We analyze the relationship between ask and transaction prices in the Swiss residential real estate market over the 2005-2015 period. First, we present strong evidence that ask and transaction prices are co-integrated across different market segments, but they do not Granger-cause one another. Second, we analyze the cross-sectional distributions of ask and transaction prices/per living space and conclude that they do not follow the same distribution, with the distribution of transaction prices close to a log normal distribution and the distribution of ask prices exhibiting slightly fatter tails. Finally, we show significant evidence that transaction prices tend to exceed ask prices during protracted booms and bubble regimes. We discuss these empirical patterns in light of theoretical housing search models, and provide support for the hypothesis that the 2005-2015 Swiss market has been dominated by an auction-like dynamics. Hence, although ask prices constitute a suitable proxy to follow the development of the Switzerland's real estate market, especially given the sparsity of available transaction data, they might be prone to underestimate the extent of price increases when the market is booming, and the magnitude of the correction when the market enters the bust phase of the housing cycle.
{"title":"Comparing ask and transaction prices in the Swiss housing market","authors":"Diego Ardila,Ahmed Ahmed,Didier Sornette","doi":"10.3934/qfe.2021004","DOIUrl":"https://doi.org/10.3934/qfe.2021004","url":null,"abstract":"We analyze the relationship between ask and transaction prices in the Swiss residential real estate market over the 2005-2015 period. First, we present strong evidence that ask and transaction prices are co-integrated across different market segments, but they do not Granger-cause one another. Second, we analyze the cross-sectional distributions of ask and transaction prices/per living space and conclude that they do not follow the same distribution, with the distribution of transaction prices close to a log normal distribution and the distribution of ask prices exhibiting slightly fatter tails. Finally, we show significant evidence that transaction prices tend to exceed ask prices during protracted booms and bubble regimes. We discuss these empirical patterns in light of theoretical housing search models, and provide support for the hypothesis that the 2005-2015 Swiss market has been dominated by an auction-like dynamics. Hence, although ask prices constitute a suitable proxy to follow the development of the Switzerland's real estate market, especially given the sparsity of available transaction data, they might be prone to underestimate the extent of price increases when the market is booming, and the magnitude of the correction when the market enters the bust phase of the housing cycle.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138503664","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study aims to better understand the role of centralized and decentralized ledgers in the money supply process. The aim is to highlight the strengths, weaknesses, opportunities, and threats of these tools in the context of finance and banking. A thorough investigation of the prior literature was carried out using sources extracted from various academic databases. A SWOT analysis based on an integrative literature review methodology was conducted to synthesize various research contributions and analyze relevant information related to centralized and decentralized ledgers. The findings reveal that centralized ledgers are still critical in the record-keeping of financial transactions, despite the strengths and opportunities of decentralized ledgers outweighing those of centralized ledgers. This study helps to increase the understanding of financial and banking sector managers concerning the importance of decentralized ledgers in delivering more value to customers.
{"title":"Centralized vs. decentralized ledgers in the money supply process: a SWOT analysis","authors":"Abderahman Rejeb, Karim Rejeb, John G. Keogh","doi":"10.3934/QFE.2021003","DOIUrl":"https://doi.org/10.3934/QFE.2021003","url":null,"abstract":"This study aims to better understand the role of centralized and decentralized ledgers in the money supply process. The aim is to highlight the strengths, weaknesses, opportunities, and threats of these tools in the context of finance and banking. A thorough investigation of the prior literature was carried out using sources extracted from various academic databases. A SWOT analysis based on an integrative literature review methodology was conducted to synthesize various research contributions and analyze relevant information related to centralized and decentralized ledgers. The findings reveal that centralized ledgers are still critical in the record-keeping of financial transactions, despite the strengths and opportunities of decentralized ledgers outweighing those of centralized ledgers. This study helps to increase the understanding of financial and banking sector managers concerning the importance of decentralized ledgers in delivering more value to customers.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70228960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Conrado Diego García-Gómez, M. Bilgin, Ender Demir, José María Díez-Esteban
This study analyzes the leverage and performance relationship in the context of the U.S. hospitality industry. We consider that, studying this traditional corporate finance issue in the context of the hospitality industry, is relevant due to its unique characteristics in terms of capital structure and value creation. In addition to Ordinary Least Squares (OLS) and Fixed-Random effects (FE-RE) estimations, we also employ System Generalized Method of Moments (GMM) panel data techniques to avoid the endogeneity issue. Thus, using a sample of 313 U.S. hospitality firms for the period 2001–2018, our primary results are consistent with the pecking order theory, suggesting a negative relationship between leverage and firm performance. The findings are robust to alternative variables description and econometric techniques. We also find an inverted U-shape relationship, but given the high indebtedness of hospitality firms, the negative impact on firm performance is prevalent. Our contribution to the literature is double. First, we highlight the importance of analyzing the capital structure issue in a certain industry and, second, we provide important policy implications for managers and investors.
{"title":"Leverage and performance: the case of the U.S. hospitality industry","authors":"Conrado Diego García-Gómez, M. Bilgin, Ender Demir, José María Díez-Esteban","doi":"10.3934/QFE.2021010","DOIUrl":"https://doi.org/10.3934/QFE.2021010","url":null,"abstract":"This study analyzes the leverage and performance relationship in the context of the U.S. hospitality industry. We consider that, studying this traditional corporate finance issue in the context of the hospitality industry, is relevant due to its unique characteristics in terms of capital structure and value creation. In addition to Ordinary Least Squares (OLS) and Fixed-Random effects (FE-RE) estimations, we also employ System Generalized Method of Moments (GMM) panel data techniques to avoid the endogeneity issue. Thus, using a sample of 313 U.S. hospitality firms for the period 2001–2018, our primary results are consistent with the pecking order theory, suggesting a negative relationship between leverage and firm performance. The findings are robust to alternative variables description and econometric techniques. We also find an inverted U-shape relationship, but given the high indebtedness of hospitality firms, the negative impact on firm performance is prevalent. Our contribution to the literature is double. First, we highlight the importance of analyzing the capital structure issue in a certain industry and, second, we provide important policy implications for managers and investors.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70229112","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Rural residents' income is one of the core issues of rural economic development, and digital financial inclusion is one of the important influencing factors of rural residents' income. Especially under the background of the implementation of digital financial technology, the relationship between the two has become more complex. Based on the panel data set of 1624 counties in Chinese mainland in the past 2014–2019 years, the paper uses panel regression models to study the impact of digital financial inclusion on rural residents' income. Further, by analyzing the industrial structure, education level and financial development level, the following conclusions are drawn. First, digital financial inclusion significantly promotes the increase of rural residents' income, but there are differences in regional level and different quantiles of rural residents' income. At the regional level, the promotion of control effect at the provincial level is stronger than that at the county level; in different quantiles of residents' income, with the increase of residents' income quantile, the promoting effect is gradually enhanced. Second, the heterogeneous impact of digital financial inclusion on rural residents' income is reflected in three aspects: regional development, education level and financial development level. Third, industrial structure, education level and financial development level will enhance the promotion effect of digital financial inclusion on rural residents' income, but there are significant differences in the intensity of the regulatory effect of the three variables.
{"title":"Does digital finance benefit the income of rural residents? A case study on China","authors":"Tinghui Li, Jiehua Ma","doi":"10.3934/qfe.2021030","DOIUrl":"https://doi.org/10.3934/qfe.2021030","url":null,"abstract":"Rural residents' income is one of the core issues of rural economic development, and digital financial inclusion is one of the important influencing factors of rural residents' income. Especially under the background of the implementation of digital financial technology, the relationship between the two has become more complex. Based on the panel data set of 1624 counties in Chinese mainland in the past 2014–2019 years, the paper uses panel regression models to study the impact of digital financial inclusion on rural residents' income. Further, by analyzing the industrial structure, education level and financial development level, the following conclusions are drawn. First, digital financial inclusion significantly promotes the increase of rural residents' income, but there are differences in regional level and different quantiles of rural residents' income. At the regional level, the promotion of control effect at the provincial level is stronger than that at the county level; in different quantiles of residents' income, with the increase of residents' income quantile, the promoting effect is gradually enhanced. Second, the heterogeneous impact of digital financial inclusion on rural residents' income is reflected in three aspects: regional development, education level and financial development level. Third, industrial structure, education level and financial development level will enhance the promotion effect of digital financial inclusion on rural residents' income, but there are significant differences in the intensity of the regulatory effect of the three variables.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70229614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Following the keep-it-sophisticatedly-simple principle, KISS, we propose using the averaging window approach to forecast the market equity premium in unstable environments. First, the estimation methodology of averaging window is a theoretically justified method robust to uncertainties on structural breaks and estimation window sizes. Second, the averaging window method has the obvious advantages of being understandable to forecast users and simple to implement, thus encouraging engagement and criticism. Our empirical results demonstrate the superior performance of the averaging window when forecasting the U.S. market equity premium, exceeding a wide range of methods which have been shown effective, such as shrinkage estimators and technical indicators.
{"title":"Equity premium prediction: keep it sophisticatedly simple","authors":"Anwen Yin","doi":"10.3934/QFE.2021012","DOIUrl":"https://doi.org/10.3934/QFE.2021012","url":null,"abstract":"Following the keep-it-sophisticatedly-simple principle, KISS, we propose using the averaging window approach to forecast the market equity premium in unstable environments. First, the estimation methodology of averaging window is a theoretically justified method robust to uncertainties on structural breaks and estimation window sizes. Second, the averaging window method has the obvious advantages of being understandable to forecast users and simple to implement, thus encouraging engagement and criticism. Our empirical results demonstrate the superior performance of the averaging window when forecasting the U.S. market equity premium, exceeding a wide range of methods which have been shown effective, such as shrinkage estimators and technical indicators.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70229204","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
By taking samples of 1221 non-financial listed companies in China from 2010 to 2019, threshold effects of financialization on enterprise R&D innovation, as well as heterogeneous impacts of the threshold effects in different enterprise types are analyzed by using panel threshold model. The research shows that there are threshold effects of financialization on enterprise R&D innovation, and these threshold effects are heterogeneous among different types of enterprises. To be specific, first, in groups with different ownership structures, the inhibiting effect of state-owned enterprises financialization on R&D innovation decreases with the increase of financialization, while the impact of financialization of non-state-owned enterprises on R&D innovation is firstly promoted and then inhibited with the increase of financialization. Second, in groups with different financing constraints, the inhibiting effect of financialization with high financing constraints enterprises on R&D innovation decreases significantly with the increase of financialization, while the effect of financialization with low financing constraints enterprises on R&D innovation changes from an insignificant promoting effect to a significant inhibiting effect with the increase of financialization. These conclusions provide empirical evidence for different types of enterprises on how to balance the relationship between financialization and R&D innovation.
{"title":"Threshold effects of financialization on enterprise R & D innovation: a comparison research on heterogeneity","authors":"Tinghui Li, Xue Li, Khaldoon Albitar","doi":"10.3934/QFE.2021022","DOIUrl":"https://doi.org/10.3934/QFE.2021022","url":null,"abstract":"By taking samples of 1221 non-financial listed companies in China from 2010 to 2019, threshold effects of financialization on enterprise R&D innovation, as well as heterogeneous impacts of the threshold effects in different enterprise types are analyzed by using panel threshold model. The research shows that there are threshold effects of financialization on enterprise R&D innovation, and these threshold effects are heterogeneous among different types of enterprises. To be specific, first, in groups with different ownership structures, the inhibiting effect of state-owned enterprises financialization on R&D innovation decreases with the increase of financialization, while the impact of financialization of non-state-owned enterprises on R&D innovation is firstly promoted and then inhibited with the increase of financialization. Second, in groups with different financing constraints, the inhibiting effect of financialization with high financing constraints enterprises on R&D innovation decreases significantly with the increase of financialization, while the effect of financialization with low financing constraints enterprises on R&D innovation changes from an insignificant promoting effect to a significant inhibiting effect with the increase of financialization. These conclusions provide empirical evidence for different types of enterprises on how to balance the relationship between financialization and R&D innovation.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70229546","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the effect of acquirer likelihood on future stock returns. In sharp contrast to prior findings, acquirer likelihood is a strong and negative predictor of cross-sectional future returns after controlling for target likelihood. If takeover exposure represents a risk premium, the effect on stock valuation should only present in either likelihood measure (acquirer or target likelihood). This evidence casts doubt on the rational risk explanation, but is consistent with a relative mispricing story. Investors take positions accordingly to explore profits from takeovers. Profits from trading strategy based on takeover probability are concentrated in stocks with high misvaluation characteristics, including small size, value, high momentum, high investment, and low turnover firms, as well as both high and low issuance (or accrual) firms.
{"title":"Relative mispricing and takeover likelihood","authors":"Keming Li","doi":"10.3934/qfe.2021031","DOIUrl":"https://doi.org/10.3934/qfe.2021031","url":null,"abstract":"This paper examines the effect of acquirer likelihood on future stock returns. In sharp contrast to prior findings, acquirer likelihood is a strong and negative predictor of cross-sectional future returns after controlling for target likelihood. If takeover exposure represents a risk premium, the effect on stock valuation should only present in either likelihood measure (acquirer or target likelihood). This evidence casts doubt on the rational risk explanation, but is consistent with a relative mispricing story. Investors take positions accordingly to explore profits from takeovers. Profits from trading strategy based on takeover probability are concentrated in stocks with high misvaluation characteristics, including small size, value, high momentum, high investment, and low turnover firms, as well as both high and low issuance (or accrual) firms.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70229648","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes a relatively new investment product named as constant leverage certificate (CLC), which is designed to provide a multiple of the return of its underlying asset on a daily basis. Based on the literature on leveraged ETFs, which have a similar design, it is well-known that such a strategy does not reproduce the corresponding multiple of the underlying in the long run. But due to the typically much larger leverage factors of CLCs compared to leveraged ETFs, it is questionable whether many of the results found for leveraged ETFs can be applied to these certificates as well. Against this background, I study the drivers of the long-term deviation of the product return from the leveraged return of the underlying, test a generalized version of the theoretical long-term return model originally developed for leveraged ETFs with a simulation study, and analyze the return distribution based on the theoretical model and empirical data. In contrast to prior literature, my results indicate that the effect of compounding is much more pronounced than the noncompounding deviation also for short-term investment periods. The theoretical model, however, is relatively accurate despite much larger leverage factors.
{"title":"Constant leverage certificates: dynamics, performance, and risk-return characteristics","authors":"Vladimir Anić","doi":"10.3934/qfe.2020032","DOIUrl":"https://doi.org/10.3934/qfe.2020032","url":null,"abstract":"This paper analyzes a relatively new investment product named as constant leverage certificate (CLC), which is designed to provide a multiple of the return of its underlying asset on a daily basis. Based on the literature on leveraged ETFs, which have a similar design, it is well-known that such a strategy does not reproduce the corresponding multiple of the underlying in the long run. But due to the typically much larger leverage factors of CLCs compared to leveraged ETFs, it is questionable whether many of the results found for leveraged ETFs can be applied to these certificates as well. Against this background, I study the drivers of the long-term deviation of the product return from the leveraged return of the underlying, test a generalized version of the theoretical long-term return model originally developed for leveraged ETFs with a simulation study, and analyze the return distribution based on the theoretical model and empirical data. In contrast to prior literature, my results indicate that the effect of compounding is much more pronounced than the noncompounding deviation also for short-term investment periods. The theoretical model, however, is relatively accurate despite much larger leverage factors.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2020-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41512126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The novel coronavirus (COVID-19) is not only an unprecedented human and health crisis, but it is expected to become one of the most economically costly pandemics in recent history. Latest financial reports indicate that the COVID-19 outbreak is severely disrupting the global economy and financial markets. Many equity markets around the world have endured heavy declines since the pandemic’s outbreak. To provide an understanding of the effects of the novel coronavirus pandemic on stock markets, we investigate in this paper the impact of the COVID-19 confirmed cases and deaths on the daily returns of the major stock market indices in the Gulf Cooperation Council (GCC) countries over the period from April 1, 2020 to June 26, 2020. Using a panel data regression analysis, we find that stock markets in the GCC countries responded negatively and with a great degree to new and total COVID-19 confirmed deaths, while response to the number of COVID-19 confirmed cases is not significant. Therefore, during the COVID-19 outbreak daily returns of the major stock market indices in the GCC countries declined as the number of confirmed deaths increased. Further analysis suggests that GCC stock markets are impacted positively by the crude oil price (WTI) and negatively by the variation of the implied volatility in the global oil market and the global stock markets.
{"title":"Impact of the novel coronavirus on stock market returns: evidence from GCC countries","authors":"Raéf Bahrini, A. Filfilan","doi":"10.3934/QFE.2020029","DOIUrl":"https://doi.org/10.3934/QFE.2020029","url":null,"abstract":"The novel coronavirus (COVID-19) is not only an unprecedented human and health crisis, but it is expected to become one of the most economically costly pandemics in recent history. Latest financial reports indicate that the COVID-19 outbreak is severely disrupting the global economy and financial markets. Many equity markets around the world have endured heavy declines since the pandemic’s outbreak. To provide an understanding of the effects of the novel coronavirus pandemic on stock markets, we investigate in this paper the impact of the COVID-19 confirmed cases and deaths on the daily returns of the major stock market indices in the Gulf Cooperation Council (GCC) countries over the period from April 1, 2020 to June 26, 2020. Using a panel data regression analysis, we find that stock markets in the GCC countries responded negatively and with a great degree to new and total COVID-19 confirmed deaths, while response to the number of COVID-19 confirmed cases is not significant. Therefore, during the COVID-19 outbreak daily returns of the major stock market indices in the GCC countries declined as the number of confirmed deaths increased. Further analysis suggests that GCC stock markets are impacted positively by the crude oil price (WTI) and negatively by the variation of the implied volatility in the global oil market and the global stock markets.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2020-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42926945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The gravity equation is a useful tool for trading, but also for financial services as recently found. This paper tries to adapt modern theories of gravity equation for these services to a novel theory on trading, for both bilateral and multilateral trade, and supply and demand sides, finding an explicit expression of demand and supply of trade. This paper also includes an explanation of some Internet-based services by considering less transport costs between both countries. The proposed trading algorithm is key for trading development and for evaluating international trade, but also for finance, taking into account the midpoint between the proposed supply and demand of financial transactions, instead of the midpoint between bid and ask prices. This achieves a good fit for international trade and an alpha for financial trading.
{"title":"A new trading algorithm with financial applications","authors":"Guillermo Peña","doi":"10.3934/qfe.2020027","DOIUrl":"https://doi.org/10.3934/qfe.2020027","url":null,"abstract":"The gravity equation is a useful tool for trading, but also for financial services as recently found. This paper tries to adapt modern theories of gravity equation for these services to a novel theory on trading, for both bilateral and multilateral trade, and supply and demand sides, finding an explicit expression of demand and supply of trade. This paper also includes an explanation of some Internet-based services by considering less transport costs between both countries. The proposed trading algorithm is key for trading development and for evaluating international trade, but also for finance, taking into account the midpoint between the proposed supply and demand of financial transactions, instead of the midpoint between bid and ask prices. This achieves a good fit for international trade and an alpha for financial trading.","PeriodicalId":45226,"journal":{"name":"Quantitative Finance and Economics","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2020-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42164664","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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