Information Resolution and Subnational Capital Markets

2021 ◽  
Author(s):  
Christine R. Martell ◽  
Tima T. Moldogaziev ◽  
Salvador Espinosa
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Local Governments ◽  
Information Dissemination ◽  
Critical Infrastructure ◽  
Critical Factor ◽  
Financial Sector ◽  
External Resources ◽  
Credit Quality ◽  
Infrastructure Finance

This book theorizes that information is a critical factor for subnational government (SNG) capital market formation and development. It empirically tests the stated relationship between information resolution institutions and mechanisms of information resolution on SNG borrowing. Based on empirical results, analyses of underlying fundamentals of city credit quality, and the study of contexts of information resolution reforms, the book recommends policy measures for central governments, regional and local governments, and financial sector firms to build capital markets for subnational borrowing. As subnational governments across the globe, especially cities, bear increasing pressures to provide critical capital infrastructure, responsibilities for the provision of local infrastructure resulting from decentralization efforts and population demands, the need for a wider array of internal and external resources, including bond market alternatives, become a priority. With information resolution, access to capital market financing becomes a feasible option of regional and local government finance. The evidence reported in this book demonstrates that SNG access to capital market financing depends on credit contractibility, which is the nation’s capacity of information resolution. The bases of credit contractibility are transparency of credit information, depth of credit information, dissemination, and regulatory quality. Evidence also shows that the informational content of underlying credit quality is a significant covariate of city-level borrowing and debt composition. Based on empirical findings and focusing on cities, the book argues that SNGs can and should strengthen their agency vis-à-vis the public and financial sector actors, in an environment where global capital is increasingly intertwined with the provision of critical infrastructure finance. Agency is necessary for city policymakers not only to achieve their key governance tasks efficiently, but do so effectively and equitably, consistent with the demands of the citizenry.

A Theory of Subnational Government Capital Market Information

2021 ◽  
pp. 9-20
Author(s):  
Christine R. Martell ◽  
Tima T. Moldogaziev ◽  
Salvador Espinosa
Keyword(s):  
Corporate Finance ◽  
Capital Markets ◽  
Capital Market ◽  
Credit Market ◽  
Theoretical Base ◽  
Legal Institutions ◽  
Market Information ◽  
Credit Quality ◽  
Subnational Government ◽  
Government Credit

Chapter 2 develops the theoretical base for why and how information resolution is expected to relate to subnational government capital market borrowing by reviewing and extending the corporate finance literature. Based on theories of information, it argues that although countries must have a certain level of maturity along economic, financial and market, political, and legal institutions before successfully managing a well-functioning capital market, the crowning factor behind an efficient subnational government credit market, beyond the fundamental dimensions of institutional maturity, is credit contractibility in the system and tools of information certification and monitoring available to subnational governments. This chapter details how information problems manifest in credit contractibility, reviews how information relates to capital finance, and applies theories of capital markets to subnational government borrowing, debt size, and debt composition. It discusses how information resolution institutions and credit quality can enhance subnational government capital markets and proposes testable hypotheses.

Subnational Government Capital Financing

2021 ◽  
pp. 162-180
Author(s):  
Christine R. Martell ◽  
Tima T. Moldogaziev ◽  
Salvador Espinosa
Keyword(s):  
Capital Markets ◽  
Local Governments ◽  
Market Access ◽  
Local Level ◽  
National Level ◽  
Future Research ◽  
Credit Quality ◽  
Governance Systems ◽  
Capital Financing ◽  
Subnational Governments

This book argues that capital markets can be an important source of financing for subnational governments across the globe as they face decentralization of governance systems and increased demand for infrastructure at the local level. The central argument is that information resolution at both the national-level and the city-level is critical for the success of subnational capital markets. Furthermore, the chapter argues that subnational governments can and must become competent actors with regards to both top-down (national to local governments) and outside-in (financial sector firms to local governments) transactions and pressures. This chapter presents city policymakers with options for capital market access when both system credit contractibility and underlying credit quality vary by offering a typology of alternatives for capital financing. The chapter recommends policies that establish contractibility and credit quality assessment mechanisms and concludes with recommendations for future research.

Determinants of Trading Decision: An Experiential Examination

GIS Business ◽  
2018 ◽  
Vol 13 (1) ◽  
pp. 1-9
Author(s):  
Gunjan Sharma ◽  
Tarika Singh ◽  
Suvijna Awasthi
Keyword(s):  
Stock Market ◽  
Capital Markets ◽  
Capital Market ◽  
Capital Mobility ◽  
Influential Factors ◽  
Herd Behavior ◽  
Human Beings ◽  
The Past ◽  
The Government ◽  
Indian Stock Market

In the midst of increasing globalization, the past two decades have observed huge inflow of outside capital in the shape of direct and portfolio investment. The increase in capital mobility is due to contact between the different economies across the globe. The growing liberalization in the capital market leads to the growth of various financial products and services. Over the past decade, the Indian capital market has witnessed numerous changes in the direction of developing the capital markets more robust. With the growing Indian economy, the larger inflow of funds has been fetched into the capital markets. The government is continuously working on investor’s education in order to increase retail participation in the Indian stock market. The habits of the risk-averse middle class have been changing where these investors started participating in the Indian stock market. It is an explored fact that human beings are irrational and considering this fact becomes imperative to investigate factors that influence the trading decisions. In this research, ‘an attempt has been made to investigate various factors that affect the individual trading decision’. The data has been collected from various stockbroking firms and from clients of those stockbroking firms their opinions were recorded by means of a questionnaire. Data collected through the structured questionnaire, 33 questions were prepared which was given to the 330 respondents on the basis of convenience sampling out of which 220 individuals filled questionnaire, the total of 200 questionnaires was included in the study after eliminating the incomplete questionnaire. Various factors are being explored from the literature and then with the help of factor analysis some of the most influential factors have been explored. Factors like overconfidence, optimism, cognitive bias, herd behavior, advisory effect, and idealism are the factors which influenced the trading decision of the investors the most. Such kind of a study is contributing in the area of behavioral finance as a trading decision is an important aspect while investing in the stock market. And this kind of study would be helping and assisting financial advisors to strategies for their clients in making the right allocation and also the policy maker and market regulators to come up with better reforms for the Indian stock markets.

Rajeev Pundir

2021 ◽  
Vol 17 (2) ◽  
pp. 105-113
Author(s):  
Rajeev Pundir
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Poverty Line ◽  
Vital Role ◽  
Capital Inflows ◽  
Share Price ◽  
Stock Index ◽  
Recent Past ◽  
Indian Government ◽  
Asset Class

Put not your trust in money, but put your money in trust.”A capital market can provide huge impetus to the development of any economy .so, it can be said that the growth and sustainability of capital markets plays an important role towards the development of the economy. It is being observed that huge fluctuations are happening in Indian capital market in recent past, but with the help of proper mechanism, which is being observed in India and after examining various risk factors involved in capital markets, we attempt to say that the growth which has been observed in Indian capital market in recent past is a realty, but not a myth. Right from the independence, thanks to steps initiated by the Indian government especially after the post liberalization era. A huge growth has been observed in the aspects of quality and quantity. Huge increase has been observed in the volumes of trade. We know that capital markets play a vital role in Indian economy, the growth of capital markets will be helpful in raising the per-capita income of the individuals, decrease the levels of un-employment, and thus reducing the number of people who lies below the poverty line. With the increasing awareness in the people they start investing in capital markets with long-term orientations, which would provide capital inflows to the sectors requiring financial assistance.“Hedge risk; make the derivatives market your investment option”Derivative is finally engineered instruments which derive its value from price of a specific asset. Value of Equity Derivatives is derived from share price of any company or share index. In India trading of two types of derivatives are permitted – Futures and Options. Derivatives trading desks face a growing number of challenges – more sophisticated derivative instruments, fiercer competition, and stricter risk reporting and compliance requirements. It is now common to trade options with multi-asset-class underlying instruments quoted in different currencies, such as an option offering the best return between a Brazilian bond and a U.S. stock index. Investor uses the derivatives as an edged sword. Derivatives instruments are like a mother’s womb that cares of her baby (Investor) from volatility in the market. In nutshell this study is an effort to analyze the trading mechanism which has been followed by the investors in current scenario.

Rule of law and preventing fraud in Nigeria’s capital market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Uchechukwu Nwoke ◽  
Ibenaku Harford Onoh
Keyword(s):  
Rule Of Law ◽  
Capital Markets ◽  
Capital Market ◽  
Critical Evaluation ◽  
Subject Area ◽  
The Body ◽  
Content Type ◽  
The Rule Of Law ◽  
Body Of Knowledge ◽  
Fresh Insight

Purpose The purpose of this paper is to critically analyse the correlation between the rule of law and the efficient functioning of capital markets. It attempts to examine the Nigerian capital market and how the rule of law can be used to prevent fraud and promote the proper functioning of the market. Design/methodology/approach The paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the inter-connectedness between law and the capital market and how the rule of law is an important instrument in capital market development. Findings The paper finds that there have been numerous infractions of the rule of law by capital market actors, leading to stultification in the growth and development of this sector of the Nigerian economy. Originality/value The paper offers a fresh insight into the correlation between the rule of law and capital markets. By critically assessing the inter-connectivity between the two concepts, it extends the body of knowledge in this area by showing how the operations of the Nigerian capital market could be improved through the proper application of the rule of law.

The Capital Market Authority Effectiveness in the Regulation of Financial Markets perspectives from the financial sector actors

2012 ◽  
Vol 02 (11) ◽  
pp. 15-24
Author(s):  
Charles Kombo Okioga
Keyword(s):  
Financial Markets ◽  
Financial Market ◽  
Capital Markets ◽  
Capital Market ◽  
Financial Regulation ◽  
International Standards ◽  
Market Regulation ◽  
Financial Market Regulation ◽  
Market Participants ◽  
New Business

Capital Market Authority in Kenya is in a development phase in order to be effective in the regulation of the financial markets. The market participants and the regulators are increasingly adopting international standards in order to make the capital markets in sync with those of developed markets. New products are being introduced and new business lines are being established. The Capital Markets Authority (Regulator) is constantly reviewing existing regulations and recommending changes to regulate the market properly. Business lines and activities are being harmonized by market participants to provide a one stop solution in order to meet the financial and securities services needs of the investors. The convergence of business lines and activities of market intermediaries gives rise to the diversity of a firm’s business operations to meet multiplicity of regulations that its activities are subject to. The methodology used in this study was designed to examine the relationship between capital markets Authority effective regulation and the performance of the financial markets. The study used correlation design, the study population consisted of 30 employees in financial institutions regulated by Capital Markets Authority and 80 investors. The study found out that effective financial market regulation has a significant relationship with the financial market performance indicated by (r=0.571, p<0.01) and (r=0.716, p≤0.01, the study recommended a further research on the factors that hinder effective financial regulation by the Capital Markets Authority.

Evaluation of Blockchain in Capital Market Use-Cases

2018 ◽  
Vol 10 (1) ◽  
pp. 54-76
Author(s):  
Sinsu Anna Mathew ◽  
Abdul Quadir Md
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Use Cases ◽  
Third Party ◽  
Global Capital ◽  
Distributed Ledger ◽  
The World ◽  
High Integrity ◽  
Middle Man ◽  
Financial Transactions

This article describes the “Blockchain” which is an upcoming technology in the current leading world and which serves as a capital market use-cases for many of the global Fintech industries across the world, is a distributed ledger of economic transactions which not only used for recording financial transactions but mostly everything of value in this world. In the current world, mostly all the transactions are done through online which mainly includes the bank as a “middle man,” which could be untrustworthy at times. Blockchain comes into the picture which eliminates the need of a middle man or third party between the users who are involved in the transactions. Represents a financial ledger entry of data structure which consists of record of transactions which is digitally signed and cannot be tampered as authenticity is ensured in which the ledger is considered to be of high integrity. One of the leading and highly valued platform of blockchain is “Hyperledger Fabric” which is meant for securing transactions and serves a powerful container technology for smart contract development in the global capital firms. The potential of Blockchain and DLT in capital markets in this upcoming world could remove many of the inefficiencies and costs inherent in the global capital markets across the world and could be considered as a viable technology which enable to settlement.

scholarly journals L’apport Des Marchés De Capitaux Au Financement Des PME Marocaines

2018 ◽  
Vol 14 (7) ◽  
pp. 250
Author(s):  
M. Mohamed Oudgou ◽  
M. Mohamed Zeamari
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Market Reforms ◽  
Institutional Conditions ◽  
The Capital Market

Moroccan SMEs do not use generally capital market due to rigidity of the conditions. Moroccan authorities have introduced the measurements to deal with this problem and to encourage SMEs to access in the capital market since 2000. However, these measures were less efficient because they are multiple reason, but indeed, it still attributed to the financial and institutional conditions of access to capital market. The article target is to analyze capital market reforms and its contribution to financing Moroccan SMEs. In order to help us to determine the constraints of access the SMEs to direct finance. In fact, to achieve the target we need to adopt a methodology based on the analysis of secondary statistics and official reports of the main actors of the capital markets in Morocco.

scholarly journals Insider Trading Crime in Turkish Criminal Law

2018 ◽  
Author(s):  
Çetin Arslan ◽  
Didar Özdemir
Keyword(s):  
Comparative Analysis ◽  
Insider Trading ◽  
Criminal Law ◽  
Capital Markets ◽  
Capital Market ◽  
Good Faith ◽  
The Other ◽  
Public Disclosure ◽  
Crime Type ◽  
The Capital Market

Insider trading act is penalised ultima ratio with the aim of fighting against manmade market actions which outrage the principle of public disclosure and the element of trust in order to establish equality and good faith in capital markets. Insider trading is first disposed as a crime among the other capital market crimes (art.47/1-A-1) in the Capital Market Code no.2499 dated 28.07.1981 with the Amendment to the law no.3794 dated 29.04.1992 and at the present time it is rearranged as a self-contained crime type in article 106 of the Capital Market Code no.6362 dated 06.12.2012. In this study, the crime of insider trading is examined –in particular through the controversial points- as a comparative analysis between abrogated and current dispositions in Turkish Law.

scholarly journals The Effect Of Internal Capital Market Of Korean Large Business Groups On Investment Efficiency

2017 ◽  
Vol 33 (5) ◽  
pp. 903-918
Author(s):  
Minwoo Lee ◽  
Yuwon Choi ◽  
Sanghyuk Moon
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Stock Price ◽  
Business Groups ◽  
Internal Capital Markets ◽  
Investment Efficiency ◽  
Internal Capital Market ◽  
Factors Affecting ◽  
Controlling Shareholders ◽  
Internal Capital

This study examines whether the effect of funding through internal capital markets on investment efficiency is differentiated by the incentives of controlling shareholders as measured by the divergence between cash flow rights and voting rights of controlling shareholders (hereafter, wedge). To empirically analyze hypotheses of this study, 1,189 firm-year observations were collected from Korean firms listed on the Korea Composite Stock Price Index (KOSPI) belonging to a large business group designated by the Korea Fair Trade Commission over the period from 2005 to 2012. The results of the analysis are as follows. First, we find that the magnitude of internal funding, as measured by total payables to the related parties, is positively (+) associated with investment inefficiency. Second, the interaction variables of total payables to the related parties and the wedge have a significant positive (+) effect on investment inefficiency. In other words, the deterioration of investment efficiency due to the increase in total payables to the related parties was mainly caused by firms with a big wedge. This result suggests that the effect of internal capital markets on investment efficiency of large business groups may be differentiated by the wedge that is proxy of the controlling shareholder’s incentive. This study provides additional evidence on previous studies on the investment efficiency of large business groups by considering both the internal capital market and incentives for funding using the internal capital market, which are important factors affecting the investment of large corporate groups. Also, the results of this study are expected to provide implications for the regulatory policy of large business groups which have recently become an issue in Korea.

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