On 25 & 26 January 2018, Dr. Stefano Alderighi, Senior Economist – Researcher at the WFE, attended and presented the WFE's research on retail trading in emerging markets at the first International Workshop on Econometrics and Empirical Economics (IWEEE).
The two-day event, held at the University of Milano-Bicocca and organised by the Italian Econometric Society (SIdE), was a great success, with more than eighty participants, and a large number of submissions. There were several academic presentations in the fields of finance and financial markets, and the event represented a good opportunity to disseminate WFE-based research in an academic environment.
In particular, one of the two keynote speakers, Professor Manuel Arellano (CEMFI), presented a recent paper that has important implications on how to calculate earnings risk, a topic of great importance for financial markets, as income uncertainty is found to crowd retail participation out of the stock market.
In the realm of Corporate Finance, Dr. Marko Melolinna (Bank of England) empirically showed that economics uncertainty, measured using alternative methods, discourages private investment among UK listed companies.
Dr. Beau Soederhuizen (Vrije Universiteit Amsterdam) focused on Macroeconomics. He developed a model that shows how fiscal policies are more effective when nominal interest rates approach zero.
On asset-pricing, Valentina Raponi and her co-authors (Imperial College) proposed a new estimation model that addresses some of the technical limitations present in previous techniques.
Stefano’s paper is the academic version of a WFE research report on how to attract retail trading in emerging markets published in August 2017. It shows that retail trading in emerging economies is sensitive to changes in transaction costs and financial literacy interventions, and that individual traders possibly see equity and fixed income products as substitutes.