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Über dieses Buch

This proceedings volume presents current research and innovative solutions into capital markets, particularly in Poland. Featuring contributions presented at the 10th Capital Market Effective Investments (CMEI 2018) conference held in Międzyzdroje, Poland, this book explores the future of capital markets in Poland as well as comparing it with the capital markets of other developed regions around the world.

Divided into four parts, the enclosed papers provide a background into the theoretical foundations of capital market investments, explores different approaches—both classical and contemporary—to investment decision making, analyzes the behaviors of investors using experimental economics and behavioral finance, and explores practical issues related to financial market investments, including real case studies. In addition, each part of the book begins with an introductory chapter written by thematic editors that provides an outline of the subject area and a summary of the papers presented.



Theoretical Aspects of Investment on Capital Market


Chapter 1. Analysis of Performance of the Warsaw Stock Exchange Companies from Finance Macrosector in Periods of Crisis

The aim of the article is the assessment of response to a crisis situation for companies belonging to the macrosector of finance in comparison with other sectors on the Warsaw Stock Exchange. The survival analysis methods were applied. The authors analysed the periods of decrease and of the subsequent increase in share prices during the crisis of 2008–2009 and the bear market of 2011. The Kaplan–Meier estimator of the survival function made possible to assess the probability of decrease and of subsequent increase in the share prices. The similarity of the survival curves was investigated using the log-rank test. The Cox regression model was used to determine the intensity of the decrease and increase in share prices. The analysis made possible to assess and compare the performance of the financial sectors against the background of other sectors in both periods.

Beata Bieszk-Stolorz, Iwona Markowicz

Chapter 2. Integration Level and the Hierarchical Structure of European Stock Markets in the Years 2004–2017

The aim of this research is to conduct a dynamic analysis of the level of integration between the European stock markets including their hierarchical structure. The analysis of the structure of links between markets allows identifying those groups of markets that have a particularly strong impact on each other and those with weaker connections. That is an important issue from the point of view of investors as strong links between markets can significantly limit the benefits of internationally diversifying investment portfolios. The study has been carried out with the use of closing prices for 35 main European stock market indices for the time period from September 2014 to August 2017. In the first step, Ward’s method was utilized to analyze the hierarchical structure of the entire set of markets. This allowed to identify groups of markets with the strongest levels of interconnectedness. Next, the level of financial integration was analyzed for the entire group of markets and for smaller subsets of the sample with the use of dynamic integration indicator—calculated as the share of variance explained by the first principal component in the overall variance of the original variables. The indicator was calculated over a moving window. This allowed not only to distinguish groups of markets with higher levels of financial integration but also to identify periods of rising and falling integration.

Elżbieta Majewska

Chapter 3. In Search of the Best Proxy for Liquidity in Asset Pricing Studies on the Warsaw Stock Exchange

Stock liquidity is unobservable, and thus, its level needs to be approximated. There is a large body of liquidity measures recorded in the existing literature. The main goal of this paper is to investigate which measure is the most appropriate one to measure stock liquidity for the purposes of asset pricing studies on the Warsaw Stock Exchange. To indicate the most appropriate proxy for liquidity, a series of correlation analysis between different liquidity measures and estimation error measures have been applied. Four high-frequency liquidity measures were used as a benchmark for liquidity, and fourteen low-frequency liquidity proxies were examined. The study was conducted on a group of 100 companies listed on the Warsaw Stock Exchange between 2006 and 2016. The ranking of low-frequency proxies for liquidity has been created based on eleven performance dimensions. It shows that the most appropriate liquidity measure on the Warsaw Stock Exchange is that developed by Fong et al. [12], which is a simplification of the zero-return-days measure developed by Lesmond et al. [20]. In addition, two modifications of Amihud’s [2] illiquidity are presented as the second and third best-performing ones. To the best of the author’s knowledge, this is the first such extensive study of the performance of liquidity measures on the Warsaw Stock Exchange. It examines both existing liquidity measures and some modifications proposed on the basis of the literature overview.

Szymon Stereńczak

Chapter 4. International Capital Markets and the Global Real Economy

This text focuses on two aspects of the relations between the financial sector and the global real economy. First, it discusses the impact of quantitative easing programs (QE) on the situation on global capital markets. The efficiency of such programs as tools to stimulate economic growth is analyzed and compared across different countries. The author puts forward a hypothesis that the efficiency of QE depends on the capital market model in a given country and the different channels of transferring capital between the financial sector and the real economy. The second aspect of the relations between capital markets and the economy discussed in this article is the problem of market efficiency. The thesis advanced here is that capital market inefficiency not only leads to wrong asset pricing and wealth transfer between investors, but also contributes to the wrong allocation of resources and underinvestment or overinvestment in given real sectors, bringing about significant losses for the entire economy.

Adam Szyszka

Chapter 5. Tax Planning in Bank Tax—Analysis of the Use of Treasury Bonds

Purpose: The issue of taxation of the financial sector has long been widely discussed both in the European Union and in other countries of the world. It is extremely important to construct a proper tax, which would ensure the objectives set for it, and at the same time would generate as little negative effects as possible and would be as little burdensome for taxpayers as possible. The aim of the study is to verify the hypothesis that banks in Poland use the possibility of purchasing treasury bonds in order to lower the tax base. Methods: The paper analyses the use of treasury securities as an instrument of tax optimisation. The study includes theoretical and empirical research. A descriptive comparative analysis has been used to assess if after the introduction of the tax on some financial institutions there was an increase in treasury bond purchases in the last days of the month and an increase in sales at the beginning of the following month. Results and conclusions: The author confirmed the research hypothesis that banks in Poland use the possibility of buying treasury bonds in order to lower the tax base.

Małgorzata Twarowska-Ratajczak

Chapter 6. The Role of a Court Expert in Determining the Sale Price of an Enterprise or Individual Assets in the Polish Bankruptcy Law—Selected Legal Aspects

The study refers to cases in which an investor decides to purchase an enterprise, its organized part or individual assets constituting the bankruptcy estate. In this situation, apart from economic aspects, the legal conditions referring to the role of the court expert in determining the sale price of an enterprise or assets are of particular importance, both as part of the pre-pack solution and in the case of bankruptcy proceedings conducted on general terms. Resolutions of the bankruptcy proceedings issued on the basis of the expert opinion regarding this price are decisive in determining the conditions of purchase of the above-mentioned components of the bankruptcy estate.

Kinga Flaga-Gieruszyńska

Chapter 7. Inclusion of ESG Factors in Investments and Value Addition: A Meta-Analysis of the Relationship

The research explores the impact of ESG factors on investments by conducting a global study considering 100 academic papers dealing with the interlinkage between ESG factors and financial performance. The papers are selected using Cochrane methodology across different geographical domains over a time period of 1990–2015 and analyzed using a meta-analytic approach. The idea was not only to assess the relationship between sustainability and financial performance but also to decipher the impact of different control variables on the relationship. The results emphasize the positive impact of ESG factors on financial performance.

Ria Sinha, Manipadma Datta, Magdalena Ziolo

Chapter 8. Financial Services Market in an Ageing Society. Challenges for the Development of Silver Economy

The article addresses the issue of the ageing of societies and the need to adopt a new strategy for financial services aimed at the elderly people. Attention is drawn to the specifics of behaviour of senior citizens as financial services customers, resulting from historical experiences, income opportunities, competencies and their cognitive abilities. It is emphasised that financial services constitute a significant part of the silver economy development, necessary due to the need for protecting capital, preserving assets and preventing loss of savings of senior citizens. The article also points to the need to use the achievements of experimental economics, economic psychology and socioeconomics to study the causes of financial behaviours. The article fits into the trend of economic and social analyses and uses the achievements of social research. It was based on existing sources and own research. Desk research and descriptive analysis were used in the presentation of the issues addressed.

Grażyna Krzyminiewska

Chapter 9. Towards Measurement Framework of Digital Skills in Finance

The ongoing technological transformation and increasing the areas of application of digital tools are naturally also observed in finance. The development of new e-finance solutions increasingly requires the digital competence of customers of the financial sector. This article aims to propose and discuss digital financial competence framework that together with a prospective statistical measurement system may help to identify problems posed by emerging digitalisation of society and economy. It attempts to systemise the measurement through the proposed framework, also dealing with conceptual and practical issues related to digital competences and skills. The article attempts to define critical competences of individuals, for the financial sector. There have been many propositions so far of generic digital skills frameworks and digital literacy assessment tools. However, there has been no proposition of digital skills framework for financial services. This paper adds to the existing works by proposing the relevant scheme of digital competences for digital financial services that subsequently may be used as a reference framework for statistical measurement.

Monika Rozkrut, Dominik Rozkrut

Quantitative Methods on Financial Markets


Chapter 10. The Motives of Name Changes and Share Quotations on the Warsaw Stock Exchange

The aim of this article is to analyse the motives of name changes made by public companies listed on the Warsaw Stock Exchange and to identify abnormal returns before and after this event depending on the motives given by issuers. The research methodology using cumulated abnormal return (CAR) was to determine the relative strength of quoted shares in relation to the WIG index before and after changes in companies’ names. The results of the research done indicated abnormal returns before the name change as well as unambiguously negative trends afterwards. The article is a continuation of the author’s previous research into the problem of name changes, which has not yet been carried out on the Polish market.

Roman Asyngier

Chapter 11. The Investor’s Preferences in the Portfolio Selection Problem Based on the Goal Programming Approach

Goal programming is the approach used for multicriteria decision making when the decision maker aims to minimize deviations between the achievement of goals and their aspiration levels. In the presence of skewness in the portfolio selection problems, the goal programming technique is an excellent and powerful quantitative tool in which the investor’s preferences among objectives are incorporated. In this study, in the mean–variance–skewness framework, the utilization of the goal programming model allows to determine the trade-off frontier or efficient frontier for a given level of decision maker’s preferences in relation to the selected parameters. Each change in the strength of preference for the expected value in relation to the third moment is a trade-off frontier in the appropriate two-dimensional space or on the surface of efficient portfolios in three-dimensional space.

Donata Kopańska-Bródka, Renata Dudzińska-Baryła, Ewa Michalska

Chapter 12. Early Warning Against Insolvency of Enterprises Based on a Self-learning Artificial Neural Network of the SOM Type

The article describes the use of a self-learning neural network of the SOM type to forecast insolvency of enterprises in construction industry. The research was carried out on the basis of information regarding 578 enterprises that went into bankruptcy in the years 2007–2013. These entities constituted a sample singled out from a population of 4750 enterprises that went bankrupt in Poland during that time, for which it was possible to obtain financial statements in the form of balance sheets and profit-and-loss accounts for the period of 5 years prior to the bankruptcy. Twelve (12) variables in the form of financial analysis indicators have been assessed, which are most commonly used in the systems of early warning about insolvency. The network constructed allowed effective classification of nearly all entities as insolvent a year before the announcement of their bankruptcy.

Kamila Migdał-Najman, Krzysztof Najman, Paweł Antonowicz

Chapter 13. Alternative Estimators for the Effective Spread Derived from High-Frequency Data

According to the literature, various proxies for the effective bid/ask spread are utilized by researchers. They can be estimated from low- or high-frequency data. In this study, three alternative estimators for the effective spread derived from high-frequency data are investigated. We analyse the basic version of percentage effective spread and two modified versions of the Roll’s estimator for the effective spread. Data set contains intraday data rounded to the nearest second for 86 Warsaw Stock Exchange (WSE) traded companies, in the period from January 2005 to December 2016. We test distributional properties, linear and nonlinear dependences, as well as stationarity of the analysed daily time series. Moreover, the research hypothesis concerning the statistical significance of correlations between daily values of various effective spread estimates is tested. Furthermore, the study provides robustness analyses of the obtained results with respect to the whole sample and three consecutive subsamples, covering the pre-crisis, crisis and post-crisis periods. The empirical findings confirm significant relationships between alternative proxies for the effective spread and turn out to be robust to the choice of the period.

Joanna Olbryś, Michał Mursztyn

Chapter 14. Investment Strategies Determined by Present Value Given as Trapezoidal Fuzzy Numbers

In the article, the present value is considered as a trapezoidal fuzzy number, same as obtained expected discount factor. The imprecise value of this factor may be used as a decision premise in creating new investment strategies. Considered strategies are built based on a comparison of a fuzzy profit index and the value limit. In this way, we obtain imprecise investment recommendation. Financial equilibrium criteria result from a special case of this comparison. Further in the paper, the following criteria are generalized: Sharpe’s ratio, Jensen’s alpha and Treynor’s ratio. Moreover, the safety-first criteria are generalized into the fuzzy case, along with Roy’s criterion, Kataoka’s criterion and Telser’s criterion. The obtained results show that the proposed theory can be used in investment applications.

Krzysztof Piasecki, Joanna Siwek

Chapter 15. Application Quantile-Based Risk Measures in Sector Portfolio Analysis—Warsaw Stock Exchange Approach

The measurement of financial risk has been one of the main goals of the investors as well as actuaries and insurance practitioners. Measuring the risk of a financial portfolio involves firstly estimating the loss distribution of the portfolio, next computing chosen risk measure. In the resent study, the robustness of risk measurement procedures and their sensitivity into point out for the dataset in present. The results show a gap between the subadditivity and robustness of risk measurement procedures. We apply into analyses alternative risk measurement procedures that possess the robustness property. The quantile-based risk measures have been applied in sector portfolio analysis for the dataset from Warsaw Stock Exchange.

Grażyna Trzpiot

Chapter 16. Is the Three-Factor Better Than Single-Factor Capital Asset Pricing Model? Case of Polish Capital Market

The three-factor model was developed by Fama and French as a response to the poor performance of the single-factor capital asset pricing model (CAPM) in explaining realized returns. However, the evidence from different markets does not give clear conclusions regarding the appropriateness of this model, and CAPM is still most commonly used by practitioners. The study aims to find out which model better explains returns from portfolios containing selected companies listed on the Warsaw Stock Exchange in the years 2007–2017. In our investigation, four portfolios including: (1) big, (2) medium size, (3) small and (4) all considered companies are concerned. We also distinguish seven sub-periods which are characterized by different situation on the Polish capital market. The results show that the three-factor model better explains rates of returns from portfolios than CAPM, although the improvement is mostly visible for the portfolios of small and medium size companies. The risk factors concerning capitalization of companies and book-to-market value rates are statistically significant in about half of estimated models whereas risk premium significantly affects returns in all models.

Dorota Witkowska

Chapter 17. Beta Coefficient and Fundamental Strength in Companies Listed on the Warsaw Stock Exchange

In the literature, the beta factor is regarded as a risk measure. It is calculated using the classic Sharpe model. The purpose of the paper is to examine the relationship between the beta coefficient and the fundamental strength index (FPI) for selected companies listed on the Warsaw Stock Exchange. The database of companies included in the survey consisted of companies included in the WIG20 stock exchange index at the end of 2006 and 2010. On that basis, it was established whether the beta coefficient affects the economic and financial standing of a company and should be used as a risk measure in stock exchange analyses. The study covered the years 2006–2010 on a quarterly basis and used economic and financial data published by Notoria Service.

Waldemar Tarczyński, Małgorzata Tarczyńska-Łuniewska

Chapter 18. Comparison of the Results of Modelling Rates of Return Depending on the Financial Situation of Companies with the Use of Real and Transformed Values of Variables

The aim of the study is to find the relationship between rates of return on shares and indicators characterizing the financial situation of companies. Three approaches to modelling rates of return were used: classic econometric models, ordered logit models and discriminant analysis. In the first approach, the real quarterly rates of return were explained variable, and in the second and third approaches, the real rates of return were transformed into variants measured on an ordinal scale. In each approach for explanatory variables (financial indicators), time lags of up to two quarters were taken into account. Additionally, the explanatory variables were transformed—the nominants were transformed into stimulants or destimulants. The study used quarterly data from 2014 to 2017 on financial ratios for Machinery sector companies listed on the Warsaw Stock Exchange from the Notoria Serwis database and data on prices from Bank Ochrony Środowiska. As a result of research conducted with the use of particular models, the financial indicators which had the greatest impact on the level of return rates were identified. Knowledge of these indicators may help investors to make decisions on the selection of companies for the investment portfolio.

Barbara Batóg, Katarzyna Wawrzyniak

Chapter 19. Diversification of the Equity Portfolio Using Precious Metals in Poland

The asset allocation is a primary tactic according to theory practitioners. It allows investors to create portfolios to minimalize the overall risk of the portfolio for a given expected return or to get the strongest possible return without assuming a greater level of risk than they are comfortable with. This study presents the risk and the effectiveness of equity portfolios in Poland which are diversified using precious metals. The portfolios are built in according to the Markowitz model. We find that adding a gold or more metals reduces the overall risk of portfolio and improves portfolio performance substantially. Relative to silver, platinum and palladium, gold has better stand-alone performance and appears to provide a better hedge against the negative effects of prices changing. Overall, our evidence suggests that investors could improve portfolio performance considerably by adding precious metals.

Agnieszka Majewska, Urszula Gierałtowska

Experimental Economies and Behavioral Finance on Capital Markets


Chapter 20. The Co-movement of the Czech Republic, Hungary and Poland Sovereign Credit Default Swaps Spreads

We use a VEC DCC M-GARCH model to investigate the daily co-movement of the Czech Republic, Hungary and Poland one-, five- and ten-year sovereign credit default swap (CDS) spreads in the period Jan 2009–May 2018. To control for a systemic risk stemming from the EU and other international markets, we nest the analysis within a four-variate system including the Germany CDS spread and the CBOE VIX. The latter serves us as a proxy for the exogenous driver of spreads. The analysis shows that the long-run dependence among the logs of CDS spreads is rare. It is only the Czech Republic and Germany one-year CDS spreads that exhibit a common stochastic trend. The remaining spreads do not co-integrate. Each country maturity time t log change in the spread depends upon that of time $$t - 1$$ and earlier. The dynamics of spreads are country specific. The Hungary CDS spreads Granger cause almost all their counterparts. The causality running other way round is incidental. The median of pairwise conditional correlation estimates among the countries of interest differs across the maturities in the way indicating that the Czech, Hungarian and Polish markets are better integrated among one another than any single with the German market.

Paweł Miłobędzki, Sabina Nowak

Chapter 21. Characteristics of Dichotomous Variable Estimators

The article covers the following probability models used in dichotomous variable analysis: logit, probit, and raybit—the last one proposed by the author. In the article, the following characteristics of estimators are derived: bias, variance, and mean squared error, which links them. The method of probability estimation which minimizes relative root mean squared error (RRMSE) is proposed. It is also shown that the goodness-of-fit measures of mean square error (MSE) and mean absolute error (MAE) models present in the field literature lead to the similar results.

Jan Purczyński

Chapter 22. Dynamics of the Financial Markets and the Wealth Concentration

The concentration of investors’ wealth is one of the most important factors shaping their investment strategies. It is reasonable to assume that it can impact the dynamics of financial markets, leading potentially to many undesirable phenomena such as lack of efficiency and collusions. Varying rates of return on investments and among investors over long periods of time favor wealth concentration. Inclusion of other factors such as skill and experience leading potentially to uniformization of behavior through learning cannot eliminate the phenomenon due to the stochastic nature of financial markets. We show that the dynamics of the market can significantly impact how quickly wealth concentration takes place. We present a simple model of wealth concentration among investors to assess the impact of randomness on the distribution of wealth in the function of time. We demonstrate that random fluctuations alone can lead to the accelerated, and under some conditions unlimited, concentration of wealth resulting in a lack of market efficiency.

Jerzy Marcinkowski

Chapter 23. Examining Engagement and Emotions in Financial Simulation Games

The popularity of educational video games means that there is a need for methods to assess their content in terms of satisfaction and the educational element of the player right from the production stage. For this purpose, indices used in EEG studies and algorithms for detecting microexpression can be used. In the research work, the following devices, i.e. EEG, EyeTracker, were used for the engagement index and a film was shot to detect emotions at a later stage. The data were collected from five participants during the investment game created in MATLAB and online stock market simulator. Thanks to the use of the above-mentioned devices, it was found out whether the game connected only with investing evokes emotions and involvement.

Konrad Biercewicz, Jarosław Duda, Mariusz Borawski

Chapter 24. Methods of Examining the Neuronal Bases of Financial Decisions

Simulation games are often used to learn how to invest in the stock market. They allow you to get to know the tools and mechanisms of investing in financial markets. However, sometimes it is difficult to explain some investors’ behaviour. Decisions are made under the influence of various emotional states. Using modern measurement methods, such as EEG or microexpression measurements, it is possible to study and analyse human behaviour resulting from various external stimuli.

Mateusz Piwowarski, Konrad Biercewicz, Mariusz Borawski

Chapter 25. Behavioural Finance Then and Now

Behavioural finance, a relatively new field that is constantly developing, has grown up to criticize the assumptions and theories of standard finance. The aim of this article is to present the development of behavioural finance of the first and the second generation. The first generation of behavioural finance focused on the analysis of irrational decisions made by rational actors. The second generation of behavioural finance considers the decision-making processes of normal people. Its further development will be based on the achievements of neuroeconomics.

Danuta Miłaszewicz

Practical Issues-Case Studies


Chapter 26. Liquidity on the Capital Market with Asymmetric Information

The effectiveness of the investment is strongly dependent on the liquidity of the shares and the degree of asymmetry of information between the market participants. There is a strong evidence in the literature that stock illiquidity should increase with information asymmetry. An important question is, if different approximations of information asymmetry are consistent in their indications. This study examines the various adverse selection measures including bid–ask spreads calculated on the basis of real transaction data and measures calculated from daily data. We consider stocks listed constantly from 2006 through 2016 on the Warsaw Stock Exchange and calculate the Pearson and the Spearman rank correlations for daily effective spread proxies across the sample. The capitalization and different periods of time are taken into account. We find that various adverse selection measures are characterized by different informational contents, resulting in relatively low coherence of the proxies used in the study.

Barbara Będowska-Sójka, Przemysław Garsztka

Chapter 27. Stock Market Reactions to Dividend Announcements: Evidence from Poland

The paper investigates the market reaction to announcements of dividend changes on the Warsaw Stock Exchange. The research was conducted on a population of non-financial companies paying regular dividends over the period 2014–2016. The sample of dividend announcements (in total 186 observations: 106 dividend increases, 43 dividend decreases and 37 no changes in dividend value) was divided into three subsamples: dividend increases, decreases, and no change. According to the dividend signalling theory, we hypothesize that the market reacts positively to announcements of dividend increases, negatively to dividend decreases, while there is no market reaction to the announcements of stable dividends. Using daily data from the Warsaw Stock Exchange, we implement the event study methodology. As expected, we can observe that the dividend increases are associated with positive abnormal returns and dividend decreases with negative abnormal returns. However, the results are statistically insignificant. Thus, there is no statistically significant relationship between the changes in dividend value and abnormal rates of return on event day and the subsequent days. Therefore, the results of the study do not support the signalling power of dividend changes on the Polish capital market.

Bogna Kaźmierska-Jóźwiak

Chapter 28. Gold Market and Selected Stock Markets–Granger Causality Analysis

The aim of the paper was to examine the bidirectional linkages between gold returns and stock indices returns. Four indices were considered (S&P500, NIKKEI, DAX, WIG). To achieve this goal, the augmented Dickey–Fuller test (ADF), Engle–Granger, and Johansen cointegration tests were applied. On the basis of the vector autoregressive (VAR) model, the Granger causality test was carried out to investigate causality between the analyzed time series. In this context, the following study hypothesis was formulated: Rates of return on stock markets were the Granger cause of the rates of return on the gold market. The research covered the period between January 1, 1997, and March 31, 2018, and two subperiods (bull and bear markets). The comparison of results for alternative VAR models estimated by employing daily and monthly data was presented. Studies for daily data have shown that feedback Granger causality appeared in four cases and the unidirectional causality was identified in eight cases. Referring to monthly data, no evidence of feedback causality was found. The unidirectional causality was present in five cases.

Katarzyna Mamcarz

Chapter 29. Investment Decision Support on Precious Metal Market with Use of Binary Representation

In this paper, a detailed analysis of HFT systems’ properties is performed with use of binary exchange rate representation for precious metals: gold and silver. The binary representation is based on transforming tick data into a binary string. In order to assess the probabilities of changes on the researched exchange market, authors use mentioned binary representation. This paper contains an analysis of the following assessment criteria: expected annual number of transaction, systemic probability of success, expected single unitary payment, expected annual unitary payment, transaction risk assessment, single unitary risk bonus, annual unitary risk bonus, expected return rate, expected interest rate, return risk premium and interest risk premium. The research was performed on five-year historical data for precious metals to dollar exchange rates (XAU/USD and XAG/USD), with use of dedicated Mql4 and C++ software created by the authors.

Krzysztof Piasecki, Michał Dominik Stasiak, Żaneta Staszak

Chapter 30. Underdevelopment of the Financial Market in China as a Barrier to the Internationalization of the Renminbi

Purpose: The Chinese economy is one of the largest and the fastest growing economy in the modern world. The importance of the renminbi as an international currency is not relevant to China’s economic potential and role in the global economy. This fact encouraged the author to explore barriers limiting the position of the renminbi as an international currency. The aim of the paper is to assess the development of the Chinese financial market and its liquidity conditions from the perspective of their impact on currency internationalization. Methods: The study includes theoretical and empirical research. A descriptive comparative analysis has been used to assess the development of the financial market in China in comparison with other economies (contemporaneously and historically) and to evaluate the renminbi’s role in the main functions of international currency using the Cohen matrix. Results and conclusions: The author confirmed the research hypothesis that one of the important constraints for the renminbi internationalization is the relatively shallow and underdeveloped financial market in China.

Katarzyna Twarowska

Chapter 31. The Mechanisms of Changes in the Infrastructure of the Payment Card Market—A Comparative Analysis of Poland and China

The Chinese payment card market differs significantly from the Polish one. The strategies for and the levels of its development vary in both countries. The subject of this work constitutes an attempt to compare the development of the infrastructure servicing the payment card markets in Poland and in China. The study was carried out based on the quarterly time series from the years 2008 to 2017. The subject of consideration is the infrastructure networks used to service payment cards. Two most important components of the payment card infrastructure were considered: the number of the point of sale terminals handling payment cards (POS) and the number of the automated teller machines (ATMs). The similarities and the differences in the construction of this infrastructure, resulting from various internal and external conditions, have been presented. The radical size differences between Poland and China result in the need to apply solutions that use quantitative market characteristics, expressed per capita, and to use measures of intensity, which are characterized by comparability of the results. The study used statistical and econometric tools for analysis of the characteristics of the payment card market infrastructure. A hypothesis was formulated about the existence of a feedback between the number of POSs and the number of ATMs, per 1 million payment cards, both in Poland and in China. This hypothesis was verified using an econometric model. The empirical econometric model allows a description of the mechanisms of the payment card market infrastructure and can be used to construct short-term forecasts.

Wiśniewski Jerzy Witold, Sokołowska Ewelina, Wu Jinghua

Chapter 32. The Econometric Analysis of the Food Sector Performance on the Background of the Main Market at Warsaw Stock Exchange

The presented work attempts an econometric analysis of the quotations of companies from the food sector against the background of the main market of the Warsaw Stock Exchange. The entire sector was examined, not individual entities, treating the WIG-food index as a portfolio of shares. The aim of the research is to identify the relationship between the agri-food sector and stock market segments. Determining the correlation strength of the WIG index—foodstuffs with the WIG, WIG20, mWIG40 and sWIG80 indices will allow linking this sector with individual markets. The formulated goal is implemented using linear regression models with one explanatory variable. The studies were limited to 2008–2017 years taking into account the monthly rates of change. The results indicate that the agri-food sector can be included in the stock market segment described by the sWIG80 index.

Dorota Żebrowska-Suchodolska, Andrzej Karpio

Chapter 33. Fuzzy AHP and VIKOR to Select Best Location for Bank Investment: Case Study in Kurdistan Region of Iraq

Location selection is one of the most important decisions of the operations manager. One of the effectiveness criteria of the organizations is the correct location. And the appropriate location for the banking sector means better network to the customers and a competitive advantage in the market. The present paper investigates the best location as using the fuzzy AHP and VIKOR analysis in the Kurdistan Region of Iraq. The research revealed that “security in the region” and “willingness to work with the bank” have been the most important criterions in location strategy. These results show contrast with the developed countries.

Ahmet Demir, Sarkhel Shawkat, Bzhar Nasradeen Majeed, Taylan Budur
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