Frontiers of Finance

A Note on Robertson and Tsiang versus Keynes

2024-06-21T14:45:29+08:00

This paper examines the Robertson/Tsiang explanation of the Savings-Investment/Loanable-Funds theory of interest that is used by mainstream economists to justify the use of this theory to analyze, predict, or explain economic behavior. It is demonstrated that, contrary to what is generally assumed, Tsiang does not reconcile the Robertson/Keynes controversy in Robertson’s favor in that Tsiang was confused as to what Keynes actually said with regard to this controversy. It is further demonstrated that Tsiang did not understand the nature of his own model in that the Loanable-Funds theory as specified by Tsiang implies that the rate of interest is a purely monetary phenomenon, determined directly by the supply and demand for the stock of money in his model, not by the flow of loanable funds or the flow of savings and investment. It is argued that the fundamental difference between Robertson and Keynes that led to the confusion that exists to this day is that Robertson’s method of analysis was comparative static while Keynes’ method of analysis was causal and dynamic. It is further argued that while comparative static analysis has proven to be an extremely valuable analytic tool in economics when it is used in conjunction with the kind of causal/dynamic analysis employed by Keynes to explain how and why the static equilibrium values are obtained, when it is not used in this way the result is the kind of arguments employed by those who defend the loanable-funds theory, namely, arguments that are, at best, semantic and, at worst, border on ideological sophistry.

Reilly’s gravity law adapted to finance

2024-06-21T14:41:39+08:00

The present paper proposes new indicators that explain the pricing of the unitary pure interest rates and interests by adapting previous Reilly’s Law (RL) models of urban economics and regional economics and Financial Gravity (FG) models for financial services. A panel dataset of 114 countries for 1967-2021 is handled, applying the OLS methodology. The results show the higher explanatory power of the adaptation of the FG models rather than the proposed adaptation of the RL ones.

Purpose: This paper tries to adapt previous Gravity Equations from Urban Economics to Finance and empirically checks whether they behave better than the recently found Financial Gravity (FG) models. For that, new indicators are provided jointly with their adaptations to Ordinary Least Square (OLS) methods. Additionally, an economic perspective of the bid-asks of financial products is provided.

Design/methodology/approach: OLS methods are used to check the desirability and accuracy of the new indicators. A panel dataset of 114 countries for 1967-2021 is handled, applying the OLS methodology.

Findings: The most adequate are the FG models after the empirical check, providing the desirable properties of those models. The results show the higher explanatory power of the adaptation of the FG models rather than the proposed adaptation of the RL ones.

Originality: This is the first paper, to the author’s knowledge, on providing an adaptation of Reilly’s Law from urban economics models to finance, also providing empirical evidence after adapting these models to linear expressions for applying OLS methods. We also provide evidence on the statistical equality between the unitary pure interest of loan and deposit interests, confirming the good properties of the FG models.

Bank-specific factors affecting the profitability of public sector banks in India: A dynamic panel approach

2024-06-21T14:39:18+08:00

Profitability of commercial banks is always under spotlight because of the immensely important role it plays in affecting country’s economic development as well as the life and living of the country men. Naturally, the factors which might have bearings on its performance assume great significance to banking administration and policy makers. This study desires to identify these factors in case of public sector commercial banks of India. Taking the data of all public sector commercial banks over the period 2000 to 2017, we have applied GMM estimation technique developed by Arellano and Bover, to investigate the bank-specific factors which have influential role in the profitability of Indian banks. Estimation results indicate that banking performance measured in terms of return on assets (ROA) and net interest margin (NIM) is significantly influenced by asset management, operating efficiency, loan quality and employees’ performance. Capital adequacy ratio also has significant contribution on ROA while, asset size leaves no significant impact on ROA and NIM. The results arrived in this study may be used to frame appropriate policy decisions for the development of the public sector banks of India.

The precision marketing of B2C e-commerce in China based on computer

2024-06-25T09:45:53+08:00

With depth development of business activities in the network, the marketing activities are also emerging. In recent years, precision marketing has become a common tendency of more and more e-commence enterprises. However, the current research focus on a specific area, with lack of comprehensive research. In view of this phenomenon, the research makes precision marketing in electronic commerce as a whole object of study, provides the theory and practice for precision marketing in electronic commerce area. This research main including literature review and research analysis two parts. Literature review works primarily introduce the theory of electronic commerce, the research and development of precision marketing and theory conducive to precision marketing. The research further makes the empirical study on precision marketing for JD. The research introduces the precision marketing measurement of JD in product, technology, marketing strategies, customer relationship management and logistics and other aspects. In addition, a survey is designed to determine the consumer purchase willingness impact factors, the research further conducts a quantitative analysis of precision marketing influence on the consumer purchase willingness, the analysis result is used to determine the key factors of precision marketing. Based on the quantitative analysis and qualitative analysis, the research provide the marketing strategy for e-commence enterprise. Finally, the research concludes the common precision marketing strategy in China, pointing out the limitation and future research direction of the research.

Impact of foreign ownership on stock return volatility of financial firms in Vietnam

2024-07-01T11:08:54+08:00

The paper investigates the impact of foreign ownership on the stock return volatility of financial firms in Vietnam. Applying panel regression models on a year-end research sample of 23 banks and financial firms listed on stock exchanges in Vietnam from 2017 to 2022, the study assures the negative relationship between foreign ownership and the stock return volatility, implying that increasing foreign ownership reduces the volatility of stock returns of financial firms. Our study’s novelty is reflected in following aspects. First, our study, examining about the foreign ownership's impact on stock returns’ volatility in emerging stock market conditions, will enrich this research field by contributing additional empirical evidence to the field through a concrete and well-designed research. Additonally, our research findings not only provide useful information about the volatility of those influential shares in mentioned industries coupled with its determinants but also support investors and policymakers in making investment decisions informedly as well as reviewing suitable regulations for investors and capitals from foreign countries, which is a critical aspect in helping Vietnam's stock market to expand more steadily and sustainably.