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1 – 10 of over 4000Needs change as people get older. Procuring resources to satisfy them can generate anguish and insecurities in consumers due to their financial situation. This study aims to…
Abstract
Purpose
Needs change as people get older. Procuring resources to satisfy them can generate anguish and insecurities in consumers due to their financial situation. This study aims to analyze the relationship between age and financial stress among Mexican adults and estimate the age of their maximum financial stress.
Design/methodology/approach
This study is based on constructing a financial stress indicator using the confirmatory factor analysis and linear regression models with a quadratic term, employing data from the National Survey on Financial Inclusion 2021.
Findings
Results show that the relationship between age and financial stress follows a quadratic pattern, with a maximum level at age 56, which varies according to sex, marital status, number of dependents, education and regions. These findings interest financial product designers and policy developers who aim to improve consumers' well-being.
Research limitations/implications
Longitudinal studies and indicators, such as financial fragility, are needed to facilitate refining models over time.
Originality/value
There is no evidence of studies that have addressed the age of maximum financial stress in Latin America. Doing so is relevant because identifying the stages in life when adults are most vulnerable to financial stress helps assess its causes more precisely, thus mitigating its adverse effects.
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“Poor, Stressed, Drink (alcohol), and Gambling” is one of the campaigns for poverty eradication in Thailand. This study focuses on informal workers—gamblers—who belong to…
Abstract
Purpose
“Poor, Stressed, Drink (alcohol), and Gambling” is one of the campaigns for poverty eradication in Thailand. This study focuses on informal workers—gamblers—who belong to low-income groups and are not covered by the law as an employer. The main objective was to investigate the factors affecting financial stress among informal laborers and determine the factors that drive informal workers to buy lottery tickets (classified by economic, psychological and social motives).
Design/methodology/approach
The authors applied binary logistic regression to determine what factors affected financial stress and multinomial logistic regression was applied to examine the factors affecting the motives for buying the lottery.
Findings
According to the study's results, factors including education, income, gambling intensity, level of financial literacy, saving and knowledge about finance in general influenced both economic and psychological motives negatively. However, gender, status, age, level of risk tolerance, self-evaluated level of acceptable risk and knowledge about compound interest influenced both economic motives and psychological motives positively. It is worth noting that both the self-evaluation of their level of financial literacy and knowledge about inflation resulted in effects moving in different directions, with self-evaluation of their level of financial literacy and knowledge about inflation negatively affecting economic motives, but positively affecting psychological motives.
Practical implications
The results of this study are expected to help policymakers understand more about this issue since it will illustrate the relationships between financial stress and financial literacy, financial behaviors, financial attitudes and risk tolerance and gambling behaviors. After all, financial stress is a significant problem affecting individuals, their families and the community, and it stems from various complex factors. Therefore, the government and counseling agencies should apply active strategies to mitigate these issues and lessen the resulting financial stress by providing financial literacy projects, as well as financial counseling.
Social implications
Low financial literacy, especially being inefficient at managing one's finances, unusually comes with unhealthy financial thought patterns, as well as a lack of systematic financial management. Furthermore, the lack of financial literacy can potentially lead to unfavorable circumstances. When one falls into uncontrollable situations, including divorce, becoming unemployed, having health problems, being in toxic relationships, loss of a breadwinner, an unexpected pregnancy, etcetera, they could easily find themselves failing to properly cope with these problems and become stressed. Finally, they are also more at risk to take illicit drugs or begin gambling more frequently.
Originality/value
One of the key elements that reduces financial stress is a person's finances, which is thought to have a significant role in reducing their betting behaviors. The findings of this study can be used to guide policy making intended to deter those who have never gambled from starting. Gambling is considered a risk-taking activity with a higher value reward in return. Money, enjoyment, socialization and excitement were all popular motives for gambling. These findings were consistent with what has been observed in Thai society related to the factors influencing individual to gamble, in other words, economic, psychological and social motives. The study focused on gamblers who were informal laborers. They are laborers without an employer according to the Thai labor law, do not have any social security from the government and, usually, have low incomes.
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Oguzhan Ozcelebi, Jose Perez-Montiel and Carles Manera
Might the impact of the financial stress on exchange markets be asymmetric and exposed to regime changes? Departing from the existing literature, highlighting that the domestic…
Abstract
Purpose
Might the impact of the financial stress on exchange markets be asymmetric and exposed to regime changes? Departing from the existing literature, highlighting that the domestic and foreign financial stress in terms of money market have substantial effects on exchange market, this paper aims to investigate the impacts of the bond yield spreads of three emerging countries (Mexico, Russia, and South Korea) on their exchange market pressure indices using monthly observations for the period 2010:01–2019:12. Additionally, the paper analyses the impact of bond yield spread of the US on the exchange market pressure indices of the three mentioned emerging countries. The authors hypothesized whether the negative and positive changes in the bond yield spreads have varying effects on exchange market pressure indices.
Design/methodology/approach
To address the research question, we measure the bond yield spread of the selected countries by using the interest rate spread between 10-year and 3-month treasury bills. At the same time, the exchange market pressure index is proxied by the index introduced by Desai et al. (2017). We base the empirical analysis on nonlinear vector autoregression (VAR) models and an asymmetric quantile-based approach.
Findings
The results of the impulse response functions indicate that increases/decreases in the bond yield spreads of Mexico, Russia and South Korea raise/lower their exchange market pressure, and the effects of shocks in the bond yield spreads of the US also lead to depreciation/appreciation pressures in the local currencies of the emerging countries. The quantile connectedness analysis, which allows for the role of regimes, reveals that the weights of the domestic and foreign bond yield spread in explaining variations of exchange market pressure indices are higher when exchange market pressure indices are not in a normal regime, indicating the role of extreme development conditions in the exchange market. The quantile regression model underlines that an increase in the domestic bond yield spread leads to a rise in its exchange market pressure index during all exchange market pressure periods in Mexico, and the relevant effects are valid during periods of high exchange market pressure in Russia. Our results also show that Russia differs from Mexico and South Korea in terms of the factors influencing the demand for domestic currency, and we have demonstrated the role of domestic macroeconomic and financial conditions in surpassing the effects of US financial stress. More specifically, the impacts of the domestic and foreign financial stress vary across regimes and are asymmetric.
Originality/value
This study enriches the literature on factors affecting the exchange market pressure of emerging countries. The results have significant economic implications for policymakers, indicating that the exchange market pressure index may trigger a financial crisis and economic recession.
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Taicir Mezghani, Mouna Boujelbène and Souha Boutouria
This paper investigates the predictive impact of Financial Stress on hedging between the oil market and the GCC stock and bond markets from January 1, 2007, to December 31, 2020…
Abstract
Purpose
This paper investigates the predictive impact of Financial Stress on hedging between the oil market and the GCC stock and bond markets from January 1, 2007, to December 31, 2020. The authors also compare the hedging performance of in-sample and out-of-sample analyses.
Design/methodology/approach
For the modeling purpose, the authors combine the GARCH-BEKK model with the machine learning approach to predict the transmission of shocks between the financial markets and the oil market. The authors also examine the hedging performance in order to obtain well-diversified portfolios under both Financial Stress cases, using a One-Dimensional Convolutional Neural Network (1D-CNN) model.
Findings
According to the results, the in-sample analysis shows that investors can use oil to hedge stock markets under positive Financial Stress. In addition, the authors prove that oil hedging is ineffective in reducing market risks for bond markets. The out-of-sample results demonstrate the ability of hedging effectiveness to minimize portfolio risk during the recent pandemic in both Financial Stress cases. Interestingly, hedgers will have a more efficient hedging performance in the stock and oil market in the case of positive (negative) Financial Stress. The findings seem to be confirmed by the Diebold-Mariano test, suggesting that including the negative (positive) Financial Stress in the hedging strategy displays better out-of-sample performance than the in-sample model.
Originality/value
This study improves the understanding of the whole sample and positive (negative) Financial Stress estimates and forecasts of hedge effectiveness for both the out-of-sample and in-sample estimates. A portfolio strategy based on transmission shock prediction provides diversification benefits.
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The increased capital requirements and the implementation of new liquidity standards under Basel III sparked various concerns among researchers, academics and other stakeholders…
Abstract
Purpose
The increased capital requirements and the implementation of new liquidity standards under Basel III sparked various concerns among researchers, academics and other stakeholders. The question is whether Basel III regulation is ideal, that is, adequate to deal with a crisis, such as the 2007–2009 global financial crisis? The purpose of this paper is threefold: First, perform a stress testing exercise on the US banking sector, while examining liquidity and solvency risk indicators jointly under the Basel III regulatory framework. Second, allow the study to cover the post-crisis period, while referring to key Basel III regulatory requirements. And third, focus on the resilience of domestic systemically important banks (D-SIBs), which are supposed to support the US financial system in times of stress and therefore whose failure causes the entire financial system to fail.
Design/methodology/approach
The authors used a sample of the 24 largest US banks observed over the period Q1-2015 to Q1-2021 and a scenario-based vector autoregressive conditional forecasting approach.
Findings
The authors found that the model successfully produces accurate forecasts and simulates the responses of the solvency and liquidity indicators to different real and historical macroeconomic shocks. The authors also found that the US banking sector is resilient and can withstand both historical and hypothetical macroeconomic shocks because of its compliance with the Basel III capital and liquidity regulations, which consist of encouraging banks to hold high-quality liquid assets and stable funding resources and to strengthen their capital, which absorbs the losses incurred in a crisis.
Originality/value
The authors developed a framework for testing the resilience of the US banking sector under macroeconomic shocks, while examining liquidity and solvency risk indicators jointly under Basel III regulatory framework, a point not yet well studied elsewhere, and most studies on this subject are based on precrisis data. The authors also focused on the resilience of D-SIBs, whose failure causes the failure of the entire financial system, which previous studies have failed to examine.
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Dalano DaSouza, Kareem Martin, Peter Abraham Jr and Godson Davis
This paper aims to simulate the potential impact of increasing non-performing loans (NPLs) on capital adequacy, interest income and firm value of banks and credit unions in the…
Abstract
Purpose
This paper aims to simulate the potential impact of increasing non-performing loans (NPLs) on capital adequacy, interest income and firm value of banks and credit unions in the Eastern Caribbean Currency Union (ECCU) using stress tests.
Design/methodology/approach
A financial stress testing model was deployed at the levels of individual financial intermediary (FI), sectoral loan portfolio composition, individual member country, and the ECCU collectively, to investigate the impact of NPL shocks on FI stability.
Findings
The authors find that shocks impact the capital adequacy of banks less than that of credit unions, but that firm value of banks is more susceptible to increases in NPLs. Interest income responses to NPL shocks were linked to credit exposure from the tourism sector, which also reduced capital adequacy more than other economic sectors. Findings show that while the COVID-19 pandemic occasioned some increase in NPLs, the magnitude of impact was significantly mitigated by pro-stability policies including loan repayment moratoria and restructuring, guidance on the distribution of profits and deleveraging by financial institutions leading up to 2020.
Originality/value
The paper is among the first to use stress testing on the Caribbean in response to the COVID-19 pandemic. Past studies which have used stress test models in the region have not explicitly investigated the impact of credit shocks on risk-weighted assets or interest income as done herein, nor do they include credit unions in the modeling. The results offer novel evaluations as well as implications for FIs in other developing economies, especially those that share a comparable financial and economic architecture.
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Siti Nurhidayah Mohd Roslen, Mei-Shan Chua and Rafiatul Adlin Hj Mohd Ruslan
The purpose of this study is to empirically investigate the asymmetric effects of financial risk on Sukuk market development for a sample of Malaysian countries over the period of…
Abstract
Purpose
The purpose of this study is to empirically investigate the asymmetric effects of financial risk on Sukuk market development for a sample of Malaysian countries over the period of 2010–2021.
Design/methodology/approach
This study refers to the International Country Risk Guide (ICRG) in determining the financial risk factors to be studied in addition to the Malaysia financial stress index (FSI) to capture changes in financial risk level. The authors use the nonlinear autoregressive distributed lag (NARDL) model to tackle the nonlinear relationships between identified financial risk variables and Sukuk market development.
Findings
The results suggest the existence of a long-run relationship between foreign debt service stability, international liquidity stability (ILS), exchange rate stability (ERS) and financial stress level with the Sukuk market development in Malaysia. Indeed, higher ILS and ERS will boost Sukuk market size, whereas higher foreign debt services and financial stress are negatively related to Sukuk market development. Findings also indicate that the long-run positive and negative impacts of identified financial risk components on Sukuk market development are statistically different. Taking into account the role of the Sukuk market in facilitating Malaysia’s economic growth, the country should aim to keep the foreign debt-to-GDP ratio at a sustainable level.
Research limitations/implications
This study points to three possible directions for future research. The first is the differential impact of financial risk components on Sukuk issuance for different Sukuk structures. As more data becomes available in the future, this area could be further explored by conducting the above analysis for different combinations of Sukuk structures and currency denominations. In addition, future researchers could also consider exploring the variability of financial risk impacts through comparative studies of the leading Sukuk-issuing countries to account for differences in regulatory frameworks and supporting infrastructure.
Practical implications
This study provides valuable practical and policy implications for strengthening the growth of the Sukuk market. While benefiting from the diversification benefits of funding sources to finance private or government projects and developments, Malaysia should remain vigilant to global economic conditions, foreign exchange markets and financial stress levels, as all of these factors may significantly influence investor sentiment and the rate of return offered by Sukuk issuance.
Originality/value
The use of the NARDL approach, which investigates the long-run effects of financial risk factors on Sukuk market development in Malaysia, makes this study a valuable addition to the literature, as there has been little research into the asymmetric effects of those variables on Sukuk market development using samples from emerging Asian markets.
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Melanie Lindsay Straiton, Kamila Angelika Hynek and Alexander Nissen
Post-migration stress is an important aspect of refugees’ mental health, but little is known about the relationship with insomnia. The purpose of this study was to investigate the…
Abstract
Purpose
Post-migration stress is an important aspect of refugees’ mental health, but little is known about the relationship with insomnia. The purpose of this study was to investigate the assication between different post-migration stress factors and insomnia among Syrian refugees living in Norway.
Design/methodology/approach
The authors analysed survey data from the REFUGE study with 873 Syrian adults who resettled in Norway between 2015 and 2017. Potential participants were randomly selected from The Norwegian Population Register. Insomnia was measured using the Bergen Insomnia Scale. Perceived-discrimination, navigation difficulties, financial strain and loss of social status were measured via the refugee post-migration stress scale. The authors ran logistic regression analyses, controlling for socio-demographics, potentially traumatic experiences and symptoms of post-traumatic stress.
Findings
Overall, 59% (95% CI, 56%–62%) of the sample reported experiencing insomnia. In the fully-adjusted model, only financial strain and navigation difficulties were significantly associated with increased odds of insomnia. Loss of social status was also related to insomnia but only before adjusting for symptoms of post-traumatic stress.
Originality/value
Financial strain and navigation difficulties appear to be the most important post-migration stress factors in terms of insomnia among Syrian refugees living in Norway. Ameliorating these difficulties could potentially reduce insomnia among refugees. Since insomnia is a risk factor for the subsequent development of post-traumatic stress and depression, it is important to prevent or improve symptoms of insomnia among Syrian refugees, especially considering the high prevalence found in this study.
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Tehzeeb Sakina Amir and Rabia Sabri
Financial inclusion is more than just granting access to financial services; it involves fostering individuals’ overall financial health and prosperity. Financial inclusion has…
Abstract
Financial inclusion is more than just granting access to financial services; it involves fostering individuals’ overall financial health and prosperity. Financial inclusion has gained significant importance for policymakers and academia in the preceding two decades. It encourages individuals by extending ownership of their financial situation and empowering them to make well-informed decisions regarding their future. The literary work highlights the importance of financial inclusion in promoting prosperity and progress in society. Furthermore, the psychological effects of financial inclusion are addressed with an emphasis on reducing anxiety and stress associated with accessing necessary financial resources and increasing experiences of financial assurance and trust. Finally, the current condition of financial inclusion and ongoing initiatives to improve it is discussed with a regional focus on Asia. The idea of the empowered consumer is introduced, along with a discussion of how financial inclusion may enlighten customers, making them more knowledgeable and engaged members of the financial market. Finally, the conclusion presents a global perspective of underdeveloped nations, emphasizing the imperative requirement for financial integration in these places and the potential benefits it can provide. The chapter provides a comprehensive understanding of financial inclusion, its significance, and its psychological effects on people and their communities, particularly in Asia and developing nations.
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This paper aims to develop a compound measure, which is fiscal vulnerability index, provides early warning signals of fiscal sustainability problems for Türkiye's economy.
Abstract
Purpose
This paper aims to develop a compound measure, which is fiscal vulnerability index, provides early warning signals of fiscal sustainability problems for Türkiye's economy.
Design/methodology/approach
The index is constructed using twelve distinct fiscal indicators and applying the portfolio method, which considers the time-varying cross-correlation structure between the subindices.
Findings
Dynamics of the fiscal vulnerability index indicate that it accurately predicts to the well-known fiscal crisis occurring in Türkiye's recent history. As a result, such a compound measure should be used in the early identification of fiscal vulnerability in Türkiye.
Originality/value
The main contribution of this paper, relative to existing papers, is that a fiscal vulnerability index was constructed by employing the most contemporaneous method and evaluating its performance in terms of capturing historical stress periods.
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