Economic Systems最新文献

This paper identifies foreign cross-listings as a potential drain on reserves and a source of vulnerability to capital reversals for host nations. Simulations of a reasonably calibrated portfolio choice model demonstrate that restrictions on the outflow side of capital markets are most effective in mitigating this vulnerability for Jamaica. A panel data and Jamaica specific empirical analysis that distinguishes between outflow and inflow restrictions shows that it is inflow, and not outflow, restrictions that are negatively related to the total amount of capital in the economy. Outflow restrictions, therefore, are preferable to inflow restrictions as they prevent reserve drainage without stunting capital market growth. Institution-level evidence, however, indicates that outflow restrictions limit local financial institutions’ ability to hedge local and global risks.

This paper analyzes cooperation between governments to set up a public firm and decide what percentage of that firm each of them owns. A symmetric model is assumed, with two countries and one domestic private firm in each country. Firms produce a homogeneous good and have quadratic cost functions. The counterintuitive result emerges that there are two equilibria, in each of which one government has a higher percentage of ownership in the public firm than the other. We extend the analysis to consider other factors that may influence the distribution of ownership of the firm between the countries: Heterogeneous goods, constant marginal cost of production, inequality in the number of private firms existing in each country, and different numbers of consumers in each country.

This study fills a research gap by specifically investigating the effect of country risk rating (CR) on shadow banking (SB) development from a global perspective using a dynamic panel estimation approach covering the period 2010–2019. Furthermore, the study explores whether a country's characteristics impact this nexus by grouping countries into advanced and emerging market economies based on their development level. To the best of our knowledge, few empirical studies have been conducted looking into this relationship from this perspective, and these findings open a new debate in banking literature. The empirical results reveal that CR positively impacts SB in advanced, emerging, and global samples of countries, implying that lower vulnerability to risk factors causes SB expansion. In addition, the results highlight that traditional macroeconomic and institutional factors impact SB development, although the extent of the effect and statistical significance of the factors vary and depend on countries' development levels. Remarkably, the empirical results confirm the validity of the complementarity and regulatory arbitrage hypotheses and support the possible asymmetric implications of monetary policy on SB. The results are robust when alternative model specifications are used and have significant implications for policymakers and regulatory bodies.

Using a unique district-level panel dataset, we investigate the effect of banking system penetration on financial inclusion in Ghana. To purge potential endogeneity bias in the underlying relationship, we exploit a change in the policy environment of the Ghanaian banking system to instrument for bank branch expansion. We show, first, that the switch from the compartmentalized system of banking to the universal banking system in Ghana has resulted in an expansion of banks’ branch network, which has benefited hitherto financially less developed districts. Second, our instrumental variable evidence suggests that banking system penetration promotes financial inclusion—notably, access to bank credit and to formal credit. The results of this paper provide important insights into the role of policy in enhancing financial inclusion.

We investigated the resilience of exporting manufacturing sectors during the Brazilian domestic recession (2014–2016) using data from various sources at the Brazilian state-sector level. We propose a new identification strategy that gauges a sector’s exposure to the recession by examining its current position in the international demand cycle, deemed exogenous from the viewpoint of a local exporter in Brazil. Following the two-year Brazilian recession, we observe a persistent negative effect on exporting sectors that are more reliant on domestic economic activity (and thus more vulnerable to the domestic recession) than those less reliant on domestic economic activity (less exposed to the domestic recession). Sectors with lower labor productivity and higher technological intensity were less resilient during the domestic recession, as revenues declined and financing costs increased substantially. Given the critical role of exports in regional economic growth, this study contributes to the formulation of public policies by documenting the economic performance of exporting sectors during periods of economic stress.

The literature on house price convergence largely relies on house price indices, based in an arbitrary year, rather than on actual price levels. This is essentially due to the scarcity of comparable house price level data. However, this severely constrains the analysis. In particular, it often forces to discard a large part of the data sample, which leads to a great loss of information and hampers analysis on sub-periods. In this paper, we combine the price level estimates produced by Bricongne et al. (2019) with long OECD house price series to analyse long-run house price convergence across 18 OECD countries. Applying the Phillips and Sul (2007) procedure, we find convergence in OECD nominal house prices, but two separate convergence clubs in real house prices. We find some convergence in euro area real house prices, but no evidence of strengthening after the introduction of the euro. β-convergence regressions (linking changes in house prices to their initial levels) point to conditional convergence, related to the evolution of gaps in real GDP per capita, long-term interest rates and population growth across countries.

When a firm is controlled by a large shareholder, the principal agency problem arises from expropriation by controlling shareholders of other shareholders. Using a sample of 3776 publicly traded firms in the Chinese A-share market over the period 2007–2020, this study investigates whether stock liquidity impedes or enhances the expropriation behavior of controlling shareholders. I demonstrate that (1) a liquid stock market generally encourages expropriation behavior by controlling shareholders, (2) the positive effect of stock liquidity on expropriation by controlling shareholders is mitigated when active investors hold a large stake in the firm, and (3) active investors’ monitoring of expropriation by controlling shareholders is mitigated at state-owned enterprises and firms that have a large gap between ownership and control. However, higher competition among blockholders strengthens the discipline of active investors with respect to expropriation. This study builds a new link between a market factor (stock liquidity) and a governance problem (expropriation by controlling shareholders) and reveals some new characteristics in the relationship between stock liquidity and corporate governance in an emerging market.

At the 2010 G20 Summit, the use of formal financial services was recognized as one of the main pillars of the global development agenda. At the same time, the fifth goal of the Sustainable development agenda outlined the importance of gender inclusion for sustainable development. Empirical research on the effect of gender inclusion on inclusive finance has however been limited to micro level studies. This study aims to verify the effect of gender political inclusion on financial inclusion on a sample of 37 African countries from 2004–2020. The empirical methodology involves the OLS, the Tobit regression and the System GMM methodologies. The results from these methods show that gender political inclusion is enhancing on financial inclusion in Africa, and this finding is robust across alternative specifications of gender inclusion and inclusive finance. Besides, governance exhibits a positive synergy effect with gender political inclusion on inclusive finance. Policy implications are discussed.

We contend that implicit government guarantees are included in municipal corporate bonds (also known as “Chengtou” bonds) issued by restructured local government financing vehicles (LGFVs) to address implicit government debt concerns, which implies lower debt financing costs. Using a sample of publicly issued Chengtou bonds between 2017 and 2021, we demonstrate that bond-specific risk is substantially reduced after LGFV restructuring. Similarly, the yield spreads on Chengtou bonds are considerably smaller than those on bonds issued by unrestructured LGFVs. Our findings generally imply that LGFV restructuring can lower debt financing costs through implicit government guarantees. Moreover, LGFV restructuring has had a credit effect, an operation effect and a willingness effect on reducing debt financing costs. Furthermore, the impact of restructuring is more pronounced among enterprises that are smaller in scale and less profitable and in regions with poorer economies. Additional investigations into the mechanism reveal that restructuring into a group enterprise can lower debt financing costs and reduce the reliance on implicit government guarantees.

Workers are failing to move to the most productive industries, despite the offer of higher wages. In order to explain this phenomenon, we provide evidence that when an industry experiences a positive, labour-productivity shock, it is subsequently harder for firms to find workers. This is represented by a fall in relative matching efficiency. We present a stylised two-sector search and matching model to show the consequences of this negative relationship. Our calibrated model not only closely tracks US wages and employment share over time, but also reveals substantial output losses as a result of labour misallocation between industries.