Bulletin of Monetary Economics and Banking (BMEB) / Buletin Ekonomi Moneter dan Perbankan
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Assessing and Mitigating the Impact of Geopolitical Risk Uncertainty on the Indian Financial Sector: A Policy Perspective
Full text linkThe study explores the impact of geopolitical risk uncertainty on the Indian financial sector, focusing on bonds, banking, currency, and the equity markets. It uses a quantile vector autoregression (QVAR) approach to examine shock transmission under different market conditions. Results show that geopolitical risks significantly influence the Indian financial sector, with varying levels of shock transmission across different market conditions. The currency and banking sectors show heightened sensitivity during periods of increased uncertainty. The findings suggest the need for effective monitoring systems and comprehensive risk management strategies to mitigate the adverse effects of geopolitical risks
The Impact of Fiscal Science and Technology Expenditure on Digital Economy: A New Path to Economic Recovery in The Post-Pandemic Era
Full text linkIn this study, a multi-dimensional digital economy evaluation index system is constructed to explore the impact of fiscal Science and Technology (S&T) expenditure on digital economy development in China. We reveal the following findings. First, we note that the China’s digital economy level as a whole is rising each year, which is less affected by the COVID-19 pandemic. Second, we document that S&T expenditures positively stimulate digital economy development. Finally, we find that the promotion effect of S&T expenditure on the digital economy is statistically significant, and this promotion effect decreases from the southwest to the northeast due to the COVID-19 pandemic
Will Green Finance Become a New Driving Force for Environmental Governance in The Post-Covid-19 Era: Evidence from China
Full text linkGreen finance stimulus plan has become an important tool for environmental governance in the post-COVID-19 era. This paper investigates the emission reduction effect and impact mechanism of green finance (GF). The empirical results indicate that GF reduces environmental pollution. This reduction effect is attributed to a promotion in green innovation and industrial upgrading. The emission reduction effect of GF reflects the threshold characteristics. Specifically, stricter environmental regulation increases the inhibitory effect of GF on pollutio
Risk, Capital, And Inefficiency: A Study of Public Sector, Private, and Foreign Banks in India
Full text linkThis paper examines the relationships between the risk, capital, and inefficiency for Indian banks across different ownership structures like public sector banks (PSBs), private, and foreign banks. Using data from 50 banks of various ownerships and the three-stage least squares technique under the simultaneous equations framework, this paper checks how the relationship varies for different groups of banks. The study finds that: i) the association between risk, capital, and inefficiency is generally opposite for foreign banks compared to the PSBs and private banks. ii) The capital is costly and impacts the profitability of Indian banks. iii) PSBs experience ill management and moral hazard issues. iv) The piling of stressed assets is the result of aggressive lending without proper risk management. The study suggests flexible capital rules for banks as per the economic cycles. It suggests that the regulators should be vigilant about the incremental business and spending habits of banks
Editorial: Synergy and Innovation in Strengthening Resilience and Economic Revival The 17th BMEB International Conference Special Issue
Full text linkDigitalization and Economies of OIC Countries
Full text linkThis paper studies the impact of digitalization on the Organization of Islamic countries (OIC) economies. The study is conducted to see whether digitalization is playing its role in enhancing economic growth. We employ a panel dataset consisting of twenty-one years from 2000 to 2020 for 57 OIC countries. We use the system generalized method of moments (GMM) estimator. The results indicate that digitalization positively impacts the economies of OIC countries. As for policy implication, this study recommends governments of OIC member countries to invest in digital infrastructure in order to foster economic growth
Does Inflation Targeting Anchor Inflation Expectations in India? Evidences from Surveys of Household and Professional Forecasters
Full text linkThis study examines whether inflation targeting (IT) anchors household and professional forecasters expectations in India. It investigates whether food and non-food inflation affect anchoring inflation expectations differently. Primarily, the results indicate significant decreases in the level and variability of expectations. Further, it provides evidence of successful anchoring for professional forecasters\u27 and household expectations. However, it also found food inflation assist anchoring of expectations, while the non-food inflation doesn\u27t. The results suggest the central bank to emphasize more on non-food inflation for better anchoring prospects. Additionally, the study identifies food inflation as the primary contributor to headline inflation variability
Trade Uncertainty and Bank Credit Growth: Evidence from China and the European Union Countries
Full text linkThis paper examines the relationship between trade uncertainty and bank lending using a sample of commercial banks in China and the European Union (EU) countries. Using a sample of commercial banks in China and the European Union (EU) countries during the period of heightened trade uncertainty from 2017Q1 to 2021Q3 measured by Ahir et al.’s (2018) World Trade Uncertainty (WTU) index, we show that trade uncertainty slows bank credit growth. We find no significant difference in the lending response to trade uncertainty between Chinese and EU banks. Our additional analyses indicate that the credit-reducing effect of trade uncertainty is stronger for better-capitalised banks and more liquid banks. We also find that trade uncertainty is negatively associated with the growth of different bank funding sources, namely, customer deposits, liabilities, and equity. However, we do not find significant evidence that trade uncertainty affects bank credit risk
Impact of Covid-19 on International Trade
Full text linkUsing a global monthly unbalanced panel dataset of 70 countries from January 2020 to May 2023, we first examine the impact of COVID-19 on global trade. The empirical results show a detrimental impact of COVID-19 on countries’ foreign trade, which persists over six months. We evaluate the robustness of our findings by employing an alternative dependent variable and different estimators. Our main findings hold and two features of our results standout: first, that COVID-19 hurt international trade more for non-Asian countries; and second, that sectoral sensitivity to COVID-19 was heterogenous. These results have important policy implications
How Does Climate Risk Affect Employment Adjustment? Firm-Level Evidence from China
Full text linkIn recent years, global climate risk has been on the rise, with extreme weather and climate-related events becoming more frequent and severe, garnering increased attention. We explore the impact of climate risk on employment adjustments using a dataset of small, medium and micro enterprises in China. Our findings indicate that as climate risk increases, employment adjustment rates increase, net employment growth rates decrease, and job destruction intensifies. These results remain robust in tests for endogeneity and robustness tests. Specifically, extreme weather events impact companies’ factories and production facilities, increasing operating costs and affecting overall production and sales. As a result, labor is underutilized, and companies have to adjust production. Under these conditions, companies face financing constraints and tend to hold cash to mitigate risk, leading them to reduce labor costs and cut employment. Our findings are particularly significant for private enterprises, firms located in the eastern and central regions, and manufacturing companies