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SMEs play a crucial role for inclusive development, but their growth is often hampered by lacking access to finance. This paper explores whether capital markets can be harnessed to foster SME finance. Given the negligible use of market-based financing by SMEs, it is analysed to what extent capital market development indirectly alleviates SMEs' financing constraints by improving their access to loans. Thus, the study builds on the theoretical model by Song and Thakor (2010), which consolidated the view that markets and banks are complementary and co-evolve. Using a modification of the analysis framework by Rajan and Zingales (1998) for 68,712 firm-level observations from 50 mostly low- and middle-income countries for 2006-2019, it empirically investigates the central prediction of Song and Thakor (2010) that capital market development is associated with an increase in bank lending, in particular, towards smaller and riskier firms. I find a positive and significant effect; in support of Song and Thakor (2010), the effect runs through increased capital market usage by financial institutions and expanded loan availability. The findings underline that markets and banks co-evolve and that the most important contribution of capital markets to SME finance is their indirect effect on bank lending and loan availability. [ABSTRACT FROM AUTHOR]

For decades, the data-centric digital circuits of global finance have been driving financial markets toward algorithmic management. The penetration of algorithms into finance dates back to the 1980s, well before becoming a significant trend in Internet and social media companies. AI is now considered the new frontier of this process. This paper examines Brazil, the most important financial center in Latin America, as a case study to explore Machine Learning applications in capital markets, providing new evidence on the penetration of automated trading systems in the region. Grounded in a historical overview of the digitalization of capital markets in Brazil, the paper draws on the STS definition of infrastructures and the political economy of digitalized finance to analyze AI as an emerging financial infrastructure. Beyond its physical and material aspects, this approach also addresses how digitalization and AI relate to financialization and the emergence of new financial risks. [ABSTRACT FROM AUTHOR]

This study investigates the impact of significant wildfires from 2019 to 2022 on nine sectors within the US capital markets, utilizing a dataset encompassing 161 wildfires. Employing a combination of parametric and nonparametric tests, alongside regression analysis, the research scrutinizes how capital markets in distinct sectors respond to wildfire events, revealing nuanced effects. In sectors directly impacted, the insurance industry displays sensitivity to fire costs, with explicit country or event mentions correlating with sustained returns. Conversely, the real estate sector experiences diminished returns during prolonged wildfires, while the forestry and timber industry exhibits heightened sensitivity to fire costs, especially when ignited by lightning. Within indirect impact sectors, the health industry shows vulnerability to fire-related fatalities, with subsequent negative correlations with country mentions. In the food industry, fire costs contribute positively to returns, while duration and size yield negative effects. The transportation industry witnesses a gradual decline in returns, escalating with the number of fire days or associated costs. In resilience and mitigation sectors, utilities demonstrate recovery post-wildfires, contrasting with consistent declines in the energy sector. Among interconnected sectors, the travel and tourism industry sees increased returns tied to the number of victims, with events caused by human actions having a more pronounced impact. This research underscores the significance of tailored risk assessment and mitigation strategies, offering valuable insights for investors and policymakers navigating the intricate relationship between environmental events and financial markets. [ABSTRACT FROM AUTHOR]

Deferred taxes emerge from timing differences in recognizing income and expenses between commercial and tax financial statements. However, the capitalization of deferred tax assets remains contentious, with questions raised about their value relevance to investors. This study aims to investigate the informational value and economic significance of deferred tax assets in financial statements prepared in accordance with both German commercial law (HGB) and International Financial Reporting Standards (IFRS). The analysis is based on financial data from 1,066 firm-year observations of HDAX-listed companies from 2000 to 2022. Using an Ordinary Least Squares (OLS) regression model, the study examines the relationship between deferred tax assets and the market value of equity. Key financial variables, including research and development expenses, deferred tax liabilities, net income, and the market-to-book ratio, are incorporated to provide a comprehensive assessment of deferred tax asset relevance in capital markets. The results demonstrate that deferred tax assets have a negligible impact on the market value of companies, with no statistically significant effect detected. Conversely, research and development costs, as well as net income, exhibit a strong positive influence on firm valuation. These findings suggest that deferred tax assets serve largely as an accounting mechanism, lacking informational value for investors.

Access to capital is critical to business growth and productivity, yet female business owners are less likely to receive formal financing. Using a large-scale field experiment in Ethiopia, we show that gender discrimination by financial providers is unlikely to be a key contributor to this gap, and that there is no meaningful trade-off between gender equity and allocating capital to high-performing businesses. We study whether finan- cial providers discriminated against female owners in a high-stakes capital allocation decision affecting real businesses in a national business plan competition. In a sample of 3,696 evaluations, we find no evidence that randomly assigned business-owner gender affected capital allocation decisions, neither for the competition prizes nor for consid- eration for a loan. Our confidence intervals are tight enough to exclude any meaningful gender discrimination in these decisions. Consistent with the lack of discrimination, an incentivized belief elicitation revealed that randomly assigned business-owner gender did not affect financial providers’ beliefs about future business performance. Using a machine learning algorithm to predict actual business performance 18 months after the competition, we find that considering gender indeed does not improve targeting of capi- tal towards high-performing businesses. The results provide support for the theoretical prediction that discrimination will not persist when it is not profit maximizing.

The article is devoted to a comprehensive analysis of the process of implementation of the European Union (EU) acts in the field of capital markets into Ukrainian legislation. The author examines the international legal basis of this process and describes the main stages of Ukraine’s relations with the EU in relation to the approximation of Ukrainian legislation to the EU acquis. The author also examines the key documents that define the relations between Ukraine and the EU in the context of European integration, including the 1994 EU-Ukraine Partnership and Cooperation Agreement and the 2014 EU-Ukraine Association Agreement. The article analyses in detail the reports of the European Commission on Ukraine’s progress in approximating its legislation to the EU acquis in the field of capital markets. The main achievements and areas requiring further improvement are highlighted. In particular, the author examines the issues of capital market supervision, rating of financial instruments, and such mechanisms for raising funds as securitisation and covered bonds. The author examines the internal aspects of bringing Ukrainian legislation in line with EU requirements, including legislative plans and current draft laws. Particular attention is paid to the analysis of recently adopted laws aimed at bringing Ukrainian legislation closer to the EU acquis in the field of capital markets. The article also examines the priority areas for further work on the implementation of EU acts, including improving legislation on combating capital market abuse, creating a mechanism for compensation to investors in securities, strengthening the supervisory powers of the National Securities and Stock Market Commission, and introducing certain types of collective investment institutions that operate in the EU but are not currently provided for in Ukrainian legislation, such as European long-term investment funds, venture capital funds, and other types of collective investment institutions. Based on the analysis, the author formulates recommendations for improving the implementation process, including strengthening coordination between various government agencies, attracting international technical assistance and holding broad consultations with market participants [ABSTRACT FROM AUTHOR]

In mid-April 2020, the global financial markets plunged into financial crisis from the unprecedented worldwide lockdowns for an extended period.

This review aims to examine the impact of increasing energy costs on the global economy, social cohesion, economic growth, and capital markets, with a particular focus on the consequences of the COVID-19 pandemic and the energy crisis intensified by the war in Ukraine. The methodology involves an extensive review of recent academic literature to cast light on these impacts. The study identifies significant disruptions in supply chains and heightened volatility in international capital markets due to these crises. Furthermore, the findings highlight the resulting challenges for policymakers, academics, market analysts, and professionals in addressing corporate sustainability in an increasingly uncertain environment. This paper underscores the continued relevance of energy issues as a central concern, both independently and in connection with broader economic sectors. Additionally, it discusses the importance of policy measures to enhance energy security and the transition towards sustainable energy solutions to mitigate these challenges and foster economic resilience. [ABSTRACT FROM AUTHOR]

Islamic finance (IF) holds significant potential for economic development and the enhancement of financial inclusion in Uzbekistan. Sukuk, as a key Islamic capital market instrument and Shari'ah-compliant investment alternative, plays an important role in this context. However, the demand for sukuk and its determinants are not well understood by policymakers and industry practitioners in Uzbekistan. This study aims to address this research gap by utilizing an ordinal logit model on primary data collected through a survey of 196 individuals from diverse demographic and professional backgrounds, with varying levels of IF and capital market knowledge and experience. The regression results indicate that factors such as prior investment experience, knowledge of sukuk, and a strong inclination toward Shari'ah-compliant investments positively influence an individual's intent to buy sukuk. Conversely, we found that residents of Tashkent (the capital city) are less likely to invest in sukuk compared to residents of other regions in Uzbekistan or those residing abroad. Based on this study's findings, several essential policy and practical recommendations are provided to relevant stakeholders. [ABSTRACT FROM AUTHOR]

Purpose: This paper aimed to compare the Quality of Accounting Information (QAI) of publicly traded companies in markets with distinct levels of economic development, represented by France, Brazil and other Latin American countries (the latter together). Methodology: The methodological approach was quantitative, with the use of descriptive and exploratory statistics, and regression with unbalanced panel data. The data used involved the following periods: French market, from 1987 to 2017; Brazilian, from 1995 to 2017 and Latin American, from 1989 to 2015. Results: The results pointed out structural differences of QAI in financial statements between the analyzed markets, indicating that the more developed one presents better QAI. Contributions of the Study: The practical contribution of this research can subsidize investor decisions, while the academic knowledge generated reveals that markets in diverse economic contexts present different levels of QAI. [ABSTRACT FROM AUTHOR]

Many firms use relative stock performance to evaluate and incentivize their CEOs. We document that such firms routinely disclose information that harms their peers' stock prices, and sometimes explicitly mention the harmed peers, by name, in these disclosures. Consistent with deliberate sabotage, peer‐harming disclosures appear to be aimed at peers whose stock price depressions are most likely to benefit the disclosing firms' CEOs. The pricing effect of these disclosures does not reverse, suggesting that the disclosures contain legitimate information regarding peers' prospects. In sum, our results suggest that relative performance evaluation in CEO pay motivates CEOs to internalize the externalities of their disclosures, and strategically disclose information that harms peers' stock prices, in order to improve their firms' relative standing within their peer group. [ABSTRACT FROM AUTHOR]

This paper focuses on how will capital markets look like in the future, identifying the new trends in this field. Given the fact that the main challenges of our time are finacing the transition to a green and low-carbon economy and dealing with digital disruption, the future capital markets will be digital due to innovation by technologies such as automated advice, robo-advisory service which involves a low cost of the financial advice service. Also the future of capital markets can be defined by the trading algorithms which quickly process information in high-frequency trading and by the distributed ledgers technology (DLT), which could change the backbone of the stock market, considering that modern technology enables stock markets to be faster and more complex than ever. As we gaze into the future of capital markets, one of the most promising trends is the utilization of AI to promote sustainability in finance. This paper delves into the transformative potential of AI in reshaping capital markets, highlighting emerging trends and its profound impact on promoting sustainability in financial ecosystems. So, the capital markets will undoubtedly evolve in the future as technological advancements, particularly the integration of new and traditional artificial intelligence capabilities, transform the financial ecosystem into a faster, smarter, and more efficient system.

Econometrics is a branch of economics that uses mathematical and statistical methods to study quantitative and qualitative relationships within economic phenomena. The purpose of this article is to study the impact of the capital market (financial instruments) on economic growth in Kazakhstan and the CIS countries through an understanding of the concept of “econometrics”. The task of the study is to determine the dependence of gross domestic product as a resultant factor over the past 20 years. Methods. The article determines the assessment of the impact of financial factors on economic growth in the short term. An econometric model was used for this purpose. The resulting factor was the gross domestic product over the past 20 years. Results. The results indicate that the capital market influences economic growth in Kazakhstan and the CIS countries. This paper presents a model of the GDP function for the economy of Kazakhstan. In the course of the study, coefficients and variables of the model were estimated to predict the level and future changes in the country’s GDP. Thus, the size of the capital market (Y1) depends on the following variables tested in the model: the number of securities issuance transactions; the volume of securities issuance transactions; the number of transactions of non-residents with shares at the secondary auction of KASE; the rate of change of shares of leading issuers on KASE

The creation of the effective stock market is considered as one of the important tasks for the further development of the national economy since the beginning of the 90s of the XX century. The issue became especially important after the activation of European integration processes in Ukraine since the conclusion of the Association Agreement with the European Union in 2014. On July 1, 2021, the Law of Ukraine On Capital Markets and Organized Commodity Markets, entered into force. Since this time, the Law was repeatedly amended, but never amended the to clarification of the general terms on stocks. Therefore, it is currently possible to claim that the Law does not comply with the principle of a unified approach in formulating the definitions of a number of similar concepts and that the concepts contained in the Law are not consistent with the terminology of related laws. The purpose of the article is a critical analysis of the basic terms on stocks in the current legislation of Ukraine, the identification of the problems in the definitions and the application of terms, as well as the justification of recommendations for improving the basic legislation on stock markets. The author found progressive changes in the general terms on stocks in the Law of Ukraine On Capital Markets and Organized Commodity Markets. The main are: 1) a group of derivative stocks is disclosed; 2) the definition of emission stocks have been renewed; 3) the specific composition of bonds has been expanded and specified; 4) the terminological structure «savings (deposit) certificate» is divided in two; 5) the classification of securities according to the «form of existence» criterion has been modernized. According to the research, the changes and additions to the basic terms on stocks are proposed in the in the Laws of Ukraine On Capital Markets and Organized Commodity Markets, On Circulation of Bills of Exchange in Ukraine, On the National Bank of Ukraine, the Civil Code of Ukraine and other acts. [ABSTRACT FROM AUTHOR]

Climate risk represents an increasingly vital issue to countries, companies, and institutional investors, making it a reality but not a distant threat to humanity. Considering the effects of climate risks on firms’ financial indices and financing options, the study investigates whether climate risk is priced by the capital markets of South Africa. The study used reported carbon emissions as a measure of climate risk of 81 listed companies in the Johannesburg Stock Exchange from 2011 to 2020 to examine whether climate risk is considered and priced by the South Africa capital market. Data was sourced from DataStream database- a global financial and macroeconomic time-series database providing data on equities, stock market indices, currencies, company fundamentals, fixed income securities, and key economic indicators. We used the two-step system Generalized Method of Moments estimation technique that copes with endogeneity concerns to corroborate the effects of climate risk on cost of capital and capital structure. We find that climate risk is priced in both cost of debt capital and cost of equity capital. Specifically, we find that an increase in a firm’s exposure to climate risk increases the cost associated with issuing debt and equity capital. We also find that climate risk exposure decreases the debt-equity ratio. Additionally, the study showed that firm size, leverage ratio, capitalization, profitability, and turnover affect both cost of capital and capital structure of listed firms. The study concludes that climate risk is priced in cost of financing in the capital market of South Africa. The study recommends that firms should invest in installing ecofriendly machinery that aligns with changing market expectations in order to reduce their carbon emissions. The study therefore highlights the need for companies to proactively assess and manage climate risks, incorporate climate considerations into their strategic decision-making, and enhance their resilience to climate-related challenges. [ABSTRACT FROM AUTHOR]

This paper examines the market responses to concurrent earnings and stock split announcements for evidence on the information content of stock splits. The majority of stock split research excludes splits announced with other information events due to confounding issues. However, it is difficult to extract the information content of splits by merely focusing on the standalone split announcement because stock splits are devoid of any information regarding firms' future cash flows. This study explicitly considers how a stock split is evaluated in conjunction with current earnings. This study shows that the market reacts more positively to earnings news concurrently announced with stock splits, consistent with the idea that splits are favorable news. Furthermore, this study finds that stock returns of concurrent split–earnings announcers exhibit a greater association with future cash flows, suggesting that investors should value stock splits favorably for more persistent earnings ahead. [ABSTRACT FROM AUTHOR]

Numerous stakeholders concur that tackling the climate change effect requires massive financial mobilization from the public and private sectors to reduce the climate financing gap. Capital markets are among the key players fostering this mobilization by issuing green financial instruments and facilitating capital flows to green investments. The study aimed to conduct a bibliometric analysis to fill a knowledge gap by evaluating the status and linkages in the literature on capital markets' green financial instrument issuances. We utilized the Bibliometrix R package and VOS viewer to analyze 314 relevant publications from the Web of Science in 2017–2023 following the Sustainable Stock Exchanges' green finance voluntary action plan. The analysis entailed mapping the scientific production trends, journal significance, author productivity, keyword linkages, emerging and trending topics, and collaborations within social structures. Further, the study assessed the applicability of Bradford's, Zipf's, and Lotka's bibliometric laws. We highlight six conclusions based on the analysis, their relevance to various stakeholders, and future research directions. The findings are essential in enhancing the decision-making process of policymakers, corporations, responsible investors, and researchers interested in understanding the effectiveness and impact of green financial instruments. [ABSTRACT FROM AUTHOR]

This paper focuses on how will capital markets look like in the future, identifying the new trends in this field. Given the fact that the main challenges of our time are finacing the transition to a green and low-carbon economy and dealing with digital disruption, the future capital markets will be digital due to innovation by technologies such as automated advice, robo-advisory service which involves a low cost of the financial advice service. Also the future of capital markets can be defined by the trading algorithms which quickly process information in high-frequency trading and by the distributed ledgers technology (DLT), which could change the backbone of the stock market, considering that modern technology enables stock markets to be faster and more complex than ever. As we gaze into the future of capital markets, one of the most promising trends is the utilization of AI to promote sustainability in finance. This paper delves into the transformative potential of AI in reshaping capital markets, highlighting emerging trends and its profound impact on promoting sustainability in financial ecosystems. So, the capital markets will undoubtedly evolve in the future as technological advancements, particularly the integration of new and traditional artificial intelligence capabilities, transform the financial ecosystem into a faster, smarter, and more efficient system. [ABSTRACT FROM AUTHOR]

This research investigates the burgeoning peer-to-peer (P2P) economy, exemplified by platforms such as Airbnb, and its implications within the North American context. The study focuses on understanding the repercussions of Airbnb announcements on capital markets, concentrating specifically on the travel and tourism sector and the real estate sector. The findings unveil a discernible augmentation in index returns preceding the announcement's publication in both sectors. However, a notable divergence manifests post-announcement: while the real estate sector sustains an upward trajectory in returns, the travel and tourism sector experiences a post-publication decline. These results underscore the strategic advantage available to investors with early access to Airbnb announcements, enabling them to capitalize on excess profits. Furthermore, the broader investor community can leverage the insights gleaned from Airbnb announcements for financial gains. A nuanced examination of regression results reveals the substantial impact of macroeconomic variables on index returns in both the travel and tourism sector and the real estate sector. These insights contribute to a more nuanced understanding of the intricate dynamics shaping these economic domains. [ABSTRACT FROM AUTHOR]

Organizational capabilities have a key influence on firm performance. Ordinary capabilities, a prominent classification advocated by capability scholars, allow a firm to perform its primary functional activities. Past research indicates that there are limits to the contributions of ordinary capabilities to firm performance, but largely has explored it via contingent effects in an industry context. We argue, however, that these limits also are a function of the development of market-supporting institutions. In this paper, we investigate the effect of capital market development – a key pillar of market-supporting institutions – on a firm's use of two ordinary capabilities, operations and marketing. We trace the heterogeneity of this effect for two key firm resources, investments in R&D and financial slack, that are indicative of different strategies pursued by firms. We test our three-way interaction model using a sample of Indian firms over a twenty-year period of institutional reforms. Our findings contribute to integrating the organizational capability and institutional theory literature and advancing research on the sustainability of firm profits in emerging economies. [ABSTRACT FROM AUTHOR]

Abstract Financial performance analysis is of vital importance those involved in a business (e.g., shareholders, creditors, partners, and company managers). An accurate and appropriate performance measurement is critical for decision-makers to achieve efficient results. Integrated performance measurement, by its nature, consists of multiple criteria with different levels of importance. Multiple Criteria Decision Analysis (MCDA) methods have become increasingly popular for solving complex problems, especially over the last two decades. There are different evaluation methodologies in the literature for selecting the most appropriate one among over 200 MCDA methods. This study comprehensively analyzed 41 companies traded on the Borsa Istanbul Corporate Governance Index for 10 quarters using SWARA, CRITIC, and SD integrated with eight different MCDA method algorithms to determine the position of Turkey's most transparent companies in terms of financial performance. In this study, we propose "stock returns" as a benchmark in comparing and evaluating MCDA methods. Moreover, we calculate the "rank reversal performance of MCDA methods". Finally, we performed a "standard deviation" analysis to identify the objective and characteristic trends for each method. Interestingly, all these innovative comparison procedures suggest that PROMETHEE II (preference ranking organization method for enrichment of evaluations II) and FUCA (Faire Un Choix Adéquat) are the most suitable MCDA methods. In other words, these methods produce a higher correlation with share price; they have fewer rank reversal problems, the distribution of scores they produce is wider, and the amount of information is higher. Thus, it can be said that these advantages make them preferable. The results show that this innovative methodological procedure based on 'knowledge discovery' is verifiable, robust and efficient when choosing the MCDA method.

We investigate the link between the rule of law and equity returns in post-transitional economies over the period January 2010–December 2020 by using panel data regressions. By applying several rule-of-law proxies for national legal frameworks and justice system quality as proxies for the rule-of-law principle, the data sets from the capital markets of Poland, Latvia, Lithuania, and Estonia showed that country-level judicial system quality is an important driver of company market performance, and that post-transitional countries with lower rule-of-law measures exhibit higher returns on equity than those with better measures. Our results support the idea that since poor governance and country instability increase agency and transaction costs, in addition to decreasing growth prospects and profitable projects available to companies, the risk premium demanded by investors increases, leading to higher equity returns.