Journal of Financial Risk Management

Journal Information
ISSN / EISSN : 2167-9533 / 2167-9541
Current Publisher: Scientific Research Publishing, Inc. (10.4236)
Total articles ≅ 194
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Latest articles in this journal

Meiyi Zhou, Lianqian Yin
Journal of Financial Risk Management, Volume 9, pp 23-43; doi:10.4236/jfrm.2020.91002

Riad Makdissi, Anita Nehme, Rachelle Chahine
Journal of Financial Risk Management, Volume 9, pp 1-22; doi:10.4236/jfrm.2020.91001

Entrepreneurs are faced with complex financial decisions to turn their businesses around. They make financial decisions in the form of savings, investment and retirement planning, which makes financial culture crucial in business financing decisions and subsequent performance. Decisions made by SME owners need to be madse with a certain level of expertise, which requires financial knowledge, behaviors and attitudes that will enhance the financial performance of the business. The purpose of this research is to know the influence of financial culture on the SMEs’ financial performance in Lebanon. The survey made it possible to deduce the relationship between the financial culture and the financial performance.
Michael Asiedu, Emmanuel Owusu Opong, Orazgylyjova Gulnabat
Journal of Financial Risk Management, Volume 9, pp 252-267; doi:10.4236/jfrm.2020.93014

For a better insight and understanding of how monetary policy and the financial market in less developed countries such as those in Africa are interrelated; there is a need to also understand and appreciate the fundamentals of these economies and the associating imperfections within their financial systems due to the fact that they are less liberalized, relatively young, highly illiquid, logistically constrained among others. This study is a comprehensive analysis of the dynamics in stock market performance following changes in monetary aggregates in ten (10) selected African countries from 1993 to 2019. We adopted three stock market performance indicators; namely S & P global equity index, stock turnover and stock market capitalization as dependent variables and inflation, broad money growth, exchange rate, real interest rate and commercial bank and lender serving as independent variables. We then employed the random effect model based on our results from the Hausman test and VECM after co-integration was established among the variables. The study established the presence of a monetary transmission mechanism following changes in money supply. We found that growth in broad money positively affects the stock market performance through the interest rate channel. Interest rate and inflation recorded negative effects on stock market performance indices. We also found that changes in monetary policy are highly significant in stock market performance in the West African market due to the relatively high level financial openness in the countries under consideration.
Pancheng Qu
Journal of Financial Risk Management, Volume 9, pp 126-140; doi:10.4236/jfrm.2020.92007

The stock price is always an interesting topic. On the one hand, from intuition, the stock price of bank is relatively stable since bank usually does not take risk behavior. From 2007 to 2014, the price of stock of Bank of American is relatively stable by checking the RRV (relative realized volatility). There is only one day has relatively high RRVs during 2007 to 2014. The date May 6th 2010, which called crash day, is a special day that needs to analyze separately. On the other hand, to find the pattern of frequency of trading, there are different sample sizes tested and compared with Poisson distribution. The result is that we can use Poisson distribution to predict probability of no arrival trade when second gap is relatively small. In addition, when plotting the daily 100 seconds accumulated RV (realized volatility) and daily average RV, there was found strong linear relationship between these two variables. In the end, using the Heston model to verify if there exist linear relationship between daily average and mean reversion rate. Then comparing trend of alpha with weekly VIX from Yahoo Finance. When using 5 days as a period to calculate the daily average RV and mean reversion rate, the significance of linear relationship is stronger. It proved the statistic intuition that larger sample size tends to decrease the volatility. The overall trend of VIX from Yahoo Finance is similar to the shape of five-day period alpha.
Ernest Yeboah Boateng, Paul K. Yeboah, Isaac Christopher Otoo, Joseph Otoo
Journal of Financial Risk Management, Volume 9, pp 377-389; doi:10.4236/jfrm.2020.94020

The Vector Error Correction (VEC) model was used to assess the impact of monetary policy rate on commodity prices in Ghana. Monthly data on monetary policy rate, commodity prices of cocoa, gold and crude oil from January 2005 to December 2017 obtained from the Bank of Ghana was used for the study. The estimated VEC model aided in establishing long and short run relationships between monetary policy rates and the major commodity prices in Ghana. The study revealed that in the long run, monetary policy rates are negatively correlated to crude oil prices, positively correlated to both cocoa prices and gold prices but to a little extent. It was also evident from the study that in the short run, the first lag of monetary policy rate is negatively related to itself and the second lag of monetary policy rate is positively related to itself. Additionally, the first and second lagged periods of cocoa price have positive influence on monetary policy rate in the short run, but the first and second lagged periods of gold price have negative influence on monetary policy rates in the short run. The Granger causality test also reveals that the movement of cocoa prices in Ghana can be explained to cause the movement of monetary policy rates and gold prices in short run. A positive shock in monetary policy rate will have a positive and persistent effect on itself. Likewise, positive shock in monetary policy rate will have a positive and persistent effect on cocoa prices. The response generated from a positive shock on monetary policy rate has a persistent and decreasing effect on both crude oil and gold prices.
Ester Agasha, Gladness Monamesti, Tshepo Feela
Journal of Financial Risk Management, Volume 9, pp 155-177; doi:10.4236/jfrm.2020.92009

The primary purpose of this study was to examine the loan portfolio quality of Uganda’s Microfinance institutions. Specifically, the study investigated respondents’ perception of capital structure, cost of capital, credit risk management, and quality of clientele base and their impact on loan portfolio quality. The study adopted an exploratory research design. The point of saturation was achieved after 16 managers (10 credit managers and 6 senior managers) were interviewed. Data were analyzed using content analysis techniques with the aid of NVivo version 12 software, and verbatism tests were used to explain the emergent themes. The findings indicate that capital structure was perceived as internal and external funding, cost of capital was perceived as pricing of funds, credit risk management was perceived as client/borrower engagement, quality of clientele base was perceived as social capital and loan portfolio quality was perceived as repayment. The findings suggested that funding, pricing of funds, client/borrower engagement, and social capital influence loan repayment. The study recommends that MFIs should source for affordable lines of credit, employ competent staff, ensure due diligence, further financial education, and ensure client sensitization. The study confirmed the relevance of the Modern Portfolio Theory in explaining loan portfolio quality. Future studies could investigate the loan portfolio quality of Microfinance Institutions in Sub Saharan Africa to find out whether the results would be similar.
Kafeel, Javed Ali, Maaz Ud Din, Abdul Waris, Muhammad Tahir, Sher Khan
Journal of Financial Risk Management, Volume 9, pp 494-517; doi:10.4236/jfrm.2020.94027

This paper examines the impact of working capital management on firm’s profitability performance of manufacturing firms by using not only static models such as ordinary least square (OLS), fixed and random effects but also dynamic models difference generalized method of moments (GMM) and system generalized method of moments (SGMM) over the period from 2007 to 2018. The performance was measured in terms of profitability by return on the asset as a dependent variable and the working capital management was determined by inventory conversion cycle (ICP), receivable collection period (RCP), payable deferral period (PDP) and cash conversion cycle (CCC) as an explanatory variables. This study only presents the results of System GMM model, due to efficient system estimator and producing statistically significant outcome. The results show that inventory conversion period (ICP) and payable deferral period (PDP) have a positive relationship with return on asset while the cash conversion cycle (CCC) has a negative effect on return on assets, whereas receivable collection period (RCP) is positive but statistically insignificant. This paper results suggest that pay suppliers prolong and collecting payments from customers earlier, moreover cement firms could add value by improving their cash conversion cycles. Furthermore, managers can create value for shareholders by reducing inventory and receivable accounts. This paper adds new knowledge to current literatures by examining the effect of working capital management on profitability in the context of an emerging capital market of Pakistan.
Yufan Yang
Journal of Financial Risk Management, Volume 9, pp 44-55; doi:10.4236/jfrm.2020.91003

Yuhui Li, Yijun Chen
Journal of Financial Risk Management, Volume 9, pp 141-154; doi:10.4236/jfrm.2020.92008

With the acceleration of economic integration, the development of Internet platform, big data technology, and the elimination of “liquor production line” from the restricted category, the development of Sichuan liquor industry is bound to usher in a new trend. This paper analyzes the current situation of Sichuan liquor industry development, and then based on Porter diamond theory, analyzes the competitiveness of Sichuan liquor industry, on this basis, combined with the Haken synergy theory, constructs an evaluation model to measure the competitiveness of Sichuan liquor industry. This will lay a foundation for the evaluation of the competitiveness of Sichuan liquor industry and the path to enhance the competitiveness of Sichuan liquor industry in the future, so as to promote the high-quality and sustainable development of Sichuan liquor industry. At the same time, it also provides reference for other regions or China’s liquor industry competitiveness evaluation.
Vanessa Seipp, Alex Michel, Patrick Siegfried
Journal of Financial Risk Management, Volume 9, pp 229-251; doi:10.4236/jfrm.2020.93013

Major financial institutions operate in different regions of the world facing different regulatory landscapes for Supply Chain risks. In this environment, the optimization issue arises how to best comply with the different regulations and reaching cost efficiency at the same time. In this research, the international regulatory landscape for Supply Chain risks of Financial Institutions is introduced and compared internationally. It is understood as an integral part of Supply Chain Risk Management of Financial Institutions, yet the latter is analysed as the research background. Additionally, expert interviews are conducted in order to link the regulation analysis to the current challenges that Financial Institutions face. Finally, recommendations are developed on how banks can be cost efficient, while remaining regulatory compliant, facing increased international regulation in the area of Supply Chain Risk Management. The outcome of the underlying research shows that banking regulation in the area of Supply Chain risks is an important lever in the banking sector to secure customers and financial markets. However, the regulatory landscape is heterogeneous and not consistent on an international scale. Regulation in Asia is highly diverse across different countries due to different states of economic development. The US applies a rather pragmatical approach towards supply chain risk regulation applying different standards of standard setting institutions. Lastly, the EU is very restrictive and strives to unify regulation across member states. Banks should follow a consistent management approach keeping in mind international locations and the strictest regulatory environment they are operating in, to improve cost efficiency yet being regulatory compliant. Also, collaboration with and amongst regulators and other banks internationally is recommended for improved cost efficiency.
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