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Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany.

Based on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy.

Finance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion.

The promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy.

The purpose of this paper is to examine the impact of real exchange rate misalignment on economy and economic sectors, namely construction, manufacturing and mining and quarrying in Malaysia.

The equilibrium real exchange rate and economic models are estimated using the autoregressive distributed lag approach.

An increase in productivity differential or reserve differential will lead to an appreciation of real exchange rate in the long run. An increase in positive (negative) real exchange rate misalignment will lead to an increase (decrease) in economy. An increase in long-run real exchange rate misalignment will lead to a decrease in economy. Real exchange rate misalignment or long-run real exchange rate misalignment can influence the manufacturing sector in Malaysia. More specifically, undervaluation will promote whereas overvaluation will hurt the manufacturing sector.

Real exchange rate misalignment can be a policy to influence economy but may not be the best choice.

Deepening supply-side structural reform is the main objective of the economic work since the Chinese economy entered a new stage of development. By adopting the fundamental principles and methodologies of Marxist political economy, the authors can provide clarifications on the three basic theoretical issues concerning the supply-side structural reform. The paper aims to discuss these issues.

First, the essential starting point for understanding the supply-side structural reform is the primacy of production, as well as the organic connection between production and consumption in social reproduction, rather than the supply and demand as superficially seen in exchanges. By identifying the right starting point, the authors can avoid alternating between demand and supply management, and between liberalism and interventionism.

Structural problems, which are closely related to the institutional structure of production and the purpose and nature of production, cannot be solely attributed to the imbalance caused by market failures. Chinese economy has suffered prolonged structural contradictions and structural problems.

To decide whether the financial and the real estate sectors are real economy or virtual economy, the key is to examine whether the monetary capital used in financial activities and real estate commodity (capital) go through the capital circulation process of from monetary capital to productive capital and further to commodity capital, and whether the capital gain is generated by the value appreciation of capital or the value transfer and distribution as a result of the transfer of ownership. With its emphasis on developing the real economy, the supply-side structural reform should foster both development of manufacturing, and parts of financial and real estate sectors that are the real economy.

How to realize social capital “exit from virtual to real” has become not only a hot issue that elicited economists' and the practice field's concern but also a key economic structure problem that the government has to solve urgently. The main purpose of this study is to explore effective methods for social capital to “exit from virtual to real”.

The study investigates the realization path of social capital's “exit from virtual to real” by using firm theory and data from the National Bureau of Statistics in China. Provincial panel data are also utilized to empirically test the impact of social capital's de-realization to virtual (or from virtual to real) on economic development and whether the path of social capital “from virtual to real” is valid.

This study analyzes the development status of social funds serving the real economy and the hazards of social funds' “exit from real to virtual,” which are mainly viewed as eroding the development of the real economy and causing operating difficulties. On the basis of firm theory, the internal motivation for why social funds flow to the real economy is explored from the perspectives of the needs of the real economy, price and profit. Moreover, this study designs a path for returning social capital to the real economy.

Overall, expanding aggregate demand while providing an effective supply and implementing a proactive fiscal policy that focuses on structural tax cuts while keeping margins in the virtual economy are appropriate for promoting the competitiveness of the real economy.

This study explores a topic, namely, social capital “exit from virtual to real,” that has received little attention. It provides an in-depth discussion of the following questions. (1) What is the current situation of social capital serving the real economy? (2) What kind of harm can social capital bring to society? What are the inherent barriers to the flow of social capital to the real economy? (3) At this stage, how can the effective transformation of social capital into the real economy be realized? The findings help in understanding the sustainable entrepreneurship concept, particularly in developing countries.

The basis of the present financial crisis, which is bound to continue inflicting its venom because of structural problems of society, economy, finance, and institutions, is the insatiable preferences of households and investors that fuel excessiveness in the real estate market. Then there is the contagion that this kind of preference has on the economy and the foreboding uncertain market expectations everywhere. Finally, the excessiveness is allowed to survive and proceed on with unrelenting animal spirit by weak government polices, outmoded understanding of the economic and financial world-system, being unable to simulate the otherwise complex system by a spent-out methodology.

This paper aims to describe, compare and analyze liquidity policies from the central bank of Indonesia, particularly reserve requirements, with respect to Islamic as well as conventional banks.

This paper provides some critical assessments on the policy applied by the central bank of Indonesia to both Islamic and conventional banks with regards to the reserve requirements applied in the Indonesian banking system. The analysis is based on whether both policies (Islamic and conventional) provide fairness to the banks as well as whether those policies support the real sector. In addition, the current global practice is also briefly described as a justification of the important and relevance of the current study.

The authors find that the policy imposed on the Islamic banks is designed to boost the real sector, compared to that of conventional banks. For the policy with respect to Islamic banks, it recognizes the banks which have been doing well in their main role as financial intermediaries and “punishes” them when they fail to do so. This policy could not be found in the context of conventional banks.

The authors argue that the current approach used for Islamic banks can also be adopted and imposed on conventional banks. This leads to a more stable financial system, since it supports the real sector.

This paper is the first to analyze central bank policies with respect to banks (Islamic as well as conventional banks) in relation to their role as financial intermediaries.

The purpose of this paper is to examine the effects of real estate market factors on foreign real estate investment (FREI).

Applying panel data technique, this paper uses related observations from 31 countries (inclusive of developed countries and emerging market economies) between 2000 and 2008 to investigate the relationships between real estate market factors and FREI.

Controlling for market size, infrastructure and political stability, the results for all countries indicate that lower financing costs and higher levels of transparency in real estate market attract greater amounts of FREI. Moreover, the paper finds that foreign real estate investors favor countries with higher property prices. Interestingly, when the paper splits the sample in developed countries and emerging market economies the paper finds that there are some differences in results in terms of determinants of FREI.

While FREI is a large component of service FDI, currently there are no analyses of FREI determinants across a broad set of countries over time. Therefore, the present study has filled this gap.

This paper aims to examine whether the release of news about policy interventions by the troika [European Union (EU)/the European Central Bank (ECB)/International Monetary Fund (IMF)] in the crisis-affected EU countries (Cyprus, Greece, Ireland, Italy, Portugal and Spain) and whether the policy responses of these countries’ governments had impacts on the return and risk of stocks in the financial and real-economy sectors of these countries.

The paper uses a broad set of news announcements concerning the troika authorities’ policy interventions and the policy responses of the affected Eurozone states’ governments. To test for the risk and return effects of these announcements during the crisis period, a set of regression equations is estimated under a difference-in-difference approach using intercept and slope dummy variables for news releases from troika authorities and from the national governments of the six EU countries. This enables unraveling the effects of the crisis (first difference) and the effects of news announcements (second difference).

The results indicate that the involvement of the troika managed to reverse some of the unfavourable market effects of the crisis. Moreover, the policy response of national governments was found to have stronger favourable effects in the markets of the affected countries implying that investors likely waited for the response of the national governments before they reacted to the policy actions of the troika. The simultaneous release of news from the troika and from national governments had adverse effects on the returns and risk of the firms in the real economy sectors, suggesting that cross-news announcements conveyed negative information in the markets.

The paper provides evidence on the effects of policy-related news announcements on the development of the recent sovereign debt crisis in Europe. This issue is highly important, as it can reveal the effectiveness of the IMF’s and EU authorities’ policy interventions in affected Eurozone member states during the first major crisis in Europe since the monetary union.