invested where there is utility, for example, economic benefit. We intend to determine that the stock price of a company that uses a particular technology [...] Read more.
Through the three industrial revolutions, technology has enabled rapid changes in society. In a capitalist society, capital is invested where there is utility, for example, economic benefit. We intend to determine that the stock price of a company that uses a particular technology will change with the life cycle of the technology in question. Specifically, we filtered companies that mainly deal with augmented reality and are listed in Korea’s KOSDAQ market. We grouped these companies based on detailed technologies that constitute augmented reality. We used the event study method to calculate the stock returns against a benchmark. As a result, in the “Peak of Inflated Expectations” stage, the portfolios of all companies using augmented reality generally show higher returns than the benchmark. However, it is difficult to ascertain whether a return generated based on one of the detailed technologies that make up augmented reality is higher or lower than that of the benchmark. During the “Trough of Disillusionment” phase, there was neither a consistent trend of cumulative abnormal returns (CAR) nor buy-and-hold abnormal returns (BHAR). However, during this stage, there was a positive correlation of average BHAR and average abnormal returns between the entire sample’s portfolio and each detailed technology firm’s portfolio. Full article
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Open AccessArticle Valuation of Digital Platforms: Experimental Evidence for Google and Facebook
Int. J. Financial Stud. 2018, 6(4), 87; https://doi.org/10.3390/ijfs6040087
Received: 29 August 2018 / Revised: 11 October 2018 / Accepted: 11 October 2018 / Published: 17 October 2018
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Abstract
This article investigates the fundamental value of digital platforms, such as Facebook and Google. Despite the transformative nature of digital technologies, it is challenging to value digital services, given that the usage is free of charge. Applying the methodology of discrete choice experiments, [...] Read more.
This article investigates the fundamental value of digital platforms, such as Facebook and Google. Despite the transformative nature of digital technologies, it is challenging to value digital services, given that the usage is free of charge. Applying the methodology of discrete choice experiments, we estimated the value of digital free goods. For the first time in the literature, we obtained data for the willingness-to-pay and willingness-to-accept, together with socio-economic variables. The customer’s valuation of free digital services is on average, for Google, 121 € per week and Facebook, 28 €. Full article
(This article belongs to the Special Issue Financial Economics)
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Open AccessArticle The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”
Int. J. Financial Stud. 2018, 6(4), 86; https://doi.org/10.3390/ijfs6040086
Received: 19 June 2018 / Revised: 29 September 2018 / Accepted: 2 October 2018 / Published: 16 October 2018
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Abstract
The “One Belt and One Road” (OBOR) project was started by the Chinese government with the aim of achieving sustainable economic development and increasing cooperation with other countries. This project has five major objectives, which include (i) increasing trade flow, (ii) encouraging policy [...] Read more.
The “One Belt and One Road” (OBOR) project was started by the Chinese government with the aim of achieving sustainable economic development and increasing cooperation with other countries. This project has five major objectives, which include (i) increasing trade flow, (ii) encouraging policy coordination, (iii) improving connectivity, (iv) obtaining financial integration, and (v) fortifying closeness between people. This paper aims to analyze the effect of exchange rate volatility on international trade and foreign direct investment (FDI) in developing countries along “One Belt and One Road”. We selected seven developing countries which are part of this project, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. We collected panel data for the period 1995 to 2016 from the U.S. Heritage Foundation, International Financial Statistics (IFS) (a database developed by the International Monetary Fund), and World Development Indicators (WDI) (a database developed by the World Bank). We applied Generalized Autoregressive Conditional Heteroscedasticity (GARCH) (1,1) and threshold-Generalized Autoregressive Conditional Heteroscedasticity (TGARCH) (1,1) models to measure the exchange rate volatility. Furthermore, we employed a fixed effect model to analyze the relationship of exchange rate volatility with international trade and FDI. The results of this paper revealed that exchange rate volatility affects both international trade and FDI significantly but negatively in OBOR-related countries, which correlates with the economic theory arguing that exchange rate volatility may hurt international trade and FDI. It can be concluded that exchange rate volatility can adversely affect international trade and FDI inflows in OBOR-related countries. Full article
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Open AccessArticle The Effect of Alternative Measures of Distance on the Correlation of Real Effective Exchange Rate Returns: An Approach to Contagion Analysis
Int. J. Financial Stud. 2018, 6(4), 85; https://doi.org/10.3390/ijfs6040085
Received: 14 August 2018 / Revised: 25 September 2018 / Accepted: 10 October 2018 / Published: 12 October 2018
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Abstract
The topic of contagion has gained importance in the last few decades, earning its place amongst the most debated topics in international economics. Contagion is a phenomenon where market disturbances in crisis times are observed to spread from one country to the other [...] Read more.
The topic of contagion has gained importance in the last few decades, earning its place amongst the most debated topics in international economics. Contagion is a phenomenon where market disturbances in crisis times are observed to spread from one country to the other in the form of comovements in exchange rates, stock prices, bond spreads, capital and trade flows. Analysing contagion and, more important, being able to make an on-coming prediction successfully helps economic planners to take appropriate rectificatory action toward establishing stable macroeconomic conditions. In previous studies, various proxies for distance have been used to test their explanatory power on a suitable dependent variable, typically a crisis index. In this paper, the separate impacts of geographic distance, psychic distance and cultural factors are tested on the correlation of real exchange rate returns to assess their predictive power. Using a sample of 30 countries for a period of 24 years (1993 to 2016) and data at monthly intervals, a panel regression is conducted. The findings of the analysis are that there is a negative effect of all the three explanatory variables on the correlation of real exchange rate returns. Moreover, a rolling regression conducted across the whole period shows coefficients going back to zero just before a crisis event and tending to fall afterwards. These findings contribute to the literature on contagion analysis by taking a different approach and exploring the separate impacts of geographic distance, psychic distance and cultural factors as explanatory variables and assessing their predictive power. The findings of the research are thus useful for policy makers towards restoring stable economic conditions. Full article
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Open AccessArticle Estimating Major Risk Factor Relativities in Rate Filings Using Generalized Linear Models
Int. J. Financial Stud. 2018, 6(4), 84; https://doi.org/10.3390/ijfs6040084
Received: 26 July 2018 / Revised: 10 September 2018 / Accepted: 2 October 2018 / Published: 11 October 2018
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Abstract
Predictive modeling is a key technique in auto insurance rate-making and the decision-making involved in the review of rate filings. Unlike an approach based on hypothesis testing, the results from predictive modeling not only serve as statistical evidence for decision-making, they also discover [...] Read more.
Predictive modeling is a key technique in auto insurance rate-making and the decision-making involved in the review of rate filings. Unlike an approach based on hypothesis testing, the results from predictive modeling not only serve as statistical evidence for decision-making, they also discover relationships between a response variable and predictors. In this work, we study the use of predictive modeling in auto insurance rate filings. This is a typical area of actuarial practice involving decision-making using industry loss data. The aim of this study was to offer some general guidelines for using predictive modeling in regulating insurance rates. Our study demonstrates that predictive modeling techniques based on generalized linear models (GLMs) are suitable in auto insurance rate filings review. The GLM relativities of major risk factors can serve as the benchmark of the same risk factors considered in auto insurance pricing. Full article
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Open AccessEditorial Editorial for Special Issue “Finance, Financial Risk Management and their Applications”
Int. J. Financial Stud. 2018, 6(4), 83; https://doi.org/10.3390/ijfs6040083
Received: 21 September 2018 / Accepted: 26 September 2018 / Published: 8 October 2018
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Abstract
We are pleased to announce the Special Issue on the Finance, Financial Risk Management and their Applications in the International Journal of Financial Studies. This Special Issue collects papers pertaining to several lines of research related to finance and financial risks. This Guest [...] Read more.
We are pleased to announce the Special Issue on the Finance, Financial Risk Management and their Applications in the International Journal of Financial Studies. This Special Issue collects papers pertaining to several lines of research related to finance and financial risks. This Guest Editor’s note synthesizes the contributing authors’ propositions and findings regarding these developments and hopes that new areas can be opened for future researches. Full article
(This article belongs to the Special Issue Finance, Financial Risk Management and their Applications)
Open AccessArticle Does Credit Composition have Asymmetric Effects on Income Inequality? New Evidence from Panel Data
Int. J. Financial Stud. 2018, 6(4), 82; https://doi.org/10.3390/ijfs6040082
Received: 4 August 2018 / Revised: 11 September 2018 / Accepted: 18 September 2018 / Published: 25 September 2018
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Abstract
This paper studied the effects of credit to private non-financial sectors on income inequality. In particular, we focused on the distinction between household and firm credits, and investigated whether these two types of credit had adverse effects on income inequality. Employing cross-section augmented [...] Read more.
This paper studied the effects of credit to private non-financial sectors on income inequality. In particular, we focused on the distinction between household and firm credits, and investigated whether these two types of credit had adverse effects on income inequality. Employing cross-section augmented cointegrating regressions and using balanced panel data for 30 developed and developing countries over the period from 1995 to 2013, we showed that firm credit reduced income inequality, whereas there was no significant impact of household credit on income inequality. We concluded that it was not the size of the private credit but its composition which mattered in reducing income inequality, due to the asymmetric effects of different types of credit. Full article
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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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