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Crowdfunding in the Wider Perspective Investment Crowdfunding: Competition Between Regulations, Institutions, and Economic Freedom

Abstract

The aim of this article is to present Investment Crowdfunding (ICF) in a perspective wider than merely as a new form of financing a certain category of business ventures. Selected aspects of ICF as a phenomenon that is a manifestation of the conflict between economic freedom and regulations and financial market institutions will be emphasized. New concepts of the part of the modern economy in the period of digitization, referred to as the collaborative economy, mesh economy, or sharing economy, should also be taken into account. The issues of excessive and restrictive regulation of the financial market will be presented in this context, as well as the constraints and risk factors of ICF operation and the Polish ICF experience.

The study hypothesises that Investment Crowdfunding is a viable alternative for financing micro and small economic projects, if compared to the traditional and over-regulated forms of financing. The usefulness of Investment Crowdfunding concerns primarily economic projects of the start-up category. The study uses the following research methods: critical analysis of the literature of the issue, descriptive and comparative analysis, case study, and deduction.

The theoretical considerations and examples presented in the article should be treated with appropriate research caution. However, they make it possible to positively verify the hypothesis.

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Regulations and Technology Behind HFT Latency, Batch Auctions and Payments for Order Flow in the US and EU

Abstract

Since the appearance of high-frequency trading in the 1990s, speed has become one of the key issues in trading and with it, the controversy around High-Frequency Trading. In recent years, there have been many discussions and analyses of how high-frequency trading may affect the financial market – but still without any clear conclusions. Leaving these opinions behind, many adjustments have already been made in the US and Europe - both to regulations and market rules, impacting not only High-Frequency Trading but general electronic trading as well. These rules and regulations are the result of technological developments in electronic trading and more specifically, High-Frequency Trading and the practice of Payments for Order Flow. The question remains as to how deep regulations should go, especially in the case of HFT which can be severely affected by harsh regulatory requirements or procedures. Because two of the most important issues in HFT are time and information, some of the rules and regulations affect aspects such as not only what type of information and how it should be gathered, but also clock synchronisation and time-stamp granularity. Another issue that may be considered controversial in the field of HFT (although it is not a practice limited to HFT) is Payment For Order Flows. Under this mechanism, wholesale market makers pay brokers for their client’s order flow – a practice that performed in great amounts and at high speeds may give a considerable level of “inside” information. Regulations, especially from ESMA (MiFID II). try in great part to thus mitigate the practice of Payments For Order Flows.

The aim of this paper is to present technological advancements in the field of trading communications used, not only by HFT firms, but also by exchanges. Additionally, the objective is to underline some challenges regarding regulatory changes that try to adapt to the current level of technology – for example, those related to clock synchronisation and data processing. One last issue brought forward is the possibility of converting markets from continuous-time auctions to discrete-time auctions - a concept that is aimed at liquidating the speed advantage and competition only to price level and hence, eliminating HFT advantages.

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Expensive and Cheap Funds – Polish Stock Mutual Fund Fees in 2017

Abstract

Mutual fund fees are extraordinarily high in Poland – almost three times higher than in Western Europe and almost five times higher than in the United States. In fact is that from among 183 Polish open-ended stock mutual funds as many as 81 impose a management fee of 4%, which is the highest value in the sample. The question arises whether it is really worth to invest in funds from the more expensive group. Comparing funds charging the highest fees (4%) with the cheaper ones it seems that there is no statistically significant difference between rate of return, risk and efficiency. However, more expensive funds have on average higher costs, are three years older and have almost 70% bigger assets. This may suggest that a well-established market position – not performance – is the trigger for raising their fees. Interestingly, funds with a relatively high minimal initial contribution level (5,000 PLN) have significantly lower management fees with similar costs, total assets value and performance results. Further analysis has also indicated that the costs level (Total Expense Ratio) is higher for older funds, while it is not related to funds’ size.

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Estimating Natural Rate of Interest and Equilibrium Exchange Rate: A Case of the Czech Republic

Abstract

Article deals with estimating real natural interest rate and exchange rate to construct monetary conditions index suitable for the Czech open economy. Despite unobservable characteristics of underlying interest rates and exchange rate, the importance of reference indicators for monetary policy is crucial. Proposed monetary condition index in gap form examines monetary impulse on economic and credit cycle in inflation targeting model.

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Mercury Retrograde Effect in Capital Markets: Truth or Illusion?

Abstract

From the most ancient times, the astrological beliefs have played an important role in human history, thinking, world-views, language and other elements of social culture. The practice of relating the movement of celestial bodies to events in financial markets is relatively newer but despite the inconsistency between financial astrology and standard economic or financial theory, it seems to be largely spread among capital market traders. This paper evaluates one of the astrological effects on the capital market, more precisely the Mercury retrograde effect on US capital market. Despite the fact that it is just an optical illusion the astrological tradition says that Mercury retrograde periods are characterized by confusion and miscommunications. The trades could be less effective, the individuals more prone to make mistakes so there is a long-held belief that it is better to avoid set plans during Mercury retrograde, signing contracts, starting new ventures or open new stock market positions. The main findings of this study are lower return’s volatilities in the Mercury retrograde periods, inconsistent with the astrologic theories assumptions but consistent with the idea that trader’s beliefs in Mercury retrograde effect could change the market volatility exactly in the opposite sense than the predicted one.

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Misinformation About Dividend Payouts Influences Transaction Prices in Experimental Asset Markets

Abstract

AIMS: The paper investigates the effects of misinformation regarding dividend payouts on bubble formation, asset pricing and individual investment returns in experimental asset markets, when correct information about the expected dividends and their probabilities is also available.

METHOD: In two experiments, totaling34 Smith-Suchanek-Williams type double-auction continuous experimental markets (238 subjects), participants were exposed to misinformation regarding dividend payouts in a previous game, with the correct dividend matrix also provided. The misinformation stated the dividends in the previous game to have been much lower or much higher than according to the expected value function. The misinformation was either homogenous for all participants or provided to only half of the investors in a market (heterogeneously).

RESULTS:Homogenous misinformation stating that the last game’s dividend payouts were high, led to larger overpricing throughout the game, as compared to baseline (no misinformation) and homogenous misinformation stating that the last game’s dividends were low. In informationally heterogeneous markets, where half of the participants received “high dividends” misinformation and half remained non-misinformed, transaction prices were the lowest compared to the aforementioned treatments. It was also discovered that agents receiving the ‘high dividend’ misinformation had lower returns than non-misinformed participants in the same heterogeneous market.

Open access
The impact of cryptocurrency on the efficient frontier of emerging markets

Abstract

Cryptocurrencies are a sweltering topic in modern times of investment strategies. Since the cryptocurrency market is classified as an emerging market, in this paper a portfolio of emerging markets is compiled from the indices of four European Union (EU) countries and one cryptocurrency. The aim of this paper is to investigate how the incorporation of the Bitcoin cryptocurrency into the portfolio affects the performance of the portfolios of these countries. Moreover, by drawing an efficient frontier, the paper identifies where Bitcoin stands relative to other indices in the portfolio. The countries whose indices were used in the analysis are: Croatia, Hungary, Romania and Poland during the period from July 13, 2018 to June 07, 2019. The method used for an efficient frontier formation is Markowitz’s Modern Portfolio Theory (MPT). By applying this theory, the minimum variance portfolio at the efficient frontier was created for the portfolio with and without the cryptocurrency. The empirical analysis indicates that Bitcoin improves the effectiveness of the portfolio in emerging markets of the selected EU countries, where the expected risks of a portfolio that includes the cryptocurrency are smaller and with higher returns than those of portfolios without Bitcoin. From the Markowitz’s theory point of view, the results of the empirical analysis also indicate that Bitcoin is on the efficient frontier. Since all instruments on the efficient frontier according to the modern portfolio theory are efficient, it can be concluded that investments in such instruments depend on investor’s risk aversion.

Open access
Heteroskedasticity in Excess Bitcoin Return Data: Google Trend vs. Garch Effects

Abstract

This paper examines the mixture of distribution properties associated with heteroskedastic excess Bitcoin return data, using the volume of Google search queries as a proxy for the information arrival time, from a monthly data sampling period of June 2010 to May 2019. The results show that the volatility coefficients become highly statistically insignificant when the lagged volume of search queries is included in the conditional variance equation of the GJR-GARCH-M model. This clearly suggests that the volume of search queries is shown to provide significant explanatory power regarding the variance of heteroskedastic excess Bitcoin return, which can be traced from the ARCH process defined in the GJR-GARCH-M specification. A significant negative relationship between the conditional volatility and the volume of search queries indicates that Internet (online) information arrival reduces the risk premium in the Bitcoin market, which may improve market stability.

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Morphactin Substantially Induced the Fourth Internode Growth in Decapitated Tulips: Relevance to Endogenous Levels of Indole-3-Acetic Acid

Abstract

Important role of auxin polar transport inhibitors such as TIBA (2,3,5- triiodobenzoic acid), NPA (N-(1-naphthyl)phthalamic acid) and morphactin (methyl 2-chloro-9-hydroxyfluorene-9-carboxylate) in stem growth of tulips was intensively studied. After the application of morphactin above the 3rd node of decapitated tulips, the stimulated growth of the 4th internode was clearly observed. On the other hand, NPA and TIBA were slightly effective in stimulating the 4th internode growth of tulips. Endogenous levels of IAA in the 4th internode after the treatment of auxin polar transport inhibitors were determined using gas-liquid chromatography-mass spectrometry (GC-MS) and gas-liquid chromatography-mass spectrometry selected ion monitoring system (GC-SIM) with deuterium labelled IAA (Indole-2,4,5,6,7-d5-3- acetic acid, d5-IAA) as an internal standard, resulted in significant accumulation of IAA in the 4th internode of tulips after the treatment of morphactin. In the treatment of NPA and TIBA, there was almost no such an accumulation of IAA. These results strongly suggest that stimulated growth of the 4th internode of tulips induced by the application of morphactin is the consequence of accumulated endogenous levels of IAA after the treatment. The possible mode of action of auxin polar transport inhibitors in tulip stem growth is also discussed.

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A Shift in U.S. Foreign Policy under the Nixon Administration and European Political Cooperation: A Historical Analysis

[accessed 14 Dec 2014] -- (1969-1976d), Note from the Soviet Leadership to President Nixon, Foreign Relations of the United States: Soviet Union, October 1971 - May 1972, vol. XIV, Document 53. Retrieved from http://history.state.gov/historicaldocuments/frus1969-76v14/d53 [accessed 10 Dec 2014] Graebner, N. A; Burns, R. D. & Siracusa, J. M. (2010), American and the Cold War, 1941-1991: A Realist Interpretation, vol. 2, California: Praeger. Isaacson, W. (1992), Kissinger: A Biography, New York: Simon and Schuster, Inc

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