Conceptual Model for Managing Sustainable Development of the Financial Market based on Fuzzy Cognitive Maps: Case Study of Kazakhstan
Description
Our research questions: What indicators can be used to collate adequate information on financial and economic sub-systems in order to form an integrated figure of economic development? What are the projected dynamics of the development of the financial market of Kazakhstan in the period up to 2025 on the basis of actual data since independence? Do the predicted dynamics meet the requirements of the country’s development? Is it possible to strengthen the dynamics of development and which instruments of economic and financial policy will be most effective? To build the Conceptual Model (further - CM) for Managing the Sustainable Development of the Financial Market of Kazakhstan, we used two main tools: a simulation method based on a fuzzy cognitive map (Axelrod, 1976; Kosko, 1986) and a method for constructing indicators of the system’s sustainable development by Bossel (1999). This made it possible to create a system framework included economic and financial indicators that form the viability and sustainability of the system, and further, through modelling tools, implement the learning and self-development processes of the system for strategic forecasting and planning. Thus, the advantages of both methods were effectively integrated into the development of the CM. This study, which used as a basis an integrated, systematic approach and mathematical simulation for the model of a highly structured, open and dynamically developing economic system, is an example of a socio-economic model with a high level of abstraction. We created a specific set of economic and financial indicators, including the latest on the factors of innovation, adaptability and behavioural finance that could reveal information about the past, current and future performance of the system. Based on our research, we concluded that without implementing special policies the financial market will develop at a slow pace and will not play a significant role in economic growth. This model is a practical tool to support decision-making in the formation of financial and economic policies for sustainable development of the financial market.