Financial risks of the stock market: opportunities and specifics of their insurance
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Author(s)Inna ShkolnykLink to ORCID Index: https://orcid.org/0000-0002-5359-0521
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Eugenia BondarenkoLink to ORCID Index: https://orcid.org/0000-0003-0525-6948
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Ievgen BalatskyiLink to ORCID Index: https://orcid.org/0000-0001-7039-1009
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DOIhttp://dx.doi.org/10.21511/ins.10(1).2019.03
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Article InfoVolume 10 2019, Issue #1, pp. 26-35
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- 1001 Views
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296 Downloads
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Creative Commons Attribution 4.0 International License
The Ukrainian stock market is rated as an emerging market, which is characterized by high profitability and higher risk level as compared to developed economies. Securities transactions on the Ukrainian stock market are accompanied by stable uncertainties. Moreover, insurance is the most effective way to reduce financial risks and their negative effects. Given the current economic and political instability, financial risk insurance can ensure the economic performance of business entities and stimulate their further economic development. Financial risk insurance is the liability insurance in its nature, but its terms are often included in property insurance. This insurance sector has considerable facilities, which require activation of new insurance products that will be able to protect individual and institutional investors. Insurance and stock markets are direct competitors for limited investor resources, including strategic sources such as temporarily free institutional investor funds and household savings. In general, although there is a significant interaction between the insurance and other financial markets in Ukraine, it is hardly realized at all, unlike foreign economies, where it is used to its maximum. With the development of the insurance culture of the population and insurance in general, the relevance of insurance services in a high-risk segment like the stock market increases. The article harmonizes types of financial risks arising on the stock market with the methods of their leveling (insurance, hedging, diversification, etc.), determines the risk factors of the investor in the stock market, and specifies the professional risks of financial institutions. For the Ukrainian stock market participants, the use of two types of insurance coverage, namely, Bankers Blanket Bond and Financial Institution Professional Indemnity, is proposed.
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JEL Classification (Paper profile tab)G10, G22, G28
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References14
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Tables1
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Figures0
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- Table 1. Possible methods for neutralizing financial risks on the stock market
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Evaluation of empirical attributes for credit risk forecasting from numerical data
Investment Management and Financial Innovations Volume 14, 2017 Issue #1 pp. 9-18 Views: 3539 Downloads: 1425 TO CITE АНОТАЦІЯIn this research, the authors proposed a new method to evaluate borrowers’ credit risk and quality of financial statements information provided. They use qualitative and quantitative criteria to measure the quality and the reliability of its credit customers. Under this statement, the authors evaluate 35 features that are empirically utilized for forecasting the borrowers’ credit behavior of a Greek Bank. These features are initially selected according to universally accepted criteria. A set of historical data was collected and an extensive data analysis is performed by using non parametric models. Our analysis revealed that building simplified model by using only three out of the thirty five initially selected features one can achieve the same or slightly better forecasting accuracy when compared to the one achieved by the model uses all the initial features. Also, experimentally verified claim that universally accepted criteria can’t be globally used to achieve optimal results is discussed.
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The determinants of liquidity risk of commercial banks in Vietnam
Tu T. T. Tran ,
Yen T. Nguyen ,
Thuy T.H. Nguyen ,
Long Tran
doi: http://dx.doi.org/10.21511/bbs.14(1).2019.09
Banks and Bank Systems Volume 14, 2019 Issue #1 pp. 94-110 Views: 1956 Downloads: 1188 TO CITE АНОТАЦІЯThis research identifies factors that explain the liquidity of commercial banks in the Vietnam banking system from 2010 to 2015. Using the OLS regression method for analysis, it was found that:
- the interbank market helps commercial banks improve their liquidity;
- the larger the loan size, the higher the liquidity risk;
- good credit risk management has a positive impact on liquidity risk management; and
- long-term interest rate is negatively related to the liquidity of commercial banks.
The research also makes recommendations on liquidity risk management policies to banks and policy-makers from the Government and the State Bank of Vietnam.
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The impact of credit risk and macroeconomic factors on profitability: the case of the ASEAN banks
Myra V. De Leon
doi: http://dx.doi.org/10.21511/bbs.15(1).2020.03
Banks and Bank Systems Volume 15, 2020 Issue #1 pp. 21-29 Views: 1860 Downloads: 642 TO CITE АНОТАЦІЯThis study investigates the effect of credit risk and macroeconomic factors on profitability of 20 ASEAN banks, particularly from Indonesia, Malaysia, Thailand and Philippines, covering the period of 2012 to 2017. The unbalanced panel data were tested for heteroscedasticity and normality. A fixed effects model and a random effects model were utilized followed by simple ordinary least squares (OLS) regression. The obtained results show that credit risk and GDP growth negatively affect Return on Equity (ROE) at 5% level of significance. The inflation rate increases ROE by 0.323%. In terms of influence, inflation has the highest impact on ROE followed by GDP growth and credit risk. Credit risk and GDP growth negatively affect Return on Assets (ROA) at 5% level of significance. ROA was also influenced by an increase in inflation rate. Therefore, this study will help banks and bank managers, depositors, investors, policy makers and governments to identify factors affecting bank profitability.
