As a booming industry, information technology has been applied to many other industries. The combination of finance and IT (financial technology) is one of the most representative mergers. Volatility is one of the most important indexes of all financial assets and it is hard to forecast using traditional financial method due to many uncertainties. This paper will use the improved LSTM network to forecast the US stock market, and compare the result with the actual data based on selected GARCH model. After a series of experiments, the predicted volatility is close to the actual volatility and LSTM is applicable in forecasting the stock volatility.
This study analyzed the impact of COVID-19 outbreak and targeted required reserve ratio cut policy on stock returns of Chinese listed companies. This paper uses the data of 3,449 A-share listed companies from February 3, 2020 to December 31, 2020 for research, the empirical results showed that stock prices of private enterprises with stronger debt-paying ability and looser financing constraints, and state-owned enterprises with less supply chain credit risks performed better, in the central and western regions, enterprises with stronger solvency and looser financing constraints have better stock price performance during the early stages of pandemic. After the implementation of the targeted RRR cut policy, the stock prices of enterprises with poor solvency, private enterprises, and enterprises in central and western regions with strong financing constraints, state-owned enterprises, and enterprises in eastern region with high credit risks all showed significant reversals, and the stock prices reflected the effect of the targeted RRR cut policy in the short and medium term. Over time, the pandemic has been controlled, and the resumption of work and production has freed most enterprises from financial difficulties. However, due to sporadic outbreaks, large private enterprises and eastern enterprises with strong risk resistance and loose financing constraints enjoy better stock price performance. This study is helpful for enterprises to understand the value of financial flexibility and solvency and provides a reference for enterprises to make financial decisions: how to balance the benefits and costs of solvency.
Under the background of effectively building the legal system of the capital market and strengthening investor protection, an evaluation of whether China's legal system's reformations have improved investor protection is of great significance. Based on the lawsuits of 663 listed companies from 1997 to 2021, this paper finds the average annual proportion of listed companies punished by the China Securities Regulatory Commission and prosecuted by the investors is 40%, and since 2017, it has stabilized at around 70%. This paper also finds the “head effect” of the number of investors and claims in the misrepresentation cases over the years and the advantages of China Securities Investor Services Center's support in investor protection. Then, the negative binomial regression method is used to empirically find that investor protection gets better and better with the reformation of China's laws. Reformations in the legal system and key provisions have all led to an increase in the number of sued investors and claims. However, the time of legal proceedings only depends on the reform of the entire legal system. Finally, to reduce litigation costs and make all investors actually receive compensation after being infringed, we should establish the class action mechanism in the future reformation of China's legal system.
China’s fund market is getting bigger and bigger. By September 2021, the number of funds in the market had exceeded 8000, with a net value of nearly 24 trillion yuan. Among them, the number of equity funds has doubled compared with 2015, and the net value has increased four times compared with 2015, and it still maintains a rapid growth momentum. Do mutual funds play a role in market stabilization? To demonstrate this issue, we combined the passive trading technique with the positive and negative feedback trading strategies and explained how the minimum position ratio of equity funds affects stock price volatility. Then, using empirical data, we apply the difference-in-differences model to analyze how shifting proportions of the equity funds’ lowest shareholding affects stock volatility. The result shows that the volatility of high-institutional stocks was significantly reduced in comparison with other stocks after 2014. This result is further confirmed in the stocks held by large-scale funds. We used PSM-DID to solve potential endogenous problems and found that the results still support the hypothesis. This evidence supports the point of statement that the equity funds in the Chinese capital market can stabilize the market especially after 2014.
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