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Article
Publication date: 1 February 2015

Hassen Chtourou

The objective of this paper is to determine the effects of the European debt crisis on the European government bonds.

Abstract

Purpose

The objective of this paper is to determine the effects of the European debt crisis on the European government bonds.

Design/methodology/approach

In this paper, we present the European government bond; we explain the European debt crisis; and we examine the evolution of the European debt.

Findings

Our results suggest that the increase of the European debt contributed to the increase of the risk and the default of the European debt and to the depreciation of the economies of the European countries.

Originality/value

We calculate the value of the European debt risks in normal cases and in the case of crisis with normal distribution.

Details

Journal of Centrum Cathedra: The Business and Economics Research Journal, vol. 8 no. 2
Type: Research Article
ISSN: 1851-6599

Keywords

Article
Publication date: 3 June 2022

Christine Clarke, Patrice Whitely and Travis Reid

This study aims to explore the sustainability of Jamaica’s public debt over a highly volatile period of time.

Abstract

Purpose

This study aims to explore the sustainability of Jamaica’s public debt over a highly volatile period of time.

Design/methodology/approach

The authors use a suite of econometric tools, including, unit root testing, cointegration testing and estimating a fiscal reaction function. The authors control for structural breaks in the regression analysis.

Findings

The authors find that whilst reschedulings might be indicative of cash-flow problems in Jamaica, fiscal policy has responded effectively to increase the public debt, thereby making the debt sustainable. Notwithstanding the political economy and social demands of the population prior to the impact of the pandemic, the implications of higher debt stocks (higher debt-servicing and lower social expenditures) might make this approach to fiscal policy and debt management infeasible. As a result, the authors recommend that the government will need to take an active approach in managing its debt position to facilitate responses to shocks and provide conditions within which maintaining fiscal discipline is feasible.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore fiscal sustainability in Jamaica over this time period whilst taking into consideration structural breaks caused by the global financial crisis and debt restructurings. The authors also take into consideration variables such as exchange rates and the occurrence of elections, which have not been included in previous studies.

Details

International Journal of Development Issues, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1446-8956

Keywords

Book part
Publication date: 18 January 2022

Ron P. Smith

This chapter examines the effect of changes in the public debt–gross domestic product (GDP) ratio on long, 10 year, interest rates in a panel of 17 countries over the…

Abstract

This chapter examines the effect of changes in the public debt–gross domestic product (GDP) ratio on long, 10 year, interest rates in a panel of 17 countries over the period 1870–2016 controlling for other variables, in particular the world interest rate. Over this long period, one can argue that most of the big changes in public debt were the product of factors largely exogenous to national interest rate determination, such as war, depression or financial crisis. The issue is of current relevance since the Covid-19 pandemic has caused large increases in the ratio of public debt to GDP in many countries. The estimates suggest that it is the change in debt, rather than the level of debt or the deficit that matters for long interest rates. World interest rates have long- and short-run effects on interest rates which are very well determined and close to one. Current inflation has a small but significant effect.

Details

Essays in Honor of M. Hashem Pesaran: Prediction and Macro Modeling
Type: Book
ISBN: 978-1-80262-062-7

Keywords

Book part
Publication date: 23 October 2017

Julius Horvath and Alfredo Hernandez Sanchez

In the domestic credit market creditor and debtor rights are clearly defined. In contrast, sovereign debt repayment is largely contingent on the debtor government’s…

Abstract

In the domestic credit market creditor and debtor rights are clearly defined. In contrast, sovereign debt repayment is largely contingent on the debtor government’s willingness to repay as enforcement of contracts at the international level is limited. In this chapter we explore different sources of sovereign debt crises as opportunistic and myopic behavior by debtor nations, over-consumption of imported goods, credit temptation by lenders eager to allocate savings surpluses, and unexpected consequences of initially seen appropriate policies. We explore how these factors have played out in the Euro-debt crisis and outline a framework for creditor responsibility to complement debtor self-restraint.

Details

Economic Imbalances and Institutional Changes to the Euro and the European Union
Type: Book
ISBN: 978-1-78714-510-8

Keywords

Book part
Publication date: 8 November 2019

Ludmila Stefanovich

This chapter is devoted to the issue of ensuring financial stability in the state. The main goal of the research is to determine the role and policy of the National…

Abstract

This chapter is devoted to the issue of ensuring financial stability in the state. The main goal of the research is to determine the role and policy of the National (Central) Bank, which was called up, together with the Government, to ensure financial stability in the Republic of Belarus. The actions of the National Bank for the implementation of monetary policy, macroprudential regulation, and supervision are reviewed. It is noted that the regulation and supervision of banks, nonbank credit and financial organizations, the payment system, the sector of other financial intermediaries (leasing activities, microfinance activities, activities of forex companies) is carried out by the National Bank of the Republic of Belarus. The main practical actions of the Government and the National Bank aimed at maintaining and ensuring financial stability is highlighted: monitoring of financial stability (goals, tasks, objects, monitoring directions are defined); creation of the Financial Stability Board (goals, objectives, representation, personal responsibility); disclosure of information on financial stability is carried out on an ongoing basis – the publication of the analytical review “Financial Stability in the Republic of Belarus.” The research provided a summary of the state of the country's financial sector and presented the achievements of the National Bank and state institutions for ensuring financial stability. The main problems affecting financial stability are highlighted: insufficient efficiency of the activities of large enterprises of the real sector of the economy; high levels of credit risk in banks; high dollarization of bank balance sheets. The directions of development of the financial market of the Republic of Belarus, contributing to ensuring financial stability are presented.

Book part
Publication date: 19 February 2020

Nesrine Bentemessek Kahia

By the beginning of the nineteenth century, British public debt, accumulated over the eighteenth century and during the Revolutionary and Napoleonic Wars (1793–1815), had…

Abstract

By the beginning of the nineteenth century, British public debt, accumulated over the eighteenth century and during the Revolutionary and Napoleonic Wars (1793–1815), had attained extremely high levels, at times even reaching 200% of the gross national product (GNP). This increase in debt paradoxically coexisted with the early progression of the industrial revolution.

In this chapter, we explain this concomitance by the effective policies of sovereign debt management put in place by the State and the Bank of England (BoE). First, the State put in place measures to lower its risk of default by funding its debt with tax revenue that would allow it to honour due payments. Second, following the suspension in 1797 of cash payments for pounds sterling, the BoE, in addition to its role in financing the State, followed an active policy of sovereign debt management, promoting both bank liquidity and market liquidity.

Details

Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought
Type: Book
ISBN: 978-1-83867-699-5

Keywords

Open Access
Article
Publication date: 14 March 2022

Kalu O. Emenike

The importance of sovereign bond as a source of financing revenue deficit, benchmarking for corporate bonds and debt management in Africa, calls for continual monitoring…

Abstract

The importance of sovereign bond as a source of financing revenue deficit, benchmarking for corporate bonds and debt management in Africa, calls for continual monitoring of its volatility dynamics. This study evaluates the nature of sovereign bond volatility interaction between African countries using bivariate BEKK-GARCH (1, 1) model. Based on a sample of eight African countries, the results show evidence of unidirectional volatility spillover from Morocco sovereign bond to Egypt sovereign bond. Next, the results show absence of volatility interaction between Ghana and Nigeria sovereign bonds. The results further show the existence of bidirectional volatility transmission between Uganda and Kenya. Finally, the results indicate evidence of bidirectional volatility interaction between Botswana and South Africa. Overall, the results show existence of full interaction between Uganda–Kenya and Botswana–South Africa sovereign bond returns, partial interaction between Egypt and Morocco sovereign bond returns and no interaction between Ghana and Nigeria sovereign bonds markets. Thus, these results provide valuable implications for sovereign and corporate credit risk management, as well as strategy for monitoring and minimising negative effect of sovereign bond volatility spillover in Africa.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1229-988X

Keywords

Open Access
Article
Publication date: 23 November 2021

Wilkista Lore Obiero and Seher Gülşah Topuz

This study aims to determine whether there is an effect of internal and public debt on income inequality in Kenya for the period 1970–2018.

1035

Abstract

Purpose

This study aims to determine whether there is an effect of internal and public debt on income inequality in Kenya for the period 1970–2018.

Design/methodology/approach

The relationship is examined by using the Autoregressive Distributed Lag (ARDL) model by Pesaran et al. (2001) and Toda Yamamoto causality by Toda and Yamamoto (1995).

Findings

Our findings suggest that both internal and public debt harm inequality in Kenya in the long term. Furthermore, a one-way causality from internal debt to income inequality is also obtained while no causality relationship is found to exist between public debt and income inequality. Based on these findings, the study recommends that to reduce income inequality levels in Kenya, other methods of financing other than debt financing should be preferred because debt financing is not pro-poor.

Originality/value

This study is unique based on the fact that no previous paper has analysed the debt and inequality relationship in Kenya. To the best of our knowledge, this will be the first study to analyse the applicability of redistribution effect of debt in Kenya. The study is also different in that it provides separate analysis for public debt and internal debt on their effects on income inequality.

Details

Journal of Economics, Finance and Administrative Science, vol. 27 no. 53
Type: Research Article
ISSN: 2218-0648

Keywords

Article
Publication date: 11 January 2021

Eda Orhun

This paper aims to investigate the impact of the coronavirus (COVID-19) on major stock markets. Specifically, an event study analysis is executed to estimate the abnormal…

Abstract

Purpose

This paper aims to investigate the impact of the coronavirus (COVID-19) on major stock markets. Specifically, an event study analysis is executed to estimate the abnormal returns of selected stock indices from 15 countries to key events concerning the global pandemic.

Design/methodology/approach

Specifically, an event study analysis is executed to estimate the abnormal returns of selected stock indices from 15 countries to key events concerning the global pandemic. The study continues with a regression analysis that looks into cross-country variation of estimated abnormal returns by using country-specific characteristics as predictors.

Findings

The results indicate that stock markets of countries that have larger foreign direct investment exposure to China, higher democracy index, a higher number of confirmed COVID-19 cases and that accept a higher percentage of Chinese tourists are more prone to getting negatively affected by such a global health crisis. On the other hand, stock markets of countries with higher health expenditure, a higher level of preparedness for pandemics and higher gross domestic product per capita are likely to have less negative abnormal returns.

Originality/value

It is one of the first studies that focuses on determining the country-specific characteristics that influence the reaction of financial markets to a global health crisis that the world is experiencing today with the COVID-19 infectious disease. Investigating cross-country effects is very relevant and important today because countries and their relevant policymakers can take lessons and get better prepared for future pandemics only by recognizing the relevant points that are underlying and shape the response of the country’s economy to such a global health crisis.

Details

Pacific Accounting Review, vol. 33 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 30 November 2020

Natalia V. Trusova, Inna Ye. Yakusheva, Yuliia M. Zavoloka, Alina H. Yefremenko, Yuliia A. Malashenko and Maryna V. Sidnenko

The article deals with the imperatives of functioning of the financial market of Ukraine in the global space of debt loading.

Abstract

Purpose

The article deals with the imperatives of functioning of the financial market of Ukraine in the global space of debt loading.

Design/methodology/approach

Within the Laffer debt curve model, the dependence of gross domestic product (GDP) change on the level of debt of the financial system for countries that form the economic core in the global financial space and well control the level of the indicator, as well as new member states that have a different level of secure debt loading and affect the portion of the financial market that forms a portfolio of securities to cover the cost of nonperforming government securities is mentioned.

Findings

It has been shown that stock indices, as constituent indicators of changes in the price environment of a certain group of securities in time space, allow to estimate the general direction of the market movement even when prices within the index basket change in different directions.

Originality/value

The dynamics of changing the debt loading of the financial system of Ukraine in the current, medium-term perspective is analyzed. The amount of the fixed and floating rate debt of the government internal securities is determined to ensure the diversification of interest rate risk. Using the parameters of the model of approximation functions of dimensionless quantities, the corridor of a safe level of general government debt in the country was determined.

Details

Journal of Economic Studies, vol. 48 no. 8
Type: Research Article
ISSN: 0144-3585

Keywords

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