Editorial

2 pages, 157 KiB

Open AccessEditorial

Financial Technology (Fintech) and Sustainable Financing: A New Paradigm for Risk Management

by Sisira Colombage

J. Risk Financial Manag. 2023, 16(12), 502; https://doi.org/10.3390/jrfm16120502 - 05 Dec 2023

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Financial technology (fintech) is transforming the financial services industry, and its impact on sustainable financing is becoming increasingly profound [...] Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

Research

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12 pages, 1971 KiB

Open AccessArticle

RCML: A Novel Algorithm for Regressing Price Movement during Commodity Futures Stress Testing Based on Machine Learning

by Caifeng Liu, Wenfeng Pan and Hongcheng Zhou

J. Risk Financial Manag. 2023, 16(6), 285; https://doi.org/10.3390/jrfm16060285 - 25 May 2023

Viewed by 939

Abstract

Stress testing, an essential part of the risk management toolkit of financial institutions, refers to the evaluation of a portfolio’s potential risk under an extreme, but plausible, scenario. The most representative method for performing stress testing is historical scenario simulation, which aims to [...] Read more.

Stress testing, an essential part of the risk management toolkit of financial institutions, refers to the evaluation of a portfolio’s potential risk under an extreme, but plausible, scenario. The most representative method for performing stress testing is historical scenario simulation, which aims to evaluate historical adverse market events on the current portfolios of financial institutions. However, some current commodities were not listed in the commodity futures market at the time of the historical event, causing a lack of the necessary price information to revalue the current positions of these commodities. To avoid over reliance on human hypothesis for these non-existent commodity futures, we propose a novel approach, RCML, to infer reasonable price movements for commodities unlisted in historical events. Unlike the previous methods, based on subjective hypothesis, RCML takes advantage of not only machine learning algorithms, but also multi-view information. Back testing and hypothesis testing are adopted to prove the rationality of RCML results. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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14 pages, 418 KiB

Open AccessArticle

Digital Assets in the Eyes of Generation Z: Perceptions, Outlooks, Concerns

by Karol Król and Dariusz Zdonek

J. Risk Financial Manag. 2023, 16(1), 22; https://doi.org/10.3390/jrfm16010022 - 29 Dec 2022

Cited by 7 | Viewed by 4908

Abstract

The recent decade saw an explosion of digital assets and digitalisation of financial services. The present contribution poses several research questions incorporated into a survey questionnaire and grouped into two categories: (1) associations with, knowledge of, and familiarity with notions relevant to digital [...] Read more.

The recent decade saw an explosion of digital assets and digitalisation of financial services. The present contribution poses several research questions incorporated into a survey questionnaire and grouped into two categories: (1) associations with, knowledge of, and familiarity with notions relevant to digital assets and (2) perceptions of digital assets and attitude towards investing in them. Invitations to participate were sent to a group of 570 random representatives of Generation Z with 387 correctly completed questionnaires employed in the study. The research demonstrated that it was not insufficient funds that posed the greatest barrier to the growth in digital assets investments. The respondents justified their concerns about digital assets with poor knowledge of cryptocurrencies and non-fungible tokens (NFTs). The scepticism is fuelled mostly by the nontangible nature of digital assets (approx. 23%). The respondents most commonly (123, approx. 47%) associated NFTs with digital works of art, virtual objects, and NFT graphics. Blockchain most often brought to the minds of the respondents databases, algorithms, data recording, transaction data transfer, data cloud transactions, cryptocurrencies, cryptography, and decentralised financial systems. The research seems to suggest a certain difficulty with representing (characterising) the digital ecosystem and virtual reality. The media narrative emphasises the intangible nature of the digital ecosystem, often depicting it as impalpable and unreal, which does not help with how prospective investors view it. Some recommendations emerge from the research that should be considered when drawing a strategy for presenting digital assets, cryptocurrencies, and NFT markets. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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16 pages, 858 KiB

Open AccessArticle

The Moderating Effect of Perceived Risk on Users’ Continuance Intention for FinTech Services

by Kshitiz Jangir, Vikas Sharma, Sanjay Taneja and Ramona Rupeika-Apoga

J. Risk Financial Manag. 2023, 16(1), 21; https://doi.org/10.3390/jrfm16010021 - 29 Dec 2022

Cited by 55 | Viewed by 3700

Abstract

The study’s aim is to investigate how FinTech users’ perceived risk influences their continuance intention to use FinTech services. The new model, which was based on the Expectation Confirmation Model, was created to achieve the study’s aim. The Partial Least Square Structural Equation [...] Read more.

The study’s aim is to investigate how FinTech users’ perceived risk influences their continuance intention to use FinTech services. The new model, which was based on the Expectation Confirmation Model, was created to achieve the study’s aim. The Partial Least Square Structural Equation Model was used to investigate the proposed model and the relationship between the adopted constructs. The sample consists of 802 individual survey responses from northern India from April to June 2022. The proposed model explains 45.4% of the variance in the continuance intention of FinTech users, which is significantly influenced by perceived usefulness and satisfaction. Furthermore, perceived risk, as a moderator, significantly moderates continuance intention through satisfaction and satisfaction through confirmation. However, perceived risk was found to have an insignificant moderating effect on the relationship between perceived usefulness and satisfaction as well as perceived usefulness and continuance intention. The findings provide insights to FinTech service providers about the factors that influence users’ intent to continue using FinTech services. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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15 pages, 4233 KiB

Open AccessArticle

Do Stock Market Volatility and Cybercrime Affect Cryptocurrency Returns? Evidence from South African Economy

by Nosipho Mthembu, Kazeem Abimbola Sanusi and Joel Hinaunye Eita

J. Risk Financial Manag. 2022, 15(12), 589; https://doi.org/10.3390/jrfm15120589 - 07 Dec 2022

Viewed by 1603

Abstract

The study investigates the effects of stock market volatility and cybercrime on cryptocurrency returns in the South African economy. Daily time series data on four different types of cryptocurrencies (Bitcoin, Ethereum, Tether, and BMB) were employed. The data covers the period from 1 [...] Read more.

The study investigates the effects of stock market volatility and cybercrime on cryptocurrency returns in the South African economy. Daily time series data on four different types of cryptocurrencies (Bitcoin, Ethereum, Tether, and BMB) were employed. The data covers the period from 1 January 2019–31 December 2021. The study employed the dynamic conditional correlation (DCC GARCH) and Bayesian liner regression model to investigate time-varying correlations among the variables. Empirical findings suggest that stock market volatility has a positive impact on the returns of BNB, Bitcoin, and Ethereum. However, it has a negative impact on Tether. Expectedly, cybercrime poses negative impacts on the returns of BNB, Bitcoin, and Ethereum but could be said to have no impact on the returns of Tether. The study concludes that ongoing efforts to reduce cybercrime activities need to be strengthened to further the use of digital currencies. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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13 pages, 290 KiB

Open AccessArticle

Analyzing Safe Haven, Hedging and Diversifier Characteristics of Heterogeneous Cryptocurrencies against G7 and BRICS Market Indexes

by Manoel Fernando Alonso Gadi and Miguel-Angel Sicilia

J. Risk Financial Manag. 2022, 15(12), 572; https://doi.org/10.3390/jrfm15120572 - 01 Dec 2022

Cited by 3 | Viewed by 1984

Abstract

Cryptocurrency markets have experienced large growth in recent years, with an increase in the number and diversity of traded assets. Previous work has addressed the economic properties of Bitcoin with regards to its hedging or diversification properties. However, the surge of many alternatives, [...] Read more.

Cryptocurrency markets have experienced large growth in recent years, with an increase in the number and diversity of traded assets. Previous work has addressed the economic properties of Bitcoin with regards to its hedging or diversification properties. However, the surge of many alternatives, applications, and decentralized finance services on a variety of blockchain networks requires a re-examination of those properties, including indexes from outside the big economies and the inclusion of a variety of cryptocurrencies. In this paper, we report the results of studying the most representative cryptocurrency of each consensus mechanism by trading volume, forming a list of twenty-four cryptocurrencies from the 1st of January 2018 to the 30th of September 2022. Using the Baur and McDermott model, we examine hedge, safe haven, and diversifier properties of all assets for all G7 country’s major indexes as well as all BRICS major indexes breaking it down by two attributes: kind of blockchain technology and pre/during COVID health crisis. Results show that both attributes play an important role in the hedge, safe haven, and diversifier properties associated with the asset. Concretely: stablecoins appear to be the only ones to maintain hedge property in most analyzed markets pre- and during-COVID; Bitcoin investment properties shifted after the COVID crisis started; China and Russia stopped being correlated with the cryptocurrency after the COVID crisis hit. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

10 pages, 291 KiB

Open AccessArticle

Information and Communication Technology Adoption and Life Insurance Market Development: Evidence from Sub-Saharan Africa

by Athenia Bongani Sibindi

J. Risk Financial Manag. 2022, 15(12), 568; https://doi.org/10.3390/jrfm15120568 - 30 Nov 2022

Cited by 6 | Viewed by 1958

Abstract

As part of the Fourth Industrial Revolution (4IR), blockchain, fintech (financial technology), and insurtech (insurance technology) are some innovations that have been rolled out in the financial landscape and have captured the imaginations of policymakers and scholars alike. The African continent lags in [...] Read more.

As part of the Fourth Industrial Revolution (4IR), blockchain, fintech (financial technology), and insurtech (insurance technology) are some innovations that have been rolled out in the financial landscape and have captured the imaginations of policymakers and scholars alike. The African continent lags in embracing technology and is still grappling with financial access and enhancing financial inclusion. As such, it is bewildering whether African insurance markets are at a stage where they can leverage the possibilities offered by the 4IR. Against this backdrop, the aim of the study was to investigate whether information communication technology (ICT) adoption influences the development of African life insurance markets. We utilised a sample of 31 sub-Saharan African countries for the period 2005–2020. Panel data techniques were employed, and the pooled ordinary least squares, fixed effects, and random effect estimators were used to test the relationship between life insurance density and the measures for ICT adoption (proxied by fixed telephones, internet use, mobile cellular telephones, and broadband) as well as financial freedom being the control variable. We found that the life insurance market development variable was positively related to three of the four ICT adoption variables, namely, fixed telephone, mobile cellular telephone, and broadband. Further, the life insurance market development variable is positively related to the financial freedom variable. These findings suggest that ICT adoption fosters the development of the life insurance market in Africa. The findings also lend credence to the view that the degrees of financial freedom of insurance companies (who are unencumbered by regulations) have a bearing on the levels of insurance sales and, hence, promote life insurance access in Africa. The policy imperatives that flow from this study are that African governments must ensure that they (1) institute ICT adoption-friendly policies and (2) regulate the life insurance sector optimally, in order to foster the development of their life insurance sectors. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

Review

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23 pages, 5338 KiB

Open AccessReview

Tracing Knowledge Diffusion Trajectories in Scholarly Bitcoin Research: Co-Word and Main Path Analyses

by Abderahman Rejeb, Karim Rejeb, Khalil Alnabulsi and Suhaiza Zailani

J. Risk Financial Manag. 2023, 16(8), 355; https://doi.org/10.3390/jrfm16080355 - 27 Jul 2023

Cited by 2 | Viewed by 1467

Abstract

In the burgeoning field of bitcoin research, a cohesive understanding of how knowledge and insights have evolved over time is lacking. This study aims to address this gap through an exploration of 4123 academic articles pertaining to bitcoin. Utilizing co-word analysis and main [...] Read more.

In the burgeoning field of bitcoin research, a cohesive understanding of how knowledge and insights have evolved over time is lacking. This study aims to address this gap through an exploration of 4123 academic articles pertaining to bitcoin. Utilizing co-word analysis and main path analysis (MPA), it uncovers key themes and seminal works that have substantially influenced the field’s progression. The identified clusters, including safe haven, internet of things (IoT), proof of work (PoW), market efficiency, sentiment analysis, digital currency, and privacy, shed light on the multifaceted discourse surrounding bitcoin. The MPA, incorporating both forward and backward local paths, traces an evolving narrative, starting from an in-depth exploration of bitcoin’s structure, anonymity, and contrasts against traditional financial assets. It tracks the shift in focus to broader market dynamics, volatility, speculative nature, and reactions to economic policy fluctuations. The analysis underscores the transformation of bitcoin research, from its beginnings as a decentralized, privacy-oriented currency to its role in global economics and green financing, revealing a complex narrative of an innovative financial instrument to a multifaceted entity. Implications drawn from this analysis include the need for further research on the potential integration of bitcoin within emerging technologies like AI and cybersecurity, the implications of bitcoin’s interplay with traditional financial systems, and the environmental impacts of bitcoin and blockchain utilization. Overall, the current study not only enhances our understanding of the bitcoin field but also charts its dynamic evolution and stimulates further academic inquiry. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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18 pages, 4207 KiB

Open AccessReview

Towards a Truly Decentralized Blockchain Framework for Remittance

by Kevin Coutinho, NeerajKumari Khairwal and Pornpit Wongthongtham

J. Risk Financial Manag. 2023, 16(4), 240; https://doi.org/10.3390/jrfm16040240 - 12 Apr 2023

Cited by 2 | Viewed by 3444

Abstract

Blockchain is a revolutionary technology that is constructively transforming many traditional industries, including financial services. Blockchain demonstrates immense potential in bringing substantial benefits to the remittance industry. Although the remittance industry has crossed the mark of USD 600 billion in 2021, remittance cost [...] Read more.

Blockchain is a revolutionary technology that is constructively transforming many traditional industries, including financial services. Blockchain demonstrates immense potential in bringing substantial benefits to the remittance industry. Although the remittance industry has crossed the mark of USD 600 billion in 2021, remittance cost is still substantially high, around 6% on average, indirectly limiting financial inclusion and promoting de-risking. The involvement of multiple intermediaries in global remittances makes cross-border payments more expensive. Many projects, including Ripple and Stellar, employ blockchain technology to provide alternative infrastructure for cross-border payments. However, the decentralization of blockchain networks in both solutions is debatable. This paper examines the market characteristics impacting remittance cost, a prominent factor driving the evolution of the remittance industry. A truly decentralized blockchain framework viz. LayerOneX, which provides remittance services at a reduced cost, is proposed in this paper. Devices with low computation and memory capacity can act as transaction validators in this solution. A universal wallet across homogeneous and heterogeneous blockchains is proposed to facilitate fast and inexpensive remittance services. Thus, a novel framework for true decentralization of blockchain-based remittance services, resulting in reduced cost and, therefore, better financial inclusion, is proposed in this paper. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing Volume II)

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