STM Article Repository

The research is an attempt to engineer a prudential toolkit for the stock market analogous to the Basel toolkit in its second, third and fourth versions.

It raises the concern about the requirement of mitigating market risk coming from excess volatility of share prices that compromises financial stability and argues that mitigating credit market risk like in the Basel prudential surveillance system is insufficient to provide accurate resilience from the onslaught of financial meltdowns.

A clear specification of stock market efficiency paves the way for an accurate understanding of the key features pertaining to the Stock market sector defining financial stability and drawing a wedge to shaping a framework for setting a prudential toolkit through adopting based on analogy to the Basel framework setting.

The issue of integration of financial sectors is conveyed a prominant role in all its aspects of; collision between instruments, the role played by the balanced scorecard and the induction of instability from the credit sector features of credit information assymetries borrowers' Creditworthiness and non performing loans through the financial accelerator effect to the excess volatility of share prices and elucidates thereby the way financial sectors are integrated.

The issue of hedging raises a concern about the role it plays in prudentiality and the potential threat it might represent for credit risk financial stability.

Finally, a general appraisal on stability and efficiency is framed in perspective for trading in the primary and secondary markets.