scholarly journals Necessity of the Establishment of a Financial Derivatives Market in Bangladesh

2014 ◽  
Vol 2 (1) ◽  
pp. 21-32
Author(s):  
Md. Habibur Rahman ◽  
Bijoy Chandra Das
Keyword(s):  
Interest Rate ◽  
Capital Structure ◽  
Financial Markets ◽  
Market Economy ◽  
Capital Market ◽  
Commercial Banks ◽  
Theoretical Framework ◽  
Financial Derivatives ◽  
Short Term ◽  
Equity Indices

Derivatives instruments have been a feature of modern financial markets for several decades. They play a pivotal role in managing the risk of underlying securities such as bonds, equity, equity indices, currency, and short-term interest rate asset or liability positions. With the development of Bangladesh’s market economy, it is now becomes very essential of the establishment of a financial derivatives market in this country. In our article is has been tried to explain in detail the theoretical framework of various types of derivatives and their potential usage in strengthening capital market, capital structure of commercial banks, against the fluctuation of major import(petroleum) and export(RMG) sectors, and thus turning Bangladesh’s economy into a strong global one. In the last part of our study, some strong recommendations with the suggestion of phase by phase establishment of a financial derivatives market are included.

A Note Concerning the Dynamics of Government Bond Yields

2021 ◽  
pp. 056943452098827
Author(s):  
Tanweer Akram
Keyword(s):  
Interest Rate ◽  
Financial Markets ◽  
Yield Curve ◽  
Empirical Studies ◽  
State Theory ◽  
Government Bond ◽  
Bond Yields ◽  
Short Term ◽  
Government Bonds

Keynes argued that the central bank can influence the long-term interest rate on government bonds and the shape of the yield curve mainly through the short-term interest rate. Several recent empirical studies that examine the dynamics of government bond yields not only substantiate Keynes’s view that the long-term interest rate responds markedly to the short-term interest rate but also have relevance for macroeconomic theory and policy. This article relates Keynes’s discussions of money, the state theory of money, financial markets, investors’ expectations, uncertainty, and liquidity preference to the dynamics of government bond yields for countries with monetary sovereignty. Investors’ psychology, herding behavior in financial markets, and uncertainty about the future reinforce the effects of the short-term interest rate and the central bank’s monetary policy actions on the long-term interest rate. JEL classifications: E12; E40; E43; E50; E58; E60; F30; G10; G12; H62; H63

scholarly journals Legal Nature and Role of Swap Arrangements and Options as Financial Instruments

2019 ◽  
Vol 57 (4) ◽  
pp. 459-480
Author(s):  
Ružica Petrović ◽  
Tamara Milenković Kerković ◽  
Dragana Radenković Jocić
Keyword(s):  
Interest Rate ◽  
Financial Markets ◽  
Financial Innovation ◽  
Fixed Time ◽  
Financial Derivatives ◽  
Bank Loans ◽  
Bond Issues ◽  
Legal Nature ◽  
The Right ◽  
Exclusive Right

AbstractFinancial derivatives are, in the last forty years, the most important financial innovation that influence the creation of new, very deep and broad financial markets. Their number is constantly increasing. There is a creation of new variants of existing derivative contracts and therefore the subjects have the opportunity to differently manage risk. Although their controversial legal nature, generally accepted view is that they were contracts. Swap is the youngest of all financial derivatives and represents a financial innovation of a later date. Market swaps recorded one of the fastest growth rate among global financial markets. Swap represents a private agreement between the two parties regarding exchange cash flow of the fixed time in the future in accordance with a predetermined pattern. The most common users of swaps are non-financial corporations, which want to receive variable, and to pay a fixed interest rate in order to limit interest expenses on bank loans or bond issues with variable interest rate, as well as banks, the governments of some supranational institutions such as the World Bank. In economic theory emphasized is the view that the comparative advantage is the basis for swaps functioning. Options are contracts in which one party has the exclusive right, while the other contracting party assumes only the obligation to buy or sell assets to which the option is created. In the nationa legislation the option contract is transferable standardized contract binding the buyer has the right to, including the payment obligation of the agreed premium on the day or days of maturity specified in the contract.

“Una fiera senza luogo”: Was Bisenzone an International Capital Market in Sixteenth-Century Italy?

2008 ◽  
Vol 68 (4) ◽  
pp. 1098-1122 ◽  
Author(s):  
LUCIANO PEZZOLO ◽  
GIUSEPPE TATTARA
Keyword(s):  
Seventeenth Century ◽  
Sixteenth Century ◽  
Financial Markets ◽  
Capital Market ◽  
International Capital ◽  
Short Term ◽  
Financial Network ◽  
International Capital Market ◽  
International Scale

From the mid-sixteenth to the early seventeenth century, Genoese bankers collected money from a variety of sources and lent it to the king of Spain. It was all made possible by the Bisenzone exchange fairs, which created an efficient financial network under Genoese control and permitted arbitrage among northern Italian financial markets. At Bisenzone, Genoese bankers raised money for these loans from a variety of sources, which reduced the risks of lending and funded the king's long-term obligations via short term loans. Bisenzone was in many ways an offshore capital market which operated on an international scale, or, in the language of the sixteenth century, a fair without a place—una fiera senza luogo.

scholarly journals Legal regulation of OTC financial derivatives trading

2021 ◽  
pp. 215-230
Author(s):  
Marija Vićić
Keyword(s):  
Financial Markets ◽  
Capital Market ◽  
Legal Framework ◽  
Legal Regulation ◽  
Financial Derivatives ◽  
Legal Issues ◽  
Legal Environment ◽  
Legal Regulations ◽  
Cross Border ◽  
Financial Derivative

Author explains legal regulation of OTC financial derivative trading on the leading financial markets (USA and EU) as well as shows uniform regulations developed in international legal environment, and separately explains legal framework of the said question in positive Serbian law. Author elaborates main current legal issues related to financial derivatives transactions on the OTC market to which domestic participants are exposed during the operations in Serbian territory but also in cross-border operations. Finally, the author provides concrete proposals for further improvement of disputable legal issues by amending the regulatory framework in line with comparative legal regulations and regulations developed by the international community. Purpose of this article is to bring the attention of legal experts in Serbia to certain inefficient solutions in currently applicable legal regulations related to financial derivatives on the OTC Market, as well as to serve to legal practice as guidance for practical solving the disputable legal issues in particular transactions which have become frequent also for domestic participants on the capital market.

scholarly journals Global Financial Derivatives Market Development and Trading on the Example of Ukraine

2020 ◽  
Vol 74 ◽  
pp. 05001
Author(s):  
George Abuselidze ◽  
Nadiia Reznik ◽  
Anna Slobodianyk ◽  
Victoria Prokhorova
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Market Economy ◽  
Financial Stability ◽  
Global Scale ◽  
Financial Derivatives ◽  
Market Development ◽  
Price Risk ◽  
Risk Hedging ◽  
Current State

Stock market of financial derivatives in Ukraine still develops. There is important to find the way how to use world experience for the domestic implementation. First of all there is a need to improve of legislative base to ensure economic and financial stability. The next way of integration process for domestic stock market of financial derivatives is stock consolidation. Before implementation of foreign experience on the stock market of Ukraine it is important to take into account of all risks which are connected with this process. This research shows appropriate steps for integration of Ukrainian stock market of financial derivatives into global scale. The article identifies the economic essence of derivatives and their types within market economy. Key trends in global derivatives trading are highlighted. Current state and organizational measures of derivatives market development in Ukraine are discussed. Price risk has become the main feature of contemporary commodity and financial markets. Globalization of world commodity and financial markets leads to rapid changes and uncertain business conditions. Under current circumstances, derivatives market provides efficient ways for price risk hedging within market economy. That is why it is important to take into consideration the contemporary state and perspectives of derivatives market in Ukraine.

scholarly journals Existence of Equilibrium for Segmented Markets Models with Interest Rate Monetary Policies

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Filippo Occhino
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Markets ◽  
Nominal Interest Rate ◽  
Short Term ◽  
Monetary Policies ◽  
Segmented Markets ◽  
Monetary Analysis ◽  
Maximum Value ◽  
Similar Proof

Several studies have recently adopted the segmented markets model as a framework for monetary analysis. The characteristic assumption is that some households never participate in financial markets. This paper proves the existence of an equilibrium for segmented markets models where monetary policy is defined in terms of the short-term nominal interest rate. The model allows us to consider the important cases where monetary policy affects output, and responds to any sources of uncertainty, including output itself. The assumptions required for existence constrain the maximum value and the variability of the nominal interest rate. The period utility function is logarithmic. The proof is constructive, and shows how the model can be solved numerically. A similar proof can be used in the case that monetary policy is defined in terms of the bond supply.

scholarly journals FORECASTING BANKS RETURN ON EQUITY USING LEADING ECONOMIC INDICATORS

2020 ◽  
Vol 21 (2) ◽  
pp. 460-468
Author(s):  
Daiva Jurevičienė ◽  
Darius Rauličkis
Keyword(s):  
Financial Markets ◽  
Commercial Banks ◽  
Theoretical Perspective ◽  
Economic Indicators ◽  
Practical Implementation ◽  
Short Term ◽  
General Group ◽  
New Approach ◽  
Return On Equity ◽  
Leading Economic Indicators

The research examines an approach to forecast return on equity using leading economic indicators for short periods in banks. ROE is one of the most important ratios for performance measurement. Its adequacy is necessary for competitiveness, attract funding in financial markets, accumulate reserve for future turbulences, secure compliance with supervisory requirements and maintain positive signals for the market. There is still a debate in the literature on factors of commercial banks’ profitability forecasting, techniques, and most appropriate models to improve the correctness of predicting and acquiring more accurate signals for communication on targets. The problems are still relevant from both a theoretical perspective and practical implementation. This research aims to prove the necessity to include leading economic indicators for short term ROE forecasting. It conducts investigations for the relevant studies, using regression analysis, necessary tests, ascertains opportunities and limitations of using these indicators and develops a conceptual model and its assessment major Baltic banks. The results show verification of approach to forecast ROE using leading economic indicators for short periods. Such study complements signalling theory with a new approach, how to predict and acquire signal not only using economic indicators as a general group but sub-group them into coinciding, lagging and leading.

scholarly journals POKRIVENE OBVEZNICE: NOVA ŠANSA ZA OPORAVAK TRŽIŠTA KAPITALA U SRBIJI

2018 ◽  
pp. 359
Author(s):  
Vladimir Mirković ◽  
Jelena Lukić
Keyword(s):  
Financial Markets ◽  
Market Economy ◽  
Capital Market ◽  
Stock Exchange ◽  
Transition Process ◽  
Open Market ◽  
The European Union ◽  
Prospective Development ◽  
Increasing Trend ◽  
Further Development

At the beginning of the XXI century, Serbia entered into transition process toward open market economy. One of the segments which should be developed in accordance with market economy principles was financial markets, more precisely capital market. Recovery of the Belgrade Stock Exchange and increasing trend in the first half of the XXI century gave optimism in prospective development of the Serbian capital market. Unfortunately, Serbian capital market did not make expected progress. In this paper, the situation on the Belgrade Stock Exchange is analyzed, trading with equity and debt instruments, emphasizing deficiencies which caused insufficient level of development of the Serbian capital market. As many opportunities for growth have been  missed and capital markets are at the stagnant level for years, there are new, sophisticated products which could give an impulse to further development of financial markets. An example of such products is covered bonds, type of debt instruments with widespread use in the European Union. In this paper the main characteristics of those products are elaborated with experiences in other countries that could be very useful for Serbia.

scholarly journals Liquidity of commercial banks in Portugal and Spain

2021 ◽  
Vol 10 (1) ◽  
pp. 46-64
Author(s):  
Marco Amaral
Keyword(s):  
Financial Markets ◽  
Commercial Banks ◽  
Banking Sector ◽  
Balance Sheet ◽  
Annual Reports ◽  
Short Term ◽  
Liquidity Management ◽  
Banking Business ◽  
Critical Aspects

Liquidity is very important for the functioning of financial markets, especially for the banking sector, because one of the critical aspects in the banking business is precisely the process of transforming short-term funds and placing them in the medium and long term. This paper aims to comprehensively assess the liquidity positions of Portuguese and Spanish commercial banks through different liquidity ratios for the period from 2002 to 2015 and understand whether the liquidity management strategy differs by bank size. To this end, unconsolidated balance sheet data were used, which were obtained from the banks annual reports. The sample includes a significant part of the Portuguese and Spanish banking sector (not only by the number of banks, but also by the representation in banks total assets). The results obtained show that Spain's banks' liquidity indicator has decreased over the last four years. In contrast, bank liquidity indicator in Portugal varied slightly positively during the period 2002-2006 but decreased sharply between 2010 to 2015. Bank liquidity increased slightly during the period of the financial crisis in both countries, namely between from 2007 to 2009. Finally, it is concluded that smaller banks have less fluctuating liquidity management, i.e., large and medium-sized banks show greater variation in bank liquidity in the period under analysis, i.e., they are less liquid.

scholarly journals Commercial Banks Performance in Ghana: Does Capital Structure Matter?

2017 ◽  
Vol 7 (1) ◽  
pp. 333 ◽  
Author(s):  
Ibrahim Nandom Yakubu ◽  
Mohammed Mubarik Alhassan ◽  
Abdul Azeez Mikhail ◽  
Abdul-Nasiru Iddrisu Alhassan
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Short Term ◽  
Return On Equity ◽  
Total Debt ◽  
Total Capital ◽  
The Relationship

This study seeks to investigate the relationship between capital structure and commercial banks performance in Ghana. Using a panel data of listed commercial banks spanning from 2010-2015, the Ordinary Least Squares regression model is employed to estimate the functions relating to bank performance (measured by Return on Equity) with measures of capital structure. The findings show statistically significant relationship between commercial banks’ performance and all the capital structure measures (the ratios of short-term debt to total capital, long-term debt to total capital, and total debt to total capital). Whereas total debt and banks’ performance are positively correlated, short-term debt and long-term debt are inversely related to banks’ performance. In essence, using large proportion of debt significantly enhance commercial banks performance in Ghana.

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