The Role of Analytics and Robo-Advisory in Investors' Financial Decisions and Risk Management

2021 ◽  
Vol 8 (2) ◽  
pp. 46-62
Author(s):  
Abhinav Pal ◽  
Shalini Singh Sharma ◽  
Kriti Priya Gupta

The global financial world has been experiencing increasing complexities in the design and construct of financial instruments, wherein the average retail investors need to be well informed and aware of the risks about the evolution of financial products and financial system. The global financial crisis of 2008-2009 is evident to the fact that traditional methods of financial advisory involving the use of human intermediaries and financial advisors is not an infallible method to determine one's financial decision or risk management. Almost a decade since the crisis, the advancement of financial technology in the form of robo-advisors and the use of data and visual analytics have completely transformed the way the retail investors make their financial decisions and also in the sphere of risk management of these investors. The study qualitatively analyses the use of the use of analytics and robo-advisory in determining retail investors' financial decisions and risk management by doing a systematic and an exhaustive literature review on the latest and the past studies on the topic.

Author(s):  
Irene Spagna

This chapter analyzes the growth of OTC derivatives before the global financial crisis of 2008 and the role of credit default swaps, in particular, in the near collapse of the global economy. It begins by exploring the basic characteristics of derivatives used as risk management instruments by investors to hedge against or exploit the volatility of asset prices. The analysis further reveals that the pre-crisis period was characterized by a broad-based consensus favoring deregulated markets and globally designed private rules. While not always unanimously supported, permissive public regulatory choices were often encouraged by interest group lobbying, the market-friendly views of many domestic authorities, and concerns about regulatory uncertainty and international competitiveness.


2021 ◽  
Author(s):  
Наталия Александровна Иванова

Актуальность исследования для экономики усиливается такими явлениями, как влияние мирового финансового кризиса, усложнение отраслевой и территориальной структуры производства, усиление интеграции всех сфер общественной жизни, возрастание значения экологических, социальных и политических факторов развития общества, повышение трансакционных издержек принятия решений в сфере управления. Изучение литературы о территориях дает основание определить понятие региональной системы России как элемент, подсистему некоторой иерархической системы, в роли которой выступает национальная экономика. Процессы глобализации коренным образом изменяют роль регионов в национальной экономике. Регион постепенно становится не только отдельным экономическим агентом, но также вступает в мировые конкурентные процессы. Положение территориально-организованных систем оказывается зависимым не только от макроэкономических условий или возможностей самих регионов, но также от расстановки конкурентных сил, механизмов взаимодействия регионов с другими субъектами. В этой связи возникает необходимость системных исследований с целью выработки комплекса мер, которые будут способствовать повышению конкурентоспособности экономики в целом, ее регионов в частности. Существующий инструментарий региональной экономики является уже недостаточным для анализа такого рода проблем, а традиционный конкурентный анализ не рассматривает регионы в качестве субъектов конкуренции. Требуется расширение и применение новых теоретических подходов к анализу региональных экономических систем и эффективности их развития, формированию целостной концепции развития территориальной организации хозяйства, что обусловило актуальность данного исследования. The relevance of the study for the economy is enhanced by such phenomena as the impact of the global financial crisis, the complication of the sectoral and territorial structure of production, the strengthening of integration of all spheres of public life, the increasing importance of environmental, social and political factors in the development of society, the increase in transaction costs of decision-making in the field of management. The study of the literature on territories gives grounds to define the concept of the regional system of Russia as an element, a subsystem of some hierarchical system, in the role of which the national economy acts. The processes of globalization are fundamentally changing the role of regions in the national economy. The region is gradually becoming not only a separate economic agent, but also enters into global competitive processes. The position of geographically organized systems turns out to depend not only on the macroeconomic conditions or the capabilities of the regions themselves, but also on the alignment of competitive forces, the mechanisms of interaction of regions with other entities. In this regard, there is a need for systematic research in order to develop a set of measures that will contribute to improving the competitiveness of the economy as a whole, its regions in particular. The existing tools of the regional economy are no longer sufficient to analyze such problems, and traditional competitive analysis does not consider regions as subjects of competition. It requires the expansion and application of new theoretical approaches to the analysis of regional economic systems and the effectiveness of their development, the formation of an integral concept of the development of the territorial organization of the economy, which determined the relevance of this study.


2017 ◽  
Vol 14 (2) ◽  
pp. 8-16
Author(s):  
Sayed M. Fadel ◽  
Jasim Al-Ajmi

The objectives of this study are to determine 1) the effect of global economic and financial crisis on risk management, 2) the severity of different types of risk facing Islamic banks, 3) the risk levels of Islamic financial modes, 4) risk assessment techniques, and 5) risk management techniques. The structure of the balance sheet, the nature of Islamic finance instruments and funding sources have a great impact on the level of risk exposure of banks and the instruments. Credit risk is found to be the most serious risk, followed by liquidity risk, market risk and operational risk, in descending order of importance. As for the riskiness of Islamic financing modes, mudarabah is perceived to be the riskiest, followed by musharakah, while murabahah ranked as the least risky mode. Moreover, Islamic banks are found to use traditional risk management techniques more than sophisticated measurements. They also adopt risk mitigation techniques that are used by conventional banks in preference to techniques that are considered to be unique to Islamic banks. This paper is the first to study the risk management practices of Islamic banks operating in Bahrain. It also provides evidence about these practices after the global financial crisis that affected all countries, including Bahrain.


2010 ◽  
Vol 230 (5) ◽  
Author(s):  
Sandra Eickmeier

SummaryThe paper assesses the transmission of US supply, demand and monetary policy shocks between 1976 and 2008 based on a factor-augmented vector autoregressive model (FAVAR) which is applied to a newly constructed set of more than 200 German time series. The study not only assesses the transmission of US shocks to German GDP via impulse response analysis but also to a large number of variables capturing the various transmission channels. The inclusion not only of aggregate trade variables but also of variables covering trade with different partner countries/regions helps analyzing more deeply the trade channel, e. g. the role of direct trade versus trade with third countries. Another focus lies on the transmission of US shocks to specific industries such as the car and the machinery industries which were particularly severely affected by the global financial crisis. Finally, the role of US shocks for the most recent downturn in Germany is assessed based on a historical decomposition.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taslima Akther ◽  
Fengju Xu

Purpose This study aims to investigate the factors that enhance the credibility of and confidence in audit value. Design/methodology/approach Data were collected from 254 institutional investors through a questionnaire survey and were analyzed using partial least squares structural equation modelling (PLS-SEM). Findings The findings reveal that the two influential predictors of enhanced credibility and confidence are perceived auditor independence and improved auditor communication. Factors related to auditor–client affiliation, such as restrictions on providing non-audit services, mandatory auditor rotation and the presence of effective audit committees, are identified as creating the perceived independence. Improved auditor communication is linked with improving the audit report and ensuring audit education, thus creating more sophisticated users who better understand the scope and purpose of an audit. Furthermore, independent audit oversight acts as a moderator in the relationship between perceived auditor independence, improved auditor communication and enhanced credibility. Enhanced credibility can lead to greater confidence in audit value. Originality/value In the wake of the global financial crisis and loss of confidence in the role of auditors, this study investigates the factors that can enhance the credibility of and confidence in audit value, especially in a non-Anglo-American setting. This study is unique in terms of methodological development, as it uses a higher-order Type II reflective–formative model using PLS-SEM.


Author(s):  
Hasan Tekin

This chapter, first, draws an overview of the theoretical and conceptual framework of corporate decisions in the global financial crisis (GFC) context. Then, it shows the connectedness of corporate finance and international trade. Finally, employing a rich dataset, this chapter assesses the impact of international trade as well as the GFC on corporate financial decisions, particularly cash holdings, debt financing, and dividend payouts over the period 2002-2016. The findings show that international trade significantly affects corporate decisions. Firms with higher trade countries have higher debt level but lower cash and dividends across the globe. During the GFC, the positive impact of trade on debt shifts to negative. Also, trade has a positive effect on both cash and debt in the aftermath of the GFC. Taken together, international trade as an institutional setting influences corporate decisions and its role on cash, debt, and dividend differ during and after the GFC.


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