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1.
Gospodarka Surowcami Mineralnymi / Mineral Resources Management ; 38(2):191-205, 2022.
Article in English | Scopus | ID: covidwho-1964974

ABSTRACT

The subject of this article is the problem of payment gridlocks and their significance for the enterprise sector and the risks they cause. The authors’ attention is focused here on presenting the essence of payment gridlocks, their consequences, as well as the causes on the sides of both the debtor and the creditor. In the empirical part of the article, the authors focused on assessing the problem of payment backlogs in selected mining and energy-production companies in Poland. A study on selected companies from this industry was conducted, the purpose of which was to show the scale of delayed payments with the particular identification of those that are payment backlogs (i.e. a delay of at least 60 days). Five major companies from the energy industry in Poland were selected for the study, representing both the mining and energy production sectors. These companies are Polska Grupa Górnicza SA, Jastrzębska Spółka Węglowa SA, ENEA SA, Energa SA and TAURON Polska Energia SA According to the available data, payment terms in this sector are the longest in the European Union compared to other sectors of the economy. In Poland, the situation is no different in this respect. This is especially visible in the mining industry, which is perceived as very risky when it comes to timely payments. Undoubtedly, reducing payment gridlocks in this industry is a difficult task, which results from its specificity and the number of problems it is struggling with, which have been additionally reinforced by the Covid-19 pandemic. © 2022. The Author(s).

2.
Webology ; 19(1):2341-2356, 2022.
Article in English | ProQuest Central | ID: covidwho-1964722

ABSTRACT

Monetary coordination and macroeconomic stability are increasingly critical for domestic and fiscal policy in the aftermath of the global financial crisis. This research investigates the impact of monetary policy on financial and economic stability following the COVID-19 pandemic's economic lockdown. This article utilized a V.A.R. (Vector Autoregressive Models) estimator for time series data models. Quarterly statistics are gathered from the first quarter of 2004 to the first quarter of 2018. Using a V.A.R. model, the study investigates the causal connections between monetary policy instruments and economic stability. The findings suggest that Iraq's monetary policy is most efficient at maintaining a target growth rate for the money supply while simultaneously controlling inflation through an equalization cap (1.8 percent). Due to the rentier structure of the Iraqi economy, the money supply had a negligible influence. Monetary authorities must monetize oil earnings in order to finance public spending. Finally, an appropriate framework for monetary management must be created that ensures monetary independence and supremacy remain unimpaired. The findings give a thorough knowledge of the links between national monetary policies and economic stability, which can eventually aid in developing nations' formulation of good monetary and fiscal policies.

3.
Economics of Agriculture ; 69(2):441-453, 2022.
Article in English | CAB Abstracts | ID: covidwho-1964484

ABSTRACT

Agroindustry is traditionally an unavoidable category in the analysis of any economy. The objectives of the research are to present a summary of the profit and financial positions of agro industrial companies in the period of COVID-19, and to analyze financial vitality in the context of liquidity of manufacture of food products and beverages, in the year 2020 and 2019, as well as its' average five-year parameters. The findings show that the liquidity indicators are below the desirable norms and overall liquidity assessment is unfavorable. Further analysis by subsectors has revealed differences in profit positions by subsectors, due to different effects of the crisis, so the findings can serve as an incentive to review decisions of all stakeholders, including economic creators' policy.

4.
Applied Economics ; 2022.
Article in English | Scopus | ID: covidwho-1960635

ABSTRACT

To understand the effect of liquidity on asset pricing, this study constructs a boundedly rational asset pricing model, introducing market liquidity and heterogeneous beliefs. Based on our model, we conduct empirical tests using the S&P 500 index from 1991 to 2021 and the CSI 500 index from 2007 to 2021. We find that market liquidity significantly influences investors’ expectations and belief switching. When market liquidity is scarce, fundamentalists in both markets expect the price to converge more quickly to its fundamental value, whereas chartists perceive that the price deviates from its fundamental value less rapidly. Lack of liquidity mitigates the investors’ original switching strategy, resulting in positive feedback as a net effect. Moreover, the S&P 500 index is efficient, whereas the CSI 500 index is slightly undervalued in the long run. Both markets exhibit large fluctuations and inefficiency during short periods such as the 2008 financial crisis and COVID-19 pandemic. As such, safeguards should be implemented against sudden shocks and the resulting price deviation and market inefficiency. © 2022 Informa UK Limited, trading as Taylor & Francis Group.

5.
Social Sciences in China ; 43(2):102-124, 2022.
Article in English | ProQuest Central | ID: covidwho-1947818

ABSTRACT

The COVID-19 pandemic, the regulation of real estate, and external uncertainties are the core variables in the recent evolution of China’s financial risks, and overall planning and structural deployment are the key guarantees for China’s financial stability. From an aggregate perspective, China’s systemic financial risk tended to ease overall in 2021, but remained high. The risk profile of China’s financial system in 2021 presented five important features. First, the macro leverage ratio fell slightly, but exposed the hidden dangers of balance sheet recession. Second, there was a certain blockage in the transmission of financial system liquidity to the real economy. Third, the fragility of the financial system was further exposed, the bond default balance reached a new high, the structural differentiation of bonds between state-owned and private enterprises became prominent, and private enterprise default became more serious. Fourth, the contagion effect of domestic cross-market financial risks remained significant. Fifth, the international political and economic situation was volatile, and spillover effects such as the rising prices of raw materials, the inauguration of a new US administration, and the shift of the Federal Reserve’s monetary policy were significantly strengthened. In terms of key risk areas, the risks of the real estate market, hidden government debt, and small- and medium-sized domestic banks were quite prominent. in 2022, pandemic prevention and control, economic recovery, and structural upgrading will remain the main themes of China’s development. China’s financial risks are generally under control, but the country will still face major risks such as a high macro leverage ratio, tight market liquidity, increasing debt vulnerability, significant spillover effects, and rising volatility in the international market.

6.
Journal of International Financial Markets, Institutions and Money ; : 101612, 2022.
Article in English | ScienceDirect | ID: covidwho-1936579

ABSTRACT

In March 2020, six European countries imposed temporary short-selling bans to prevent further stock price declines, to reduce volatility, and to ensure financial stability during the Covid-19 pandemic, whereas other countries abstained from implementing these restrictions. We examine the effects of these regulatory interventions on stock returns and market quality for major European countries with and without bans. Our results reveal that restricting short selling did not stabilize stock prices but adversely affected market liquidity, as reflected in wider bid-ask spreads and lower turnover. In addition, smaller stock markets and smaller firms suffered more from the deterioration in market quality. Using logit regressions, we investigate the determinants for the probability that a country would impose short-selling restrictions. The results suggest that countries with weaker economies, lower fiscal capacity, less financial development, and stricter lockdown measures were more likely to adopt a ban. Overall, short-selling bans during the Covid-19 crisis negatively affected market quality and consequently regulators in general should abstain from implementing such restrictions in the future.

7.
Journal of Futures Markets ; 2022.
Article in English | Web of Science | ID: covidwho-1935679

ABSTRACT

This study examines the relation between the COVID-19 pandemic and hedge efficiency in commodities futures markets. In particular, we first evaluate the informational content of commodity futures by investigating whether futures prices are accurate and unbiased predictors of future-spot prices, and then we identify key financial and real economy transmission channels associated with the pandemic. We use data of all contracts from all commodities traded at Brazilian futures markets from 2018 to 2020. We document market inefficiency and bias for all commodities. We also find that COVID-19 has a negative correlation with hedge efficiency, and that liquidity, economic activity, export, and agriculture's employment share are transmission channels to hedge efficiency.

8.
PUBLIC FINANCE QUARTERLY-HUNGARY ; 67(2):213-230, 2022.
Article in English | Web of Science | ID: covidwho-1939733

ABSTRACT

The Covid-19 crisis and its economic consequences for emerging countries have highlighted the role of robust, inclusive, and equitable elements of multiple contingency lines to keep these economies away from falling into a devastating cycle of rising sovereign spread. This study first summarizes the crisis-fighting performance of the IMF and eight major RFAs since the outbreak of Covid-19. Then our theoretical model focuses on the deterioration of market expectations (namely about future global economic growth, funding conditions in key currencies and public default) influence on the sovereign spread, by employing a structural panel Vector Autoregression. The results showed that sovereign spread depended not only on the global and local growth or the external funding environment but on the market sentiment as well. Also, the results pointed out the importance of financial supports by international actors like the IMF and partially the RFAs in managing the sovereign spread.

9.
International Journal of Emerging Markets ; 17(7):1635-1658, 2022.
Article in English | ProQuest Central | ID: covidwho-1932028

ABSTRACT

Purpose>The study aims to empirically examine the effect of bank liquidity creation on non-performing loans (NPLs) in the Middle East and North Africa (MENA) region.Design/methodology/approach>Berger and Bouwman's (2009) three-step methodology was employed to calculate the level of liquidity creation of a selected sample of 111 commercial banks in ten MENA countries from 2010–2017. Next, the two-step system generalized method of moments (GMM) estimator was used to investigate the linkage between bank liquidity creation and NPLs.Findings>The results demonstrated a significant negative effect of bank liquidity creation on NPLs in the short and long term, implying that liquidity creation through both on- and off-balance sheet activities decreases NPLs. These findings accord with the “economic-enhancing” view. Furthermore, regression analysis investigated whether this relationship remained similar for Islamic and conventional banks. The results showed that liquidity creation diminishes Islamic and conventional bank NPLs.Research limitations/implications>The empirical findings raise several significant policy implications. Bank liquidity creation may decrease rather than increase NPLs, although the process of liquidity creation is viewed as risky by rendering banks more illiquid. Therefore, policy-makers should encourage bank liquidity creation to stimulate the economy. In a robust economy, borrowers are more likely to repay their debts, consequently diminishing banks' NPLs.Originality/value>To the best of the author's knowledge, the current study is the first to provide empirical evidence on the effect of bank liquidity creation on NPLs in MENA countries.

10.
SSRN; 2022.
Preprint in English | SSRN | ID: ppcovidwho-340153

ABSTRACT

The Coronavirus crisis has led to unprecedented economic shocks to the corporate world and challenged how corporate management contributes to business resilience amid the pandemic. Employing a novel measure of managerial ability constructed for a large sample of U.S. publicly listed firms, we document that firms led by higher managerial ability exhibit lower stock return volatility, higher operating performance, and lower levels of default risk amid the pandemic. A difference-in-differences analysis suggests that the impact of managerial ability on firm performance is stronger during the pandemic than during the pre-pandemic period. The effect of managerial competency on corporate resiliency is more pronounced among firms that have high exposure to COVID-19. In addition, firms led by high managerial competency management are associated with higher stock liquidity and are less likely to exhibit employment, healthcare, safety, and consumer protection related violations amid the pandemic.

11.
SSRN; 2022.
Preprint in English | SSRN | ID: ppcovidwho-339953

ABSTRACT

This paper studies the COVID-19 pandemic as an exogenous shock to investor uncertainty and examines the effects of uncertainty on stock liquidity. Analyzing data from Chinese listed firms, we find that stock liquidity dries up significantly in response to an increase in uncertainty resulting from regional pandemic exposure. The underlying reason for the decline in stock liquidity during the pandemic is a combination of earnings and information uncertainty. Funding constraints, investor sentiment, inattention rationales, and aggravated macroeconomics are excluded. Our findings also add to the discussions on the economic consequences of the COVID-19 pandemic on financial markets.

12.
International Review of Financial Analysis ; 83:102273, 2022.
Article in English | ScienceDirect | ID: covidwho-1926558

ABSTRACT

This paper investigates static and dynamic liquidity spillovers for a pool of ten Eurozone countries for the period 2000–2021. We estimate a generalised vector autoregressive (VAR) model based on Diebold and Yilmaz (2009, 2012). We find evidence for static and dynamic transmission of shocks through the liquidity channel. We propose a static measure of liquidity spillovers which captures total and pairwise average spillovers across Eurozone countries. Our measure shows strong evidence of interconnection within the Eurozone through the liquidity channel. We investigate the dynamic intensity and direction of liquidity spillovers, finding significant evidence of contagion during crisis periods. Our results indicate that most of the shocks during periods of financial uncertainty arise from leading economies within the Euro area.

13.
Xitong Gongcheng Lilun yu Shijian/System Engineering Theory and Practice ; 42(6):1544-1559, 2022.
Article in Chinese | Scopus | ID: covidwho-1924683

ABSTRACT

This paper studies the causes of household liquidity constraints in China, the inhibiting impact of liquidity constraints on aggregate demand, and the amplifying effect of liquidity constraints on the negative impact of the COVID-19 pandemic. Using the China family panel studies (CFPS) 2010-2018 and Internet survey data during the pandemic, we analyze the impact of the "income effect" caused by income decline and the "debt overhang effect" caused by real estate boom on household liquidity constraints. Furthermore, we also explore the amplifying effect of liquidity constraints on negative demand shocks during the pandemic. We find that, liquidity of Chinese households had been gradually deteriorating before the pandemic, specially, from 2010 to 2018, the ratio of China's households who were subject to liquidity constraint was increasing from 24.37% to 35.31%. For the middle-income class, compared with the "income effect", the "debt overhang effect" is more significant, and is the main driver of making households possibly subject to liquidity constraints. Meanwhile, liquidity constraints significantly affect consumption, compared with households without liquidity constraints, households with liquidity constraints decrease their consumption by 6.9%. To the amplifying effect of liquidity constraints on the impact of pandemic, we find that, compared with homeowners without mortgage, homeowners with mortgage and households without housing both reduced more consumption, saved more, are also more likely to fall into liquidity constraints, and more conservative on consumption in the second half of 2020. This paper not only provides a new explanation for the sluggish consumption in China, but also provides a basis for demand-side reform. © 2022, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.

14.
Investment Management and Financial Innovations ; 19(2):95-106, 2022.
Article in English | Scopus | ID: covidwho-1912505

ABSTRACT

This paper aims to analyze business liquidity perceptions during the Covid-19 lockdown and how the lockdown affected businesses. The research methodology used in this paper consists of a literature review on businesses in the lockdown and an analysis of data collected through a survey conducted in the second quarter of 2020, immediately after the Covid-19 restriction measures were imposed. The sample used contains 180 businesses from a population of 166,386 businesses in Albania, providing a 7.30% error according to the Raosoft calculator. A more in-depth analysis was made by comparison, using box-plots for liquidity issues and problems faced by small, medium and large businesses (SMLEs) during the pandemic. The degree of significance of factors taken into consideration in this study is expressed by Pearson’s Correlation Coefficient (PCC) and an econometric model. The processing and analysis of data was made using SPSS V21. From the analysis of the factors considered and the size of the business, two important conclusions emerge: (1) the exercise of activity for Albanian businesses is closely related to the payments and the business perspective (bankruptcy risk);(2) the fear of bankruptcy was felt more by big business, while medium business had fewer problems referring to all the factors taken into consideration. The econometric model determined the most important factors for assessing the level of impact of Covid-19: Failure Perception, Support from Solidarity Packages, and Cash Reserves Usage. Surprisingly, it is noticed that businesses attribute the use of cash reserves (C.R.U) to different expenses/liabilities compared to the traditional ones treated in this study. © Bitila Shosha, Romeo Mano, Armela Anamali, 2022.

15.
Journal of Global Information Management ; 30(4):1-16, 2022.
Article in English | ProQuest Central | ID: covidwho-1911822

ABSTRACT

In today's highly developed world of financial globalization, international capital flows in my country and the entire Asia-Pacific region are gradually increasing. The stock market is an important part of the capital market. The stock market has gradually improved its capital liquidity. With the improvement of the investment environment in the international capital market and the gradual relaxation of capital controls, with the development of the "Belt and Road" development concept, Thailand has gradually chosen to buy and sell shares of Chinese investors. What investors need to consider is how to achieve capital appreciation. Investors need to consider how to achieve capital appreciation. However, a sudden new crown pneumonia epidemic broke the peace and excitement that the New Year should have, and also brought a great impact on the stock market. Of course, the stock market is affected by many factors. There are some problems here, such as the experience of the Chinese stock market.

16.
JOURNAL OF EMPIRICAL FINANCE ; 68:20-33, 2022.
Article in English | Web of Science | ID: covidwho-1907280

ABSTRACT

During the pandemic, households accumulated savings in their deposit accounts as a result of a reduction in their spending, which occurred due to the restrictions on their mobility. This led to a significant increase in bank deposits for banks located in counties with a larger reduction in spending. Banks, in turn, used these additional funds to issue more real estate loans. This implies that policies that might affect household spending would lead to changes in the volume of deposits in the banking system, which have consequences on banks' loan supply.

17.
Economic and Social Development: Book of Proceedings ; : 77-84, 2022.
Article in English | ProQuest Central | ID: covidwho-1904812

ABSTRACT

The aim of this paper is to analyze the impact of the Covid-19 pandemic on the financial enterprise performance in Montenegro. The analysis was conducted on a sample of 124 enteprises (small, medium and large) in the trade sector that has the largest share in the creation of Montenegrin gross domestic product (GDP). As the trade sector includes wholesale and retail trade, this paper focuses on the wholesale sector. The research compared the period before Covid-19, i.e. years: 2018 and 2019, and the period during Covid-19, year 2020. The financial enterprise performance is discussed on the basis of analysis of liquidity, solvency, efficiency andprofitability. The results showed that the Covid-19 pandemic had negative impact on business operations of the enterprises in terms ofprofitability and efficiency, while solvency and liquidity were almost unchanged. The results showed that the Covid-19 pandemic had bad consequences for the company's business in terms of profitability and efficiency, while solvency and liquidity were almost unchanged. The contribution of this paper consists in assessing the impact of the health crisis on the operations of business entities in the trade sector, based on the ratio analysis of the financial statements of this sample. In addition to the above, the paper provides an overview of available data related to the analysis of the structure of the Montenegrin economy. This research emphasizes that more attention needs to be paid to the risks that external environmental uncertainty brings to small, medium and large enterprises and to help these enterprises anticipate risks when making business decisions.

18.
Folia Oeconomica Stetinensia ; 22(1):263-286, 2022.
Article in English | ProQuest Central | ID: covidwho-1902870

ABSTRACT

Research background: In March 2020, when the US financial markets were in the grip of the COVID-19 crisis, the Fed instituted various policies and programs to alleviate stress in financial markets. One such program involved the Fed purchase of securities and ETFs in certain market segments, including high yield bonds. This buying action inspired investors to join the Fed (or front-run the Fed) in the high yield bond market, resulting in the tightening of spreads in that market to historically tight levels.Purpose: In this research we investigate whether investors could have seen any signs of higher liquidity risk in US high yield mutual funds since the beginning of COVID-19 pandemic and avoid it. Theoretically, funds with heightened liquidity risk should have higher historical returns (adjusted for interest rate risk and credit risk) because borne risk requires return as compensation. But because of the unusual market conditions during the COVID-19 pandemic investors could look inside funds (to see what bonds the funds owned) and then avoid funds with holdings known to be less liquid.Research methodology: The study is based on data on US mutual funds from the Morningstar Direct database. The authors made a serial correlation model with an AR(1) process and the lagged effects model vs CAPM model to measure two proxies for liquidity risk for each US high yield mutual fund in our fund universe, in order to identify those funds at particular risk for portfolio illiquidity since the beginning of the COVID-19 pandemic.Results: it is found that the proposed measures may be an effective tool for selecting high yield funds against liquidity risk. Therefore, they should be considered by investors or analysts as a practical tool to identify funds that might be illiquid.Novelty: The study focuses on the liquidity risk in US high yield bond mutual funds before and after the outbreak of the COVID-19 pandemic, which was a crisis situation with implications for liquidity risk. The methods used and results achieved may be a basis for studies of other types of funds and markets outside the USA.

19.
Folia Oeconomica Stetinensia ; 22(1):152-171, 2022.
Article in English | ProQuest Central | ID: covidwho-1902868

ABSTRACT

Background: There is a raging debate on how the COVID-19 pandemic disrupted the financial market environments, affected the banks’ strength as the credit channel, and the nexus between market liquidity and credit risk. During the COVID-19 crisis in the banking sector, credit risk and liquidity risk cannot be ignored as they have a considerable bearing on the performance and survival of banks.Purpose: Within the context of COVID-19, bank-specific and external factors were examined to determine the relationship between liquidity and the credit risk of South African domiciled banks.Research methodology: Quarterly panel data from 13 South African domiciled banks from 2018 to 2021 were examined using panel data methodologies: fixed effects and the system GMM.Results: In an analysis of the period between 2019Q1 to 2021Q1 the results suggest a positive relationship between liquidity and credit risk, the COVID-19 pandemic was found to have an implication on the nexus as the COVID-19 dummy variable was significant. Also, the results show that liquidity deteriorated with an increase in COVID-19 cases during the pandemic period. During the Pre-COVID-19 liquidity improved with a decrease in credit risk. Nevertheless, during COVID-19 liquidity was not influenced by credit risk. The results are contrary to the pre-COVID-19 period as the government interventions to support households and non-financial firms could have changed the dynamics of liquidity and loan losses.Novelty: The pandemic has ushered in a novel set of responses whose lasting impacts are not yet certain. The originality of the article lies in the nature of the investigation, where the nexus between liquidity and credit risk under the COVID-19 shocks/pandemic set-up. This is a unique study as the study revealed that policymakers and researchers alike should pay particular attention to the vulnerabilities to shocks from within and outside of the financial system as COVID-19 was found to significantly affect liquidity and credit risk. Since the pandemic is still active, further research is necessary to examine the cointegrating and causal relationship in the long run.

20.
SSRN; 2022.
Preprint in English | SSRN | ID: ppcovidwho-338899

ABSTRACT

This paper provides an overview of regulatory forbearance and its jurisdictional application in the banking system during the COVID-19 Pandemic. Over the years, regulatory forbearance has been used in the banking system and in recent times, it was prominently brought to the fore during the Pandemic as some banking system regulators applied it to cushion the adverse impact of the Pandemic on the sector and economy. The paper is descriptive in nature and draws on existing literature to explain the concept of regulatory forbearance, the types and those applied by regulators in some climes during the Pandemic. It also discusses the rationale for the use of regulatory forbearance such as financial stability and consumer protection, the challenges associated with it and how measures like stringent conditions can be instituted to ensure its effectiveness.

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