Portsmouth academics study our financial future

With economics and finance a major part of the Brexit narrative, Portsmouth academics are aiming to shed light on how the future may shape money matters at home and abroad.

Promoted by IG
Wednesday, 4th December 2019, 1:47 pm
Macro shifts lead to micro changes

Working together as part of the Portsmouth Finance Research Group, university professionals and financial experts are on a mission to innovate. As economic pressures continue to sway political and civil opinions, new ideas are becoming ever more important. At the Portsmouth Finance Research Group, multi-disciplinary research teams are analysing and hypothesizing on various facets of the financial world.

For example, Eun Young Oh is studying the impact of online financial instruments such as Bitcoin and crowdfunding. Using macroeconomic theories (New Keynesian Theory) and empirical data analysis, Oh is analysing the impact of these innovations both on the financial world as a whole, and on individuals. In fact, much of the work carried out by the research group is ultimately aimed at the individual and how current dynamics and future changes will affect their lives.

Macro shifts lead to micro changes

For something like Bitcoin, the implications are becoming more obvious. By adopting a digital, borderless, decentralised currency, consumers can have greater levels of flexibility and anonymity.

Of course, any changes on a microscopic level are often caused by macroscopic changes. With Brexit threatening to disrupt international affairs, the research group has a special interest in foreign markets. As the strength of one currency fluctuates, so do those around it. For governments, major shifts in the currency market can have a profound impact on imports, exports, and more.

This naturally creates a trickledown effect. While the average consumer may not notice small shifts in the price of imported goods, things become a lot clearer when you survey the trading markets. For instance, contracts for difference (CFD) trading has become better known in recent years. Thanks to the emergence of online trading platforms, novices can now learn the basics of CFD trading, which involves buying or selling shares based on a future price, and make their own investments.

Savvy consumerism sparks further change

In the example given, a trader expects the price of shares in Lloyds Bank to drop below their current value. Based on that, they enact a virtual contract (a contract for difference) in which they agree to sell XX shares for a set price in the future. If their prediction is correct, they make money based on the difference between the price they sell for and the actual price at the time of selling. Although complex to grasp at first, CFD trading is a fairly simple process that’s made easier by modern trading sites.

This has led to a greater appreciation not only of how financial markets work, but how world events can impact the price of stocks, shares, goods, and services. In essence, consumers have become financial analysts. The Portsmouth Finance Research Group is simply doing what the average person can do but on a grander scale. By analysing how the markets are moving, the impact of new technology and the way consumers are becoming more astute when it comes to international finances, it wants to predict how economic structures will change.

Only by developing new models and ways of viewing the ever-changing financial world can researchers and, in turn, politicians create stable economies. Brexit has caused uncertainty since 2016, however, it’s in times of uncertainty that innovations happen. The Portsmouth Finance Research Group is just one of many academic groups looking to use the current dynamics to redefine the future of economics and, ultimately, of our finances.