Global Finance

The effect of exchange rate volatility on trade is a controversial issue in international economics. Despite a widespread view that an increase in exchange rates volatility reduces trade, there is no real consensus on the direction or the size of the exchange rate volatility–trade level linkages. This paper investigates the relationship between US trade volume and exchange rate volatility using cointegration and error-correction models. We use conditional variances of the real effective exchange rate (REER) series modeled as a generalized autoregressive conditional heteroskedastic (GARCH) process to measure the exchange rate volatility. The cointegration results indicate a significant negative relationship between US export volume and exchange rate volatility. The short-run dynamics of the relationship, however, show that the effects of both real exchange rates and exchange rate volatility are insignificant.

ABSTRACT:
The tenets and concepts of Islamic Economics are vast. Islamic Economics is vastly more than the usual mindset of many, precisely, “absence of Riba (usury) in an economy”.
However, its pure and harmless nature has been a sort of intimidation to conventional economics. The cardinal principles of Islamic  Finance sourced from the Quran(shariah) is divine, its capability of sustaining and substituting the conventional economics and global financial system is immeasurable.
For no reason, conventional economics has failed to foresee the various global financial crisis that has been occurring since the Great Depression of the 1930s and the recent 2008 global financial crisis. Neither has it been able to find a lasting solution.
Instead, the conventional economics/economist left the world wondering about a lasting solution and prevention/elimination of future occurrence of a global financial crisis. To really understand what is going on beneath, we must return to the discredited non-quant model of economics, selfless and dedicated for equality, progress and development, for example; ISLAMIC ECONOMICS.

Official discourses of Development are being redefined. If the key geopoliti-cal contexts shaping the postwar Development project were decolonisation and the Cold War, the defining world-historical transformations shaping the emerging vision of Development are the expansion of state capitalism and the rise of China. The IMF, the World Bank, the OECD, the G20, other multilaterals, and bilateral partners are increasingly taking stock of the rise of state capitalism, and acting as ideational vectors of this emerging regime. However, this new "state capitalist normal" is also portrayed as carrying risks. There is anxiety regarding the direction the political form of global capital accumulation is heading: with the unchecked proliferation of state capitalism possibly blunting competition, politicising economic relations, and intensifying geoeconomic tensions. This anxiety underwrites the current re-articulation of Development, one which embraces the state as promoter, supervisor, and owner of capital; even as it critiques China's use of similar instruments.

With Beyond Debt: Islamic Experiments in Global Finance, Daromir Rudnyckyj has opened a passage to a different world of theory and practice in global finance. This world is the world of Islamic finance. A financial system which operates according to Islamic law (shariah). As critical scholars continue to criticise the finance of Western capitalism, Islamic finance is both proposing and executing new ways of addressing the turmoil of global finance. Rudnyckyj’s research reminds critical scholars that finance is always two steps ahead, and that this whole time we may have been following the wrong trail.

This special section shifts analytical attention onto efforts undertaken by dispersed sets of actors operating in online communities to mobilize a novel internet‐based technology that mysteriously appeared at the height of market volatility in 2008. Applications of blockchain technologies and the challenges presented to longstanding patterns of financial globalization are analysed by a group of scholars with backgrounds in anthropology, political science and sociology. This introductory article first elaborates what blockchain technologies consist of before foreshadowing the insights that the following interdisciplinary investigations yield for comprehending the implications that technological changes pose for global finance specifically and globalization more generally.

The main premise of this paper is that, until recently, African elites did not regulate or control financial flows moving across the continent. They were not financial gatekeepers. In Africa Since 1940, Cooper identified African elites as gatekeepers regulating access to resources and opportunities passing through strategic sites. This paper makes a case for revision of existing notions of the gatekeeper state in an ongoing effort to (re)negotiate the continent’s colonial past through two new arguments. The first is that financial power was never located at a ‘peripheral’ African gate, but resolutely held onto within leading financial centres, circumventing any opportunity for African elites to control financial flows. Failure to distinguish between types of flows distorts analysis of African political economic power under colonialism. It is only in the post-2000 period, that we see powerful African states driving the integration of African markets into the global financial system. The second argument is that these African goals to control financial flows correspond more to ‘gateway’ strategies than to gatekeeper. Drawing on the case of Lagos, I demonstrate how this ‘gateway’ concept better captures trans-scalar processes of new financial clustering in Africa’s emerging markets than a concept associated with ‘gates’ under Empire.

The study examines the first day returns of over 480 initial public offerings (IPO) in Hong Kong during a 12-year period (1994–2005). Based on this set of observations the study builds a comprehensive model of the short-term price performance of new offerings, in the light of the existing theoretical hypotheses about IPO underpricing. Results show clear evidence of the signaling effect of underwriters' reputation. For a set of different conditions and time periods examined, the most sought after underwriters are consistently associated with less underpriced offerings. In addition, the study shows that offerings underwritten by two or more underwriters tend to be less underpriced and that underpricing may be a signal in its own right. The study also shows that the informed demand hypothesis of Rock (1986) is supported only where some specific circumstances are verified. Finally, results confirm the recent trend (in Hong Kong) towards a less aggressive underpricing.

Siegel's paradox is a fundamental question in international finance about exchange rates for futures contracts and has puzzled many scholars for over forty years. The unorthodox approach presented in this article leads to an arbitrage-free solution which is invariant under currency re-denominations and is symmetric, as explained. We will also give a complete classification of all such aggregators in the general case. The formula obtained in this setting therefore describes all the negotiated no-arbitrage forward exchange rates in terms of a reciprocity function. Keywords: Siegel's paradox, forward exchange rates, discount bias.

This paper investigates Levy spectral risk measures (SRM) as a coherent alternative to generalized Pareto spectral risk measures. Specifically, using futures data from major indexes, we consider using SRM for conditional distributions belonging to the generalized hyperbolic family of Levy processes, and compare and contrast the results with those obtained from the traditional unconditional extreme value approach. Compared with Levy models, the extreme value model provides poor estimates of quantiles outside the fixed tails, which in turn yield poor estimates of the spectral risk measure itself. The superiority of the Levy models is increasingly apparent as investors become increasingly risk averse.

Amid escalating claims about the promises and perils of emergent financial technologies (fintech), critical investigation of the extent to which specific technological changes in global finance are truly ‘disruptive’ is sorely needed. Yet, IPE has engaged little with the growing focus on fintech in popular and regulatory debates, as well as in Social Studies of Finance (SSF). This article and accompanying special issue foreground ‘infrastructures’ as a heuristic for injecting nuance into debates on the emergence, limits and implications of technological changes in global finance while bringing IPE into conversation with perspectives on fintech in cognate literatures. Building on insights developed in Science and Technology Studies (STS), we argue that tracing the ways in which infrastructures enabling financial markets to operate are assembled out of multiple old and new socio-technical devices offers productive avenues for addressing key questions arising from several entanglements underpinning technological change. The findings of contributions to this special issue are linked to two key themes in debates on the impacts of technological change: financial inclusion and financial stability. Further avenues are proposed for examining the infrastructures in which technological change occurs in global finance and beyond, while fostering on-going dialogues between IPE, STS and SSF.

Neuere politische und soziologische Ansätze untersuchen die Performativität des Finanzsystems, also die Frage, wie Politik, Finanzpraktiken und Wirtschaftswissenschaft das Finanzsystem gestalten und konstituieren, wobei sich bislang zwei Forschungsrichtungen herausgebildet haben. Während der eine Ansatz mit Rückgriff auf Callon die Performativität konkreter Handlungen der Finanzakteure in den Blick nimmt, bezieht sich der andere auf Foucault und Butler und betont, dass die diskursive Struktur des Finanzsystems der analytische Ausgangspunkt sein sollte, um deren Auswirkungen auf die alltäglichen Lebensverhältnisse zu untersuchen. Beiden Ansätzen fehlt allerdings ein Konzept, das Mikro- und Makroebene analytisch zusammenbringt und insbesondere die politischen Konflikte um die Gestaltung des globalen Finanzsystems berücksichtigt. Diese Lücke, so wird dargelegt, kann mit der poststrukturalistischen Hegemonietheorie geschlossen werden. Zugleich wird die sozioökonomische Selektivität sedimentierter Finanzstrukturen durch das Konzept der stratifizierten Hegemonie erklärt. Am Beispiel der politischen Governance der Euro-Krise wird die performative Kraft der Austeritätspolitik diskutiert.

This paper evaluates different hedging strategies for aluminum and copper futures contracts traded at Shanghai Futures Exchange. In addition to usual candidates such as the traditional regression hedge ratio and the hedging strategy constructed from bivariate fractionally integrated generalized autoregressive conditional heteroskedasticity (BFIGARCH) model, two advanced specifications are proposed to account for impacts of the basis on market volatility and

This paper examines China's influence on the volatility of crude oil prices in the international markets. Using data from 1997–2007, we find that China has little impact on the volatility of the world crude oil markets. On the contrary, our evidence shows that the crude oil price innovations in China are significantly driven by the OPEC and US markets, which