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Capital markets in Central and Eastern Europe: two selected cases

Author

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  • Nicolescu Luminiţa

    (The Bucharest University of Economic Studies, Bucharest, Romania)

  • Tudorache Florentin Gabriel

    (The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

The evolution of mutual funds in terms of their inflows and outflows is seen as a good indicator of the capital markets’ performance in different countries. At individual level, investors substantiate their buying decisions on the past performance information and invest asymmetrically in funds with very good performance in the previous periods. Numerous studies, mainly conducted in US, illustrate that mutual fund flows are highly dependent on the funds’ previous performance, as a common behavior of investors resides in looking for highly performing funds than to get rid of poorly performing ones. This paper investigates the flows of funds into and out of Slovakian and Hungarian mutual funds during the period 2007-2014 and has as main purpose to analyze the behavior of investors in mutual funds in these two emerging financial markets. The analysis focuses on identifying patterns in investors’ decision making processes and on checking the similarity of their behavioral patterns and illustrating differences among the two. Given the peculiarities of the studied period, a financially turbulent period, the paper also tries to evaluate if and how the financial crisis affected the investing behavior of Slovakian and Hungarian investors, based on the evolution of inflows and outflows of funds in a period that comprises the global financial crisis and the present period in which recovery has started.

Suggested Citation

  • Nicolescu Luminiţa & Tudorache Florentin Gabriel, 2017. "Capital markets in Central and Eastern Europe: two selected cases," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 11(1), pages 597-606, July.
    • Handle: RePEc:vrs:poicbe:v:11:y:2017:i:1:p:597-606:n:64
    DOI: 10.1515/picbe-2017-0064
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    References listed on IDEAS

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    3. Tudorache Florentin Gabriel & Luminiţa Nicolescu & Radu Lupu, 2015. "Evolution of Mutual Funds in Romania: Performance and Risks," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 180-197, December.
    4. Ferreira, Miguel A. & Keswani, Aneel & Miguel, Antonio F. & Ramos, Sofia B., 2012. "The flow-performance relationship around the world," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1759-1780.
    5. Tudorache F. & Nicolescu L. & Belascu L., 2016. "The performance of mutual funds in Slovakia," Bulletin of Taras Shevchenko National University of Kyiv. Economics. Вісник Киiвського нацiонального унiверситету iм. Тараса Шевченка. Серiя: Економiка, CyberLeninka;Издательско-полиграфический центр «Киевский университет», issue 11 (188), pages 26-33.
    6. Varga, Gyorgy & Wengert, Maxim, 2010. "The growth and size of the Brazilian mutual fund industry," MPRA Paper 21581, University Library of Munich, Germany.
    7. Richard Fu & Marco Navone & Marco Pagani & Themis D. Pantos, 2012. "The Determinants of the Convexity in the Flow-Performance Relationship," Published Paper Series 2012-1, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
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    Cited by:

    1. Paulo Reis Mourao & Alina Irina Popescu, 2021. "Discussing the political survival of Romanian ministers since 1989—Do economic conditions matter?," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(1), pages 63-93, January.

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