Financial stability influence on climate risk, GHG emission, and green economic recovery of China.

This study examines the nexus between financial stability, climate risks, GHG emission mitigation, and green economic recovery of China. Financing efforts to protect against and reduce the hazards associated with climate change need to consider these risks and resources. Study used the Kalman technique of analysis for empirical inference. This research focuses on the carbon risk in China by employing a Kalman estimation approach. Although environmental mitigation was found to be important at 39%, financial strength and carbon hazards were considerable at 34%. Moreover, the report demonstrates the relationship between climatic threats and environmental drift in China, at a rate of 17%, emphasizing the need to address climate change issues. A state's fiscal health guarantees national economic security while pursuing green economic recovery initiatives. Researchers concluded that precise policy suggestions were needed to promote green economic development.

COVID-19 and financial institution stability: stress testing the Eastern Caribbean currency union

PurposeThis paper aims to simulate the potential impact of increasing non-performing loans (NPLs) on capital adequacy, interest income and firm value of banks and credit unions in the Eastern Caribbean Currency Union (ECCU) using stress tests. Design/methodology/approachA financial stress testing model was deployed at the levels of individual financial intermediary (FI), sectoral loan portfolio composition, individual member country, and the ECCU collectively, to investigate the impact of NPL shocks on FI stability. FindingsThe authors find that shocks impact the capital adequacy of banks less than that of credit unions, but that firm value of banks is more susceptible to increases in NPLs. Interest income responses to NPL shocks were linked to credit exposure from the tourism sector, which also reduced capital adequacy more than other economic sectors. Findings show that while the COVID-19 pandemic occasioned some increase in NPLs, the magnitude of impact was significantly mitigated by pro-stability policies including loan repayment moratoria and restructuring, guidance on the distribution of profits and deleveraging by financial institutions leading up to 2020. Originality/valueThe paper is among the first to use stress testing on the Caribbean in response to the COVID-19 pandemic. Past studies which have used stress test models in the region have not explicitly investigated the impact of credit shocks on risk-weighted assets or interest income as done herein, nor do they include credit unions in the modeling. The results offer novel evaluations as well as implications for FIs in other developing economies, especially those that share a comparable financial and economic architecture.

Adoption of FinTech services amidst COVID-19 pandemic: empirical evidence from Assam

PurposeThe paper intends to comprehend the pattern of usage of FinTech services among bank customers during the COVID-19 pandemic. The paper also examines the factors influencing the adoption of FinTech services by using the constructs from the technology acceptance model (TAM) together with highlighting the issues faced in using FinTech services in Assam.Design/methodology/approachThe research is empirical in nature. Data have been collected from 1,066 prime earners of the households having a bank account.FindingsThere has been an upsurge in the use of FinTech services in the area of study. Apart from government and private service employees, businessmen, self-employed professionals, many daily-wage earners and agriculturists have also experienced an increase in their frequency of usage of FinTech services thereby making technology-based financial services an indispensable tool in enhancing access, improving inclusivity in the times of crisis and aftermath. Government support, trust, perceived usefulness (PU), attitude and social influence have a positive influence on FinTech adoption;however, perceived risks impact respondents' trust towards FinTech services thereby requiring necessary measures to evaluate organizations' preparedness to deal with cyber threats.Originality/valueThe paper provides insight into the factors impacting the adoption of FinTech services to stimulate superior connectivity infrastructure, robust security measures and maintaining financial stability with adequate supervisory and monitoring regulations to enhance trust towards FinTech services during the crisis and aftermath.

Were we happy and we didn't know it? A subjective dynamic and financial assessment pre-, during and post-COVID-19.

The COVID-19 pandemic has brought many changes into people's lives. Fear, job insecurity, changes in their financial stability, concerns about their future lives have changed the entire lives of people and have affected the cognitive well-being of individuals. The purpose of the present analysis is to measure how the COVID-19 pandemic, along with financial factors, has affected the perceived level of well-being of individuals. We are also interested whether there are differences between life before COVID-19, life now with COVID-19, and life after the COVID-19 pandemic, in terms of future expectations. To address this objective, we performed an ANOVA approach and a GLM estimate on repeated measures for a large sample (1572 respondents) from 43 worldwide countries, during the period May 2020 and July 2021. Our results show that financial factors reflected by both the size of income and changes in personal or family income affect the levels of happiness. Robustness checks using stress as an alternative estimator for happiness have consolidated our results. Additionally, we find that well-being during COVID-19 compared to the previous period decreased, while in future, people expect to be happier, but not more than in the past when they did not know about the existence of this virus. This is one of the first studies to investigate the relationship between happiness and income before, during, and after COVID-19. These findings are important for policymakers to improve the conditions of living in the areas of health and financial stability.

TWITTER-BASED ECONOMIC POLICY UNCERTAINTY INDEX FOR CHILE

In this paper, we develop a daily-frequency measure of economic and policy uncertainty for Chile, employing information obtained from Twitter accounts using web scraping techniques and following closely the methodology proposed by Baker et al. (2016). Our proposed measure, called DEPUC, aims to capture the level of general disagreement –a proxy for economic and policy uncertainty– in topics such as the economy, economic policies, uncertainty about particular events, and Chile's conjuncture situation. The index, available from 2012 onwards, shows significant hikes that coincide with several local and international episodes that provoked extraordinary levels of uncertainty in Chile, especially after the events around the civil protests in mid-October 2019 and the start of the COVID-19 pandemic in mid-March 2020. An empirical exercise reveals that the proposed measure is a significant determinant of the nominal exchange rate dynamics, especially when this variable's magnitude is high and a week after the shock occurs. On the contrary, when the exchange rate is low, the impact of uncertainty on this variable is quantitatively smaller for any forecasting horizon. These features, and others discussed in the paper, highlight the usefulness of the proposed metric as an additional indicator that policymakers can incorporate into their monitoring toolkit. © 2023, Revista de Analisis Economico. All Rights Reserved.

Do lower environmental, social, and governance (ESG) rated companies have higher systemic impact? Empirical evidence from Europe and the United States

In recent years, companies have increasingly been characterized by environmental, social, and governance (ESG) scores, and investors and academics have raised questions concerning financial performance and investment risks. Now, as the European Banking Authority has acknowledged that ESG risks can potentially impact the economic and financial system, the debate on systemic risk has gained traction. Understanding the relationship between ESG merit and systemic risk is of utmost importance for the stability of the economic and financial system, still, research is limited. Relying on real‐world European and United Stated data, we quantify systemic risk by means of QL‐CoVaR. Empirical analyses of the entire period from 2007 to 2021 show that companies with high ESG scores tend to exhibit low QL‐CoVaR values indicating a positive effect of ESG scores. Such evidence is confirmed by clustering the individual companies into ESG portfolios and focusing on COVID‐19. Additional insights using the individual pillars are also provided.

Financial stability and monetary policy of the Central Bank of West African Countries: a Markov-Switching model

Purpose This paper aims to examine the response of monetary policy to financial instability in the West African Economic and Monetary Union.Design/methodology/approach Through annual aggregated data from 1970 to 2019, the empirical strategy is based on the Markov regime-switching model with fixed probabilities.Findings The results revealed that the monetary policy of the central bank of the West African Economic and Monetary Union is characterized by two regimes (calm and distress) with respect to the trend of financial stability. The authors also found that the occurrence of the calm regime was likely greater than that of the distress regime. In addition, the calm regime is longer than the distress regime. The authors finally revealed that the central bank reacts to financial instability risk by increasing its short-term interest rate when financial instability reaches a threshold.Research limitations/implications The limitation of this study is the unavailability of monthly or quarterly data that are more suitable for the methodological approach adopted.Originality/value This study is the one to estimate the response of the Central Bank of West African Countries to financial stress using a novel approach based on the Markov-Switching regression.

Measuring Evidence Affecting the Financial Stability of Airport Operations in Malaysia

The indicator of bankruptcy exposure for airport operations in Malaysia is calculated by using Altman's Z'-score. Financial and non-financial attributes related to the bankruptcy exposure show multicollinearity, and the redundant information was identified and removed. The common period for the variables is from 1999-2021, which includes the period of COVID-19 pandemic. Models with a combination of financial and non-financial attributes further reduce the deviation between the estimated standard deviation of the residuals and the marginal standard deviation of the bankruptcy risk in comparison to models without the combination. The best model provides improvements in terms of the mean of the absolute errors (MAE), mean of absolute percentage errors (MAPE), and mean absolute scaled errors (MASE). Furthermore, all determinants in the best model are statistically significant. We suggest that the opportunity for optimisation, including total movements of passenger, cargo and mail, could reduce the company's bankruptcy exposure. Findings indicate that reducing the financial leverage could improve the financial distress risk while liquidity, net operating margin, and asset turnover are positively contributed to the financial stability of the largest airport operator in Malaysia. If the marginal average of annual exposures to bankruptcy of 4.04% continues linearly into the future, the company is expected to transition from being financially stable to experiencing financial distress in 2030. © 2022 IEEE.

The impacts of financial and macroeconomic factors on financial stability in emerging countries: evidence from Turkey's nonperforming loans

This study examines the impacts of financial and macroeconomic factors on financial stability in emerging countries by focusing on Turkey's banking sector. In this con-text, financial stability is represented by nonperforming loans (NPLs). Four financial and three macroeconomic indicators as well as the Covid-19 pandemic are included as explanatory variables. Quarterly data from 2005 Q1 to 2020 Q3 are analyzed by using the residual augmented least squares unit root test and generalized method-of-moments. The empirical results show the following: credit volume, which is a financial indicator, has the greatest effect on NPLs;risk-weighted assets, unemployment rate, foreign exchange rate and economic growth all have a statistically significant impact on NPLs;the Covid-19 pandemic has had an increasing impact on NPLs;inflation and interest rates have a positive coefficient, as expected, although they are not statistically significant. These results highlight the importance of financial factors (ie, credit volume and risk-weighted assets) over macroeconomic factors in terms of NPLs. Based on the empirical results of the study, we suggest Turkish policy makers focus primarily on financial variables (ie, credit growth and risk-weighted assets) as well as considering the effects of other factors. © Infopro Digital Limited 2023.

Japan's unemployment rate hike amid the COVID-19 pandemic – why was it so mild?

This essay is a flash report on the impact of the COVID-19 pandemic on Japan's labour market in the fiscal year 2020 wherein Japan's unemployment rate increase was much milder than in other G7 countries. How was such a favourable outcome achieved? To answer this question, this essay analyses primary statistics to show that the main contributing factors were the swift cut of labour hours and the rapid increase in coronavirus-related paid leave. The latter factor is due primarily to an expanded labour policy measure. Generous policy measures to support corporate finance were also effective in maintaining general financial stability and preventing an increase in failures in the fiscal year 2020.

Challenges to self-isolation among contacts of cases of COVID-19: a national telephone survey in Wales.

BACKGROUND: Self-isolation is challenging and adherence is dependent on a range of psychological, social and economic factors. We aimed to identify the challenges experienced by contacts of coronavirus disease 2019 (COVID-19) cases to better target support and minimize the harms of self-isolation. METHODS: The Contact Adherence Behavioural Insights Study (CABINS) was a 15-minute telephone survey conducted with confirmed contacts of COVID-19 (N = 2027), identified through the NHS Wales Test Trace Protect (TTP) database. RESULTS: Younger people (aged 18-29 years) were three times more likely to report mental health concerns (adjusted odds ratio [aOR]: 3.16, 95% confidence interval [CI]: 2.05-4.86) and two times more likely to report loneliness (aOR: 1.96, CI: 1.37-2.81) compared to people aged over 60 years. Women were 1.5 times more likely to experience mental health concerns (aOR: 1.51, 95% CI: 1.20-1.92) compared to men. People with high levels of income precarity were eight times more likely to report financial challenges (aOR: 7.73, CI: 5.10-11.74) and three times more likely to report mental health concerns than their more financially secure counterparts (aOR: 3.08, CI: 2.22-4.28). CONCLUSION: Self-isolation is particularly challenging for younger people, women and those with precarious incomes. Providing enhanced support is required to minimize the harms of self-isolation.

The COVID-19 pandemic and financial stability in Vietnam: evidence from the interbank market

Purpose: This study investigates the impact of the COVID-19 pandemic on financial stability in Vietnam, a developing country characterized by a bank-based financial system. Design/methodology/approach: Using a sample of daily data from January 23, 2020 to June 30, 2022, the VECM and NARDL models are employed to study Vietnam's financial stability in face of the COVID-19 disaster. Following the literature on COVID-19, the authors measure the impact of the pandemic by the number of daily infected cases and the national lockdown. Given the reliance of the Vietnamese government on the banking system to regulate the economy, the authors evaluate financial stability from the interbank market and stock market perspectives. Findings: The authors find that the pandemic imposes a destructive effect on financial stability during the early time of the pandemic;however, the analysis with an extended period indicates that this effect gradually fades in the long term. In addition, from the NARDL results, the authors reveal an asymmetric relationship between the financial market and the COVID-19 pandemic in both short term and long term. Research limitations/implications: An implication drawn from this study is that unprecedented health disasters should be resolved by unprecedented stringent countermeasures when conventional methods are ineffective. Although rigorous remedies may increase short-term liabilities, their implementation quickly ceases disease diffusion and helps an economy enter the recovery stage in a timelier manner. Originality/value: The study is the first to examine the impact of the COVID-19 pandemic on financial stability, via the interbank market lens, in a developing country that relies on the bank-based financial system. © 2023, Emerald Publishing Limited.

Should investors rely on central bank asset purchases to backstop markets?

During the global financial crisis, central banks in advanced economies cut policy rates to near zero, and then provided further stimulus via balance sheet expansion. In many instances this took the form of quantitative easing — central banks creating new money with which to purchase securities. With years of quantitative easing behind us, and aggressive measures from central banks during the COVID-19 pandemic, should investors now expect central banks to backstop financial markets? This paper examines asset purchases from the twin perspectives of monetary and financial stability, and argues that investors should not expect central banks to always come to their rescue. © Henry Stewart Publications 1752-8887 (2023).

Dynamic Spatial Spillover Effects of Financial Risk: A Comparative Analysis between the Subprime Crisis and the COVID-19 Crisis

The subprime crisis and the COVID-19 crisis have severely impacted the development of global financial stability, which arouses scholars' thinking about the financial risk. Clarifying the contagion mechanism and spatial spillover effect of financial risk under the subprime crisis and the COVID-19 crisis is of great significance for preventing and controlling financial risk. This paper explores and compares the main contagion mechanism, contagion channels, and spatial spillover effects of financial risk during the subprime crisis and the COVID-19 crisis by using the dynamic Spatial Dubin Model. The results show that the transnational contagion mechanism of financial risk during the subprime crisis is the monsoon effect. The inflation rate has a positive spatial spillover effect on financial risk. During the COVID-19 crisis, the transnational contagion mechanism of financial risk is the spillover effect. Net exports and stock market returns have positive spatial spillover effects on financial risk. Financial risk is mainly transmitted across borders through commodity prices during the subprime crisis, while during the COVID-19 crisis, it's through trade exchanges and financial capital flows. In addition, the spatial contagion intensity of financial risks during the COVID-19 crisis is higher than during the subprime crisis. This paper provides experience and reference for countries to formulate financial risk prevention plans. © 2022 ACM.

Adoption of FinTech services amidst COVID-19 pandemic: empirical evidence from Assam

PurposeThe paper intends to comprehend the pattern of usage of FinTech services among bank customers during the COVID-19 pandemic. The paper also examines the factors influencing the adoption of FinTech services by using the constructs from the technology acceptance model (TAM) together with highlighting the issues faced in using FinTech services in Assam.Design/methodology/approachThe research is empirical in nature. Data have been collected from 1,066 prime earners of the households having a bank account.FindingsThere has been an upsurge in the use of FinTech services in the area of study. Apart from government and private service employees, businessmen, self-employed professionals, many daily-wage earners and agriculturists have also experienced an increase in their frequency of usage of FinTech services thereby making technology-based financial services an indispensable tool in enhancing access, improving inclusivity in the times of crisis and aftermath. Government support, trust, perceived usefulness (PU), attitude and social influence have a positive influence on FinTech adoption;however, perceived risks impact respondents' trust towards FinTech services thereby requiring necessary measures to evaluate organizations' preparedness to deal with cyber threats.Originality/valueThe paper provides insight into the factors impacting the adoption of FinTech services to stimulate superior connectivity infrastructure, robust security measures and maintaining financial stability with adequate supervisory and monitoring regulations to enhance trust towards FinTech services during the crisis and aftermath.

Do lower environmental, social, and governance (ESG) rated companies have higher systemic impact? Empirical evidence from Europe and the United States

In recent years, companies have increasingly been characterized by environmental, social, and governance (ESG) scores, and investors and academics have raised questions concerning financial performance and investment risks. Now, as the European Banking Authority has acknowledged that ESG risks can potentially impact the economic and financial system, the debate on systemic risk has gained traction. Understanding the relationship between ESG merit and systemic risk is of utmost importance for the stability of the economic and financial system, still, research is limited. Relying on real-world European and United Stated data, we quantify systemic risk by means of QL-CoVaR. Empirical analyses of the entire period from 2007 to 2021 show that companies with high ESG scores tend to exhibit low QL-CoVaR values indicating a positive effect of ESG scores. Such evidence is confirmed by clustering the individual companies into ESG portfolios and focusing on COVID-19. Additional insights using the individual pillars are also provided.

FinTech and the COVID-19 pandemic: Evidence from electronic payment systems

This paper investigates the effects of the coronavirus disease 2019 (COVID-19) pandemic on financial institutions and on consumers' adoption of Financial Technology (FinTech) for payments. This paper documents the following findings in Kenya. (1) The COVID-19 pandemic accelerated the adoption and increased the payment concentration of FinTech. We document an approximately 54% increase in mobile banking transactions, a 19.56% increase in mobile banking agents, and a 14.56% increase in the number of mobile banking accounts. (2) The use of all types of electronic payment cards declined significantly during the pandemic. (3) The pandemic magnified interbank contagion and liquidity risks and reduced both domestic and international electronic fund transfers via both the Real-Gross Settlement System and the Automated Clearing House. Overall, our results indicate that FinTech not only partially alleviated the negative impact of the COVID-19 pandemic during Q1 of 2021 but also accelerated consumers' adoption of FinTech and digital onboarding, especially in Q3 and Q4 of 2022.

EFFECT OF ISLAMIC FINANCIAL SYSTEM STABILITY ON ECONOMIC PERFORMANCE IN INDONESIA

This study constructs a financial stability index for the Islamic financial system of Indonesia using the dynamic factor model and then links it to economic performance employing a nonlinear autoregressive distributed lag (NARDL) model. The financial stability index constructed from a broad range of macrofinancial variables captures well the 2008-2009 global financial crisis and the 2020-2021 COVID 19 pandemic crisis periods. The most significant results suggest that positive and negative shocks in Islamic financial stability in the long run increase and decrease economic performance, respectively. The quantile regression results also demonstrate that Islamic financial stability is statistically significant throughout all quantiles in promoting economic performance, although it plays a greater role at lower quantiles and diminishes when the economic performance is at a high level. Our results highlight that the stability of the Islamic financial system deepening would positively enhance economic performance. © 2021 Asociación Española de Historia Económica.

Another Hole in China's 'Great Wall of Money'? Conceptualizing the Involvement of Foreign Investments in the Chinese Non-performing Loans Market Under the US-China Trade Deal

In early 2020, the world economy plunged into a major recession due to the Coronavirus disease 2019 (COVID-19) pandemic, and non-performing loans (NPLs) went back on the agenda for banks and regulators in many countries. This is a timely article as it focuses on an attention-drawing regulatory catalyst for changes to the position of foreign investors in the Chinese NPLs disposal market. It uses the Phase One Trade Deal between the United States (US) and China as an opportunity to assess whether or not China is ready to shift towards a new approach for foreign investors trading in the primary NPLs market. Existing studies have been quick to conclude that the US-China Phase One Trade Deal will lead to a policy shift in the Chinese NPLs market through Article 4.5 contained therein. If the US-China Phase One Trade Deal is reviewed in its entirety and if China's concepts of stability, its state ownership policy and its recent treaty practice are all carefully considered, however, the involvement of foreign investment in the NPLs market may be viewed less optimistically. Using the US-China Phase One Trade Deal as a prism, it can be seen that bilateralism in trade policy may have its own limitations. China's perception of and policy towards international institutions and regimes show its willingness to integrate into the existing multilateral trade order even though its policy is still obscure and hesitant. Washington should be prepared to soften its decoupling stance to promote cooperation and coordination of the two countries in multilateral institutions.

The role of capital structure management in maintaining the financial stability of hotel firms during the pandemic-A global investigation.

Due to the detrimental effects of the Covid-19 pandemic on the hotel sector, pandemic crisis management research has received lots of academic attention, from studies in sales-marketing to human resource management. However, financial management has been largely overlooked in the agenda of pandemic crisis management and hotel resilience. Therefore, this paper aims to address the research gap by exploring the role of capital structure management in maintaining financial stability and resilience capacities of hotel firms during this evolving and unpredictable Covid-19 pandemic. Using a database of 1882 firm-quarter observations of 196 hotel firms in 30 countries from Quarter 3 2018 to Quarter 2 2021, it is found that low debt capital structure mitigates the adverse impact of the pandemic on hotel firms' financial stability during this turbulent time; particularly the negative impacts caused by government restrictions on both domestic and international travel. The benefit of low debt levels is more pronounced for more vulnerable hotels such as small, less diversified, and slow growing hotel firms. Also, hotel firms that have less long-term debt are more financial stable and resilient during pandemic period. Research outcomes suggest that financial management, in particular capital structure policies should be a critical part of hotel resilience building and crisis management strategy for hotel firms.