Journal of International Financial Markets Institutions & Money最新文献

Financial technology, also known as fintech, is transforming daily lives and revolutionising the financial industry. However, there is currently no consensus regarding the effect of fintech on the green bond market. Using novel Chinese data, this study provides robust evidence that fintech development can significantly boost green bond issuance. Further analysis suggests that this promotional effect occurs by empowering intermediary institutions and increasing social environmental awareness. Additionally, we investigate the heterogeneous effect and find that the positive relationship is more pronounced for bonds without high ratings and whose proceeds are not used for refinancing. This effect is also stronger for non-state-owned issuers and in cities connected with High-Speed Railway networks or located in the eastern region of China. These results call for attention from policymakers and security managers to take further notice of fintech utilisation in green finance products.

This paper discusses the resurgence of the Feldstein–Horioka puzzle after the global financial crisis within the European space. Revisiting the theory of intertemporal choice, this paper suggests that the deterioration of macroeconomic fundamentals that favor capital flows from richer to poorer economies can lead investment and savings to correlate across countries even without frictions to capital mobility. I test this hypothesis against a data set of 12 European economies spanning since the inception of the Maastricht treaty and ending immediately before the start of the Covid-19 pandemic. I find that the investment-savings correlation is generally low both across and within open economies, aligning with the theoretical stylized fact. However, this can be jeopardized when low-income economies accumulate large net stocks of foreign liabilities coupled with sluggish prospects for productivity growth. Ultimately, if investment and savings are not managed in line with macro fundamentals, foreign investors eventually impose a premium on new liabilities, raising the cost of financing investment with foreign funds and leading the correlation between investment and savings to rise both across and within countries.

Many central banks pursue some kind of exchange rate objective. We derive what variables the central bank should look at when setting the interest rate to implement a given objective. Exchange market pressure (EMP), the tendency of the exchange rate to change, emerges as the key variable. This yields a policy rule for the interest rate where EMP is added to, say, a Taylor rule. The coefficient for EMP depends on two structural parameters, namely the effectiveness of the interest rate to ward off depreciation, and the degree of exchange rate management. The rule can implement many regimes, from floating to intermediate to fixed rates. It can be applied to many models, and we illustrate it in a New Keynesian model for a small open economy.

To assess similarities in international asset markets’ responses to political news, we construct a political news index using advanced natural language processing. We then examine how the volatility across international asset markets is connected to the development of our political news index by measuring the daily directional connectedness using a VAR-based framework. Finally, we apply an unsupervised algorithm to cluster markets based on their volatility connectedness to political news. Our analysis reveals eight distinct clusters that reflect the markets’ sensitivities to political dynamics. This data-driven analysis offers insights into the influence of political developments on market volatility.

Amid the global energy crisis, we examine the impact of electricity market regulations in the European Union (EU). Pursuing an integrated EU electricity market inadvertently heightened the interdependence between gas and electricity prices. The EU energy crisis, triggered by the gas supply shock, amplified power prices and their volatility. These volatility spikes led to substantial margin increases on power futures contracts crucial for mitigating electricity price risks. The increase in margins placed a substantial financial burden on EU power utilities. We document an almost eight-fold surge in required collateral for long positions in front-month EU power futures contracts during the one-year duration of the crisis. Throughout the crisis, EU utilities experienced lower sales and profitability compared to their US counterparts, and a portfolio of EU power utilities significantly underperformed a counterfactual portfolio of US power utilities.

Fintech has experienced rapid advances in recent years. This study examines the impact of Fintech on financial stability for a group of 25 countries during 2013–2020. We adopt the novel Fintech-enabled financing volume to directly measure Fintech development. We utilise both the aggregate and disaggregated level of Fintech financing; the latter includes crowdfunding, business lending and consumer lending, each has a different funding process and default rates. We account for spatial dependence in financial stability across countries by employing various spatial models. Our findings first reveal that there is positive spatial dependence of financial stability across countries. It implies that financial stability has a positive spillover to neighbouring countries and validates the necessity of spatial analysis. Second, based on the Spatial Durbin Model which best describes our data, Fintech financing makes a positive local and cross-border contribution towards financial stability, irrespective of alternative weight matrices and sample sizes. Such positive impact is more profound in countries with smaller sizes of Fintech financing volume, and the cross-border effect is stronger with closer geographic proximity. Finally, crowdfunding enhances financial stability, whilst consumer lending has a contrasting destabilising effect.

Recent research has started to acknowledge the vital role of soft information in shaping credit rating outcomes. We extend this literature by investigating the effect of corporate integrity culture on the credit rating process and document a significant positive relationship between a culture of integrity and corporate credit ratings. We further show that this relationship is from both an indirect effect of integrity on a reduced financial risk, and a direct effect of integrity in signalling the creditworthiness of the underlying firm. When an alternative signalling device, such as firm reputation, earnings management activity, and Carbon Disclosure Project involvement, contradicts with integrity culture, integrity is no longer a significant predictor of credit ratings. Our results suggest that corporate culture plays an important role in the credit rating assessment process.

This study shows a significantly positive relationship between natural disasters and firm-level stock price crash risk using a sample of listed firms from emerging markets.The channel tests suggest that natural disasters affect crash risk by increasing corporate risk-taking, dampening firm fundamentals, and aggravating bad news hoarding. The research further identifies that the effect of natural disasters on crash risk is moderated by country-level and firm-level characteristics. Overall, our findings contribute to a broader understanding of the economic outcomes of natural disasters in emerging markets.

This paper examines the impact of exchange rate movements on firm outward direct investment (ODI), by taking into account the heterogeneous effects between distribution and production ODI. Overall, homecurrency depreciation tends to increase ODI due, in large part, to the growing emergence of distribution ODI as predicted by a theoretical model. Using rich Chinese firm-level ODI decision data over the period between 2000 and 2008, the intensive empirical search shows strong supports to the model prediction on the complementary relationship between distribution ODI and export. In response to home depreciation, Chinese firms set up more distribution trade affiliates to promote exports. Such results are robust to different econometric methodologies, empirical specifications, and time spans.

Using data from forty-six developed and emerging markets, we show that a world-based environmental, social, and governance index (ESGI) provides useful information about future economic activity in- and out-of-sample. A relatively high increase in ESGI predicts a decrease (increase) in future economic activity in the short (long) term. We document that the environmental, social, and governance components of ESGI contribute to the predictability of economic activity. Our results have significant implications for policymakers to advise firms to adopt better ESG practices.