Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106231
Nicola Del Sarto , Irene Comeig Ramirez , Lorenzo Gai
This paper investigates how traditional banks' stock prices react to FinTech funding announcements, addressing a notable research gap. Using event study methodology with the MSCI index as a benchmark, we analyze stock price responses of European traditional banks from 2010 to 2019. Both parametric t-tests and non-parametric generalized sign tests are employed to assess the impact. Grounded in signaling theory, we hypothesize that FinTech funding events signal increased competition and strategic uncertainty, affecting investor perceptions of traditional banks. Our findings indicate that FinTech funding announcements significantly influence traditional bank stock prices, with digital lending FinTechs having a more substantial impact compared to digital capital raising and digital payment FinTechs. This study highlights the differentiated investor response to FinTech competition, providing insights into the strategic challenges and market dynamics between traditional financial institutions and FinTech startups.
{"title":"Impacts of FinTech funding announcements on traditional banks: An event study analysis","authors":"Nicola Del Sarto , Irene Comeig Ramirez , Lorenzo Gai","doi":"10.1016/j.jeconbus.2024.106231","DOIUrl":"10.1016/j.jeconbus.2024.106231","url":null,"abstract":"<div><div>This paper investigates how traditional banks' stock prices react to FinTech funding announcements, addressing a notable research gap. Using event study methodology with the MSCI index as a benchmark, we analyze stock price responses of European traditional banks from 2010 to 2019. Both parametric t-tests and non-parametric generalized sign tests are employed to assess the impact. Grounded in signaling theory, we hypothesize that FinTech funding events signal increased competition and strategic uncertainty, affecting investor perceptions of traditional banks. Our findings indicate that FinTech funding announcements significantly influence traditional bank stock prices, with digital lending FinTechs having a more substantial impact compared to digital capital raising and digital payment FinTechs. This study highlights the differentiated investor response to FinTech competition, providing insights into the strategic challenges and market dynamics between traditional financial institutions and FinTech startups.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106231"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452782","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106218
Harold Rodriguez, Jefferson Colombo
Spot bitcoin ETFs have been recently approved in the U.S., increasing retail and institutional investors’ attention to crypto. To contribute to the debate on whether bitcoin protects against inflation, we analyze the effect of inflation shocks on bitcoin returns through the estimation and inference of Vector Autoregressive Models (VARs), identifying inflation shocks as surprises in the U.S.’s CPI and Core PCE announcements. Based on monthly data between August 2010 and January 2023, the results indicate that bitcoin returns increase significantly after a positive inflationary shock, corroborating empirical evidence that bitcoin can act as an inflation hedge. However, we observe that bitcoin’s inflationary hedging property is sensitive to the price index – it only holds for CPI shocks – and to the period of analysis – the hedging property stems primarily from sample periods before the increasing institutional adoption of BTC (“early days”). Notably, the inflation hedge property of bitcoin (Gold) has disappeared (strengthened) from the COVID-19 outbreak onwards. We conclude that bitcoin’s inflation-hedging property is context-specific and likely diminishes as it achieves broader adoption and becomes more integrated into mainstream financial markets.
{"title":"Is bitcoin an inflation hedge?","authors":"Harold Rodriguez, Jefferson Colombo","doi":"10.1016/j.jeconbus.2024.106218","DOIUrl":"10.1016/j.jeconbus.2024.106218","url":null,"abstract":"<div><div>Spot bitcoin ETFs have been recently approved in the U.S., increasing retail and institutional investors’ attention to crypto. To contribute to the debate on whether bitcoin protects against inflation, we analyze the effect of inflation shocks on bitcoin returns through the estimation and inference of Vector Autoregressive Models (VARs), identifying inflation shocks as surprises in the U.S.’s CPI and Core PCE announcements. Based on monthly data between August 2010 and January 2023, the results indicate that bitcoin returns increase significantly after a positive inflationary shock, corroborating empirical evidence that bitcoin can act as an inflation hedge. However, we observe that bitcoin’s inflationary hedging property is sensitive to the price index – it only holds for CPI shocks – and to the period of analysis – the hedging property stems primarily from sample periods before the increasing institutional adoption of BTC (“early days”). Notably, the inflation hedge property of bitcoin (Gold) has disappeared (strengthened) from the COVID-19 outbreak onwards. We conclude that bitcoin’s inflation-hedging property is context-specific and likely diminishes as it achieves broader adoption and becomes more integrated into mainstream financial markets.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106218"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452785","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2025.106234
Rafael Schiozer
{"title":"Editorial – Digital finance transforming the financial landscape","authors":"Rafael Schiozer","doi":"10.1016/j.jeconbus.2025.106234","DOIUrl":"10.1016/j.jeconbus.2025.106234","url":null,"abstract":"","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106234"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452784","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106196
Luca Galati , Alexander Webb , Robert I. Webb
How do cryptocurrency markets react when an exchange allows trading but freezes withdrawals? This study examines the impact of liquidity funding shocks on the market liquidity of cryptocurrency markets and traders’ behavior. We examine this issue using a natural experiment in major cryptocurrencies when the FTX exchange, while about to file for bankruptcy, prohibited most investors from withdrawing assets held by the exchange while allowing trading to continue. By using proprietary tick-by-tick data, we test price divergence between FTX and Binance and perform t-tests on the difference in magnitude of liquidity measures between the pre- and post-withdrawal halt periods. We find that a substantial amount of trading on FTX occurred during this stranded asset period, even though liquidity deteriorated as the bid-ask spread and implicit transaction costs increased sharply. We further find traders engaging in a revealing flight to safety by moving their investments in stablecoin Tether or even exiting the market. These findings not only shed light on the resilience of cryptocurrency markets in the face of liquidity crises but also offer insights into the mechanisms traders employ to navigate such tumultuous periods.
{"title":"Market behaviors around bankruptcy and frozen funds withdrawal: Trading stranded assets on FTX","authors":"Luca Galati , Alexander Webb , Robert I. Webb","doi":"10.1016/j.jeconbus.2024.106196","DOIUrl":"10.1016/j.jeconbus.2024.106196","url":null,"abstract":"<div><div>How do cryptocurrency markets react when an exchange allows trading but freezes withdrawals? This study examines the impact of liquidity funding shocks on the market liquidity of cryptocurrency markets and traders’ behavior. We examine this issue using a natural experiment in major cryptocurrencies when the FTX exchange, while about to file for bankruptcy, prohibited most investors from withdrawing assets held by the exchange while allowing trading to continue. By using proprietary tick-by-tick data, we test price divergence between FTX and Binance and perform t-tests on the difference in magnitude of liquidity measures between the pre- and post-withdrawal halt periods. We find that a substantial amount of trading on FTX occurred during this stranded asset period, even though liquidity deteriorated as the bid-ask spread and implicit transaction costs increased sharply. We further find traders engaging in a revealing flight to safety by moving their investments in stablecoin Tether or even exiting the market. These findings not only shed light on the resilience of cryptocurrency markets in the face of liquidity crises but also offer insights into the mechanisms traders employ to navigate such tumultuous periods.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106196"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143453531","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106224
Lucas Mussoi Almeida , Marcelo Scherer Perlin , Fernanda Maria Müller
This article presents a comparative analysis of the Ethereum (ETH) weak form of market efficiency priced in Bitcoin (BTC), Dai (DAI), and Tether (USDT). The investigation encompasses data from Uniswap-V2, a decentralized app utilizing a Constant Product Market Maker (CFMM) for cryptocurrency pricing, and Binance, a centralized exchange. The study employs different rolling windows to apply the asymmetric MF-DFA. The efficiency of exchange pairs is ranked using the market deficiency measure (MDM). Besides aligning with the literature, revealing an efficiency increase with larger rolling window sizes across centralized and decentralized exchanges and overall, upward and downward trends, our findings reveal that the CFMM employed by Uniswap-V2 leads to a more efficient market for the ETH-BTC pair compared to Binance, making it among the first studies to compare efficiency across these exchanges types. To delve deeper into this phenomenon and explore the dynamics between distinct pricing mechanisms, the Thermal Optimal Path is employed. The analysis highlights a lead-lag relationship between ETH prices in centralized and decentralized exchanges. The results suggest that market efficiency emerges first in the decentralized exchange, particularly when ETH is priced in BTC. The asymmetric MF-DFA was also employed on the pairs datasets before and after the Ethereum 2.0 hard fork. The findings of this analysis revealed significant results indicating that following the fork, Uniswap-V2 exhibited superior market efficiency compared to Binance for the majority of overall and downward trends, a phenomenon that was not observed prior to the merge. These findings contribute to the existing literature on cryptocurrency market efficiency by emphasizing the influence of network upgrades in trading platforms. Notably, this research reveals that, for the ETH-BTC pair, decentralized exchanges exhibit superior a level of weak form efficiency.
{"title":"Pricing efficiency in cryptocurrencies: The case of centralized and decentralized markets","authors":"Lucas Mussoi Almeida , Marcelo Scherer Perlin , Fernanda Maria Müller","doi":"10.1016/j.jeconbus.2024.106224","DOIUrl":"10.1016/j.jeconbus.2024.106224","url":null,"abstract":"<div><div>This article presents a comparative analysis of the Ethereum (ETH) weak form of market efficiency priced in Bitcoin (BTC), Dai (DAI), and Tether (USDT). The investigation encompasses data from Uniswap-V2, a decentralized app utilizing a Constant Product Market Maker (CFMM) for cryptocurrency pricing, and Binance, a centralized exchange. The study employs different rolling windows to apply the asymmetric MF-DFA. The efficiency of exchange pairs is ranked using the market deficiency measure (MDM). Besides aligning with the literature, revealing an efficiency increase with larger rolling window sizes across centralized and decentralized exchanges and overall, upward and downward trends, our findings reveal that the CFMM employed by Uniswap-V2 leads to a more efficient market for the ETH-BTC pair compared to Binance, making it among the first studies to compare efficiency across these exchanges types. To delve deeper into this phenomenon and explore the dynamics between distinct pricing mechanisms, the Thermal Optimal Path is employed. The analysis highlights a lead-lag relationship between ETH prices in centralized and decentralized exchanges. The results suggest that market efficiency emerges first in the decentralized exchange, particularly when ETH is priced in BTC. The asymmetric MF-DFA was also employed on the pairs datasets before and after the Ethereum 2.0 hard fork. The findings of this analysis revealed significant results indicating that following the fork, Uniswap-V2 exhibited superior market efficiency compared to Binance for the majority of overall and downward trends, a phenomenon that was not observed prior to the merge. These findings contribute to the existing literature on cryptocurrency market efficiency by emphasizing the influence of network upgrades in trading platforms. Notably, this research reveals that, for the ETH-BTC pair, decentralized exchanges exhibit superior a level of weak form efficiency.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106224"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452779","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106222
Yao Li
This paper examines, at the micro-level, the relationship between digital financial inclusion and households’ CO2 emissions, aiming to investigate the connection between financial inclusion and the environment. Exploiting a unique survey panel dataset of 13,624 Chinese households, I find that digital financial inclusion can increase households’ CO2 emissions, and this result is applicable to other emerging countries. Further analysis based on the mediation model sheds light on how digital financial inclusion influences direct and indirect households’ CO2 emissions, respectively. Specifically, digital financial inclusion encourages non-renewable energy consumption, thereby increasing households’ direct CO2 emissions. Simultaneously, it promotes subsistence and development consumption upgrades, contributing to increased households’ indirect CO2 emissions. Moreover, the study reveals that the impact of digital financial inclusion is heterogeneous. The environmental deterioration effect of digital financial inclusion is mainly driven by the actual uses of different services. As digital financial inclusion develops, its environmental detriment intensifies. Also, in cities where the Carbon Trade Policy (CTP) is implemented, digital financial inclusion can significantly reduce CO2 emissions. Overall, the findings have several implications for addressing environmental problems in developing countries.
{"title":"How does digital financial inclusion affect households’ CO2? Micro-evidence from an emerging country","authors":"Yao Li","doi":"10.1016/j.jeconbus.2024.106222","DOIUrl":"10.1016/j.jeconbus.2024.106222","url":null,"abstract":"<div><div>This paper examines, at the micro-level, the relationship between digital financial inclusion and households’ CO<sub>2</sub> emissions, aiming to investigate the connection between financial inclusion and the environment. Exploiting a unique survey panel dataset of 13,624 Chinese households, I find that digital financial inclusion can increase households’ CO<sub>2</sub> emissions, and this result is applicable to other emerging countries. Further analysis based on the mediation model sheds light on how digital financial inclusion influences direct and indirect households’ CO<sub>2</sub> emissions, respectively. Specifically, digital financial inclusion encourages non-renewable energy consumption, thereby increasing households’ direct CO<sub>2</sub> emissions. Simultaneously, it promotes subsistence and development consumption upgrades, contributing to increased households’ indirect CO<sub>2</sub> emissions. Moreover, the study reveals that the impact of digital financial inclusion is heterogeneous. The environmental deterioration effect of digital financial inclusion is mainly driven by the actual uses of different services. As digital financial inclusion develops, its environmental detriment intensifies. Also, in cities where the Carbon Trade Policy (CTP) is implemented, digital financial inclusion can significantly reduce CO<sub>2</sub> emissions. Overall, the findings have several implications for addressing environmental problems in developing countries.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106222"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452780","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106232
Navendu Prakash , Shveta Singh , Seema Sharma
The push for a digital economic framework has spurred multifaceted innovations in payments and settlement systems worldwide. The speed, accuracy, and reliability of payment infrastructure significantly influences monetary supply and credit flows, underscoring their critical role in monetary policy formulation. This paper elucidates the importance of efficient payment systems as precursors to financial intermediation. Distinguishing between large-value and retail payment systems, it examines the extant transmission mechanism via two intervening channels: currency holdings and excess reserves of commercial banks. The findings bear profound policy implications, advocating for transitioning to electronic payment systems that minimizes the use of cash. At the macroeconomic level, findings reveal how efficient payment systems enhance deposit intermediation, credit creation, and economic growth. Results indicate a marked degree of substitution between electronic and paper-based clearing platforms, and consequently, the shift towards electronic payments tends to reduce the negative effects of paper-based clearing on growth and consumption.
{"title":"Payment systems innovations, substitutive effects, and the real economy: The intervening role of currency holdings and excess reserves","authors":"Navendu Prakash , Shveta Singh , Seema Sharma","doi":"10.1016/j.jeconbus.2024.106232","DOIUrl":"10.1016/j.jeconbus.2024.106232","url":null,"abstract":"<div><div>The push for a digital economic framework has spurred multifaceted innovations in payments and settlement systems worldwide. The speed, accuracy, and reliability of payment infrastructure significantly influences monetary supply and credit flows, underscoring their critical role in monetary policy formulation. This paper elucidates the importance of efficient payment systems as precursors to financial intermediation. Distinguishing between large-value and retail payment systems, it examines the extant transmission mechanism via two intervening channels: currency holdings and excess reserves of commercial banks. The findings bear profound policy implications, advocating for transitioning to electronic payment systems that minimizes the use of cash. At the macroeconomic level, findings reveal how efficient payment systems enhance deposit intermediation, credit creation, and economic growth. Results indicate a marked degree of substitution between electronic and paper-based clearing platforms, and consequently, the shift towards electronic payments tends to reduce the negative effects of paper-based clearing on growth and consumption.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106232"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452783","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2025.106233
Rahul Verma, Devlina Chatterjee
We aim to understand the relative impact of traditional financial inclusion (FI) and digital financial inclusion (DFI) on perceived financial resilience (FR). We use Global Findex data for the years 2014 and 2021. Our sample includes 33933 individuals from 13 emerging economies. FI indicators include bank account ownership, saving, borrowing, payments and receipts. DFI indicators include digital borrowing, receipts and payments. Socio-economic and demographic factors such as age, gender, education and income, and informal financial activities are included as control variables. To address endogeneity issues, we include instrumental variables for each FI and DFI indicator. Individuals from Argentina, Brazil, China, Russia, South Africa and Thailand report higher levels of FI and DFI, while those from Egypt, India, Mexico and the Philippines report low levels. Estimated coefficients from bi-probit models indicate that “savings” had the largest positive impact on FR. Two FI indicators “bank account ownership” and “making payments”, and one DFI indicator “digital payments” had smaller and similar effect sizes. Digital borrowing had a small effect while digital receipts had no effect on FR. Our results indicate that having access to savings plays a larger role in improving individual financial resilience compared to other indicators. Policy implications are discussed.
{"title":"Relative impact of digital and traditional financial inclusion on financial resilience: Evidence from 13 emerging countries","authors":"Rahul Verma, Devlina Chatterjee","doi":"10.1016/j.jeconbus.2025.106233","DOIUrl":"10.1016/j.jeconbus.2025.106233","url":null,"abstract":"<div><div>We aim to understand the relative impact of traditional financial inclusion (FI) and digital financial inclusion (DFI) on perceived financial resilience (FR). We use Global Findex data for the years 2014 and 2021. Our sample includes 33933 individuals from 13 emerging economies. FI indicators include bank account ownership, saving, borrowing, payments and receipts. DFI indicators include digital borrowing, receipts and payments. Socio-economic and demographic factors such as age, gender, education and income, and informal financial activities are included as control variables. To address endogeneity issues, we include instrumental variables for each FI and DFI indicator. Individuals from Argentina, Brazil, China, Russia, South Africa and Thailand report higher levels of FI and DFI, while those from Egypt, India, Mexico and the Philippines report low levels. Estimated coefficients from bi-probit models indicate that “savings” had the largest positive impact on FR. Two FI indicators “bank account ownership” and “making payments”, and one DFI indicator “digital payments” had smaller and similar effect sizes. Digital borrowing had a small effect while digital receipts had no effect on FR. Our results indicate that having access to savings plays a larger role in improving individual financial resilience compared to other indicators. Policy implications are discussed.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106233"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143452781","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jeconbus.2024.106208
Shaista Wasiuzzaman , Ak Md Saiful Luqman Pg Hj Ahmad
The aim of this study is to investigate the link between investor perception regarding government advisories on cryptocurrencies, their perceived risk of cryptocurrencies and their willingness to invest in cryptocurrencies. The link is examined via Partial Least Squares-Structural Equation Modelling (PLS-SEM) using 212 responses gathered from a survey questionnaire distributed to groups related to cryptocurrency investment in social media platforms over a period of around four months. It is found that the investor’s perception regarding government advisories on cryptocurrencies, which are cautionary in nature, have a significant negative impact on their perception of the risk of cryptocurrencies. Perception regarding government advisories reduces the willingness to invest in cryptocurrencies. However, it is also found that perceived risk does not have any significant influence on the willingness to invest in cryptocurrencies, indicating that although risk perception is heightened as a result of the cautionary government advise, this does not result in a significant reduction in the willingness to invest in cryptocurrencies. Hence, perceived risk does not play a significant mediating role in influencing the effect government advisories have on the willingness to invest in cryptocurrencies.
{"title":"Perception towards government advisory, perceived risk and willingness to invest in cryptocurrency","authors":"Shaista Wasiuzzaman , Ak Md Saiful Luqman Pg Hj Ahmad","doi":"10.1016/j.jeconbus.2024.106208","DOIUrl":"10.1016/j.jeconbus.2024.106208","url":null,"abstract":"<div><div>The aim of this study is to investigate the link between investor perception regarding government advisories on cryptocurrencies, their perceived risk of cryptocurrencies and their willingness to invest in cryptocurrencies. The link is examined via Partial Least Squares-Structural Equation Modelling (PLS-SEM) using 212 responses gathered from a survey questionnaire distributed to groups related to cryptocurrency investment in social media platforms over a period of around four months. It is found that the investor’s perception regarding government advisories on cryptocurrencies, which are cautionary in nature, have a significant negative impact on their perception of the risk of cryptocurrencies. Perception regarding government advisories reduces the willingness to invest in cryptocurrencies. However, it is also found that perceived risk does not have any significant influence on the willingness to invest in cryptocurrencies, indicating that although risk perception is heightened as a result of the cautionary government advise, this does not result in a significant reduction in the willingness to invest in cryptocurrencies. Hence, perceived risk does not play a significant mediating role in influencing the effect government advisories have on the willingness to invest in cryptocurrencies.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"133 ","pages":"Article 106208"},"PeriodicalIF":3.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142191534","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study scrutinizes the effects of Indonesia’s 2016 debt-to-equity cap reform (thin capitalization rule) on capital structure, highlighting the role of debt tax benefits. The reform curtails debt tax benefits and furnishes a quasi-experimental setting, allowing a comparison between firms affected by the reform and those unaffected. Focusing on private firms and employing an entropy balancing weighted difference-in-difference approach, we elucidate that the reform results in a substantial 9.7 percentage point reduction in the debt ratio and a 5.3 percentage point increase in the stock ratio. Additionally, utilizing a pseudo tax cut reform framework combined with an isolated impact of the zero marginal debt tax benefit, we identify an implied tax elasticity of debt around 0.88, contributing to the observed decline in the debt ratio. Notably, smaller firms exhibit a more pronounced response, and the stock ratio undergoes a significant metamorphosis, suggesting the need for nuanced policy adjustments. Overall, the study underscores the profound influence of debt tax benefits in shaping corporate financing decisions.
{"title":"Debt and debt tax benefit: Evidence from Indonesia debt-to-equity cap reform","authors":"Timbul Parasian Hutahean , Wawan Hermawan , Bayu Kharisma , Alfiah Hasanah","doi":"10.1016/j.jeconbus.2024.106217","DOIUrl":"10.1016/j.jeconbus.2024.106217","url":null,"abstract":"<div><div>This study scrutinizes the effects of Indonesia’s 2016 debt-to-equity cap reform (thin capitalization rule) on capital structure, highlighting the role of debt tax benefits. The reform curtails debt tax benefits and furnishes a quasi-experimental setting, allowing a comparison between firms affected by the reform and those unaffected. Focusing on private firms and employing an <em>entropy balancing weighted difference-in-difference</em> approach, we elucidate that the reform results in a substantial 9.7 percentage point reduction in the debt ratio and a 5.3 percentage point increase in the stock ratio. Additionally, utilizing a pseudo tax cut reform framework combined with an isolated impact of the zero marginal debt tax benefit, we identify an implied tax elasticity of debt around 0.88, contributing to the observed decline in the debt ratio. Notably, smaller firms exhibit a more pronounced response, and the stock ratio undergoes a significant metamorphosis, suggesting the need for nuanced policy adjustments. Overall, the study underscores the profound influence of debt tax benefits in shaping corporate financing decisions.</div></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":"132 ","pages":"Article 106217"},"PeriodicalIF":3.3,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142698358","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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