The use of American style equity options as hedging instrument has gained currency in recent times. This phenomenon devolves from the ever-expanding need by individuals, corporations and governments to hedge away their financial risks and the clarion call for derivative securities that give the...

We design a field experiment to study the relationship between neglect of compound interest and pension contributions in rural China. We randomly assigned some households to a financial education treatment, emphasizing the concept of compound interest. This treatment increased the pension...

In this paper, we investigate the following problem: How can a financial institution, which has sold an option to a client, optimally hedge the payoff of this option by investing into a stock and into the option itself? Optimality is measured in terms of minimal variance and the associated...

This paper introduces the probabilistic formulation of continuous-time economic models: forward stochastic differential equations (SDE) govern the dynamics of backward-looking variables, and backward SDEs capture that of forward-looking variables. Deep learning streamlines the search for the...

The antecedent studies have designed a novel financial mechanism in which, upon trading intellectual capital, the economy creates or receives money to ensure unimpeded capital access and spur its generation and exploitation. This piece summarises some mathematical aspects, allowing us to apply...

Since the onset of the financial crisis in 2007, more than 370 of the almost 8000 US banks insured by the Federal Deposit Insurance Corporation have failed. By comparison, between 2000 and 2004 there were around 30 failures and no failures occurred between 2005 and the beginning of 2007.We focus...

This article examines the ability of time-varying Gaussian and Student t copulas to accurately predict the probability of joint extreme co-movements in stock index returns. Using a sample of more than 20 years of daily return observations of the Eurostoxx50 and Dow Jones Industrial stock...