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The purpose of the paper is to study the relevance of macroprudential policies (MPPs) in influencing bank lending in small open economies with dual banking systems.
Abstract
Purpose
The purpose of the paper is to study the relevance of macroprudential policies (MPPs) in influencing bank lending in small open economies with dual banking systems.
Design/methodology/approach
In the analysis, the author employed the dynamic panel data methodology as compared to alternate techniques since it is able to address potential endogeneity challenges.
Findings
Using quarterly data from the period 2002–2020, the author finds that MPPs are highly effective in containing the growth of public credit, whereas its impact on private credit is much less effective. The disaggregated findings reveal that macroprudential measures are less effective in containing the growth of private credit by Islamic banks.
Originality/value
The majority of studies on MPPs are focused on emerging and advanced economies, limiting their policy appeal from the standpoint of small open economies. In this connection, this paper contributes to the literature on the relevance of such policies for a small open economy with a dual banking system and significant hydrocarbon exports. The paper's analysis therefore holds relevance for similar economies, both in the region and elsewhere, on the role and relevance of MPPs with emphasis on Islamic banks.
Thembeka Sibahle Ngcobo, Lindokuhle Talent Zungu and Nomusa Yolanda Nkomo
This study aims to test the dynamic impact of public debt and economic growth on newly democratized African countries (South Africa and Namibia) and compare the findings with…
Abstract
Purpose
This study aims to test the dynamic impact of public debt and economic growth on newly democratized African countries (South Africa and Namibia) and compare the findings with those of newly democratized European countries (Germany and Ukraine) during the period 1990–2022.
Design/methodology/approach
The methodology involves three stages: identifying the appropriate transition variable, assessing the linearity between public debt and economic growth and selecting the order m of the transition function. The linearity test helps identify the nature of relationships between public debt and economic growth. The wild cluster bootstrap-Lagrange Multiplier test is used to evaluate the model’s appropriateness. All these tests would be executed using the Lagrange Multiplier type of test.
Findings
The results signify the policy switch, as the authors find that the relationship between public debt and economic growth is characterized by two transitions that symbolize that the current stage of the relationship is beyond the U-shape; however, an S-shape. The results show that for newly democratized African countries, the threshold during the first waves was 50% of GDP, represented by a U-shape, which then transits to an inverted U-shape with a threshold of 65% of GDP. Then, for the European case, it was 60% of GDP, which is now 72% of GDP.
Originality/value
The findings suggest that an escalating level of public debt has a negative impact on economic growth; therefore, it is important to implement fiscal discipline, prioritize government spending and reduce reliance on debt financing. This can be achieved by focusing on revenue generation, implementing effective taxation policies, reducing wasteful expenditures and promoting investment and productivity-enhancing measures.
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Keywords
Łukasz Kurowski and Paweł Smaga
Financial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies…
Abstract
Purpose
Financial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies remains unclear. In this study, the “soft” approach to such policy mix was tested – how often monetary policy (in inflation reports) analyses financial stability issues. This paper aims to discuss the aforementioned objective.
Design/methodology/approach
A total of 648 inflation reports published by 11 central banks from post-communist countries in 1998-2019 were reviewed using a text-mining method.
Findings
Results show that financial stability topics (mainly cyclical aspects of systemic risk) on average account for only 2%of inflation reports’ content. Although this share has grown somewhat since the global financial crisis (in CZ, HU and PL), it still remains at a low level. Thus, not enough evidence was found on the use of a “soft” policy mix in post-communist countries.
Practical implications
Given the strong interactions between price and financial stability, this paper emphasizes the need to increase the attention of monetary policymakers to financial stability issues.
Originality/value
The study combines two research areas, i.e. monetary policy and modern text mining techniques on a sample of post-communist countries, something which to the best of the authors’ knowledge has not been sufficiently explored in the literature before.
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Keywords
Abdelkader Derbali, Lamia Jamel, Monia Ben Ltaifa, Ahmed K. Elnagar and Ali Lamouchi
This paper provides an important perspective to the predictive capacity of Fed and European Central Bank (ECB) meeting dates and production announcements for the dynamic…
Abstract
Purpose
This paper provides an important perspective to the predictive capacity of Fed and European Central Bank (ECB) meeting dates and production announcements for the dynamic conditional correlation (DCC) between Bitcoin and energy commodities returns and volatilities during the period from August 11, 2015 to March 31, 2018.
Design/methodology/approach
To assess empirically the unanticipated component of the US and ECB monetary policy, the authors pursue the Kuttner's approach and use the federal funds futures and the ECB funds futures to assess the surprise component. The authors use the approach of DCC as introduced by Engle (2002) during the period from August 11, 2015 to March 31, 2018.
Findings
The authors’ results suggest strong significant DCCs between Bitcoin and energy commodity markets if monetary policy surprises are incorporated in variance. These results confirmed the financialization of Bitcoin and commodity energy markets. Finally, the DCC between Bitcoin and energy commodity markets appears to respond considerably more in the case of Fed surprises than ECB surprises.
Originality/value
This study is a crucial topic for policymakers and portfolio risk managers.
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Salwa Abdelaziz and Mariam Wagdy Francis
This study aims to analyze the impact of cooperation between banking supervisory entities on maintaining financial stability, using Single Supervisory Mechanism evolution and…
Abstract
Purpose
This study aims to analyze the impact of cooperation between banking supervisory entities on maintaining financial stability, using Single Supervisory Mechanism evolution and performance as instance. Then banking supervisory cooperation and financial stability in Egypt are reviewed.
Design/methodology/approach
The qualitative method is used to study and analyze the practices that contributed to financial instability and raised the need for supervisory cooperation. Descriptive qualitative method is used to study the interrelations between supervisory authorities on various levels and its impact on financial stability.
Findings
Findings show that maintaining financial stability through strong, consistent complete or semi unified supervisory framework faces challenges. Providing cooperation between different supervisory authorities, effective information sharing, gained experience in the long run contributes to financial stability.
Originality/value
The originality of this research paper arises from the fact that it encompasses the academic aspect through interpreting the developments that occurred to the cooperation in banking supervision in relation to the financial instability times in the Eurozone that led to the establishment of Single Supervisory mechanism, and the challenges it faced. The supervisory cooperation in Egypt is studied as well at international, regional levels and its role in contributing to financial stability. To the best of the authors' knowledge this is the first study that studies the banking supervisory cooperation between Egyptian supervisory authorities and other international and regional authorities.
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