Moods, Market Sentiments, Weather Conditions: Influence on Economy and Financial Markets

A special issue of International Journal of Financial Studies (ISSN 2227-7072).

Deadline for manuscript submissions: closed (30 October 2016) | Viewed by 13441

Special Issue Editors


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Co-Guest Editor
Newcastle Business School, Northumbria University, Newcastle Upon Tyne, UK
Interests: panel unit root test under nonlinearity and structural break and its application on international purchasing power parity; exchange rate volatility, strategic asset allocation and inter-temporal hedging demands, and hedging strategy in China’s Energy Market
Special Issues, Collections and Topics in MDPI journals

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Co-Guest Editor
Newcastle Business School, Northumbria University, Newcastle Upon Tyne, UK
Interests: financial risk management; banking regulations; investments and micro-finance
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The use of weather conditions (i.e., temperatures or sunspot) to study financial markets and real economy are increasing (Bassi, Colacito and Fulghieri, 2013). Specifically, in the finance literature, weather conditions have been used to examine returns and volatilities of financial market (Kaplanski et al., 2013). In addition, weather conditions have many unique features, which contribute to a market generating sentiments in the business communities (Ho, 2015). The study of weather conditions has emerged both for academics and practitioners’ practice, which becomes one of the main areas of empirical financial research, as well as financial risk management. Thus, the primary goal of this Special Issue will be to highlight weather conditions as an empirical setting for understanding financial and economics phenomena and will highlight weather’s unique influence on human behavior. Topics in this Special Issue can include, but are not limited to, the effect of temperature, global warming, sunspots, sunlight, natural disasters, and other factors related to nature.

Dr. Chi Keung Lau
Dr. Satish Sharma
Co-Guest Editors

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Keywords

  • Weather Derivatives
  • Risk and Uncertainty
  • Financial Markets
  • Weather Economics
  • Forecasting and Simulation
  • Crisis Management

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Published Papers (2 papers)

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Research

479 KiB  
Article
Effectiveness of Weather Derivatives as a Risk Management Tool in Food Retail: The Case of Croatia
by Ivana Štulec
Int. J. Financial Stud. 2017, 5(1), 2; https://doi.org/10.3390/ijfs5010002 - 1 Jan 2017
Cited by 18 | Viewed by 7817
Abstract
Non-catastrophic weather risk is gaining importance as climate change becomes more pronounced and economic crisis forces companies to strengthen their cost control. Recent literature proposes weather derivatives as flexible weather risk mitigating tools. Only a handful of studies analysed the feasibility of weather [...] Read more.
Non-catastrophic weather risk is gaining importance as climate change becomes more pronounced and economic crisis forces companies to strengthen their cost control. Recent literature proposes weather derivatives as flexible weather risk mitigating tools. Only a handful of studies analysed the feasibility of weather derivatives in industries other than agriculture and energy. The purpose of this paper is to review available weather risk management solutions in retail, present weather derivatives as non-catastrophic weather risk management tools, empirically demonstrate the process of designing weather derivatives and assess their effectiveness as risk mitigating tools in retail. Empirical analysis is performed on beverage sales in 60 large food stores in Croatia, and performance of monthly temperature put options during the summer season is examined. For weather sensitivity analysis of sales, the method of panel regression was used. Results show that weather has a statistically significant effect on beverage sales and that weather derivatives prove to be effective in beverage sales uncertainty reduction. Their effectiveness differs between covered periods and cities. Full article
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2046 KiB  
Article
Spatially-Aggregated Temperature Derivatives: Agricultural Risk Management in China
by Lu Zong and Manuela Ender
Int. J. Financial Stud. 2016, 4(3), 17; https://doi.org/10.3390/ijfs4030017 - 5 Sep 2016
Cited by 4 | Viewed by 5269
Abstract
In this paper, a new form of weather derivative contract, namely the climatic zone-based growth degree-day (GDD) contract, is introduced. The objective is to increase the risk management efficiency in the agricultural sector of China and to reduce the model dimension of multi-regional [...] Read more.
In this paper, a new form of weather derivative contract, namely the climatic zone-based growth degree-day (GDD) contract, is introduced. The objective is to increase the risk management efficiency in the agricultural sector of China and to reduce the model dimension of multi-regional temperature-based weather derivatives pricing. Since the proposed contract serves as a risk management tool for all of the cities in the same climatic zone, we compare the risk hedging power between the climatic zone-based and the city-based GDD contracts. As a result, we find that the differences between the two types of temperature-based weather contracts are maintained within a certain range. Full article
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