Bulletin of Monetary Economics and Banking (BMEB) / Buletin Ekonomi Moneter dan Perbankan
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How do Life and Non-Life Insurance Affect Financial Inclusion? New Empirical Evidence from a Cross-Country Analysis
Full text linkThis paper examines the influence of life and non-life insurance on financial inclusion in 79 countries during 2019. Financial inclusion indices were calculated using the Euclidean distance approach. The study reveals that the financial inclusion level is considerably impacted by the integration of insurance indicators. In over 64% of the countries, the financial inclusiveness is reduced as a result of the incorporation of life insurance. In contrast, the financial inclusiveness of nearly 47% of the countries was enhanced by the inclusion of non-life insurance. The paper emphasizes the necessity for policymakers to take insurance into account as a critical element of financial inclusion strategies and measures, providing valuable insights for improving global financial inclusiveness
Nonlinear Monetary Policy Reaction Function and Macroeconomic Fundamentals in India
Full text linkThe hybrid Taylor rule of the Reserve Bank of India (RBI) is the subject of the current study, which investigates nonlinearities in an open economy that includes a fiscal variable. The analysis employs a nonlinear cointegration approach and identifies policy preference asymmetries. The RBI prioritizes price stability due to the preference for inflation avoidance over recession. Fiscal variable plays a significant role in estimating the Taylor rule, which suggests that it is necessary to align fiscal and monetary policy in order to maintain the inflation within the designated range. Lastly, the nonlinear Taylor rule findings not only aid in comprehending the central bank’s policy setting behavior but also prevent the drawing of inaccurate and misleading inferences
Exchange Rate and Indonesia Economic Growth
Full text linkWe examine the effect of the exchange rate on the economy and the impact of the Dominant Currency Paradigm (DCP) on Indonesia’s export volume. This study employs multiple methodologies, namely the Auto Regressive Distributed Lag (ARDL) model, the non-linear version of ARDL, and panel regressions. The findings indicated that the depreciation of the exchange rate influenced economic expansion. The beneficial effect was mitigated by the influence of finance as seen in the company’s financial sheet. The findings also indicate the influence of DCP on the volume of international trade in Indonesia
Unravelling the Nexus Between Corporate Governance and Sustainability Performance: Evidence from India
Full text linkThis research investigates the influence of Corporate Governance (CG) practices on the Sustainability Performance (SP) of Indian non-financial firms. The study, utilizing a balanced panel of 1550 firm-year observations, demonstrates that overall corporate governance score and CEO duality improve sustainability performance. However, the moderation effect indicates that the positive effect of CG practices on SP is compromised when the same person holds both CEO and chairperson positions in a firm. Additionally, the relationship between CG and SP varies based on ownership structure, i.e., group-affiliated and non-group affiliated firms, as well as different industrial sectors, i.e., manufacturing, service, and diversified sectors
Impact of Dividend Policy on Share Price Volatility: Evidence from Sri Lanka
Full text linkThis paper investigates how dividend policy affects share price volatility among companies on the Colombo Stock Exchange from 2012 to 2020, including the COVID-19 period. Using a fixed effects model that explains 70% variability, we find both dividend per share and payout ratio significantly reduce share price volatility. Results remain robust even after excluding 2020 data. We identify several policy implications including how our results are useful for policy makers in understanding financial market instability and how investors can factor information in forecasting market prices
Health Crisis and Currency Risk: Fresh Evidence from New Data Sets
Full text linkWith the aid of a method of predictability analysis that involves a feasible quasigeneralized least squares estimator, we examine the predictive power associated with the newly computed COVID-19 indices, which are disaggregated into six indices for currency market risks (realized volatility of exchange rate). Our sample size covers the period between December 31, 2019, and December 28, 2021. We note mixed outcomes for the major currency markets considered. On average, while the health crisis seems to have heightened the risks associated with Pounds Sterling, Australian Dollar and Canadian Dollar against USD, it exerts a moderating effect on the Euro, Yen and Swiss Franc against USD. However, the indices consistently demonstrate predictive prowess across multiple out-of-sample forecasts, which we adduce to the richness of the new measures
Do Digital Transformation and Macroeconomic Stability Matter for The Asean\u27s Economic Growth?
Full text linkThis work assesses the association between digital transformation, macroeconomic stability, and economic growth. We employ yearly data from 2010 to 2021 in ASEAN countries. The findings show digital transformation and macroeconomic stability can increase in GDP in the long term. Digital transformation contributes favorably and substantially, while macroeconomic stability negatively and significantly affects economic growth in the short-term. The study reveals causal link between digital transformation and macroeconomic stability, causality from digital transformation to economic growth, and economic growth to macroeconomic stability. This implies that digital transformation is the engine of growth
Triple Shock on External Sustainability in Indonesia
Full text linkThis study evaluates Indonesia’s external sustainability by analyzing exports, imports, and net unilateral transfer payments. The study utilizes Indonesia’s data from the third quarter of 2005 to the fourth quarter of 2019, applying both a long-run dynamic model and a short-run forward-looking model incorporating triple shocks. This research excludes the period from 2020 onwards due to the economic upheaval in Indonesia resulting from the COVID-19 outbreak. This study concludes that Indonesia’s current account is unsustainable, as neither export nor import variables exhibit a long-term link, hence failing to meet intertemporal budget constraints. Furthermore, imports substantially influence long-term exports, which increase at a slower rate than imports. Economic variations and global oil price volatility also affect exports
Does Digital Finance Move Together with Technology Innovation in China?
Full text linkExisting academic research has predominantly examined the unidirectional impact of digital finance on technological innovation, thereby neglecting the reciprocal interplay between these two domains. This study fills this gap by investigating the long-term bidirectional cointegrated relationship between digital finance and technological innovation. Using panel cointegration estimation methods on panel data from 286 Chinese cities during 2011–2020, empirical results reveal a long-term co-movement between digital finance and technological innovation. Pooled Mean Group estimation demonstrates that digital finance makes significant contributions to technological innovation in both long-term and short-term contexts. However, sub-sample analyses show that digital finance consistently boosts technological innovation in cities with high financial development, but its impact is short-term in cities with low financial development. These findings provide crucial insights for policymakers to formulate targeted measures that foster the synergistic development of digital finance and technological innovatio
The Impact of Increasing News Intensity and Number of Investors on the Relationship between News Sentiment and Price Movement in the Developing Country: Indonesian Evidence
Full text linkThis study examines how news intensity and investor numbers affect the link between news sentiment and equity price movements in Indonesia, using the LQ45 Index. Applying methods such as correlation analysis, CAPM, VAR, Granger causality tests, and rolling correlations, we find that higher news intensity and investor participation strengthen the connection between news sentiment and stock returns while also increasing volatility. The findings suggest that incorporating news sentiment analysis can improve market stability and investment decisions in developing economies