Top Research Papers on Finance Topics

Abstract We identify the core topics of research applying machine learning to finance. We use a probabilistic topic modeling approach to make sense of this diverse body of research spanning across multiple disciplines. Through a latent Dirichlet allocation topic modeling technique, we extract 15 coherent research topics that are the focus of 5942 academic studies from 1990 to 2020. We find that these topics can be grouped into four categories: Price‐forecasting techniques, financial markets analysis, risk forecasting and financial perspectives. We first describe and structure these topics and ...

Abstract Biodiversity conservation will supersede climate change risk mitigation and adaptation as the next grand challenge for sustainable finance. Closing the financing gap between what is currently spent and what is needed to be spent over the next 10 years to mobilize private investment to maintain ecosystem integrity and biodiversity, and the services they provide, is estimated to exceed hundreds of billions per year. Yet there are no studies in the top tier journals in finance that have framed the risks related to biodiversity loss, how those risks might be priced, or how the private fin...

Maritime transport is considered as the lynchpin of global trade. In the past decades, a large number of academic articles in the maritime transport field have been published. This study aims to provide a comprehensive review of the development of maritime transport research. A structural topic model (STM) is adopted to analyze the research themes and trends in the maritime literature. STM is a text mining-based methodology to uncover main topics from large-scale unstructured textual data. In total, 3199 articles published between Jan 1991 and Aug 2020 were collected and analyzed. The results ...

ABSTRACT DeFi (‘decentralized finance’) has joined FinTech (‘financial technology’), RegTech (‘regulatory technology’), cryptocurrencies, and digital assets as one of the most discussed emerging technological evolutions in global finance. Yet little is really understood about its meaning, legal implications, and policy consequences. In this article we introduce DeFi, put DeFi in the context of the traditional financial economy, connect DeFi to open banking, and end with some policy considerations. We suggest that decentralization has the potential to undermine traditional forms of accountabili...

Abstract Sustainable finance—the integration of environmental, social, and governance (“ESG”) issues into financial decisions—is an increasingly important topic. Within companies, sustainability is no longer an ancillary issue confined to corporate social responsibility departments, but a CEO-level issue fundamental to the core business. Within the investment industry, sustainability used to be the exclusive domain of “socially responsible investors” who had social as well as financial objectives, but is now mainstream and includes investors with purely financial goals. This article introduces...

Abstract Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by showing that employment decisions are constrained by firms’ financial health and liquidity. Our main analysis uses a collage of three “quasi-experiments” to trace the effects of finance on employment. The results suggest that financial constraints and the availability of credit play an important role in firm-level employment decisions, as well as aggregate unemployment outcomes.

In this article, we review the literature studying interactions between climate change and financial markets. We first discuss various approaches to incorporating climate risk in macrofinance models. We then review the empirical literature that explores the pricing of climate risks across a large number of asset classes, including real estate, equities, and fixed income securities. In this context, we also discuss how investors can use these assets to construct portfolios that hedge against climate risk. We conclude by proposing several promising directions for future research in climate finan...

We review an empirical literature that studies the role of social interactions in driving economic and financial decision-making. We first summarize recent work that documents an important role of social interactions in explaining household decisions in housing and mortgage markets. This evidence shows, for example, that there are large peer effects in mortgage refinancing decisions and that individuals’ beliefs about the attractiveness of housing market investments are affected by the recent house price experiences of their friends. We also summarize recent work showing that social interactio...

Household financial decisions are complex, interdependent, and heterogeneous, and central to the functioning of the financial system. We present an overview of the rapidly expanding literature on household finance (with some important exceptions) and suggest directions for future research. We begin with the theory and empirics of asset market participation and asset allocation over the life cycle. We then discuss household choices in insurance markets, trading behavior, decisions on retirement saving, and financial choices by retirees. We survey research on liabilities, including mortgage choi...

This volume comprises 16 contributions that present advanced topics in graph domination, featuring open problems, modern techniques, and recent results. The focus is on primary dominating sets such as paired domination, connected domination, restrained domination, dominating functions, Roman domination, and power domination. Additionally, surveys include known results with a sample of proof techniques for each parameter. Of extra benefit to the reader, the first chapter includes a glossary of commonly used terms; the second chapter provides an overview of models of domination from which the pa...

This paper creates a navigator of the documents, allowing users to explore the hidden structure that a topic model discovers, and reveals meaningful patterns in a collection, helping end-users explore and understand its contents in new ways.

An in-depth analysis of unsupervised topic models from their inception to today is provided, tracing the origins of different types of contemporary topic models and comparing their proposed algorithms, as well as their different evaluation approaches.

The main aim of this article is to present the results of different experiments focused on the problem of model fitting process in topic modeling and its accuracy when applied to long texts and present a clear-cut power-law relation between the optimal number of topics and the analyzed sample size.

Artificial Intelligence (AI) has affected all aspects of social life in recent years. This study reviews 177,204 documents published in 25 journals and 16 conferences in the AI research from 1990 to 2021, and applies the Latent Dirichlet allocation (LDA) model to extract the 40 topics from the abstracts. According to the topics obtained, 7 subfields of the AI field can be discovered: Approximate Reasoning, Computational Theory, Intelligent Automation, Artificial Neural Network, Machine Learning, Natural Language Processing, and Computer Vision. This study aggregates the results of the LDA mode...

Using the panel data of A-share listed companies from 2011 to 2020, we demonstrate that the WW index can characterize the level of enterprise financing constraints in China more effectively. We investigate the effect of regional digital finance (DF) development on enterprise financing constraints. This study found that DF can significantly alleviate enterprise financing constraints, and the effect is greater for small and medium-sized enterprises (SMEs) and private enterprises. DF can partially correct the size discrimination and ownership discrimination of traditional finance on private SMEs,...

This paper investigates the effects of financing constraints on prompting green innovations using a sample of Chinese listed firms in the period 2001–2017. Also, we explore how green finance policies resolve financing constraints of firms to green innovation. The capability of green innovation is found to be impaired when firms face higher financing constraints, and privately owned enterprises tend to be more vulnerable than state-owned ones in this regard. Although green finance policies can effectively ease financing restraints on green innovation overall, green credits are less likely to be...

The classical techniques used by the financial industry is outlined and the potential advantages and limitations of quantum techniques are discussed, as well as challenges that physicists could help tackle.

To date, scholars working in the area of behavioral finance have mostly focused on asset pricing and portfolio theory, but less so in corporate finance. In this paper, I propose a conceptual framework for applying behavioral ideas to the main topics which comprise corporate finance, and call the approach “behavioral corporate finance.” There are two key behavioral impediments to the process of value maximization, one internal to the firm and the other external. I call the first impediment behavioral costs. In this respect, the behavioral corporate approach deals with four cases or categories, ...

This book introduces machine learning methods in finance. It presents a unified treatment of machine learning and various disciplines in quantitative finance, with an emphasis on how theory and hypothesis tests inform the choice of algorithm for financial data modeling and decision making.

This article examines the role of sustainable finance and investment in Japan and how the Japanese financial sector can mitigate growing climate risks and support Japan's transition towards a zero-carbon, sustainable economy. It first illustrates Japan's exposure to physical and transitional climate risks before reviewing emerging practices in sustainable finance. These include the growing importance of environmental, social, and governance (ESG) criteria in financial decision-making; more rigid reporting and disclosure standards; and the development of green bond and sustainable investment ma...

Textual analysis, implemented at scale, has become an important addition to the methodological toolbox of finance. In this review, given the proliferation of papers now using this method, we first provide an updated survey of the literature while focusing on a few broad topics—social media, political bias, and detecting fraud. We do not attempt to survey the various statistical methods and instead initially focus on the construction and use of lexicons in finance. We then center the discussion on readability as an attribute frequently incorporated in contemporaneous research, arguing that its ...

This article starts from the premise that International Political Economy (IPE) literature – with some notable exceptions – has a blind spot for the colonial and contested histories of financial infrastructures. Often considered to be the mere ‘plumbing’ of international finance, financial infrastructures instead are profoundly political and rooted in long-term colonial histories. To start addressing these blind spots, the article draws on literatures in critical infrastructure studies, that offer understandings of infrastructure as lively, contested and profoundly political. The argument is t...

Our legacy financial infrastructure has both limited growth opportunities and contributed to the inequality of opportunities. Around the world, 1.7 billion are unbanked. Small businesses, even those with a banking relationship, often must rely on high-cost financing, such as credit cards, because traditional banking excludes them from loan financing. High costs also impact retailers who lose 3% on every credit card sales transaction. These total costs for small businesses are enormous by any metric. The result is less investment and decreased economic growth. Decentralized finance, or DeFi, po...

The immutable refrain ‘change is the only constant’ serves as both cautionary and aspirational catchphrase. Our social environment is changing; improving on average globally, but with benefits dist...

Abstract We study how countries’ financial structure affects their transition to low-carbon growth. Using global industry-level data, we document that carbon-intensive industries reduce emissions faster in economies with deeper stock markets. The main channel underpinning this stylised fact is that stock markets facilitate green innovation in carbon-intensive sectors, resulting in lower carbon emissions per unit of output. More tentative evidence indicates that stock markets also help to reallocate investment towards more energy-efficient sectors. Cross-border spillovers are limited: less than...

This paper investigates how green credit regulation affects firms' loan conditions and their economic and environmental performance. In a simple theoretical model, with strengthened green credit regulations, banks raise loan interest rates to nonabatement firms. Firms that were formerly indifferent to pollution abatement must redetermine their abatement and production strategies. Using disaggregated firm-level data, we find that, after the reinforcement of green credit regulation, noncompliant firms saw a larger increase in interest rates, decrease in loan amounts, and more difficulty in acces...

Which financial frictions drive firms' financing constraints? We structurally estimate dynamic firm financing models embedding many financial frictions, on panels of public firms and private firms. We focus on limited enforcement, moral hazard, and trade-off models and assess which models rationalize best observed corporate policies across various samples. Our tests, based on empirical policy function benchmarks, favor trade-off models for larger public firms, limited commitment models for smaller public firms, and moral hazard models for Private firms. Our estimates suggest significant financ...

This article surveys research on the effects of digitalization on access to finance, focusing on access through fintech, and discusses the challenges of research in the digital finance area and proposes some new avenues for future research.

We develop a model in which a start-up firm issues tokens to finance a digital platform, which creates agency conflicts between platform developers and outsiders. We show that token financing is preferred to equity financing unless the platform expects strong cash flows, has large financing needs, or faces severe agency conflicts. Tokens are characterized by their utility features, facilitating transactions, and security features, granting cash flow rights. While security features trigger endogenous network effects and spur platform adoption, they also dilute developers’ equity stake and incen...

Planning and Control Techniques (N. Hill). Financial Forecasting (G. Parker). Financial Statement Analysis (M. Fridson & M. Marocco). Return on Investment as a Dynamic Management Process (J. Weston). An Options Approach to Corporate Finance (W. Kester). Small Business Finance: Sources of Capital (S. Appel). Cash Management (B. Stone). Management of Accounts Receivable and Payable (R. Johnson & J. Kallberg). Capital Budgeting (H. Bierman, Jr.). Mergers and Acquisitions Analysis (A. Rappaport). Leasing (J. Martin). Long-Term Sources of Funds and the Cost of Capital (T. Copeland). Dividend Policy...

We show how real and financial frictions amplify, prolong, and propagate the negative impact of uncertainty shocks. We use a novel instrumentation strategy to address endogeneity in estimating the impact of uncertainty by exploiting differential firm exposure to exchange rate, policy, and energy price volatility. We show that financially constrained firms cut investment more than unconstrained firms following an uncertainty shock. We then build a general equilibrium heterogeneous firms model with real and financial frictions, finding that financial frictions (i) amplify uncertainty shocks by d...

ABSTRACT Several papers argue that financial economics faces a replication crisis because the majority of studies cannot be replicated or are the result of multiple testing of too many factors. We develop and estimate a Bayesian model of factor replication that leads to different conclusions. The majority of asset pricing factors (i) can be replicated; (ii) can be clustered into 13 themes, the majority of which are significant parts of the tangency portfolio; (iii) work out‐of‐sample in a new large data set covering 93 countries; and (iv) have evidence that is strengthened (not weakened) by th...

This study investigates the impact of China's Green Finance Innovation and Reform Pilot Zones on corporate financing. I view the "Green Finance Innovation and Reform Pilot Zones" piloted in certain provinces in China as a quasi-natural experiment and use a Difference-in-Differences (DID) approach to explore the impact of this policy on corporate debt financing costs and financing scale. The results show that the green finance pilot zone policy increases the financing scale of green enterprises and reduces that of polluting enterprises, but it does not significantly impact financing costs. The ...

Different topic modeling approaches capable of dealing with correlation between topics, the changes of topics over time, as well as the ability to handle short texts such as encountered in social media or sparse text data are presented.

In this paper, we analyse the recent development of green sukuk (often referred to as an Islamic green bond) since its issuance in Malaysia in 2017, and critically evaluate whether it addresses some of the existing contradictions of green finance. Using a financial ecologies approach, we examine Malaysia's configuration of green sukuk as drawing from the existing international green bond regime, partnership with the World Bank, and Malaysia's own experience and expertise in Islamic finance, with the objective of building Kuala Lumpur's competitiveness as a global Islamic financial centre. Thro...

This Research Note presents several contributions and mathematical studies in fluid mechanics, namely in non-Newtonian and viscoelastic fluids and on the Navier-Stokes equations in unbounded domains. It includes review of the mathematical analysis of incompressible and compressible flows and results in magnetohydrodynamic and electrohydrodynamic stability and thermoconvective flow of Boussinesq-Stefan type. These studies, along with brief communications on a variety of related topics comprise the proceedings of a summer course held in Lisbon, Portugal in 1991. Together they provide a set of co...

It is empirically demonstrate that providing topic models with a small number of keywords can substantially improve their performance, and the proposed keyword assisted topic model (keyATM) provides more interpretable results, has better document classification performance and is less sensitive to the number of topics than the standard topic models.

This review explores recent progress throughout this landscape with a particular focus on thermosensing in the model plant Arabidopsis, finding potential novel thermosense mechanisms are based on lipid and liquid-liquid phase separation.

This introductory paper aims to highlight the growing need for effective synthetic data generation in the financial domain and aims to develop a shared vocabulary and context for generating synthetic financial data using two types of financial datasets as examples.

State and Local Public Finance provides a comprehensive and sophisticated analysis of state and local government public finance practices and issues, using the basic tools of economics. This fifth edition maintains its focus on key local services such as education, health care, and transportation and brings in new coverage of land use and housing, applications from behavioral economics, and more international comparisons. This textbook provides an examination and analysis of public finance practices and problems in a federal fiscal system, focusing on the fiscal behavior and policies of state ...