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The IUP Journal of Applied Finance
ISSN: 0972-5105
A ‘peer reviewed’ journal indexed on Cabell’s Directory,
and also distributed by EBSCO and Proquest Database

Jan'18

Previous Issues

The IUP Journal of Applied Finance is a quarterly finance journal that showcases empirical research in applied finance. IJAF provides research articles on business environment, regulatory environment, equity markets, debt markets, corporate finance, financial services, portfolio management, international finance and risk management.

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  • Business Environment
  • Regulatory Environment
  • Equity Markets
  • Debt Market
  • Corporate Finance
  • Financial Services
  • Portfolio Management
  • International Finance
  • Risk Management
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Hidden Leverage in Conglomerates: An Unintended Systemic Risk
Linkages of the Malaysian Share Market with Developed Bourses?
Influence of Urgency on Financial Risk-Taking Behavior of Individual Investors: The Role of Financial Risk Tolerance as a Mediating Factor
Managements’ View on Shares Repurchase: An Indian Survey
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Contents
(Jan 2018)

Hidden Leverage in Conglomerates: An Unintended Systemic Risk

--G Jagan Mohan and Puja Padhi

A business with interests in more than one sector of the economy can be run as a single company with multiple divisions as a conglomerate or with several independently run companies as a conglomerate. In India, conglomerates are large and diverse family-owned businesses. The firms affiliated to them hold large market shares in their respective sectors. On average, they tend to be larger than the unaffiliated firms. Through the act of setting up independent firms, shadow leveraging takes place through seemingly arm’s length relationships. Considerable effort is made to obfuscate the nature of the association between firms to obviate the accounting requirements for disclosure of consolidated accounts. This paper tries to establish that firms affiliated to a conglomerate are far more leveraged than their unaffiliated counterparts. Regulators and market participants are focused narrowly on their specific jurisdictions. Since the leverage is moved to unlisted and unregulated market segments, the systemic risk arising from them remains largely unexplored. Regulators need to be aware of this systemic risk and alter regulations to introduce greater disclosures from such groups.

Article Price : Rs.50

Linkages of the Malaysian Share Market with Developed Bourses?

--John Murugesu and Chandra Sakaran

The question of whether global share markets are linked or integrated has important implications for portfolio diversification and risk reduction strategies. While integration of financial markets can increase the liquidity, transparency and efficiency of markets, it can also increase the risks of contagion (Mollah et al., 2016). This paper explores the long-run and short-run relationship between the Malaysian share market and the developed share markets in Singapore, Hong Kong, the UK and the US. In this paper, the Johansen cointegration test and VAR model are used to examine the long-term relationship of the Malaysian share market with the developed markets. The results indicate that the Malaysian share market is not integrated with the above markets in the long term. However in the short-term, a one-way Granger causality exists between the Malaysian share market and the US and UK share markets. The results are consistent with the notion that developed share markets have a significant and positive influence on the short-term returns of smaller share markets such as Malaysia’s. The results also affirm the general view that price movements in developed share markets can be used as a guide for investment decisions in emerging markets.

Article Price : Rs.50

Influence of Urgency on Financial Risk-Taking Behavior of Individual Investors: The Role of Financial Risk Tolerance as a Mediating Factor

--Pragati Hemrajani and Shiv Kumar Sharma

This paper empirically examines whether unobserved variable (urgency) is capable of influencing individual investors’ financial risk-taking behavior. It further aims to explore the causal relationship from urgency through financial risk tolerance to financial risk-taking behavior. Based on the review of previous studies, two conceptual frameworks (direct effect and indirect effect) followed by a set of hypotheses were developed. A survey was conducted among individual investors (N = 90) with various levels of investment experience, through a structured questionnaire followed by data analysis using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The results were found to be significant when examined for both direct and causal pathways thereby suggesting the need for more research aimed at examining the effects of these unobserved variables on financial risk-taking behavior of individuals.

Article Price : Rs.50

Managements’ View on Shares Repurchase: An Indian Survey

--Sadaf Anwar, Shveta Singh and P K Jain

Shares repurchase has become an increasingly common emerging instrument of corporate payout policy around the world. In fact, significant ‘announcement effects’ have been reported upon their announcements. Apart from the instant market reaction, it is necessary to understand the fundamental and the psychological factors behind the shares repurchase announcements. Hence, it becomes imperative to understand the driving forces behind and the motivations/perceptions of the management announcing these decisions. The literature review indicates that, in India, no comprehensive survey has been undertaken in the past on the managerial views and motives subsequent to shares repurchase in Indian context. This paper is a modest attempt to fill these research gaps, amongst others. The objective of the paper is to gauge/understand the viewpoint of the Indian finance managers (of BSE 500 index firms) in respect of the announcement of shares repurchase using a survey approach (structured questionnaire). A substantial majority of the Indian finance managers believe that shares repurchase enables investors to express confidence in the firm and is an attractive means of obtaining a sound capital structure. They strongly support the undervaluation hypothesis as the shares repurchase are considered the ‘news bulletin’ of the conviction of the management regarding the undervaluation of shares.

Article Price : Rs.50

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Automated Teller Machines (ATMs): The Changing Face of Banking in India

Bank Management
Information and communication technology has changed the way in which banks provide services to its customers. These days the customers are able to perform their routine banking transactions without even entering the bank premises. ATM is one such development in recent years, which provides remote banking services all over the world, including India. This paper analyzes the development of this self-service banking in India based on the secondary data.

The Information and Communication Technology (ICT) is playing a very important role in the progress and advancement in almost all walks of life. The deregulated environment has provided an opportunity to restructure the means and methods of delivery of services in many areas, including the banking sector. The ICT has been a focused issue in the past two decades in Indian banking. In fact, ICTs are enabling the banks to change the way in which they are functioning. Improved customer service has become very important for the very survival and growth of banking sector in the reforms era. The technological advancements, deregulations, and intense competition due to the entry of private sector and foreign banks have altered the face of banking from one of mere intermediation to one of provider of quick, efficient and customer-friendly services. With the introduction and adoption of ICT in the banking sector, the customers are fast moving away from the traditional branch banking system to the convenient and comfort of virtual banking. The most important virtual banking services are phone banking, mobile banking, Internet banking and ATM banking. These electronic channels have enhanced the delivery of banking services accurately and efficiently to the customers. The ATMs are an important part of a bank’s alternative channel to reach the customers, to showcase products and services and to create brand awareness. This is reflected in the increase in the number of ATMs all over the world. ATM is one of the most widely used remote banking services all over the world, including India. This paper analyzes the growth of ATMs of different bank groups in India.
International Scenario

If ATMs are largely available over geographically dispersed areas, the benefit from using an ATM will increase as customers will be able to access their bank accounts from any geographic location. This would imply that the value of an ATM network increases with the number of available ATM locations, and the value of a bank network to a customer will be determined in part by the final network size of the banking system. The statistical information on the growth of branches and ATM network in select countries.

Indian Scenario

The financial services industry in India has witnessed a phenomenal growth, diversification and specialization since the initiation of financial sector reforms in 1991. Greater customer orientation is the only way to retain customer loyalty and withstand competition in the liberalized world. In a market-driven strategy of development, customer preference is of paramount importance in any economy. Gone are the days when customers used to come to the doorsteps of banks. Now the banks are required to chase the customers; only those banks which are customercentric and extremely focused on the needs of their clients can succeed in their business today.

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