Gold and the Stock Market: 3 Essays on Gold Investments

This thesis gives an overview of the history of gold per se, of gold as an investment good and offers some institutional details about gold and other precious metal markets. The goal of this study is to investigate the role of gold as a store of value and hedge against negative market movements in turbulent times. I investigate gold’s ability to act as a safe haven during periods of financial stress by employing instrumental variable techniques that allow for time varying conditional covariance. I find broad evidence supporting the view that gold acts as an anchor of stability during market downturns. During periods of high uncertainty and low stock market returns, gold tends to have higher than average excess returns. The effectiveness of gold as a safe haven is enhanced during periods of extreme crises: the largest peaks are observed during the global financial crises of 2007-2009 and, in particular, during the Lehman default (October 2008). A further goal of this thesis is to investigate whether gold provides protection from tail risk. I address the issue of asymmetric precious metal behavior conditioned to stock market performance and provide empirical evidence about the contribution of gold to a portfolio’s systematic skewness and kurtosis. I find that gold has positive coskewness with the market portfolio when the market is skewed to the left. Moreover, gold shows low cokurtosis with the market returns during volatile periods. I therefore show that gold is a desirable investment good to risk averse investors, since it tends to decrease the probability of experiencing extreme bad outcomes, and the magnitude of losses in case such events occur. Gold thus bears very important and under-researched characteristics as an asset class per se, which this thesis contributed to address and unveil.

Countries under Adjustment Programmes: What role for the ECB? CEPS Special Report No. 124, December 2015

Providing ‘technical assistance/advice’ on programmes for countries under financial stress is well within the mandate of the European Central Bank (ECB). Being fully part of the Troika, however, is a different role. Formally the ECB does not participate in the ‘decision-making’ on programmes (decisions are taken by the Finance Ministers – and the IMF). However, the ECB is part of the ‘decision-shaping’ process. These two roles have often been confused. The ECB should interpret its formal role in future ESM (European Stability Mechanism) programmes as narrowly as possible. Providing advice but avoid taking part in the operational work of programme surveillance. The ECB should de facto leave the Troika. At any rate, future incidents like the Italian or Spanish letters will be superseded by the OMTs (outright monetary transactions) and an Irish-type situation would be shaped by the legal framework of the Bank Recovery and Resolution Directive (BRRD) and the potential funding from the Single Resolution Fund (SRF). An additional issue for the ECB is internal coherence: Its six-member Executive Board manages the participation in the Troika, monetary policy is decided by the Governing Council and banking supervision is under the Supervisory Board, separated in principle by Chinese walls from the (rest of the) ECB.

Variáveis discriminantes para inferência da insolvência de empresas brasileiras: um estudo para o período de 2008 a 2016

This study aimed to determine if accounting and governance indicators are relevant to foresee the stages of financial stress of companies by using a logistic regression. With the formation of two samples was possible to verify if the inclusion of insolvency data defined by cash flow shortage events were relevant to increase model capacity for prediction of insolvency. The remaining insolvency stages were judicial reorganization and bankruptcy. The control sample is formed by healthy companies, from the same sector and size. The period of analysis includes events that occurred between January 2008 and March 2016. The main variables that showed significant results to predict insolvency states, a year before the event happens, were Profitability, Efficiency and Payment Capacity indicators. The Governance indicator was only significant to predict insolvency arising from judicial reorganization and bankruptcy. Among the models studied, the most accurate model presented total correctness capacity of 88,7%, classifying correctly 88% of solvent companies and 89,3% of insolvent companies. The results indicate the usefulness of financial indicators of Payment Capacity, Efficiency and Profitability, as well as the Governance variable, to discriminate the insolvency of companies.

Fragilidad financiera en Colombia y las decisiones de política monetaria del Banco de la República, 1996-2012

Este artículo evalúa cuál ha sido el papel de las decisiones de política monetaria del Banco de la República dentro de los procesos de inestabilidad financiera acaecidos en Colombia en el período 1996-2012. Según la revisión de hechos, la crisis de 1999 puso en duda el papel estabilizador del banco central, lo cual reflejó una postura contra-cíclica demasiado débil para la recuperación, y la crisis de 2008 encontró un banco más preparado, aunque con respuesta tardía a los procesos emergentes de fragilidad financiera. A través de estimaciones econométricas se evidencia que una política monetaria contractiva puede inducir una crisis financiera cuando la reacción se da en momentos de mayor estrés financiero.

The new global financial landscape under stress

Includes bibliography

Stress and coping among migrant labourers in urban Vietnam : an adaptation cycle and health vulnerabilities

Rural-urban migration continues to grow in many developing countries including Vietnam. The experience of stress and coping associated with this process may vary for people from different circumstances. However, there has been little research on migrants to date. This study adopts a qualitative approach to research on unregistered, male, migrant freelance labourers in urban Vietnam and to explore factors contributing to stress and coping among this population. The study revealed an array of stressors related to migrants' life experiences in urban space, including physical, financial and social factors. Coping was diverse, including problem-focused coping (PFC) and emotion-focused coping (EFC), pro-social and anti-social, active and passive. Less active and anti-social coping appeared common. Together, weak social network and lack of support from formal systems placed coping and adaptation in a cyclic relationship. The results highlight a multi-disciplinary approach to help cope and adapt effectively for these men.

The Levels of Job Satisfaction, Stress and Burnout In Australian and New Zealand Haemodialysis Nurses

Background: Job dissatisfaction, stress and burnout is linked to high rates of nurses leaving the profession, poor morale, poor patient outcomes and increased financial expenditure. Haemodialysis nurses find their work satisfying although it can be stressful. Little is known, however, about job satisfaction, stress or burnout levels of haemodialysis nurses in Australia and New Zealand. Aims: To assess the current levels of job satisfaction, stress, burnout and nurses’ perception of the haemodialysis work environment. Methods: An observational study involved a cross-sectional sample of 417 registered or enrolled nurses working in Australian or New Zealand haemodialysis units. Data was collected using an on-line questionnaire containing demographic and work characteristics as well as validated measures of job satisfaction, stress, burnout and the work environment Results: 74% of respondents were aged over 40 and 75% had more than six years of haemodialysis nursing experience. Job satisfaction levels were comparable to studies in other practice areas with higher satisfaction derived from professional status and interactions with colleagues. Despite nurses viewing their work environment favourably, moderate levels of burnout were noted with frequent stressors related to workload and patient death and dying. Interestingly there were no differences found between the type or location of dialysis unit. Conclusion: Despite acceptable levels of job satisfaction and burnout, stress with workloads and facets of patient care were found. Understanding the factors that contribute to job satisfaction, stress and burnout can impact the healthcare system through decreased costs by retaining valued staff and through improved patient care.

Cortisol shifts financial risk preferences

Risk taking is central to human activity. Consequently, it lies at the focal point of behavioral sciences such as neuroscience, economics, and finance. Many influential models from these sciences assume that financial risk preferences form a stable trait. Is this assumption justified and, if not, what causes the appetite for risk to fluctuate? We have previously found that traders experience a sustained increase in the stress hormone cortisol when the amount of uncertainty, in the form of market volatility, increases. Here we ask whether these elevated cortisol levels shift risk preferences. Using a double-blind, placebo-controlled, cross-over protocol we raised cortisol levels in volunteers over eight days to the same extent previously observed in traders. We then tested for the utility and probability weighting functions underlying their risk taking, and found that participants became more risk averse. We also observed that the weighting of probabilities became more distorted among men relative to women. These results suggest that risk preferences are highly dynamic. Specifically, the stress response calibrates risk taking to our circumstances, reducing it in times of prolonged uncertainty, such as a financial crisis. Physiology-induced shifts in risk preferences may thus be an under-appreciated cause of market instability.

Progress towards understanding the genetics of posttraumatic stress disorder

Posttraumatic stress disorder (PTSD) is a complex syndrome that occurs following exposure to a potentially life threatening traumatic event. This review summarises the literature on the genetics of PTSD including gene–environment interactions (GxE), epigenetics and genetics of treatment response. Numerous genes have been shown to be associated with PTSD using candidate gene approaches. Genome-wide association studies have been limited due to the large sample size required to reach statistical power. Studies have shown that GxE interactions are important for PTSD susceptibility. Epigenetics plays an important role in PTSD susceptibility and some of the most promising studies show stress and child abuse trigger epigenetic changes. Much of the molecular genetics of PTSD remains to be elucidated. However, it is clear that identifying genetic markers and environmental triggers has the potential to advance early PTSD diagnosis and therapeutic interventions and ultimately ease the personal and financial burden of this debilitating disorder.

The financial storms in Vietnam's transition economy: a reasoning on the 1991-2008 period

This study focuses on those substantial changes that characterize the shift of Vietnam’s macroeconomic structures and evolution of micro-structural interaction over an important period of 1991-2008. The results show that these events are completely distinct in terms of (i) Economic nature; (ii) Scale and depth of changes; (iii) Start and end results; and, (iv) Requirement for macroeconomic decisions. The study rejected a suspicion of similarity between the contagion of the Asian financial crisis in 1997-98 and economic chaos in the first half of 2008 (starting from late 2007). The depth, economic settings of, and interconnection between macro choices and micro decisions have all grown up significantly, partly due to a much deeper level of integration of Vietnam into the world’s economy. On the one hand, this phenomenon gives rise to efficiency of macro level policies because the consideration of micro-structural factors within the framework has definitely become increasingly critical. On the other and, this is a unique opportunity for the macroeconomic mechanism of Vietnam to improve vastly, given the context in which the national economy entered an everchanging period under pressures of globalization and re-integration. The authors hope to also open up paths for further empirical verifications and to stress on the fact that macro policies will have, from now on, to be decided in line with changing micro-settings, which specify a market economy and decide the degree of success of any macroeconomic choices.

The Vietnam's Transition Economy and Its Fledgling Financial Markets: 1986-2003

In this paper, we analyze the context of Vietnam’s economic standings in the reform period. The first section embarks on most remarkable factors, which promote the development of financial markets are: (i) Doi Moi policies in 1986 unleash ‘productive powers’. Real GDP growth, and key economic indicators improve. The economy truly departs from the old-style command economy; (ii) FDI component is present in the economy as sine qua non; a crucial growth engine, forming part of the financial markets, planting the ‘seeds’ for its growth; and (iii) the private economy is both the result and cause of the reform. Its growth is steady. Today, it represents a powerhouse, and helps form part of the genuine financial economy. A few noteworthy points found in the next section are: (i) No evidence of financial markets existence was found before Doi Moi. The reform has generated a bulk of private-sector financial companies. New developments have roots in the 1992-amended constitution (x3.2); (ii) The need to reform the financial started with the domino collapse of credit cooperatives in early 1990s. More stress is caused by the ‘blow’ of banking deficiency in late 1990s; and (iii) Laws on SBV and credit institutions, and the launch of the stock market are bold steps. Besides, the Asian financial turmoil forces the economy to reaffirm its reform agenda. Our findings also indicate, through empirical evidences, that economic conditions have stabilized throughout the reform, thanks to the contributions of the FDI and private economic sector. Private investment flows continue to be an eminent factor that drives the economy growth.

A neural biomarker of psychological vulnerability to future life stress.

We all experience a host of common life stressors such as the death of a family member, medical illness, and financial uncertainty. While most of us are resilient to such stressors, continuing to function normally, for a subset of individuals, experiencing these stressors increases the likelihood of developing treatment-resistant, chronic psychological problems, including depression and anxiety. It is thus paramount to identify predictive markers of risk, particularly those reflecting fundamental biological processes that can be targets for intervention and prevention. Using data from a longitudinal study of 340 healthy young adults, we demonstrate that individual differences in threat-related amygdala reactivity predict psychological vulnerability to life stress occurring as much as 1 to 4 years later. These results highlight a readily assayed biomarker, threat-related amygdala reactivity, which predicts psychological vulnerability to commonly experienced stressors and represents a discrete target for intervention and prevention.

Stress processes in caring for an end-of-life family member:Application of a theoretical model

Objectives: Family caregivers play a vital role in maintaining the lives of individuals with advanced illness living in the community. However, the responsibility of caregiving for an end-of-life family member can have profound consequences on the psychological, physical and financial well-being of the caregiver. While the literature has identified caregiver stress or strain as a complex process with multiple contributing factors, few comprehensive studies exist. This study examined a wide range of theory-driven variables contributing to family caregiver stress. Method: Data variables from interviews with primary family caregivers were mapped onto the factors within the Stress Process Model theoretical framework. A hierarchical multiple linear regression analysis was used to determine the strongest predictors of caregiver strain as measured by a validated composite index, the Caregiver Strain Index. Results: The study included 132 family caregivers across south-central/western Ontario, Canada. About half of these caregivers experienced high strain, the extent of which was predicted by lower perceived program accessibility, lower functional social support, greater weekly amount of time caregivers committed to the care recipient, younger caregiver age and poorer caregiver self-perceived health. Conclusion: This study examined the influence of a multitude of factors in the Stress Process Model on family caregiver strain, finding stress to be a multidimensional construct. Perceived program accessibility was the strongest predictor of caregiver strain, more so than intensity of care, highlighting the importance of the availability of community resources to support the family caregiving role.

Stress and coping in parents of newly born twins

Objective: Research indicates that parents of twins have poorer psychosocial outcomes than parents of singletons. Parents who have conceived using assisted reproductive technology (ART) have been found to be at higher risk of negative psychosocial outcomes compared to parents who have conceived spontaneously. The current study aimed to model the factors associated with parenting stress of newly-born twins, using the Transactional Model of Stress.

Methods: Data were collected using a cross-sectional survey design with participants identified from delivery records across Northern Ireland. Mothers and fathers (n = 104) of twins aged between 1 and 12 months old returned a questionnaire pack containing the Parenting Stress Index, Impact on the Family Scale-Financial Burden, Coping Orientation to Problems Experienced – Brief Version, Multidimensional Scale of Perceived Social Support, General Health Questionnaire and a demographic questionnaire.

Results: There were no differences on psychological outcomes between parents who had conceived via ART and those who conceived spontaneously. Regression analyses found that social interaction and support is an important variable in terms of the psychological outcomes experienced by parents of twins.

Conclusion: Parents of newly-born twins regardless of the mode of conception should be considered an at risk group for parental distress. Support groups such as the Twins and Multiple Births Association could be important in providing that crucial social interaction and support that seems to be important in the emotional well-being of parents of twins.