Bulletin of Monetary Economics and Banking (BMEB) / Buletin Ekonomi Moneter dan Perbankan
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From Hell to Heaven: How Climate Risks Hurt the Poor and Climate Finance Heals Them
Full text linkThis study explores the global impact of climate finance on wealth and income inequality, utilizing the IV-GMM model to capture nuanced relationships. Key findings indicate that climate finance effectively reduces both forms of inequality, benefiting low-income populations and suggesting it as a viable tool for inequality reduction. Notably, the impact of climate finance is asymmetric: countries with lower initial inequality levels experience more pronounced benefits, while the effect lessens as inequality increases. Additionally, climate risks—represented by natural disasters— worsen inequality, underscoring climate finance’s dual role in directly reducing inequality and indirectly mitigating disaster impacts. These insights offer valuable policy implications, highlighting climate finance as a means to promote equity and alleviate poverty in the face of escalating climate challenges
Macroeconomic Risks of Carbon Emission Constraints
Full text linkGreen and low-carbon transformation is an inevitable trend for protecting the climate and ecology while achieving stable economic development. To actively and prudently achieve carbon emission targets, the government will further implement robust policy measures to support the development of a green and low-carbon economy. However, there are risks associated with the implementation strength and frequency of future carbon emission constraint policies, which could impact different market economic entities and cause macroeconomic fluctuations. This paper analyzes the transmission mechanism of the risks associated with carbon emission constraint policies, and examines their impact on the macroeconomy. We find that the risks associated with carbon emission constraint policies can inhibit investment and financing at the capital level, and cause output decline and deflation at the production level
EDITORIAL (Domestic Policies (and Shocks), Macroeconomic Stability, and Economic Growth BMEB India Special Issue)
Full text linkDomestic Policies (and Shocks), Macroeconomic Stability, and Economic Growth BMEB India Special Issu
Monetary Policy Impact on Stock Returns for Selected South Asian Countries
Full text linkIn this paper, we examine the monetary policy impact on the stock market returns and volatility for four major South Asian countries (Bangladesh, India, Pakistan, and Sri Lanka). We test our hypothesis that monetary policy influences both the first and second order of stock returns by using monthly data. The short-term interest rate and the Treasury bill rate are employed as proxies for monetary policy. Controlling for industrial production, inflation, exchange rates (vis-à-vis the US dollar), US interest rate, and money supply, our findings indicate that there exists a statistically significant impact of short-term interest rates on stock returns only in the case of Sri Lanka. However, when we consider the Treasury bill rate as a proxy for monetary policy, we find evidence that it has a statistically significant effect on stock returns in all the four countries. There is limited evidence that monetary policy influences volatility
Cost of Capital and Climate Risk in the Indonesian Bonds Market
Full text linkThis study analyzes the impact of climate risk, cost of capital, and macroeconomic variables on the Indonesian bond market, focusing on non-ESG aware and ESG-aware bonds. Using a regression analysis, we found that the cost of capital has a significant negative effect on bond yields, highlighting the importance of policymakers focusing on initiatives that can lower the cost of capital for investors. Inflation rate was also found to have a significant positive effect on non-ESG aware bonds, which is a unique feature of the Indonesian bond market. We found that ESG-aware bond yields were negatively significant, indicating that investors are increasingly considering environmental and social values when making investment decisions. Additionally, macroeconomic variables did not show a significant impact on ESG-aware bonds. Our study provides valuable insights for policymakers and investors on how to navigate the Indonesian bond market and implement strategies that align with environmental and social value
The Impact Of Covid-19 Pandemic On Carbon Emissions: Empirical Evidence From China
Full text linkIn this study, we investigate the short-term impact of the COVID-19 pandemic on China’s carbon emissions. We use data for a panel of 30 Chinese provinces over the period January 2020 to December 2020. The results indicate that carbon emissions in China decreased considerably during the COVID-19 outbreak. This finding remains robust when we use different proxies for core variables. The pandemic had a more pronounced impact on carbon emissionsin regions with a surplus of carbon emission allowances, and the negative effects of the pandemic on carbon emissions were greater in the first half of 2020 compared to the second half. Reduced carbon emissions are just a temporary and short-term benefit of the COVID-19 pandemic. The negative impact of COVID-19 on China’s carbon emissions is unsustainable in the long-run. This study provides valuable recommendations for China and other countries to achieve green economic recovery and climate goals in the post-pandemic er
Capital Flow and Bank Lending Channels in a Small Open Economy: Evidence from Indonesia
Full text linkThis paper investigates the implication of macro-financial linkages to explain the interaction of the financial and business cycles as the primary contributor to understanding the fluctuations in the Indonesian economy. It attempts to capture the interaction of the global financial and domestic business cycles through portfolio flow by incorporating investor behavior through a preference for domestic asset classes. Furthermore, due to information asymmetries between lenders and borrowers, we include the monitoring cost to explain the transaction cost in the credit market as a factor that drives macroeconomic fluctuations. Our findings demonstrate how financial imperfections can amplify the impact of global financial cycles on domestic business cycles. The demand for riskier investment illustrates how risk-taking behavior impacts capital flow and contributes to the endogenous amplification of economic cycle
EDITORIAL (Climate Change, Economic Growth and Macroeconomic Sustainability BMEB China Special Issue)
Full text linkIndia and the Rest of the World: Analyses of International Monetary Policy Spillovers
Full text linkThe US is India\u27s largest trading partner, followed by the European Union. Our study, using the GVAR model, shows that a US monetary policy (MP) shock results in a depreciation of the Indian currency vis-a-vis the dollar. This is due to Indian investors preferring to invest in the US, which provides higher returns during a US MP shock. The Eurozone MP shock does not have a significant impact due to the increasing dollarization of the Indian economy. However, the US MP shock propagation diminishes when there is economic policy uncertainty. Our findings have implications for monetary policy conduct in India
Cheaper is Better? Evidence From China Fund Expense and Performance
Full text linkThe expense of mutual fund sustained a substantial growth in recent years, but do the expense of fund genuinely contribute to the fund performance? We examine the relation between the expense of Chinese actively managed equity funds and their performance. We show that the expense has a negative effect on the excess return of funds, which is consistent with the well-established negative relation from previous research of the mutual fund in U.S. In subsequent heterogeneity analysis, we also find that the fund’s return volatility strengthens the negative effects, whereas its age and size did not. After further analysis and additional results, we can also explore how other factors influence the fee-performance relation, especially the family size and the growth of net value which are closely intertwined and exerting a positive influence because of the interplay policy framework and markets emphasis. The findings augmented the theoretical discourse pertaining to fee-performance relation in the sample of China and established a theoretical underpinning for the progression of further expense alleviation reforms within the fund sector