Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies

Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies

Introduction. Small and medium enterprises (SMEs) are crucial in the economy by providing jobs, contributing to GDP, efficiently providing products and services where economies of scale are not needed and creating cash flows. However, SMEs encounter certain obstacles, with financial constraints bein...

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Date:2025
Main Authors: Balci, Nehir, Saygili, Arikan Tarik
Format: Article
Language:English
Published: Dr. Viktor Koval 2025
Subjects:
SME Stock Market
Emerging Economies
Volatility Spillover
GARCH model.
Online Access:https://ees-journal.com/index.php/journal/article/view/307
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Journal Title:Economics Ecology Socium

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Economics Ecology Socium
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spelling oai:ojs2.www.ees-journal.com:article-3072025-09-29T09:52:57Z Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies Balci, Nehir Saygili, Arikan Tarik SME Stock Market, Emerging Economies, Volatility Spillover, GARCH model. SME Stock Market, Emerging Economies, Volatility Spillover, GARCH model. Introduction. Small and medium enterprises (SMEs) are crucial in the economy by providing jobs, contributing to GDP, efficiently providing products and services where economies of scale are not needed and creating cash flows. However, SMEs encounter certain obstacles, with financial constraints being the major ones. SME markets have been perceived as another opportunity for SMEs to obtain external financing.  Aim and tasks. This study aims to analyse the interactions between major stock and SME markets in emerging economies, focusing on China, India, and Indonesia. Results. The diagonal BEKK and DCC-GARCH models analyse the transitions between these stock markets. The study findings offer compelling evidence of dynamic conditional correlations across all markets and illustrate significant volatility spillovers among the SME markets. This correlation is evident both in the short and long periods. The evidence indicates that small- and medium-sized market volatility significantly affects larger markets. The findings reveal a substantial interplay between the major and SME stock markets in emerging economies, including China, India, and Indonesia. According to the diagonal BEKK and the DCC results, investors should not expect significant diversification benefits by including primary and SME market instruments in their portfolios. Investors should closely monitor the co-movements and transitions between these markets to optimise their portfolio diversification strategies. Conclusions. Creating an environment and conditions that promote the growth of SMEs and improve resilience through specific fiscal alternatives, enhancing access to financing, and upgrading market infrastructure are essential. This study found substantial interplay between major and SME stock markets. Policymakers should be aware that SME market fluctuations influence larger stock exchanges and destabilise macroeconomic conditions, such as economic stability and growth. Therefore, regulatory actions that project the need and operational efficiency of stock market segments should be implemented to prevent adverse effects. For instance, transparency and risk management can stabilise SME stock markets to avoid volatility in larger markets. Dr. Viktor Koval 2025-09-30 Article Article Peer-reviewed Article application/pdf https://ees-journal.com/index.php/journal/article/view/307 10.61954/2616-7107/2025.9.3-9 Economics Ecology Socium; Vol. 9 No. 3 (2025): Economics Ecology Socium; 122-137 Економіка Екологія Соціум; Том 9 № 3 (2025): Economics Ecology Socium; 122-137 2616-7107 2616-7107 10.61954/2616-7107/2025.9.3 en https://ees-journal.com/index.php/journal/article/view/307/268 Copyright (c) 2025 Economics Ecology Socium
institution Economics Ecology Socium
baseUrl_str
datestamp_date 2025-09-29T09:52:57Z
collection OJS
language English
topic SME Stock Market
Emerging Economies
Volatility Spillover
GARCH model.
spellingShingle SME Stock Market
Emerging Economies
Volatility Spillover
GARCH model.
Balci, Nehir
Saygili, Arikan Tarik
Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
topic_facet SME Stock Market
Emerging Economies
Volatility Spillover
GARCH model.
SME Stock Market
Emerging Economies
Volatility Spillover
GARCH model.
format Article
author Balci, Nehir
Saygili, Arikan Tarik
author_facet Balci, Nehir
Saygili, Arikan Tarik
author_sort Balci, Nehir
title Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
title_short Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
title_full Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
title_fullStr Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
title_full_unstemmed Investment Risk Management in Major Stock Exchanges and SME Markets of Emerging Economies
title_sort investment risk management in major stock exchanges and sme markets of emerging economies
description Introduction. Small and medium enterprises (SMEs) are crucial in the economy by providing jobs, contributing to GDP, efficiently providing products and services where economies of scale are not needed and creating cash flows. However, SMEs encounter certain obstacles, with financial constraints being the major ones. SME markets have been perceived as another opportunity for SMEs to obtain external financing.  Aim and tasks. This study aims to analyse the interactions between major stock and SME markets in emerging economies, focusing on China, India, and Indonesia. Results. The diagonal BEKK and DCC-GARCH models analyse the transitions between these stock markets. The study findings offer compelling evidence of dynamic conditional correlations across all markets and illustrate significant volatility spillovers among the SME markets. This correlation is evident both in the short and long periods. The evidence indicates that small- and medium-sized market volatility significantly affects larger markets. The findings reveal a substantial interplay between the major and SME stock markets in emerging economies, including China, India, and Indonesia. According to the diagonal BEKK and the DCC results, investors should not expect significant diversification benefits by including primary and SME market instruments in their portfolios. Investors should closely monitor the co-movements and transitions between these markets to optimise their portfolio diversification strategies. Conclusions. Creating an environment and conditions that promote the growth of SMEs and improve resilience through specific fiscal alternatives, enhancing access to financing, and upgrading market infrastructure are essential. This study found substantial interplay between major and SME stock markets. Policymakers should be aware that SME market fluctuations influence larger stock exchanges and destabilise macroeconomic conditions, such as economic stability and growth. Therefore, regulatory actions that project the need and operational efficiency of stock market segments should be implemented to prevent adverse effects. For instance, transparency and risk management can stabilise SME stock markets to avoid volatility in larger markets.
publisher Dr. Viktor Koval
publishDate 2025
url https://ees-journal.com/index.php/journal/article/view/307
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first_indexed 2025-11-22T02:52:40Z
last_indexed 2025-11-22T02:52:40Z
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