Economies

Open AccessArticle

Youth Entrepreneurship in Germany: Empirical Evidence on the How, the Why, the How Many, the Who and the When

by

Rolf Sternberg

and

David Breitenbach

Economies 2023, 11(6), 161; https://doi.org/10.3390/economies11060161 - 07 Jun 2023

Abstract

Youth entrepreneurship is an increasingly prominent aspect of entrepreneurship support policies, but there is surprisingly little relevant research-based empirical evidence. This research gap is particularly noticeable when it comes to the personal and contextual factors that steer young people’s decision to start a [...] Read more.

Youth entrepreneurship is an increasingly prominent aspect of entrepreneurship support policies, but there is surprisingly little relevant research-based empirical evidence. This research gap is particularly noticeable when it comes to the personal and contextual factors that steer young people’s decision to start a business. Using statistically representative survey data from the Global Entrepreneurship Monitor for Germany, we apply logit regressions to determine the influence of 10 independent variables on the likelihood of starting a business. We distinguish between 18–24-year-olds and 25–64-year-olds as well as between founders and non-founders. Self-efficacy in entrepreneurial skills, fear of failure and gender are the strongest influencing variables for the person-related factors and knowledge of other founders for the contextual factors. For younger people, the formal level of education and the perception of local entrepreneurial opportunities do not play a role in the decision to start a business, whereas they are very important for older people. Our results suggest that start-up promotion policies should explicitly address the empirically proven factors of youth entrepreneurship instead of a ‘one size fits all’ policy for new businesses, regardless of the age of the founders. Full article

(This article belongs to the Special Issue Focused Issues and Trends in Economic Research from Germany)

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Open AccessArticle

The Multidimensional Logistic Model According to the Forecast of Employment of Graduates of Institutions of Higher Education of the Republic of Kazakhstan

by

Laura A. Khassenova

,

Altyn M. Yessirkepova

,

Marat K. Seidakhmetov

,

Zarema A. Bigeldiyeva

and

Dinmukhamed S. Zhakipbekov

Economies 2023, 11(6), 160; https://doi.org/10.3390/economies11060160 - 05 Jun 2023

Abstract

This article constructs a multidimensional logistic model for predicting the employment of graduates of higher educational institutions trained under the program of academic mobility, using the example of Kazakh universities. The purpose of the research is to identify the relationship between academic mobility [...] Read more.

This article constructs a multidimensional logistic model for predicting the employment of graduates of higher educational institutions trained under the program of academic mobility, using the example of Kazakh universities. The purpose of the research is to identify the relationship between academic mobility and the employment of university graduates, as well as the necessary skills and competencies that can promote academic mobility in higher education institutions. This paper presents the results of calculating correlation coefficients and conducting a chi-square test, which demonstrated a relationship between the dependent variable and other questions in the graduate questionnaire. After the discovery of pairwise relationships, a multivariate logistic model was built that included statistically significant categories of responses. As a result, it was determined that the usefulness of participation in the academic mobility program is influenced by foreign language proficiency, an increase in academic mobility, the development of educational programs based on the needs of the labor market, as well as an increase in the weight of those methods that form practical skills in information analysis and the creation of public spaces in the labor market. The model demonstrated good predictive properties, which can be used to predict those individuals who were helped by academic mobility in finding employment. Full article

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Open AccessArticle

Challenges in Assessing the Behaviour of Nodal Electricity Prices in Insular Electricity Markets: The Case of New Zealand

by

Daniela Pereira Macedo

,

António Cardoso Marques

and

Olivier Damette

Economies 2023, 11(6), 159; https://doi.org/10.3390/economies11060159 - 01 Jun 2023

Abstract

In this new era of energy transition, access to reliable and correctly functioning electricity markets is a huge concern for all economies. The restructuring path taken by most electricity markets involves the movement towards green generation structures and the increasing integration of wind [...] Read more.

In this new era of energy transition, access to reliable and correctly functioning electricity markets is a huge concern for all economies. The restructuring path taken by most electricity markets involves the movement towards green generation structures and the increasing integration of wind and solar photovoltaic energy sources. Furthermore, it involves the electrification of energy systems, which implies a substantial increase in electricity demand levels. It is also important to add that electricity use has been pivotal in achieving efficient productivity levels in many sectors and is thus crucial to boosting economic activity. Nevertheless, this shift in generation structures has raised several challenges in electricity markets, mainly because the electricity produced from wind and solar photovoltaics is intermittent. In turn, adopting green power sources has been claimed to increase electricity price volatility and thus increase pricing risks. Therefore, to ensure that the right market signals are being sent to investors, the behaviour of electricity prices should be carefully assessed. There are three main types of pricing mechanisms commonly used in electricity markets: zonal, uniform and nodal. This study provides a short literature survey on these three pricing mechanisms. Our analysis has revealed that the assessment of the behaviour of nodal electricity price volatility is rarely studied in the literature. This fact has motivated the exploration of this topic and the consideration of the New Zealand electricity market case. The New Zealand electricity market is an energy-only system with no interconnections with other electricity markets. Furthermore, it has plenty of electricity produced from hydropower, which has a high potential to reduce price volatility through its backup role. The nodal pricing mechanism is complex, and data on it are hard to process. This paper elucidates the main challenges in processing electricity big data. Three different procedures to make this data more useable are described in detail. The main conclusions of this paper highlight the need to access easy-to-manage data and identify certain variables that significantly affect nodal prices for data which are unavailable. Full article

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Open AccessArticle

Assessing and Forecasting the Long-Term Impact of the Global Financial Crisis on Manufacturing Sales in South Africa

by

Tendai Makoni

and

Delson Chikobvu

Economies 2023, 11(6), 158; https://doi.org/10.3390/economies11060158 - 30 May 2023

Abstract

Sales forecasting is a crucial aspect of any successful manufacturing organisation as it provides the foundation for investment, employment development, and innovation. The Global Financial Crisis (GFC) had a negative impact on the manufacturing sector in South Africa (SA) and the rest of [...] Read more.

Sales forecasting is a crucial aspect of any successful manufacturing organisation as it provides the foundation for investment, employment development, and innovation. The Global Financial Crisis (GFC) had a negative impact on the manufacturing sector in South Africa (SA) and the rest of the world. The objective of this paper is to analyse the trend of manufacturing sales before, during, and after the GFC and to quantify the impact of the GFC on the total manufacturing sales in SA. The time-series-based Box–Jenkins methodology is used to achieve the objective. The study used Statistic South Africa’s data on monthly total manufacturing sales in SA from January 1998 to December 2022. Total manufacturing sales exhibit strong seasonality. The ACF, PACF, and EACF plots, as well as the AIC, BIC, RMSE, and MAE, suggest the SARIMA(2,1,2)(2,1,1)₁₂ model as the best model for explaining and forecasting manufacturing sales in SA. The SA manufacturing sector was negatively impacted by the GFC, as evidenced by the comparison between actual data and projections based on a historical path prior to the GFC. Manufacturing sales are recovering from the GFC but have not reached potential levels that could have been achieved without the crisis. The SA manufacturing sector may take time to reach the expected/projected sale levels that could have been achieved in the absence of the GFC. Full article

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Open AccessArticle

Interaction and Main Effects of Finance Support and Other Business Support Services on the Entrepreneurial Ecosystem: A Case Study of the Mpumalanga Province, South Africa

by

Kanayo K. Ogujiuba

,

Maria Eggink

and

Ebenezer Olamide

Economies 2023, 11(6), 157; https://doi.org/10.3390/economies11060157 - 26 May 2023

Abstract

Finance support and other forms of business support have been recognized as key factors in the entrepreneurial ecosystem in theoretical and empirical investigations. There is currently a knowledge gap regarding the combined impact of these two variables on the entrepreneurial ecosystem, even though [...] Read more.

Finance support and other forms of business support have been recognized as key factors in the entrepreneurial ecosystem in theoretical and empirical investigations. There is currently a knowledge gap regarding the combined impact of these two variables on the entrepreneurial ecosystem, even though much research has shown that both variables have a favorable influence on entrepreneurial ecosystems. The primary goal of this study is to determine whether the interactions between the two variables—finance support and other business support services—have an impact on the entrepreneurial ecosystem in South Africa. A second objective is to determine the main effects of these variables on the entrepreneurial ecosystem. A standardized questionnaire was used to conduct a study of 2000 SMEs in the South African province of Mpumalanga. To investigate the effects of business support services and finance on the ecosystem as measured by the test instruments, a two-way between-groups analysis of variance was carried out. Depending on their finance index, subjects were classified into three groups: low, medium, and high. There was a statistically significant main effect for finance and other business support services with F(2, 1478) = 26.109, p ≤ 0.001 and F(2, 1478) = 149.552, p ≤ 0.001 respectively. However, the effect sizes were small (partial eta squared = 0.034 and 0.168). Post hoc comparisons using the Tukey HSD test indicated that the mean scores differed for all the groups in finance support and other business support services. It was found that financial support and other business support would impact the SME ecosystem in South Africa positively if implemented separately but not if implemented interactively. The targets of financial support should be separated from other business support during policy formulation and implementation by the government. Full article

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Open AccessArticle

Micro, Small, and Medium Enterprises’ Readiness for Digital Transformation in Indonesia

by

Lina Anatan

and

Nur

Economies 2023, 11(6), 156; https://doi.org/10.3390/economies11060156 - 26 May 2023

Abstract

The Fourth Industrial Revolution (IR4) and the COVID-19 pandemic have become triggers for micro, small, and medium enterprises (MSMEs) to conduct digital transformation even though there are many problems that need to be resolved, particularly those related to the readiness of MSMEs in [...] Read more.

The Fourth Industrial Revolution (IR4) and the COVID-19 pandemic have become triggers for micro, small, and medium enterprises (MSMEs) to conduct digital transformation even though there are many problems that need to be resolved, particularly those related to the readiness of MSMEs in facing digitalization. This study aims to investigate Indonesian MSMEs and identify problems and types of knowledge transfer activities. By involving 101 MSMEs selected using convenience sampling and collected through an online survey, the hypotheses testing shows that the perception of higher drivers for IR4 promoting IR4 readiness is supported, while the perception of higher barriers to IR4 decreasing IR4 readiness is not supported. The problems faced by MSMEs in Indonesia are related to financial, human resources, marketing, operational, administrative, and organizational management. To solve these problems and enhance the readiness for digitalization, knowledge transfer activities from universities to MSMEs are needed. This study provides a theoretical contribution to the strategic management literature to fill the lack of studies on MSMEs’ e-readiness in developing countries and a practical contribution to assist decision-makers in formulating strategies to support MSMEs in facing IR4 and solving internal problems through knowledge transfer activities. Full article

(This article belongs to the Section Economic Development)

Open AccessArticle

The Impact of the Stock Market on Liquidity and Economic Growth: Evidence of Volatile Market

by

Collin Chikwira

and

Jahed Iqbal Mohammed

Economies 2023, 11(6), 155; https://doi.org/10.3390/economies11060155 - 24 May 2023

Abstract

Stock markets serve as a conduit for money and liquidity, which are necessary for economic growth and stability. This study aimed to determine whether stock market impacts are communicated in an economically unstable environment, characterised by volatility, high inflation rates, and political instability. [...] Read more.

Stock markets serve as a conduit for money and liquidity, which are necessary for economic growth and stability. This study aimed to determine whether stock market impacts are communicated in an economically unstable environment, characterised by volatility, high inflation rates, and political instability. The research used a time series Vector Autoregressive model (VAR) with quarterly data from between 2013 and 2022. The study revealed that there is a positive statistically significant association between the stock market and economic growth at the 10% level. On the other hand, the stock market liquidity has no major influence on Zimbabwe’s economic development. As a result, the study advises policymakers to evaluate the rules regulating the stock market carefully and to relax some of the requirements for firms to be listed on the stock exchange. The stock market will become more liquid as a result of this because it will draw more internal and external businesses to being listed. The ZSE should also develop a framework for the gradual implementation of the commodity derivatives exchange as Zimbabwe’s substantial mineral reserves and robust agriculture may bring significant income to the country’s economy. Full article

(This article belongs to the Section Economic Development)

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Open AccessArticle

The Effects of Inequality on the Substitution of Essential Goods for Tobacco Smoking in South Africa

by

Nomusa Yolanda Nkomo

,

Mduduzi Biyase

and

Beatrice D. Simo-Kengne

Economies 2023, 11(6), 154; https://doi.org/10.3390/economies11060154 - 24 May 2023

Abstract

Tobacco consumption contributes to a substantial amount of household expenditures, which might lead to decreased spending on other essentials. This study examines household head tobacco expenditures in various inequality settings. In this study, we investigated the impact of gender, race, and educational inequality [...] Read more.

Tobacco consumption contributes to a substantial amount of household expenditures, which might lead to decreased spending on other essentials. This study examines household head tobacco expenditures in various inequality settings. In this study, we investigated the impact of gender, race, and educational inequality and the substitution effect of tobacco expenditure on essentials such as children’s education and household food. We looked at how much of the resources household heads spend on tobacco in different inequality settings that replace households’ essentials. The panel setting of the National Income Dynamics Study (NIDS), South Africa’s first nationally representative household panel survey, is used as a data collection source for this study. These are household surveys conducted by the Presidency’s Office of Planning, Monitoring, and Evaluation. The panel data are subject to attrition in longitudinal research. We compared the conditional expenditure shares of various types of households using econometric models such as moment quantile regression. A negative and statistically significant estimated coefficient of tobacco expenditure and the coefficient of the interacted term (inequality and tobacco expenditure) demonstrated the substitution effect. The findings reveal that low-income households whose heads smoke tobacco invest less in their children’s education, while well-educated heads of high-income households’ place as much value on their children’s education as they do on cigarette expenditure. The study also points out that the share of income spent on cigarettes by black household heads is negatively connected to their children’s education across all quantiles compared to non-blacks. We conclude that low-income households are more likely to experience the substitution impact than high-income households. This study recommends, among other things, that low-income households should prioritize needs over non-essentials in order to maximize household satisfaction, and government should implement policies that will limit tobacco consumption expenditure. Full article

Open AccessArticle

Refund of Consumption Tax to Low-Income People: Impact Assessment Using Difference-in-Differences

by

Jorge Luis Tonetto

,

Adelar Fochezatto

and

Giovanni Padilha da Silva

Economies 2023, 11(6), 153; https://doi.org/10.3390/economies11060153 - 24 May 2023

Abstract

One way to reduce inequality and poverty is to promote tax justice. In 2021, the government of the state of Rio Grande do Sul, Brazil, implemented a program (the Devolve-ICMS Program) that refunds consumption tax to low-income citizens (cashback). This study aims to [...] Read more.

One way to reduce inequality and poverty is to promote tax justice. In 2021, the government of the state of Rio Grande do Sul, Brazil, implemented a program (the Devolve-ICMS Program) that refunds consumption tax to low-income citizens (cashback). This study aims to evaluate the impacts of this Program using a differences-in-differences model and having, as response variables, the monthly sum of electronic invoices issued to the Program’s beneficiaries, as well as their value. The database used includes all invoices issued to the target population during the 12 months before the Program’s implementation and the 14 months after its implementation, resulting in 7.7 million records. To receive the tax refund, the eligible population must pick up a Citizen Card, made available by the state government, which was done by a significant part of this population. The treatment group is composed of eligible citizens who have the Card, whereas the control group comprises eligible citizens who do not have it. The results show that the Program is effective, as it has reduced tax pressure on poor people and increased both the number of invoices issued and their value. Full article

(This article belongs to the Section Economic Development)

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Open AccessArticle

Threshold of the CAPB That Can Be Attributed to Fiscal Consolidation Episodes in South Africa

by

Eugene Msizi Buthelezi

and

Phocenah Nyatanga

Economies 2023, 11(6), 152; https://doi.org/10.3390/economies11060152 - 23 May 2023

Abstract

This paper investigates the threshold of the cyclical adjusted primary balance (CAPB) that can be attributed to fiscal consolidation in South Africa. The CAPB framework is used in the threshold autoregressive regime (TAR) from 1979 to 2022. The contribution of the paper is [...] Read more.

This paper investigates the threshold of the cyclical adjusted primary balance (CAPB) that can be attributed to fiscal consolidation in South Africa. The CAPB framework is used in the threshold autoregressive regime (TAR) from 1979 to 2022. The contribution of the paper is the estimation of the CAPB in the context of South Africa to find fiscal consolidation episodes. Moreover, we identify the threshold of CAPB that can be attributed to fiscal consolidation, which the available literature is silent on. The TAR, first-order derivative and dummy variables are employed to find thresholds that can be attributed to fiscal consolidation episodes. By doing so, we provide valuable insights into the underlying dynamics of fiscal consolidation in the country, which can help policymakers develop more effective strategies for managing fiscal consolidation episodes. We estimated the success of fiscal consolidation on government debt in South Africa. There is a threshold of −1.28168%, 1.9182%, and 1.9270% for the CAPB of total government revenue increase, government expenditure cut, and the CAPB as a sum of both revenue and expenditure, respectively. These thresholds are different from the threshold of 1.5% advocated in the literature. It is recommended that a country-based threshold be used to find fiscal consolidation episodes. No or less fiscal consolidation is needed, as it results in less chance of reduction in government debt. Fiscal authorities must establish and execute a strategy for managing domestic government debt to avoid increasing its risk. Full article

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Open AccessArticle

Economic Recovery Strategy of Sectoral Industries Post-COVID-19: Input–Output Model Simulations

by

Firmansyah Firmansyah

,

Andrian Budi Prasetyo

,

,

,

,

and

Economies 2023, 11(5), 151; https://doi.org/10.3390/economies11050151 - 19 May 2023

Abstract

The global COVID-19 pandemic has suppressed the economy and people’s welfare, including in Indonesia and Central Java Province, as indicated by the weakening of the national economy by −2.06 percent and locally by −2.65 percent in 2020. Although the economy grew by 3.32 [...] Read more.

The global COVID-19 pandemic has suppressed the economy and people’s welfare, including in Indonesia and Central Java Province, as indicated by the weakening of the national economy by −2.06 percent and locally by −2.65 percent in 2020. Although the economy grew by 3.32 percent in 2021, societal welfare remains lower than in 2019, marked by an increase in unemployment and poverty throughout 2019–2021. Furthermore, the threat of COVID-19 including new variants of the virus continues to weigh on the economy, in 2022 and beyond. This study considered an industrial approach to production, based on inter-industrial linkages and policy simulations with input–output analysis. The objectives of this research are to analyze the impact of the COVID-19 pandemic on the economy of Central Java and to formulate an effective economic recovery policy for industry. The results show that the industries affected by the COVID-19 pandemic in Central Java can promote recovery of overall income in economic industry better than the leading industry and the industries with the highest output multipliers, expressed as a proportional increase in final demand for each industry. Meanwhile, the economic recovery strategy of increasing final demand in industries with high output multipliers results in a faster increase in economic output compared with increasing final demand in the affected industries or leading industries. Full article

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Open AccessArticle

Policy Drivers of Inter-Regional Investment in China

by

Ruicong Sang

,

W. Robert J. Alexander

and

Sajid Anwar

Economies 2023, 11(5), 150; https://doi.org/10.3390/economies11050150 - 18 May 2023

Abstract

We examine how the policies of Chinese regional governments affect the investment location decisions of firms. Using a dataset compiled from the reports on the investment decisions of 498 listed Chinese companies headquartered in the provinces of Guangdong, Jiangsu, Shanghai, and Zhejiang, we [...] Read more.

We examine how the policies of Chinese regional governments affect the investment location decisions of firms. Using a dataset compiled from the reports on the investment decisions of 498 listed Chinese companies headquartered in the provinces of Guangdong, Jiangsu, Shanghai, and Zhejiang, we estimate discrete choice models of the investment decisions of these firms. The variables of interest relate to government policies, but we also control for both market and firm characteristics. The provision of superior communications infrastructure leads to an increased probability of investment, as does a lower proportion of state-owned enterprises and a lower burden of regional government administrative expenses. We quantify potential changes in the probability of attracting investment by calculating the average marginal effects over a range of values of the variables of interest. Our extraction of primary data on firms directly from their annual reports allows us to address a gap in the literature with respect to the influence of regional government policies on investment decisions during a historical period (2000–2010) when inter-regional investment was particularly important as it saw a move to the decentralisation of decision making to regional government level. Our results provide useful guidance as to how local governments can best attract investment, namely by focusing on improving communications infrastructure, reducing government ownership of the means of production, and reducing administrative burden. Although there is currently a renewed focus on central government control, these findings remain relevant and can contribute to the ongoing debate concerning the optimal balance between centralisation and decentralisation. Full article

(This article belongs to the Section International, Regional, and Transportation Economics)

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Open AccessArticle

Dynamic Dependency between the Shariah and Traditional Stock Markets: Diversification Opportunities during the COVID-19 and Global Financial Crisis (GFC) Periods

by

Mosab I. Tabash

,

Mohammad Sahabuddin

,

Fatima Muhammad Abdulkarim

,

Basem Hamouri

and

Dang Khoa Tran

Economies 2023, 11(5), 149; https://doi.org/10.3390/economies11050149 - 17 May 2023

Abstract

The aim of the present research is to highlight whether there exist any diversification opportunities from investing in developed and developing countries’ Shariah-compliant and non-Shariah-compliant stock markets during global financial crisis (GFC) and the COVID-19 pandemic periods. For this purpose, we employ daily [...] Read more.

The aim of the present research is to highlight whether there exist any diversification opportunities from investing in developed and developing countries’ Shariah-compliant and non-Shariah-compliant stock markets during global financial crisis (GFC) and the COVID-19 pandemic periods. For this purpose, we employ daily data for both Shariah and non-Shariah indices from 29 October 2007 to 31 December 2021. The study uses multivariate GARCH-DCC and wavelet approaches to examine if there exist diversification opportunities in the selected markets. Evidence from this study shows that although the developing markets’ stock returns experience high volatility of a similar degree, the conventional indices of Malaysia have the highest volatility among them. This shows that Shariah indices have less exposure to risk and higher possibilities of diversification compared to their conventional counterparts. Regarding developed markets, the Japanese conventional index and the U.S. Shariah indices are more volatile compared to other indices in the market. Moreover, the results of the wavelet power spectrum show significant and higher volatility during the COVID-19 pandemic rather than the GFC. Similarly, the Chinese conventional market experienced minimum variance during the GFC and COVID-19 pandemic period. On the other hand, the results of wavelet-coherence transform indicate that the Japanese Shariah-based market offered better portfolio opportunities for U.S. traders during the GFC and the COVID-19 pandemic periods. Hence, opportunities for investment in this selected market are basically close to zero. Therefore, investors should carefully choose which stocks they can include in their investment portfolio. Full article

(This article belongs to the Special Issue Role of Islamic Finance in Modern Economy)

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Open AccessReview

Has the COVID-19 Pandemic Cooled Down or Stimulated the Countertendencies of Capital? A Critical Review

by

Leonardo Carnut

,

Lucas Uback

and

Áquilas Mendes

Economies 2023, 11(5), 148; https://doi.org/10.3390/economies11050148 - 16 May 2023

Abstract

This is a critical review of what the Marxist scientific literature presents on the forms of countertendency to falling profit rates carried out during the COVID-19 pandemic. The 33 articles included in this review were studied using a Marxist approach. The following elements [...] Read more.

This is a critical review of what the Marxist scientific literature presents on the forms of countertendency to falling profit rates carried out during the COVID-19 pandemic. The 33 articles included in this review were studied using a Marxist approach. The following elements of the articles were synthesized and criticized: the analysis matrices, the methodological aspects of the articles, the elements contrary to the law of the tendency of the rate of profit to fall, and the cases studied and their contexts of analysis. The articles reviewed allow us to state that during the COVID-19 pandemic, there was intensification in the forms of an increased degree of labour exploitation, cheapening of the elements of constant capital, and increased relative overpopulation and shareholder capital. Full article

Open AccessArticle

Liquidity Creation, Oil Term of Trade Shocks, and Growth Volatility in Middle Eastern and North African Countries (MENA)

by

Ali Almeshari

,

Mohamed Hisham Bin Dato Haji Yahya

,

Fakarudin Bin Kamarudin

,

Rosalan Ali

and

Sha’ari Abd Hamid

Economies 2023, 11(5), 147; https://doi.org/10.3390/economies11050147 - 15 May 2023

Abstract

Both real and monetary shocks have been extensively researched, with conflicting findings on the involvement of the banking sector following the occurrence of these shocks. Nonetheless, liquidity creation (LC) appears to be one of the most underappreciated banking operations. This research analyses the [...] Read more.

Both real and monetary shocks have been extensively researched, with conflicting findings on the involvement of the banking sector following the occurrence of these shocks. Nonetheless, liquidity creation (LC) appears to be one of the most underappreciated banking operations. This research analyses the impact of LC on economic volatility and the mechanisms through which LC influences volatility in 10 MENA countries from 2000 to 2019. Using a recently published panel cointegration estimating approach, we show that LC does influence growth volatility over the long term and short term—in other words, LC, as a primary activity of banks, helps to reduce volatility. According to PMG’s findings, both real and monetary shocks significantly increase volatility in the short term compared to their influence in the long term. The channels of expression show that LC mitigates the influence of real shocks (amplifies the effect of monetary shocks) on growth volatility, and there is a greater magnitude of this effect in the short term. Strengthening the banking industry through LC, which is their primary business, could be a critical strategy in avoiding economic swings. Full article

(This article belongs to the Special Issue International Financial Markets and Monetary Policy 2.0)

Open AccessArticle

Drivers of Financial Inclusion: Insights from Sub-Saharan Africa

by

Shani Bashiru

,

Alhassan Bunyaminu

,

Ibrahim Nandom Yakubu

and

Mamdouh Abdulaziz Saleh Al-Faryan

Economies 2023, 11(5), 146; https://doi.org/10.3390/economies11050146 - 12 May 2023

Abstract

Financial inclusion has garnered global attention due to the detrimental effect that financial exclusion has on tackling socioeconomic challenges such as poverty. Using a dynamic panel approach, our study examines the drivers of financial inclusion in the context of Sub-Saharan Africa (SSA) over [...] Read more.

Financial inclusion has garnered global attention due to the detrimental effect that financial exclusion has on tackling socioeconomic challenges such as poverty. Using a dynamic panel approach, our study examines the drivers of financial inclusion in the context of Sub-Saharan Africa (SSA) over the period 2000 to 2017. We discover that financial globalization and literacy rates positively and significantly drive financial inclusion. We also find that rural population growth has a profound adverse impact on financial inclusion. The study further reveals that bank profitability, bank stability, and economic growth have a negative albeit insignificant effect on financial inclusion. The positive effect of financial globalization on financial inclusion has important policy implications for Sub-Saharan African countries. In this respect, the integration of the local financial system with global financial markets will facilitate efforts to achieve financial inclusion in the region. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

Open AccessArticle

Empirical Linkages between Branching, Lending, and Competition: A Study of Pakistani Banks

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and

Economies 2023, 11(5), 145; https://doi.org/10.3390/economies11050145 - 11 May 2023

Abstract

This study examines the relationship between branching, lending, and competition in Pakistani banks. Due to denationalization, Pakistani banks started to increase their branch networks and change loan and deposit policies. To check the effect of geographic diversification and distance on the performance of [...] Read more.

This study examines the relationship between branching, lending, and competition in Pakistani banks. Due to denationalization, Pakistani banks started to increase their branch networks and change loan and deposit policies. To check the effect of geographic diversification and distance on the performance of banks, the market power of loans and deposits, and the effect of large and medium banks on the performance of small banks, a sample of commercial banks is selected. The study finds that geographic diversification and distance between bank branches and headquarters do not affect the performance of the banks, but geographic diversification of banks in different areas affects the market power of loans and deposits. The results show that medium and large banks do not affect the performance of the small banks because small banks are better performing in the local market. Medium and large banks are affected by the market power of the loans and deposits of small banks. The study recommends an important policy regarding branch management and its effect on bank performance. Full article

Open AccessArticle

Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework

by

Theron Shumba

and

Sophia Mukorera

Economies 2023, 11(5), 144; https://doi.org/10.3390/economies11050144 - 11 May 2023

Abstract

The CMA (Common Monetary Area) is a quadrilateral monetary arrangement encompassing South Africa, Namibia, Lesotho, and Eswatini. The four countries have undergone a gradual improvement in regional economic integration for the effective economic coordination of their policymaking. Despite the monetary coordination, the countries [...] Read more.

The CMA (Common Monetary Area) is a quadrilateral monetary arrangement encompassing South Africa, Namibia, Lesotho, and Eswatini. The four countries have undergone a gradual improvement in regional economic integration for the effective economic coordination of their policymaking. Despite the monetary coordination, the countries are still experiencing poor economic performance. This study traces how a shock or an unanticipated change in the anchor country’s central bank’s policy instrument, in this case, South Africa, affects the macroeconomic performance in the entire CMA region. Employing a Panel Structural Vector Autoregressive model (Panel-SVAR) and annual data from 1980–2021, the findings show that a positive shock in the repo rate from South Africa significantly affected important macroeconomic performance indicators. The results indicate that a shock in the anchor country’s repo rate is followed by a significant decline in RGDP_G, a decrease in inflation, a decrease in money supply, and an increase in lending rate in the entire CMA region. The study recommends that CMA monetary authorities and policymakers need to formulate policies toward cushioning the effects of unanticipated monetary policy shock from the anchor country as well as global shocks. Full article

(This article belongs to the Special Issue International Financial Markets and Monetary Policy 2.0)

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Open AccessArticle

Analysis of Success Factors, Benefits, and Challenges of Issuing Green Bonds in Lithuania

by

Julija Bužinskė

and

Jelena Stankevičienė

Economies 2023, 11(5), 143; https://doi.org/10.3390/economies11050143 - 10 May 2023

Abstract

The objective of this study is to establish understanding of the success factors in issuing green bonds including the corresponding benefits and challenges of their issuance in Lithuania. The research methodology is comprised of the three parts: (1) a literature review to examine [...] Read more.

The objective of this study is to establish understanding of the success factors in issuing green bonds including the corresponding benefits and challenges of their issuance in Lithuania. The research methodology is comprised of the three parts: (1) a literature review to examine the success factors, benefits, and challenges of issuing green bonds as identified by researchers in different countries; (2) use of the methodological potential of the analysed field to formulate an expert survey via the analytical hierarchy process method; (3) summary of the results of the survey and proposals for its further development. Findings suggest that the reputation, good credit rating, and the environmental, social, and governance score of the issuer are the key considerations in the success of green bonds issuance. On the benefits side, green bonds bear low investment risks with the ability to raise large investment amounts while providing quantifiable and measurable benefits. The challenges related to the issuance of green bonds include greenwashing, the questionable role of the green bond market in environmental protection, and insufficient financial and economic benefits of issuance. Practical implications of the study are based on the notion that findings can be applied as a reference point by potential issuers willing to issue green bonds, investors willing to invest in green bonds, and policy-makers willing to promote sustainable and green finance. An original aspect of this paper is its study focus on peculiarities of the issuance of green bonds in the region, in a smaller country which can serve as a reference point for considering potential issuance of green bonds. Full article

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