Sovereign Debt Crisis in Sri Lanka and Bangladesh: A Comparative Study

Using IMF's World Economic Outlook (WEO) data for the macroeconomic variables, this study comparatively examines the sovereign debt crises in Sri Lanka and Bangladesh. It identifies different macroeconomic factors related to the sovereign debt crisis, investigates their interrelations, and explores if their debt crises are similar. It shows that the general revenue to Gross Domestic Product (GDP) ratios of Sri Lanka degraded to converge with the upgrading status of Bangladesh during the Covid-19 period. Since 2010, Sri Lanka has maintained a well-off economic status with per capita GDP, while Bangladesh has a long way to go yet. The general expenses to GDP ratio of Sri Lanka shows stresses on its GDP, while that of Bangladesh is more relaxed. Sri Lanka has overstressed debt to GDP ratio along with Balance of Payments (BOP) deficits, while Bangladesh has continued traces of managed debt to GDP ratio along with BOP surpluses. Bangladesh has taken enough precautions in their sovereign debt management, compared to Sri Lanka. Even in 2020, Bangladesh maintained progressive investment track over the threshold limit of 30%, while Sri Lanka fell into a debt trap. Following the pandemic, Bangladesh has enjoyed a gross national savings to GDP ratio of above the threshold of 25%, while Sri Lanka is going through a critical phase. It shows governance myopia of Bangladesh regarding its imbalanced current account positions, while governance myopia of Sri Lanka exists with reference to its imbalanced current account positions, adverse gross debts, and government borrowing as well.

EU or Euro Area Crisis? Studying Differentiated Integration as an Idea Structuring Elite Perceptions of the Sovereign Debt and the COVID-19 crisis

After the sovereign debt crisis, scholars concluded that euro area member states (EAMS) and non-EAMS embarked on diverging paths of integration. Yet, their united response countering the economic consequences of the COVID-19 crisis contradicts the path-dependency argument. This article takes an ideational approach. It demonstrates that the different crisis outcomes regarding differentiated integration (DI) in Economic and Monetary Union (EMU) coincide with variations of how DI influenced elite crisis perceptions as an idea. While policymakers perceived the sovereign debt crisis as a currency area crisis with threats and spillovers applying to EAMS, they interpreted the COVID-19 crisis as a health emergency threatening all EU member states. These differences in elite crisis perceptions facilitated different outcomes regarding DI despite unchanged economic and fiscal circumstances among EAMS and non-EAMS. The findings challenge deterministic assumptions on the self-reinforcing nature of DI in EMU and establish DI as an idea structuring elite perceptions. [ FROM AUTHOR] Copyright of Journal of European Integration is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full . (Copyright applies to all s.)

The impact of Covid-19 on the capital structure in emerging economies: evidence from India

PurposeCapital structure is an important corporate financing decision, particularly for companies in emerging economies. This paper attempts to understand whether the pandemic had any significant impact on the capital structure of companies in emerging economies. India being a prominent emerging economy is an ideal candidate for the analysis.Design/methodology/approachThe study utilizes three leverage ratios in an extended market index, BSE500, for the period 2015–2021. The ratios considered are short-term leverage ratio (STLR), long-term leverage ratio (LTLR) and total leverage ratio (TLR). A dummy variable differentiates the pre-epidemic (2015–2019) and pandemic (2020–2021) period. Control variables are used to represent firm characteristics such as growth, tangibility, profit, size and liquidity. Dynamic panel data regression is employed to address endogeneity.FindingsThe findings point out that Covid-19 has had a significant, negative effect on LTLR, while the impact on STLR and TLR was insignificant. The findings indicate that companies based in a culturally risk-averse environment, such as India, would reduce the long-term debt to avoid bankruptcy in times of uncertainty.Research limitations/implicationsThe study covers the impact of the pandemic on Indian companies. Hence, generalization of the findings to global context might not be valid.Practical implicationsTo maintain economic growth in the post-crisis period, Indian policymakers should ensure accessibility to low-cost capital. The findings provide impetus to deepen the insignificant corporate bond market in India for future economic revival.Originality/valueDeveloping countries are struggling to revive the economies postpandemic. This is particularly true for Asian economies which are heavily reliant on banks for survival. This research finds evidence to utilize bond market as a source of raising capital for economic revival.

Effect of Remittance Inflows on External Debt in Developing Countries

This paper analyzes the effect of remittance inflows on external debt in developing countries, by identifying international reserves as a potential transmission channel. Using panel data over the period 1970–2017 and covering 50 low-and middle-income countries worldwide, we find a positive and significant effect of remittance inflows on the external debt-to-GDP ratio. We also find a negative and significant effect of international reserves on external debt. After controlling for international reserves, the effect of remittance inflows on external debt increases;it remains positive and significant. The results suggest that the role of international reserves as a self-insurance mechanism, and the Dutch disease effect related to remittance inflows are at play. In addition, we find negative and significant effects of economic growth and savings-investment gap on external debt. We also find positive and significant effects of the nominal exchange rate and the United States lending interest rate on external debt. We discuss the policy implications of these findings, while highlighting factors that policymakers should focus on for containing external debt in developing countries in the post-COVID-19.

Aid, Trade and Development: The Future of Globalization, Second Edition

This volume presents a broad sweep of modern economic history underpinning aid, trade, development and globalization in the last half century and the salient challenges facing the global community today. The author draws on his long years as an academic and development practitioner to recommend what needs to be done to cope with the backsliding of the fight against global poverty, fractured geopolitics and the threats to the multilateral economic order. The new, revised edition analyses how unilateralism, rising protectionism and the Covid-19 pandemic seriously threaten global sustainable development. It concludes with recommendations on the policy changes needed to make globalization more equitable and development more sustainable. This book will be of interest to researchers and students of economic development and economic history, as well as all those concerned about global inequality and sustainability. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022.

Creating a new sovereign debt reconstruction mechanism: why incentives, risk sharing, and CACs will all matter

This paper argues that the Covid recession, and aggressive monetary tightening in the US accompanying the post-Covid recovery, are likely to cause a sovereign debt overhang in emerging market economies—i.e. debt which is unlikely to be fully repaid. A sovereign debt reconstruction mechanism (SDRM) seems necessary to avoid widespread disorderly debt write-downs. We discuss a range of procedures that are available, building upon Anne Krueger's proposal for an SDRM in 2002 (Krueger, 2002a,b). At that time Krugman (1988) had already argued that any SDRM should incentivize debtors so that they put in effort to clear their debts (a Krugman contract). Menzies (2004) went further than this to show that these effects should be further sharpened, creating what he called ‘hyper-incentive effects' (a Menzies contract). The International Monetary Fund has argued that risk-sharing between debtors and creditors will also be important (IMF, 2020). But we show that risk-sharing will—in general—pull in the opposite direction to incentive effects, and we doubt the extent to which the IMF has recognized this trade-off. Finally, we argue that collective action clauses (CACs) increase the probability of achieving any agreement, whatever it might be. They will help avoid the alternative of disorderly debt write-downs, outcomes which will deliver neither incentive effects nor risk-sharing. © The Author(s) 2023. Published by Oxford University Press.

The Economic Impact of COVID-19 Crisis Based on Complex Network Evolution Model

The Covid-19 crisis impacts the economy with non-equilibrium and non-linear shocks. This paper builds a trading network model based on the theory of trading economics. Using the network model, the evolutionary procedure of the economic depression triggered by the shocks are researched. The study shows that under the impact of shocks, small and medium-sized trading agents with weak profitability will first experience cash flow crisis. Then the crisis contagion is formed in upstream and downstream through the trading network. The credit reduction caused by the business deterioration will make the interest rate in the economy increase and promote each other with the bankruptcy of trading entities. Eventually, it leads to the feedback loop in liquidity crisis and debt crisis, which accelerates the bankruptcy of enterprises and possibly causing a debt crisis in the banking sector. It is found that after the shock, the economic recovery may take three patterns: stable recovery, slow recession and secondary crisis. Finally, the paper proposes relevant policy recommendations to reduce the impact of the crisis. © 2023 Editorial Borad of Complex Systems and Complexity Science. All rights reserved.

Determinants of Indebtedness in Expanding Portuguese Hotels

The hotel industry has been one of the fastest-growing economic sectors in Portugal in recent years. According to the European Best Destinations website, Portugal has consolidated itself as a destination of excellence. The explanation of the capital structure of firms remains relevant in financial research. However, prior international empirical evidence is not exclusive and is still scarce in the Portuguese hotel sector, which motivated this research. This study aimed to analyse the influence of determinants on the capital structure of 821 Portuguese hotels between 2011 and 2019 (until the constraints of the COVID-19 pandemic affected the international tourism sector) and to determine whether strategies were conducted according to trade-off and pecking order theories. This study used an econometric approach based on the static panel data model, with tests recommending the fixed effects model estimated by the least squares dummy variables (LSDV) within. The analysed determinants were return on assets, size, tangibility, growth opportunities, risk and other tax benefits besides debt in order to explain the indebtedness through three alternative measures. The results of this research show that managers sought an optimal combination of equity and debt, which was weighted between tax savings and the cost of financial distress. However, they pursued this objective through the hierarchical sequencing of funding sources in order to minimise the costs of information asymmetry. © 2023 by the authors.

Real Estate Insights The continuing uncertainty of property investment markets – an outlook for the UK in 2023

PurposeThe aim of this Real Estate Insight is to comment upon the outlook for real estate investment in the United Kingdom (UK) at the beginning of 2023 in light of global inflation brought about by the pent-up post-pandemic demand push for goods and services and the exacerbation of the Ukraine/Russia conflict.Design/methodology/approachThis Real Estate Insight will comment upon changes in the investor's view of the UK economy and the relative attractiveness of the different property sectors and the shift in thinking post-pandemic.FindingsThis paper will consider a number of scenarios and possibilities flowing from the current uncertainties in the property market and the wider economy.Practical implicationsAs with all property investment, the value and performance of the property assets is interlinked with the use and demand of different property types. Understanding the supply and demand drivers provides investors with a reasoned conjecture of how the property market may perform going forward.Originality/valueThis is a review of the UK market in relation to post-COVID-19 changes to supply and demand at both an operational and investment level.

Policy space index: Short-term response to a catastrophic event

What policy space does a country have for a short-term response to a catastrophic event? To quantify this space, the paper proposes a policy space index. The index combines a quantitative, albeit relatively limited and narrow, fiscal space concept with the indicators of nominal monetary space and reserve space. Each nominal policy space indicator is then adjusted for individual country's institutional features, such as the status of its currency, income group, access to capital markets, debt distress level, and the exchange rate regime. The final policy space index is derived as a composite of the three nominal policy space indicators, each adjusted for five institutional features. This index is different from the approach to measure fiscal space at the IMF and requires more work before it can be used operationally. The proposed index allows measuring the overall policy space in each country directly in percent of GDP. By way of illustration, the paper applies the index to the Covid-19 crisis.

Economic policy uncertainty, governance institutions and economic performance in Africa: are there regional differences?

In recent years, the global economy has witnessed several uncertainty-inducing events. However, empirical evidence in Africa on the effects of economic policy uncertainty (EPU) on economic activities remains scanty. Besides, the moderating effect of governance institutions on the uncertainty-economic performance relationship in Africa and the likelihood of regional differences in the response of economic activities to EPU on the continent are yet to be investigated. To address these gaps, we applied system GMM and quantile regressions on a panel of forty-seven African countries from 2010 to 2019. We find that while global EPU and EPUs from China, USA and Canada exert considerable influence on economic performance in Africa, the effects of domestic EPU and EPUs from Europe, UK, Japan, and Russia were negligible, suggesting that African economies are resilient to these sources of uncertainty shocks. We also find that governance institutions in Africa are not significantly moderating the uncertainty-economic performance relationship. However, our results highlighted regional differences in the response of economic activities to uncertainty, such that when compared to East and West Africa, economic performance in Central, North and Southern Africa is generally more resilient to global EPU and EPUs from China, USA, Europe and UK. We highlighted the policy implications of these findings.

ASIAN BIOTECH CLINICAL TRIAL DEMAND MOVES TO THE WEST

The critical element, of course, is that there can be no compromise on trial design, execution and data collection to deliver a robust drug development package. AUM's strategy is to reverse this flow and go from Asia to the West, satisfying the need of the Asian population for innovative and affordable drug development and reducing the cost of health care in Western countries by introducing drugs at an "Asian" price point. [...]the dislocation in services from widespread lockdowns resulted in significant delays in data collection and management of research samples. Even when we could transfer them to appropriate laboratories for analysis, the staff shortages, backlog of samples, and supply chain disruption of critical reagents and parts caused troubling delays in obtaining and analyzing data.

Two Major Economic Crises in the Early Twenty-First Century and their Impact on Central Bank Independence

Two major economic crises in the early twenty-first century have had a serious impact on monetary policy and CB independence. Disruption in financial intermediation and associated deflationary pressures caused by the global financial crisis of 2007–2009 and European financial crisis of 2010–2015 pushed central banks (CBs) in major currency areas towards adoption of unconventional monetary policy measures, including large-scale purchase of government bonds (quantitative easing). The same approach has been taken by CBs in response to the COVID-19 crisis in 2020 even if the characteristics of this crisis differ from the previous one. As a result of both crises, CBs have become major holders of government bonds and de facto – main creditors of governments. Against rapidly deteriorating fiscal balances, CBs have become hostages of fiscal policies, which compromises their independence. Risks to the CB independence also come from their additional mandates (beyond price stability) and populist political pressures.

Avoiding a lost decade—an interim update

All sovereign debt restructurings are inherently messy, expensive, exasperating, time-consuming, and contentious.These are the familiar pathologies in the international system to resolve unsustainable sovereign debts. But the period since the onset of the Covid-19 crisis has revealed (to use a term we all learned during pandemic lockdowns) several new co-morbidities.These include a breakdown in the ability of the major external creditor groups (traditional Paris Club lenders, non-Paris Club bilateral creditors like China and bondholders) to coordinate their debt relief efforts, the increasingly diverse nature of the private-sector entities holding claims against a debtor state, and the total absence of any mechanisms—statutory or contractual—that can be used to ensure that the sacrifices made by the vast majority of claimants and official sector sponsors in the economic recovery process cannot be exploited by the uncooperative few. © The Author(s) 2023. Published by Oxford University Press.

How could a new universal code of conduct prevent and resolve sovereign debt crises? Proposals for design and implementation

In response to the COVID‐19 crisis, government spending around the world has increased significantly and will continue to grow as interest rates rise. In view of protracted and costly sovereign debt restructurings in the previous decades, contractual and noncontractual instruments of the Global Debt Governance‐system have been insufficient to prevent and to resolve sovereign debt crisis. While statutory and comprehensive approaches to resolve sovereign debt crises lack the political support such as an insolvency procedure for states incomprehensive contractual approaches including collective action clauses (CACs) cannot fully secure a comprehensive debt resolution. Codes of conduct could constitute an essential instrument to contribute to preventing and resolving sovereign debt crises. There are two main impediments for establishing and adopting such codes of conduct effectively. First, a range of codes of conduct with different institutional settings and principles have been established − and partly implemented − including those of the Institute of International Finance, the United Nations, the G20, the IMF and the OECD. However, differing institutional settings do not contribute to preventing or effectively resolving debt crises when the actors concerned apply different codes of conduct. We suggest a new universal code of conduct in which the elements of the various proposals made by the public and private sectors would be combined. Second, the global economic governance structure lacks incentives for creditors and debtors to adhere to this new universal code of conduct. This paper proposes measures providing incentives for creditors and debtors to apply the nonstatutory code of conduct.

Shifts in the portfolio holdings of euro area investors in the midst of COVID-19: Looking-through investment funds

We study the impact of the COVID-19 shock on the portfolio exposures of euro area investors. The analysis "looks-through" holdings of investment fund shares to first gauge euro area investors' full exposures to global debt securities and listed shares by sector at end-2019 and to subsequently analyse the portfolio shifts in the first and second quarters of 2020. We show heterogeneous patterns across asset classes and sectors, but also across less and more vulnerable euro area countries. In particular, we find a broad-based rebalancing towards domestic sovereign debt at the expense of extra-euro area sovereigns in the first quarter of 2020, consistent with heightened home bias, which however levelled off in the second quarter. On the contrary, for listed shares we find that euro area investors rebalanced away from domestic towards extra-euro area securities in both the first and the second quarter, which may be associated with better relative foreign stock market performance. Many of these shifts were only due to indirect holdings, corroborating the importance of investment funds in assessing investors' exposures-especially for households, insurance companies and pension funds-in particular in times of large shocks. We also confirm the important intermediation role played by investment funds in an analysis focusing on the large-scale portfolio rebalancing observed between 2015 and 2017 during the ECB's Asset Purchase Programme.

The role of COVID-19 in worsening the debt sustainability in developing economies - The case of Ghana and Kenya

The SARS-CoV-2 coronavirus pandemic has raised public debt sustainability issues, especially for Heavily Indebted Poor Countries (HIPC). Developing countries with limited fiscal space have had to take on significant external debts to help deal with the negative effects of the pandemic. This has led to further increases in the debt levels of these countries, with the potential to trigger a debt default. Addressing these issues, this study uses a framework for fiscal policy and public debt sustainability analysis. The results confirm the impact of the SARS-CoV-2 coronavirus pandemic on the debt levels of Ghana and Kenya. This study recommends the creation of domestic fiscal buffers and fiscal space toward the attainment of long-term debt sustainability, contrary to the popular view of offering debt relief to these countries.

Impact of financial behaviour on financial well-being: evidence among young adults in Malaysia

The high cost of living and prolonged lockdowns due to the COVID-19 pandemic made the financial well-being of individuals vulnerable, especially young adults. This paper examines the impact of financial behaviour on financial well-being (FWB) among young Malaysians during the COVID-19 pandemic. The study collected variable data on financial literacy, financial behaviour, financial socialisation, self-control, financial technology and FWB. To collect a representative sample of Malaysian young adults, a multi-stage random sampling method was used, and 360 young adults aged 18-29 years old completed the questionnaires. Structural equation modelling was adopted to investigate the factors influencing young adults' FWB. The empirical findings revealed a significant mediating effect of financial behaviour in the relationships between financial literacy, financial socialisation, self-control, financial technology, and FWB. The research concluded that the mediation analysis yields a clear and firm conclusion that financial behaviour is important in empowering young adults' FWB. Thus, the present study adds value to the existing literature on the relationship between financial behaviour and FWB. Furthermore, the paper's findings will assist government agencies and non-governmental organisations in developing outreach programmes for young adults per the strategies outlined in the Twelfth Malaysia Plan and the aspirations pledged in the Malaysian Youth Policy 2015-2035.

Exploring pharmacy student experiences with student debt and perspectives on future burnout and loan relief

Objective Pharmacy students with substantial educational debt are at risk for excessive workloads, burnout, and clinical errors. During the COVID-19 pandemic, policies addressing economic hardships for all student debt borrowers included temporary suspension of monthly payments and 0% interest during the pause. This study aimed to understand student-level factors regarding student debt from the lived experiences of current pharmacy students and aimed to understand how current pharmacy students view temporary loan relief. Methods We used semi-structured interviews of pharmacy students across four years of progression in their pharmacy program to better understand student experiences with debt, different factors that may influence the impact of student debt on short-term and long-term outcomes for students, and student perspectives on debt relief policies and potential solutions. Our thematic analysis was grounded in existing evidence and a conceptual framework, while also allowing codes to emerge directly from the data. Results A total of 20 pharmacy students were interviewed with a median student debt of $77,000, with debt amounts ranging from $0 to $209,000. Students described what mediating factors influenced their experiences, the influence of student debt on clinician burnout, and other outcomes impacted by student debt. Six overarching themes emerged relevant to current students: student debt influences education and career decisions, debt is risky given the saturated pharmacy market, debt is an accepted burden, debt will inhibit starting a life, the COVID-19 loan relief is revealing, and early financial education is needed. Conclusion Pharmacy students burdened with debt described a variety of different experiences and attitudes towards that debt and provided their perspectives on how student debt influences short-term education and career decisions. While students accept the tradeoff of debt for their education as an inevitable burden, reported coping mechanisms and strategies shared suggest some solutions may be available to ameliorate this burden.

Public debt and r-g risks in advanced economies: Eurozone versus stand-alone

Differentials between interest rates on government bonds (r) and economic growth rates (g) are a key determinant of public debt dynamics. What are the predictors of r-g, and what risks do policy-makers face? Applying regression methods to data on 22 OECD countries over 1970-2018 shows that higher public debt levels are not predictive of more unfavourable r-g in both Eurozone and stand-alone countries, where the latter issue debt in their own currency. The Euro Crisis – a period characterised by doubts over whether the ECB would backstop government bond markets – is linked with more unfavourable r-g, but only in Euro periphery countries. Our results suggest that the Eurozone's institutional architecture affects r-g risks. While we find that predicted probabilities of future r – g < 0 are typically significantly higher than 50% across OECD economies under conditions similar to the pre-Covid-19 years, r-g risks are most significant in the Euro periphery.