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Several developing economies witnessed a large number of systemic financial and currency crises since the 1980s that resulted in severe economic, social, and political problems. The devastating impact of the 1982 and 1994–1995 Mexican crises, the 1997–1998 Asian financial crisis, the 1998 Russian crisis, and the ongoing financial crisis of 2008–2009 suggests that maintaining financial sector stability through reduction in vulnerability is highly crucial. The world is now witnessing an unprecedented systemic financial crisis originated from the USA in September 2008 together with a deep worldwide economic recession, particularly in developed countries of Europe and North America. This calls for devising and using on a regular basis an appropriate and effective monitoring and policy formulation system for detecting and addressing vulnerabilities leading to crisis. This chapter proposes a macroprudential/financial soundness monitoring, analysis, and remedial policy formulation system that can be used by most developing countries with or without crisis experience as well as with limited data. It also discusses a process for identifying and compiling a set of leading macroprudential/financial soundness indicators. An empirical illustration using Philippines data is presented. There is an urgent need for increased coordination, collaboration, and partnership among central banks, banking and financial market supervision agencies, and ministries of finance, economic, and planning for proper macroprudential monitoring. A high-level national financial stability committee under the auspices of the head of the state as well as a ‘‘regional financial stability board’’ needs to be established to complement and support the activities of an “international stability board.”

This study aims to analyze the imbalances in the public finance structure of Pakistan’s economy and highlight the need for comprehensive reforms. Specifically, it aims to contribute to the empirical literature by analyzing the relationship between fiscal vulnerability, financial stress and macroeconomic policies in Pakistan’s economy between 1971 and 2020.

The study develops an index of fiscal vulnerability, an index of financial stress and an index of macroeconomic policies. The fiscal vulnerability index is based on the patterns of fiscal indicators resulting from past trends of the selected variables in Pakistan’s economy. The financial stress in Pakistan is caused from the financial disorders that are acknowledged in the composite index, which is based on variables with the potential to indicate periods of stress stemming from the foreign exchange market, the securities market and the monetary policy components. The macroeconomic policies index is developed to analyze the mechanism through which fiscal vulnerability and financial stress have influenced macroeconomic policies in Pakistan. The causal association between fiscal vulnerability, financial stress and macroeconomic policies is analyzed using the auto-regressive distributive lags approach.

There exists a long-run relationship between the three indices, and a bi-directional causality between fiscal vulnerability and macroeconomic policies.

This study contributes to the development of a fiscal monitoring mechanism, which has the basic purpose of analyzing the refinancing risk of public liabilities. Moreover, it focuses on fiscal vulnerability from a macroeconomic perspective. The study tries to develop a framework to assess fiscal vulnerability in light of “The Risk Octagon” theory, which focuses on three risk components: fiscal variables, macroeconomic-disruption-associated shocks and non-fiscal country-specific variables. The initial contribution of this work to the literature is to develop a framework (a fiscal vulnerability index, financial stress index and macroeconomic policies index) for effective and result-oriented macro-fiscal surveillance. Moreover, empirical literature emphasized and advised developing countries to develop their own capacity mechanisms to assess their fiscal vulnerability in light of the IMF guidelines regarding vulnerability assessments. This study thus attempts to fulfill the said gap identified in literature.

The COVID-19 pandemic has exposed the financial-economic vulnerability of the public and threatened the household financial stability, especially of the low-income group population, in developing economies such as India. The assessment of household financial vulnerability has gained considerable attention these days, especially in poor and developing countries. This article seeks to assess the level of household financial vulnerability in India, based on a household survey conducted across India.

This paper has proposed a financial vulnerability index (FVI) based on three self-reported parameters: (1) making end meet, (2) perception of income shock and (3) perception of expenditure shock. Subsequently, the impact of various behavioural and socioeconomic factors on the proposed financial vulnerability index has been assessed using fractional probit regression.

The research findings indicate that higher financial knowledge, better money management skills and lower impulsivity in financial behaviour can reduce financial vulnerability. It is suggested that suitable financial literacy programmes be implemented for vulnerable sections of society to enhance their financial knowledge, improve money management skills and manage impulsivity, thereby helping them make informed financial decisions leading to their financial well-being.

To the best of the authors’ knowledge, none of the past studies have developed and assessed the financial vulnerability index in India. This study provides relevant recommendations for various financial sector regulators and government institutions in India.

The present study examines the potential relationship between financial capability and household financial vulnerability for a sample of Spanish individuals.

The methodology combines a literature review deepening on the two concepts addressed in this paper – financial vulnerability and financial capability – and an empirical analysis. Based on a sample of 7,811 Spanish individuals taken from the Survey of Financial Competences, different probit regression models are used to test the relationship of key independent variables (namely, financial literacy, financial inclusion, and financial capability) with household financial vulnerability.

Empirical evidence points to the existence of a negative relationship between financial capability and household financial vulnerability. Besides, the variable on financial capability demonstrates, per se, a greater explanatory power than its two components (i.e. objective financial literacy and financial inclusion) separately, particularly in the case of financial literacy.

This paper contributes to the research on household finances along three main dimensions. Firstly, it enhances the research on financial capability by analysing how it relates to consumers' financial vulnerability; an association barely explored by the extant literature. Secondly, it gets closer to the multifaceted concept of financial vulnerability through a wide set of objective and subjective proxy variables. And thirdly, the empirical evidence found leads to proposing some recommendations aimed at improving households' financial capability.

With the global financial crisis, the United Arab Emirates (UAE) experienced its own unraveling of macro-financial imbalances and thus presents an interesting case to analyze the underlying fragilities in federal governments. The purpose of this paper is to investigate the evolution of fiscal policy in the UAE at consolidated and subnational levels in the run-up and after the crisis, and provide pertinent insights about the importance of policy coordination in other federal fiscal systems – and monetary unions, as brought to light by the recent developments in Europe.

In measuring the cyclicality of fiscal balances at the consolidated and emirate level in the UAE, this paper uses the non-hydrocarbon primary budget balance, excluding interest spending and hydrocarbon revenues, investment income of the sovereign wealth fund, scaled by non-hydrocarbon GDP. The cyclically adjusted primary balance is estimated by deducting cyclical components from the actual balance. It is important to correct for cyclical changes because the budget balance tends to vary endogenously according the state of the economy – deteriorating during a bust and improving in a boom. Furthermore, since hydrocarbon revenues are dependent on the erratic behavior of hydrocarbon prices, the cyclically adjusted non-hydrocarbon primary balance is computed, using the elasticity of non-hydrocarbon revenues and primary expenditures relative to non-hydrocarbon GDP, to assess whether fiscal policy exacerbates economic fluctuations in the UAE at the aggregate and emirate levels.

The empirical findings show that procyclical fiscal policies prior to the crisis reinforced the financial sector cycle, exacerbated the economic upswing, and thereby contributed to the build-up of macro-financial vulnerabilities. The paper also sets out policy lessons to develop a rule-based fiscal framework that would help strengthen fiscal policy coordination between the various layers of government and ensure long-term fiscal sustainability and a more equitable intergenerational distribution of wealth.

The lack of fiscal policy coordination among subnational governments complicates macro-economic management at the federal level. Since the UAE has a pegged exchange rate regime and consequently a limited scope to use monetary policy, the burden of macro-economic stabilization falls on fiscal policy. Accordingly, this paper shows that procyclical fiscal policies prior to the crisis reinforced the “financial accelerator” effect, exacerbated the economic cycle, and thereby contributed to the build-up of economic and financial vulnerabilities in the UAE.

This study focuses on how young adults face the COVID-19 pandemic by investigating their personal concerns about mental well-being, career/studies and economic situation. The authors investigated how young adults' (aged 18–29) personal concerns differ from older people's concerns (aged 30–65) and which person- and context-related antecedents relate to personal concerns.

Data of Finnish young adults aged 18–29 (n = 222), who participated in the “Corona Consumers” survey (N = 1,000) in April 2020, were analyzed by path analysis and compared to participants aged 30–65 by independent samples t-test.

Young adults were significantly more concerned about the effects of the COVID-19 pandemic on their mental well-being, career/studies and economic situation than older people. Females were more concerned about their mental well-being than males. Among youth, lower life satisfaction was related to concerns about mental well-being, and lower satisfaction with financial situation was related to concerns about career/studies and economic situation. Young adults' predisposition to avoid difficult situations was related to more frequent concerns in all domains, whereas generalized trust and education were not.

Due to cross-sectional data, causal COVID-19 interpretations should be made cautiously.

Strong youth policies are needed for youth empowerment, mental health and career advancement in the pandemic aftermath.

The study highlights the inequality of the effects of COVID-19: The pandemic has radically influenced young adults as they exhibit significant personal concerns in age-related life domains.

The context conditions for third sector organizations (TSOs) in Europe have significantly changed as a result of the global economic crisis, including decreasing levels of public funding and changing modes of relations with the state. The effect of economic recession, however, varies across Europe. The purpose of this paper is to understand why this is the case. It analyses the impact of economic recession and related policy changes on third sector development in Europe. The economic effects on TSOs are thereby placed into a broader context of changing third sector policies and welfare state restructuring.

The paper focusses on two research questions: how has the changing policy environment affected the development of the third sector? And what kind of strategies have TSOs adopted to respond to these changes? The paper first investigates general trends in Europe, based on a conceptual model that focusses on economic recession and austerity policies with regard to the third sector. In a second step of analysis, the paper provides five country case studies that exemplify policy changes and responses from the third sector in France, Germany, the Netherlands, Poland and Spain.

The paper argues that three different development paths can be identified across Europe. In some countries (France and Spain), TSOs face a strong effect of economic recession. In other countries (Germany and Poland) the development of the third sector remains largely stable, albeit at different levels, whereas in the Netherlands, TSOs rather experience changes in the policy environment than a direct impact of economic decline. The paper also shows that response strategies of the third sector in Europe depend on the context conditions. The paper is based on the European project “Third Sector Impact.” It combines an analysis of statistical information with qualitative data from interviews with third sector representatives.

The paper contributes to our understanding of the interrelation between economic recession, long-term policy changes and third sector development in Europe.

The purpose of this paper is to investigate the information content of the variables that can help detecting external and internal imbalances in an early stage. The starting point is the Scoreboard, where nine indicators are chosen in order to increase macroeconomic surveillance of all member states.

This paper provides an overview of the variables that could be informative for imbalances by focusing on EU-27 countries over the period 1960-2010. The number of chosen variables is 28, and they are aggregated in six macro-areas. Therefore, once an imbalance is observed in any of those areas, it is possible to detect in a simple way which specific variable is determining such outcome.

In general, this approach provides reliable signal to the policy-makers about the indicators that can drive imbalances within the area, shedding light on the relationship among the variables included in the analysis, too.

In fact, the empirical results underline some well-known critical issue for several countries, and is largely in line with results obtained in a variety of EC and OECD studies.

The main added value of the approach adopted in this paper is the introduction of more variables than those initially proposed by the European Commission in the construction of the Scoreboard. This provides more information about the macroeconomic situation in each country, preserving, however, the simplicity of the analysis as the variables are aggregated by homogeneous areas.

This study aims at establishing a linkage between IFRS adoption and environmental pollution in Africa. More so, the role of institution was emphasized as a possible ameliorator of environmental pollution in the face of IFRS adoption.

The empirical model builds on the traditional EKC hypothesis, by including IFRS adoption variable and an interaction term (which captures the multiplicative between IFRS adoption and institutions). Data was gathered for 47 African countries for the period 2001–2013. The SGMM technique was used in the estimation process.

The robust estimation reveals that a positive and significant linkage exist between IFRS adoption and environmental pollution. The interactive variable also shows that the effect of IFRS on the environment will reduce when institutions quality (in the form of bureaucratic corruption) is addressed.

The linkage between IFRS and the environment has not received empirical attention. This is partly due to the fact that accounting phenomenon is rarely linked to macroeconomic outcomes. However, there is a rising interest in the role of accounting institutions on economic outcomes and this study contributes sufficiently to this budding body of knowledge.

This chapter aims to discuss the challenges facing these countries building productive capacity for development. This chapter makes use of data published by international organizations as indicators for measuring the state of development in the Arab region. Several indicators are presented to compare Arab countries with other world regions. The use of data identifies some of the gaps that countries in the Arab region need to close to strengthen capacity building for development and fostering economic growth. The findings from the data presented reveal that the productive structure in most Arab countries remains weak to generate production linkages and provide incentives for investment in nonenergy sectors. The failure of the export-led growth model to diversify output and promote development in energy producing countries has increased the dependence of these countries on global trade. Fluctuations in commodity prices and uncertainty about global demand for energy have influenced the ability of the state to construct strategies for rapid transformation. Except for the energy sector, the productivity of nonoil sectors remains low reflecting inadequate incentives and ineffective entrepreneurial capabilities. The study examines the challenges for building productive capacity in the Arab world. It illustrates the failure of the led-export model and its inability to prompted economic diversification, especially in the Gulf countries. The study contributes to the literature on capacity building in the Arab world so that to encourage researchers and students of development conducting studies concerning the main development challenges facing these countries.