Determinants of financial stability and risk transmission in dual financial system: Evidence from the COVID pandemic

Existing literature on spillovers and connectedness between Islamic and conventional financial markets overlooked the fundamental role played by money markets in volatility spillovers and risk transmission across markets. That being so, this paper aims at investigating the dynamic co-movements and volatility spillovers across Islamic and conventional financial markets in a dual financial system over the period from January 3, 2007 to June 30, 2021. To this end, the DECO-GJR-GARCH model and the volatility spillover approach were applied. Furthermore, the ARDL model was utilised to explore the key determinants of co-movements and risk transmission across Islamic and conventional financial markets. This not only allowed us to study the interconnectedness and volatility spillovers between financial sectors under different market conditions but also enabled us to highlight the key role played by the money markets. Empirical results show that markets have significant responses to any new relevant information. While both conventional stock and money market are the main transmitters of shocks to other markets, the Islamic money market is a net recipient. Furthermore, the volatility spillovers across conventional and Islamic financial markets became stronger during the COVID-19 epidemic. The study also finds that global uncertainties have a significant and negative impact on the dynamic co-movements, but not on volatility connectedness among the underlying markets. These findings have important implications for many stakeholders including portfolio managers, investors, and policymakers in terms of diversifying their portfolios and enhancement of financial stability during times of black swan events and negative shocks such as the COVID-19 pandemic.

Generalized Weierstrass-Mandelbrot with Disturbance for Big Data Applications in Economic and Financial Systems

Disturbance such as COVID-19, pollution or policy variation to the economic and financial system has significant effect in the big data applications. Hence to study the effect of the disturbance on the related time series plays important role in further applying the big data in economic and financial system. Generalized Weierstrass-Mandelbrot Function is presented to study the complexity of the related time series theoretically and simultaneously. The results show that the disturbance indicated as the exponential form can generate multifractal features for the related time series. And the irregularity and long memory are also simulated by this model and described by the R/S method and multifractal analysis. © 2023 IEEE.

Assessment of a pandemic emergency financing facility

The pandemic bond issued by the World Bank (WB) in 2017 is a financial innovation enabling the transfer of the pandemic risk from the underdeveloped/developing countries to the financial market. It covers perils of various diseases that could overwhelm the global health systems and adversely impact the world economy. If all the triggers are activated, the bond's principal and coupons are used to finance coordinated, swift and resilient medical response to safeguard the well-being of the populace. This product, however, is criticised for its onerous trigger requirements. We examine the WB's pandemic-bond pricing framework, which requires inputs that are only partially available. From a rather unstructured COVID-19 data set, an information database is created and customised for pandemic-bond valuation. A vector auto-regressive moving average model is utilised to jointly describe the triggers dynamics. Our modelling simulations of risk triggers reveal that the bond payout could be made in less than half of the WB's earliest opportunity of 85 days. © 2023 The Authors

Impact of Anti-Pandemic Policy Stringency on Firms' Profitability during COVID-19

The coronavirus (COVID-19) pandemic devastated all economies across the world and triggered a deterioration in firms' financial performance. However, some sectors turned out to be more vulnerable while others continued to perform well during the crisis period. Given this fact, we conducted a comprehensive study to estimate the impact of the COVID-19 pandemic on firms' profitability in Europe. We used a dynamic panel data approach and a system generalized method of moment (System-GMM) model to investigate (i) which sectors were affected and what was the magnitude of the impact on firms' profitability, and (ii) whether the stringency of anti-pandemic policies such as workplace closures and travel bans impacted firms unevenly. We find that COVID-19 caused about a 25% decline in the profitability of firms. The most impacted sectors were Consumer Discretionary, Consumer Staples, and Industrials, where profitability declined from 20 to 48%. We also find that firms in countries with high anti-pandemic policy stringency lost about 19% more in profitability than in the rest of the countries in Europe during 2020. © 2023 by the authors.

Smart Contracts For NGOs and Startups using Blockchain

This paper proposes and emphasizes the requirement of an Blockchain based smart contract for NGO's and startup crowdfunding in the present circumstances. It also highlights the need of an online financial system for indigenous NGO's and seed fund utilization of startups. Conventionally, most charity organizations make use of hard cash for settling its transactions making the process less transparent. However, due to the COVID-19 pandemic, financial system has been largely affected. In this case an online financial transaction cum procurement portal would be crucial for the candidates applying relief in remote locations. The system analyses their eligibility based on their Curriculum Vitae (CV). Proposed system uses Ethereum based smart contract and Truffle Box to build a complete Dapp (decentralized application). Authors have used MetaMask Extension as a cryptocurrency wallet and Ganache blockchain to develop, deploy and test the decentralized application. © 2022 IEEE.

How can banks and finance companies incorporate value chain factors in their risk management strategy? The case of agro-food firms

A value chain framework for guiding the financial firms in their credit decisions is urgent, as the current COVID-19 pandemic has highlighted, but missing in the extant literature, particularly for those that lend to industries sensitive to value and supply chain bottlenecks. This study creates knowledge in value chain finance, a big untapped and un-researched market. It constructs, confirms, and validates a value chain framework for assessing risks in lending to Agro and Food Processing firms in which value chain risks are major business concerns globally. To pursue the objectives of the study, we use a novel methodology that integrates the Modified Delphi technique, exploratory factor analysis, confirmatory factor analysis, and discriminant analysis. Based on testing and analysis of primary data, including loan data, a framework comprising six factors is proposed for use in conjunction with existing risk assessment models of finance companies to improve the quality of their credit decisions, contributing to their performance sustainability. © 2022 ERP Environment and John Wiley & Sons Ltd.

Green financing for sustainable development: Insights from multiple cases of Vietnamese commercial banks

Although the public sector is seen as the main party responsible for taking action on climate change and sustainable development, private commercial banks are in a unique position to support or shift the funding focus on green investment. By employing a qualitative research approach based on six commercial banks, this paper aims to investigate the current practices of how commercial banks are contributing to advance green business initiatives. Accordingly, this research examines and identifies the facilitators and challenges in domestic and foreign commercial banks in Vietnam which support green business initiatives. In addition to addressing the recent calls for the investigation of the role of commercial banks in facilitating green finance, our study expands the emerging literature by demonstrating the current efforts of Vietnam's commercial banks in fostering green finance during the Covid-19 pandemic. © 2022 ERP Environment and John Wiley & Sons Ltd.

Stochastic ordering of systemic risk in commodity markets

The contribution of commodity risks to the systemic risk is assessed in this paper through a novel approach that relies on the stochastic property of concordance ordering of CoVaR. Considering the period that spans from 2005 to 2022 and the VIX as the proxy for the stability of the financial system, we build the stochastic ordering of systemic risk for 35 commodities belonging to four sectors: Agriculture, Energy, Industrial Metals, and Precious Metals. The estimates of the ΔCoVaR signal that contagion effects from commodity markets to the financial system have been stronger during the years 2017–2019. Backtests validate CoVaR as a more resilient risk measure than the VaR, especially during periods of market turmoils. The stochastic ordering of CoVaR shows that severe losses (downside risk) in commodity markets tend to exacerbate systemic financial distress more than gains (upside risk). Commodity risks arising from WTI and EUA are threatening triggers for systemic risk. In contrast, the financial system is less vulnerable to a broader range of scenarios arising from fluctuations in Gold prices. As top contributors to the systemic risk, among the sectors we find Energy and Precious Metals with respect to upside risk and downside risk. The Covid-19 crisis has deeply amplified the systemic influence arising from the downside risk of WTI, Gasoline, and Natural Gas UK and has confirmed the safe-haven role of Gold. © 2022 Elsevier B.V.

The Problem of Asymmetric Development of the Global Financial Market

The transformation of the modern global monetary and financial system involves the elimination of institutional and functional contradictions existing at various levels. Some contradictions arose as a result of the asymmetric development of the global financial market (GFM). The aim of the article is to substantiate the asymmetry of the GFM development as an organic phenomenon, which, on the one hand, becomes a serious obstacle to the functioning and progressive development of the world economy, and, on the other hand, is the driving force behind this development. The authors apply general logical, theoretical, empirical, and special research methods. The origins of the asymmetric development of the GFM are determined. Endogenous and exogenous factors of GFM asymmetry were revealed. The article considers examples of asymmetry in various GFM segments. The negative impact of the global financial and economic crisis of 2008–2009 and the coronavirus pandemic on increasing the asymmetry of the GFM development has been determined. Based on the analysis of the key macroeconomic indicators of the top 20 countries in terms of GDP, the asymmetric nature and the absence of stable patterns that determine the country's position in the world ranking are revealed. The authors conclude that the asymmetry of the GFM development is an organic phenomenon, caused by a wide range of causes of endogenous and exogenous nature. Endogenous asymmetries can be partially compensated either through complete economic isolation, which is likely to lead to a slowdown in development and lagging behind other countries in the future or through active involvement in a system of world economic relations based on fair partnerships. Exogenous asymmetry, due to the peculiarities of the historically established world order, is destructive for all participants in the global economic system, including those whose interests must be protected in the first place. © Balyuk I.A., Balyuk M.A., 2022.

THE EFFICIENCY OF ENSURING THE FINANCIAL SECURITY OF ARMENIA: NEW APPROACHES

Financial security is considered a subsystem of the economic security system. The financial security of the Republic of Armenia is one of the most urgent issues of study and analysis. Covid-19 and the 2020 war in Armenia harmed all sectors of the Armenian economy, especially economic and financial security. At this moment, the research of the chosen topic becomes more than necessary and urgent. In the current post-crisis period, financial security is more than possible in Armenia. In this article, we tried to define and analyze the elements affecting the security of the Armenian financial system and evaluate the current effectiveness of financial security. For that purpose, we have formulated the following research questions: How are countries' financial security assessed? What elements ensure financial security in Armenia? Is the current system of financial security effective in Armenia? The applied methodologies are quantitative and qualitative. In particular, we used index analysis, graphical analysis, comparison, and expert evaluation analysis to answer the research questions. The analysis results showed that the change of isolated factors significantly impacts indicators of the country's economy, particularly the financial system;moreover, the factors indirectly impact the country's social, political, and public life.

Bank Loan Default Prediction Using Ensemble Machine Learning Algorithm

Banks play an integral role in the financial system of any country which directly affects its economic status and growth. The major roles of banks include accepting deposits from its customers, using those deposits to lend money to the borrowers in return for some interest, granting credits, discounting on bills etc. But the main source of profit for the banks is the interest it receives from lending money to the borrowers. And in a scenario of global pandemic like Covid-19, the number of people requiring financial aid from the banks has increased drastically. But a major problem faced by these banks is the failure of timely loan repayment by the borrowers. So, to tackle this problem, banks now a days use some models to predict the possibility of loan repayment from the borrower. Factors like annual income, employment status, home ownership, current debt etc are taken into consideration to categorize the loan request as bad loan or not. So, this paper basically aims to develop a similar model, but using ensemble machine learning algorithm of Random Forest Classification. And perform a comparative analysis with the model (Decision Tree Classification) that are currently in use. After complete implementation of all the models it was concluded that Random Forest Classifier Outperformed Decision Tree Classifier in terms of accuracy. © 2022 IEEE.

Credit Risk Models in the Mexican Context Using Machine Learning

The Default Rate is related to the period of the economic cycle in which they are observed, during expansion periods of the economy the default rate tends to be lower. But in contraction periods, the default rate tends to increase and this could be a risk for the stability of a country’s economy. Therefore, it is important to monitor the perspective of the economy in case it is expected to decrease or have abrupt movements. This work aims to identify the economic variables that determine the default rate of the Mexican Financial System and to find a machine learning model that forecasts the default rate. For this, we aggregate a dataset based on three official Mexican sources that compile data from 2013 to 2022, including the COVID-19 pandemic time frame. Then, we propose the analysis using two machine learning models. After the analysis, the results confirm that the artificial neural networks model shows better predictive power for the default rate values. We also implement an easy to use web application to estimate the default rate based on three simple variables. We anticipate this work might help on estimating the default rate and might impact on the strategic policies in the Mexican economy. © 2022, The Author(s), under exclusive license to Springer Nature Switzerland AG.

Moderating Role of Personality in Relationship to Financial Attitude, Financial Behaviour, Financial Knowledge and Financial Capability

Advancements in financial system and technology, enlarged individual responsibility for financial decisions, and rapid information expansion, have fundamentally transformed women's need to be functionally literate and financially capable, especially after the COVID-19 pandemic. The personality also has long term implications on financial well-being. The aim of the paper is to study the dominating role of financial attitude, financial awareness & skills, and financial behaviour on financial competence and the moderating role of personality on financial knowledge, financial behaviour, financial attitude, and financial capability. Multi stage stratified random sampling has been used to collect data from 530 urban working women in both the Public and Private sectors, self-employed professionals, and entrepreneurs. Smart-PLS is used by applying Structure Equation Modelling (SEM) to study the moderating role of personality on financial attitude, behaviour, knowledge, and capability. Further the Chi-square test and Tukey test and Kruskal Wallis Test are used to test the hypothesis. The study found that Financial Knowledge of working women with gold personalities influences their financial capability (Beta, 0.578) the most, While, Financial Behaviour is the primary influencer having green (Beta, 0.396) & blue (Beta, 0.638) personalities. Working women having Green Personality are found to be superior with respect to Financial Behaviour, Financial Capability and Financial Knowledge. It is also observed that working women having blue personality characteristics, have comparatively better financial attitude. © 2022 WITPress. All rights reserved.

Trends and Factors of Development of the Financial system Elements of the Modern Russian Economy

The subject of the research is the segments of the financial system of the Russian Federation: the budget system, the banking sector, the stock and insurance markets, and the currency policy of the state. The purpose of the study is to determine the trends and factors in the development of the main elements of the financial system at the present stage. The relevance of scientific research is due to the fact that the financial system is a key element of the strategy of socio-economic development of any state, providing economic processes with financial resources and capital. The author uses the following methods: analysis, synthesis, generalization, and the logical method. The study highlights promising directions, ways and mechanisms for the development of the Russian financial system that are relevant in the 2020s. The key factors influencing their trends and threats that create barriers are analyzed. The main directions, ways and mechanisms for stimulating the further development of the elements of the financial system are described. The author concludes that due to the spread of the coronavirus pandemic and economic sanctions imposed on Russia, the stability of the Russian financial system has been violated, which requires the adoption of state regulation mechanisms to improve the activities of financial institutions. The prospect of further research on this topic may be related to the development of areas for improving individual elements of the Russian financial system. © Ismoilov g.N., 2022.

ASIA’S PUBLIC DEBT: WILL A STABILIZATION PERIOD COME?

The article discusses the main trends characterizing the development of the situation with internal and external public debt in Asia in the modern period. The leading factor in the growth of domestic debt was the spread of the COVID-19 pandemic, which made the Asian states face the need to sharply increase financial support for the socio-economic sphere for an indefinite period, which leads to a revision of the upper limit of the budget deficit and a narrowing of the country’s fiscal space. There is an increasing danger of an excess of budget expenditures over income caused by the expansion of loans and guarantees to small and medium-sized businesses and support for households due to the growing wave of bankruptcies and financial insolvency. The pressure is most felt on low-income Asian countries with underdeveloped capital markets that are at high risk of a debt crisis. The article notes that after a period of external financial stability, the problem of repayment of external debt caused by the deficit of their balance of payments is again aggravated in the developing countries of Asia. Crisis phenomena in the economy impose restrictions on the volume of resources coming from outside. At the same time, the needs of developing Asian countries for an influx of international funds in connection with the repayment of previously attracted loans and debt restructuring are increasing significantly. A forecast is made that, in general, in 2022–2023, the external public debt of Asian countries will continue to increase, exacerbating the vulnerability of their economies. Some of them will have to change their development model due to increased risks – ​increased funding needs, foreign investor positions, exchange rate fluctuations and short maturities of liabilities requiring a reprioritization of government spending and a more efficient budget process. It is concluded that while looking for a solution to the problems of attracting new borrowings and at the same time increased debt servicing, in some cases Asian countries will inevitably face a peak in debt, the need for debt restructuring and new difficult negotiations with creditor countries. © 2022, Russian Academy of Sciences. All rights reserved.

Financial security during a pandemic SARS-CoV-2 Coronovirus pandemic in Poland

The year 2020 was sure dominated by the pandemic caused by the new SARS-CoV-2 coronavirus. Many effects of the COVID-19 pandemic appeared in the Polish economic reality, including those related to financial security. In connection with these changes, many important questions have arisen, among others: will the financial systems of Poland be stable during the evolving crisis situations, intensively changing social and economic conditions, and will the people participating in these systems be safe from a macro-and microeconomic perspective? In the face of the situation, are the safety net institutions prepared to fight the economic crisis? The aim of the article is to analyse and evaluate the Polish financial system during the pandemic. Efforts were made to indicate the impact of the negative consequences of the COVID-19 pandemic on the country's financial security. The pandemic affects the country’s economy in two ways, it has stalled many manufacturing industries and there has been a gap in the supply of products to the domestic market. All sectors of the economy experience disruptions leading to a shortage of good and the resulting higher prices thereof. Limited economic activity also generates lower tax revenues. Because it is precisely when the government increases spending, it results in larger fiscal deficits and greater public debt. The article focuses on discussing the potential effects of the COVID-19 pandemic on the stability of the financial system in Poland.

Reserve Currency Competition in a Polycentric World Financial System

This research is devoted to the issues of reserve currency competition in the global financial system. The paper aims to investigate key sources of competitive advantages of reserve currencies in the context of the development of the global financial system towards currency multipolarity and assess how digital transformation can affect the drivers of reserve currenciesf competitive positions in the global financial system. The author uses the following methods of scientific research: analysis, synthesis, ion, deduction, induction, and logical method. The article notes that the financial market capacity is the key factor of reserve currency competitiveness. The author emphasizes that monetary policy instruments that provide funding for financial institutions play a key role in strengthening reserve currency competitiveness in the global financial market. The author highlights that during the COVID.19 crisis monetary policy of the central banks that issue reserve currencies stabilized the situation in the world financial system and strengthened the positions of the major reserve currencies in the global financial market. The author notes that the increase of monetary policy cooperation between central banks points to the evolution of the world financial system towards currency multipolarity. The research emphasized that the development of ecosystems driven by digital transformation can significantly affect the competitive positions of currencies in the global financial system. The author concludes that the global financial system is evolving towards currency multipolarity meaning that the US dollar will remain a leading reserve currency and at the same time other reserve currencies will likely play a bigger role. Further research of currency competition problems may investigate the impact of digital transformation on competitive positions of reserve currencies in the global financial system. © Sakharov D. M., 2022.

IMPACT OF COVID-19 PANDEMIC ON ACCELERATING THE DIGITIZATION AND TRANSFORMATION OF BANKS

The coronavirus crisis has highlighted the need to accelerate the introduction of innovative technologies in the banking and financial system, expand sources of non-bank financing, increase financial literacy among the population, as well as develop more transparent mechanisms of social support for those in need. The article presents the importance of the transformation of banking services in Uzbekistan in the context of the COVID-19 pandemic, the issues of expanding the scope of remote banking services, the views and opinions of economists on them, the state of remote banking services in the world during the COVID-19 pandemic, existing problems and methods their solutions, approaches and suggestions. © 2021 ACM.

ISLAMIC FINTECH INSTRUMENTS: NEW OPPORTUNITIES FOR DIGITAL ECONOMY OF UZBEKISTAN

The Islamic financial system is one of the fastest-growing systems in the world, which is actively strengthening and expanding its position internationally. This is evidenced by the rapid growth in the number of Islamic financial institutions, the opening of Islamic windows and branches by traditional banks, as well as the growth in sales of Islamic securities on leading stock exchanges. The global financial and economic crisis of 2008 and the global financial crisis caused by the COVID-19 pandemic made it an urgent task to use and expand Islamic financial mechanisms that rely on the real sector and contribute to the development of society. This article analyzes the growth of the Islamic financial sector, particularly Sukuk - Islamic securities in the global financial market and the current state of Islamic finance in Uzbekistan. Also presented are the results of the, including a survey on the introduction and development of Islamic finance in Uzbekistan. © 2021 ACM.

A Deep Convolutional Neural Network for COVID-19 Chest CT-Scan Image Classification

A novel corona virus (COVID-19) is a new dangerous disease which affects the global economic growth and challenge to the doctors and scientists. This disease is escalating gradually which impacts world’s financial system at risk. Due to increase in COVID-19, the role of artificial intelligence, machine learning, and deep learning is crucial in this situation. Deep learning is a dominant tool to control this pandemic outbreak by predicting the disease in advance. Deep learning techniques deal with several types of data sources that put together to form the user-friendly platforms for physicians and researchers. The proposed methodology is based on convolutional neural network which classifies the COVID-19 chest CT-scan images into infected or not infected. We have done the experiment on publicly available dataset in GitHub which consists of 360 positive and 397 negative chest CT-images which are collected from 216 patients. In our proposed CNN model, we used Adam optimizer with learning rate 0.001 and obtained the classification accuracy 88.4%. The experimental results show that our methodology can handle current pandemic situation in a better manner. © 2022, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.