Search Results (19)

Amid the global drive to enhance public sector performance in the digital economy era, improving government spending efficiency has become a critical governance objective. This study investigates the impact of digital inclusive finance on government spending efficiency from a digital finance systems perspective using county-level panel data in China’s Yangtze River Delta for the period 2014–2022 and constructing the fixed-effects model and instrumental variable method to estimate the effect of digital inclusive finance and explore its underlying mechanisms. Heterogeneity across regions with varying economic development levels is analyzed, and fiscal pressure is examined as a potential mediating factor. The results indicate that (1) digital inclusive finance significantly enhances government spending efficiency, primarily through broad service coverage and deep usage of digital financial services such as mobile payments, digital credit, and insurance; (2) the positive effect is more pronounced in counties with lower government spending efficiency and economic development; and (3) fiscal pressure acts as a key transmission channel, with broader digital inclusive finance coverage helping to alleviate fiscal stress and improve government spending efficiency. These findings offer empirical insights into the role of digital finance in promoting effective and adaptive public financial governance. Full article

With the continuous integration of globalization and financial markets, the linkage of global financial risks has increased significantly. This study examines the risk spillover effects and transmission dynamics among the financial markets in G20 countries, which together represent over 80% of global GDP. With increasing globalization and the interconnectedness of financial markets, understanding risk transmission mechanisms has become critical for effective risk management. Previous research has primarily focused on price volatility to measure financial risks, often overlooking other critical dimensions such as liquidity, credit, and operational risks. This paper addresses this gap by utilizing the vector autoregressive (VAR) model to explore the spillover effects and the temporal and spatial characteristics of risk transmission. Specifically, we employ global and local Moran indices to analyze spatial dependencies across markets. Our findings reveal that the risk linkages among the G20 financial markets exhibit significant time-varying characteristics, with spatial risk distribution showing weaker dispersion. By constructing a comprehensive financial risk index system and applying a network-based spillover analysis, this study enhances the measurement of financial market risk and uncovers the complex transmission pathways between sub-markets and countries. These results not only deepen our understanding of global financial market dynamics but also provide valuable insights for the design of effective cross-border financial regulatory policies. The study’s contributions lie in enriching the empirical literature on multi-dimensional financial risks, advancing policy formulation by identifying key risk transmission channels, and supporting international risk management strategies through the detection and mitigation of potential contagion effects. Full article

In recent years, supply chain risks and stability have become a focal point of public attention. However, there is no consensus on how exogenous shocks affect the sustainability of supply chain relationships, nor a clear mechanism of influence. This study uses data from all A-share listed companies in China from Q2 2018 to Q4 2021, constructing a “supplier–quarter–customer” relationship dataset, with the COVID-19 pandemic serving as an exogenous shock. The results show that after experiencing exogenous shocks, the sustainability of supply chain relationships actually strengthens. This suggests that companies may take measures to enhance supply chain stability and maintain existing relationships to ensure sustainability. Channel analysis reveal that trade credit serves as a channel for the impact of exogenous shocks on the sustainability of supply chain relationships, with companies adjusting trade credit supply to downstream customers to maintain and strengthen stability. Additionally, the impact of exogenous shocks on the sustainability of supply chain relationships varies with market concentration, product input heterogeneity, and firms’ ownership type. Therefore, companies should enhance supply chain relationship management, utilize trade credit as a risk buffer, and optimize the supply chain structure to reduce risk transmission and maintain sustainability. Full article

Credit rationing, especially prevalent for smaller firms, impedes economic growth. A central bank-aligned not-for-profit managed business-to-business “stablecoin” (“synthetic central bank digital currency”) providing trade credit liquidity can provide additional monetary mass to mitigate small firm credit rationing. This raises growth by reducing monetary transmission imperfections consequent upon asymmetric information, commercial bank underwriting restrictions, market power dynamics, and regulatory distortion. A simple framework is developed to contextualise small firm credit rationing and associated monetary transmission imperfections with broader credit flows into both the real and monetary sectors. Evidence is presented regarding monetary transmission efficacy to firms, paving the way to proposing a business-to-business central bank-mediated “trade credit stablecoin” to improve business credit supply. In addition to providing additional (estimated at more than 10%) industrial and commercial (including smaller) firm financing, the envisaged trade credit stablecoin provides an additional monetary transmission channel for central banks to manage credit supply to the real economy to support economic activity and raise growth. Available to all firms, the trade credit stablecoin offers additional low-cost liquidity to firms, thereby offering policymakers an additional contra-cyclical monetary transmission instrument to support growth and, where necessary, reduce real economic disruption consequent upon financial system crises and liquidity events. Full article

This paper’s objective is to examine the asymmetric cointegration and asymmetric effects of financial development and monetary policy on monetary transmission mechanisms in the Nigerian context using annual data spanning the period from 1986 to 2023. This study pushes the frontiers of knowledge by providing information on the nonlinear impacts of monetary policy and financial sector innovations on monetary transmission mechanisms in Nigeria to help policymakers tailor their strategies to local conditions, enhancing the effectiveness of monetary interventions in the economy. To achieve this, this paper adopted nonlinear ARDL models to understand how changes in the direction of monetary policy and developments in the financial system induce changes in the transmission of monetary policy. The findings document the existence of asymmetries in both the short and long run, revealing that the impacts of financial development and monetary policy on the different monetary policy channels are not uniform. These asymmetries indicate that the responses of various economic variables to monetary policy actions differ depending on the level of financial development. These findings underscore the complexity of the monetary transmission mechanism and the necessity for a nuanced understanding of how financial development and monetary policy interact in different contexts. Consequently, this finding is symptomatic of some characteristics of those financial markets on their way toward advanced developments. As the financial system matures, monetary policy may have a greater impact on the cost of short-term funding for banks without having any discernible effect on the rates at which businesses and households access funding. Therefore, this paper recommends focusing on the policies that will foster the financial system across the banking sector, capital market, bond market, and overall financial sector to improve the efficiency of the monetary transmission process. Full article

The energy-saving and low-carbon development model is one of the important symbols of high-quality economic development. This article attempts to study the environmental effects of green finance from both theoretical and empirical perspectives, that is, to test whether green finance policies contribute to achieving energy conservation and emission reduction. This article is based on provincial panel data from 2007 to 2020 in China and constructs a dynamic spatial Durbin model to examine the impact of green finance on environmental pollution and energy intensity. The results indicate that (1) green finance can achieve a dual effect of energy conservation and emission reduction simultaneously and has a significant promoting effect on energy conservation and emission reduction in neighboring regions. This conclusion is still valid after conducting robustness tests. (2) The energy-saving and emission-reduction effects of green finance exhibit significant regional heterogeneity, indicating that the performance of green finance is more outstanding in the eastern region with a higher level of economic development. (3) Mechanism testing has found that green finance can achieve energy-saving and emission-reduction effects through four channels: environmental regulation, credit allocation, enterprise profits, and enterprise innovation. Therefore, in order to further promote high-quality economic development, we need to build a comprehensive and multi-level green finance system, enrich the green finance policy toolbox, and smooth the transmission channels of green finance to promote green and stable economic development. Full article

The global financial crisis (2008–2009) represents a notable example of a generally unpredicted crisis in economic history. Nevertheless, it presented features comparable to almost any previous (monetarily related) crisis episode. For instance, it was characterized by a “vicious cycle” made by over-issued money and/or over-granted loans nourishing private and public indebtedness and—eventually—affecting asset prices with stable consumer price indexes. While the post-COVID-19 inflation presents different characteristics because of being a crisis “exogenous” to the economic system, the present Communication claims that future crises (if endogenous to the economic system) are likely to follow usual patterns. The approach used to analyse the transmission channels contributing to economic and financial crises is theoretical. Nevertheless, the present Communication still contains statistical evidence in support of the predictability of such crises as soon as their usual dynamics is understood. The statistical analysis carried out is rather descriptive than causal in nature. Finally, this Communication reminds that “typical” economic and financial crises in advanced economies behave along some consolidated patterns. At their origins, there are mostly over-issued money and/or over-granted loans by central and/or commercial banks financing private and public debt. This phenomenon exacerbates risks in the economy and—while it incentivises money issuers and credit granters in good times to over-issue money and over-grant credits to earn extra-profits—it over-exposes economic agents to the risk of (even greater) economic losses in negative times. As soon as the bubble to be defined as over-proportionally grown prices of specific assets due to over-issued money and over-granted credits pops and funds are rapidly divested, prices collapse and drive the economy into a severe crisis. Full article

Economic policies aimed at managing economic variables in the short and long term have always been of special importance. These policies seek to reduce economic fluctuations in the short term and increase sustainable economic growth in the long term. One of these policies is monetary policy, which is mainly carried out by central banks worldwide. This paper uses the Keynesian Dynamic Stochastic General Equilibrium (DSGE) model to examine the effects of monetary policy on the real variables of the Iranian economy through the credit channel and the balance sheet channel. The presented model analyzed information about macroeconomic variables in Iran for the period from 1990 to 2020. The obtained results show that with the implementation of restrictive monetary policy in the economy, all productive activities of enterprises decreased, and this led to a decrease in household income, which in turn reduced household savings in the form of bank deposits. Because the most important sources of financing for banks are deposits, the ability of banks to offer loans was reduced. On the other hand, a restrictive monetary shock was associated with a decline in the value of corporate securities. As a result, the amount of received loans by firms was reduced by the value of the assets. This reduced the demand of banks for bank loans, which intensified the effects of the initial shock, along with a reduction in the banks’ ability to provide lending services. Further, the results indicate the relative success of the model in simulating Iran’s macro economy. Full article

Since the introduction of a series of collective forest tenure reforms in China, diverse forestland mortgage financial products have been available even in rural areas. It is difficult for rural households to make appropriate financial decisions in order to increase their income due to a lack of financial knowledge and relevant skills. It is important to analyze the relationship between financial literacy, borrowing behavior, and rural household income. Based on the learning-by-doing theory, the credit constraint theory, and the data obtained from the survey of 460 households in five rural countries of Liaoning Province, alternative econometric models were used to estimate the “Financial Literacy-Borrowing Behavior-Household Income” transmission channel. The findings reveal that the financial literacy levels are positively associated with household income and that there is an inverted U relationship between them which is low on both sides and high in the middle. In addition, the financial literacy has a significantly positive effect on the farmers’ credit behavior, which in turn promotes their income growth. The results provide a new perspective on the study and a clear explanation of the role of financial literacy in improving the loan amountsavailable in China’s rural areas. The paper concludes with recommendations for policymakers to prioritize financial education that will promote and support credit constraint reduction in collective forest areas. Full article

Although empirical studies show that different types of loans have different risks (moreover, consumer credit risk is higher compared to other types of loans), it is common to study the credit risk of the banking sector as a whole, or of an individual bank’s whole loan portfolio, and the macro-economic factors affecting it (without grouping them by type of loan). Thus, an analysis of the credit risk of the whole loan portfolio (measured by all non-performing loans) is insufficient. Therefore, the aim of this research is to identify the macroeconomic determinants of the consumer loan credit risk and quantitatively assess their impact in Central and Eastern European countries. After the analysis of scientific literature in the field of credit risk determinants, a detailed classification of factors influencing banking credit risk is proposed. The distinguishing feature of the classification is that the factors influencing credit risk are classified at five different levels; twelve groups of general macroeconomic conditions variables were selected as the potential factors of NPLs. This classification can be useful to better understand and investigate the factors influencing banking credit risk for the whole loan portfolio (in the same way as the factors that affect the credit risk of different types of loans, e.g., consumer loans). Using the methods of constant, fixed and random-effects panel analysis, simple OLS, least squares with breakpoints regression analysis and Markov regime-switching models, the impact of the macroeconomic variables from twelve separate groups is evaluated. The data from 11 CEE countries are used, and the period from 2008 to 2020 is covered. The results of this assessment reveal that in the group of CEE countries, such variables as GDP and labour market variables appeared to have contributed to the increase in the share of non-performing consumer loans, while inflation and real estate market variables were related to the decrease in consumer NPLs; at the same time, the impact of variables form other groups appeared to be mixed-nature or insignificant. The results of this research are useful in that they allow the identification of the most important determinants of consumer loan credit risk and thus allow making assumptions about NPL changes due to the changing macroeconomic situation. In the case of Lithuania, this kind of study (assessment of macroeconomic determinants of consumer loan credit risk) was conducted for the first time. Consumer loan credit risk assessment is especially relevant in an increasing interest rate environment, and deeper analysis can help banks and other financial institutions to manage credit risk. On the other hand, a better understanding of the main influencing factors of the macroeconomic environment can help central banks and other official institutions take appropriate monetary and fiscal policy decisions to ensure a good credit transmission channel for sustainable economic growth. Full article

Green development is an inevitable trend of sustainable development: how does it affect green economic growth as the main channel of green project financing and the core force of building a green financial system? The present article measures the relationship between green credit and sustainable economic growth using a benchmark regression analysis model and explores the main influencing factors and regional characteristics that affect the coupling development of green credit and sustainable economic growth by combining mechanism and heterogeneity tests. The results of the study show that: (i) Green credit has a significant positive contribution to sustainable economic growth. (ii) In terms of the transmission mechanism, industrial upgrading and environmental regulation have a significant impact on sustainable economic growth. (iii) In terms of heterogeneity, the effect of green credit on sustainable economic growth is the most pronounced in the west, followed by the central and eastern regions of China. The policy implications of this study are that green credit in China is an inevitable trend, and that a sound policy supporting the legal system and information communication mechanisms should be promulgated to ensure the effective allocation of resources, thereby promoting the coordinated, sustainable and stable development of environmental protection and the economy. Full article

Infrared (IR) communication is one of the wireless communication methods mainly used to manipulate consumer electronics devices. Traditional IR devices support only simple operations such as changing TV channels. These days, consumer electronic devices such as smart TV are connected to the internet with the introduction of IoT. Thus, the user’s sensitive information such as credit card number and/or personal information could be entered with the IR remote. This situation raises a new problem. Since TV and the set-top box are visual media, these devices can be used to control and/or monitor other IoT devices at home. Therefore, personal information can be exposed to eavesdroppers. In this paper, we experimented with the IR devices’ reception sensitivity using remotes. These experiments were performed to measure the IR reception sensitivity in terms of distance and position between the device and the remote. According to our experiments, the transmission distance of the IR remote signal is more than 20 m. The experiments also revealed that curtains do not block infrared rays. Consequently, eavesdropping is possible to steal the user’s sensitive information. This paper proposes a simple, practical, and cost-effective countermeasure against eavesdropping, which does not impose any burden on users. Basically, encryption is used to prevent the eavesdropping. The encryption key is created by recycling a timer inside the microcontroller typically integrated in a remote. The key is regenerated whenever the power button on a remote is pressed, providing the limited lifecycle of the key. The evaluation indicates that the XOR-based encryption is practical and effective in terms of the processing time and cost. Full article

The purpose of this study is to examine the monetary policy transmission mechanisms in seven South Asian Association for Regional Cooperation (SAARC) countries to discover the viability of the convergence of the SAARC into a monetary and economic union based on common monetary channels. By employing optimal currency area theory, we used the restricted VAR analysis on the annual data from 1978 to 2017. We find that the money channel response provides proof for the presence of an exchange rate and credit channels. Furthermore, the real sector also responds to changes in fiscal and monetary shocks through the exchange rate and credit channels over short-run to long-run time horizons. This implies that the SAARC is a good candidate due to common exchange rate and credit channels. The function of the variance decomposition and the impulse for forming a monetary and economic union is that they share a coincidental pattern of dynamic reactions of inflation and growth to exogenous shocks. If the SAARC monetary and economic union is created, it will reap overall economic benefits inside and outside of Asia just like the European Union (EU). Full article

This is the first study to systematically assess the significance of the standard money multiplier vis-à-vis the bank credit transmission channel in the case of Pacific Island Economies, focusing on Papua New Guinea. The vector autoregressive model comprising six variables—interest rate, inflation rate, loans, deposits, reserve money, and real output—was estimated using quarterly data for the period 1980q1 to 2017q4. We applied the ordinary least squares (OLS) method to estimate the system of vector autoregressions (VARs). The estimation was conducted for the full and sub-sample periods. From the impulse response functions generated, the results suggest that the money multiplier does not hold and that the transmission to bank credit appears weak. It seems that the ability of the Central Bank to make loanable funds available through its conduct of monetary policy may not enhance private sector credit. On the other hand, there appears to be a significant and positive association between bank deposits and credit, suggesting that bank deposits and credit are endogenous and demand driven. Full article

All countries worldwide faced the COVID-19 pandemic and had to take actions to lower the economic shock. Financial authorities play an especially significant role in economics and can help to manage the negative consequences. This article focuses on the European central bank monetary policy and actions taken for COVID-19 risk management. This research aims to identify the significant factors influencing the long-term loans for enterprises’ credit conditions in a forward-looking approach and determine the impact of the spread of COVID-19 pandemic on banking sector credit risk, financial distress, lending growth, and financial soundness indicators. This research is focused on the credit transmission channel and the role of the Pandemic Emergency Purchase Program in different countries of the euro area. To reach the main goal, panel data regression models are used. Our findings showed that the banks’ risk tolerance is a principal factor influencing long-term loan credit standards. We also identified that the spread of the COVID-19 pandemic has a statistically significant negative effect on banking sector credit risk, financial distress, banking sector profitability, and solvency. Furthermore, after analyzing the euro area banking sector, we found that liquidity increased. Hence, it means that banks have enough funds to support sustainable economic growth, but on the other side, commercial banks do not want to take credit risk because of their risk tolerance. Our research findings show the mixed effect of the COVID-19 pandemic on financial stability: while the overall financial distress decreased and banking sector liquidity increased, the profitability and solvency decreased some extent. Full article