Search results

The authors investigate the impacts of international capital inflows on bank lending in the Association of Southeast Asian Nations-6 (ASEAN-6) countries on the dynamics of both bank loan volumes and credit risk-taking. The authors further explore the heterogenous impacts of different components of the foreign capital. As a robustness check, the authors also examine the role of crisis periods and agency problem on the relationship between international capital inflows and bank lending.

The authors explore the impacts of international capital inflows on bank lending in the ASEAN-6 countries, including Malaysia, Indonesia, Thailand, Philippines, Singapore and Vietnam. The authors employ quarterly data from 2005Q1 to 2021Q2 from 45 commercial banks in the ASEAN-6 countries. The article uses bank-fixed and time-fixed effects in the panel dataset to account for any unobserved heterogeneity.

The authors find that capital inflows to the ASEAN-6 countries are associated with higher bank loan growth and lower loan loss provisions to net interest income ratios. Moreover, the positive relationships between capital inflows to the bank loan growth and credit risk-taking are mainly driven by the dynamics in foreign direct investments (FDIs) and other inflow (OI) components. Contrary to the global financial crisis (GFC), the authors note that the mediating role of capital inflows on bank lending is of particular importance in the COVID-19 pandemic.

This study has some limitations that provide vendors for future research. First, while the authors focus on the impact of capital inflows on bank-level lending activities, future research can also explore the role of foreign capital on bank efficiency and financial stability. Second, although foreign capital fluctuates the most during crisis periods, the movement of capital inflows is also sensitive to other periods of heightened global uncertainty. Thus, rather than focus on the behavior of foreign capital during crisis periods, future research can examine and explore the impacts of capital inflows in different periods of “stop” and “surge” for sudden contraction and boom in capital inflows to the ASEAN-6 countries.

First, the authors provide a comprehensive analysis of international capital inflows' impact on bank lending in the ASEAN region on both bank loan volumes and credit risk-taking. Second, the authors provide evidence of the impact of different forms of foreign capital on the bank lending. Third, the authors investigate the heterogeneous impact of foreign capital on crisis periods and bank sizes, which the authors emphasize the unusual characteristics of the COVID-19 crisis compared with the GFC.

Tax evasion and money laundering have become important sources of illicit financial flows in developing countries. Foreign capital flows used by shell corporates are generally with no real economic activities but motivated by harmful tax practices, thereby inducing loss of revenue for developing countries. Despite the coercive actions, such as backlisting of noncooperative jurisdictions to anti-money laundering and countering terrorism financing standards, illicit financial activities are still eroding the tax base in developing countries. The purpose of the paper is to assess the blacklisting effectiveness as a coercive policy against illicit financial activities.

This paper applies a propensity score matching strategy to a sample of 118 developing jurisdictions from 2009 to 2017 to evaluate changes in illicit financial activities following the blacklisting.

The results show that rather than altering illicit inflows in blacklisted countries, financial restrictions have produced the inverse, causing a boomerang effect on financial crime activities. The illicit share of capital inflows increases on average by 6 percentage points and 0.7% of GDP following the blacklisting. These results are robust to alternative matching methods and to the hidden bias problem.

Most of the previous research analyzed the link between blacklisting and fiscal revenues. However, here, the study analyzes whether blacklisting makes countries more cooperative in terms of fighting illicit financial flows.

The study investigates the co-movements amongst real estate investments trust (REITs). This study examines the co-movements between the world and individual countries' REITs and the co-movements amongst country-pair REITs. This study explores the responsiveness of the REITs markets' co-movements to the 2008 global financial crisis (GFC), the coronavirus disease 2019 (COVID-19) pandemic and the Russian–Ukraine conflict.

The study employs a wavelet coherency technique and relies on data from six REITs markets over the 1995–2022 period.

The evidence shows a generally high level of coherency between the global and the country's REITs. The findings further indicate higher co-movements between some country pairs and a lower co-movement for others. The results suggest that the REITs markets increased in co-movements around the 2008 GFC, the COVID-19 pandemic and the Russian–Ukraine conflict. These increased co-movements mostly lasted for a short period suggesting REITs markets contagion around these global events. The results generally suggest interdependence between the global and the country's REITs. Additionally, interdependence is observed for some of the country-pair REITs.

The evidence indicates that REITs markets respond to global events. Thus, the increasing co-movement amongst REITs observed in this study may expose domestic REITs to global crisis. However, this study provides opportunities for minimising the cost of capital for real estate projects. Also, REITs provide limited diversification gains around crisis times. Therefore, countries need to open the REITs markets to global investors whilst pursuing policies to ensure the resilience of the REITs markets to global events. Investors should also take note of the declining geographic diversification gains from some country-pair REITs portfolios.

This study aims to investigate the impact of exchange rate volatility and the risk of expropriation on the decision to repatriate foreign earnings.

The current study uses secondary data for foreign subsidiaries of US multinational corporations (MNCs) in 40 countries from 2004 to 2016. We use the dynamic panel difference generalised method of moments (GMM) to estimate the dynamic earnings repatriation model.

The findings show that foreign subsidiaries of US MNCs in countries with volatile exchange rates tend to repatriate more earnings to the parent company. The findings also reveal that a greater risk of expropriation in the host country leads to the higher repatriation of foreign earnings to the parent company. The findings support the notion that MNCs use the earnings repatriation policy as a means of mitigating risks arising in the host country.

Practical implications for modern managers include shedding light on how financial managers can use earnings repatriation policy to mitigate exchange rate risk and the risk of expropriation in the host country. The findings also contain policy implications at the host country level that how exchange rate volatility and risk of expropriation can reduce foreign investment in the host country.

This study adds to the earnings repatriation literature by analysing the direct effect of exchange rate volatility on earnings repatriation decisions, as opposed to the impact of the exchange rate itself, as suggested by previous research. Hence, the findings broaden our understanding of the direct influence of exchange rate volatility on the decision to repatriate foreign earnings. The present study also examines the role of the risk of expropriation in determining earnings repatriation policy, which has received little attention in prior empirical studies.

Many studies have analysed the impact of various variables on the ability of companies to raise capital. While most of these studies are sector-agnostic, literature on the effects of macroeconomic variables on sectors that established over the last 20 years like property technology and financial technology, is scarce. This study aims to identify macroeconomic factors that influence the ability of both sectors and is extended by real estate variables.

The impact of macroeconomic and real estate related factors is analysed using multiple linear regression and quantile regression. The sample covers 338 observations for PropTech and 595 for FinTech across 18 European countries and 5 deal types between 2000–2001 with each observation representing the capital invested per year for each deal type and country.

Besides confirming a significant impact of macroeconomic variables on the amount of capital invested, this study finds that additionally the real estate transaction volume positively impacts PropTech while the real estate yield-bond-gap negatively impacts FinTech.

For PropTech and FinTech companies and their investors it is critical to understand the dynamic with mac-ro variables and also the real estate industry. The direct connection identified in this paper is critical for a holistic understanding of the effects of measurable real estate variables on capital investments into both sectors.

The analysis fills the gap in the literature between variables affecting investment into firms and effects of the real estate industry on the investment activity into PropTech and FinTech.

This study aims to estimate the amount of money laundering (ML) with multiple proxy approaches and measure the effects of ML on various indicators of the economic and financial sectors. Theoretical justifications are recruited from the parasite theory of organised crime.

A quantitative research methodology was used on a balanced panel data set to test the study’s hypothesis through generalised method of moment (GMM). The study sample consisted of 77 countries, and the data was collected for 15 years (2005–2019).

A study has found that 1.23% of global gross domestic product is laundered yearly, and there is no noticeable decline in ML activities. Further study has also found that ML has devastating effects on countries, government revenue, foreign investment, economic development, political and peace conditions, bank liquidity, interest rate volatility and exchange rate volatility. The study has not witnessed the negative consequence of ML on countries’ inflation rates.

Estimates of the study guide policymakers about the volume of resources fleeing and helps them to decide the level of response needed. Further findings help them prioritise the response system according to the area most affected.

This study is an original contribution by the authors and has studied the effects of ML by computing the amount of ML by four different proxies.

This research paper attempts to empirically examine the relationship between the performance of the banking industry and foreign direct investment (FDI), thereby helping the readers contemplate one of the least explored areas of the existing literature associated with the idiosyncratic characteristics of FDI resulting from its interaction with the efficient banking performance of the host country. The study has focused on the economy of Bangladesh because of its significant amount of FDI inflows from the rest of the world and its adoption of many liberalization policies, especially in the banking sector and in the areas of international business and trade.

The study, to produce unbiased estimates, employed the autoregressive distributed lag (ARDL) model for analyzing the time series data collected from reliable sources.

The key outcomes of the study reveal that the sound performance of the banking industry appears to be counterproductive for FDI inflows, which is a bit unconventional insight. In the context of Bangladesh, trade openness, inflation rate and infrastructural development seem to be the dominant factors behind the rising inflows of FDI. Market size appears to be an insignificant determinant of FDI inflows.

This is a unique study because of its focus on the unexplored area in the literature.

Under the trend of global economic integration and the new context of stagflation, frequent fluctuations in international interest rates are exerting far-reaching impacts on the world economy. In this paper, the transmission mechanism of the impact of fluctuations in international interest rates (specifically, the American interest rate) on the bankruptcy risk in China's pillar industry, the construction industry (which is also sensitive to interest rates), is examined.

Using an improved contingent claims analysis, the bankruptcy risk of enterprises is calculated in this paper. Additionally, an individual fixed-effects model is developed to investigate the mediating effects of international interest rates on the bankruptcy risk in the Chinese construction industry. The heterogeneity of subindustries in the industrial chain and the impact of China's energy consumption structure are also analysed in this paper.

The findings show that fluctuations in international interest rates, which affect the bankruptcy risk of China's construction industry, are mainly transmitted through two major pathways, namely, commodity price effects and exchange rate effects. In addition, the authors examine the important impact of China's energy consumption structure on risk transmission and assess the transmission and sharing of risks within the industrial chain.

First, in the research field, the study of international interest rate risk is extended to domestic-oriented industries. Second, in terms of the research content, this paper is focused on China-specific issues, including the significant influence of China's energy consumption structure characteristics and the risk contagion (and risk sharing) as determined by the current development of the Chinese construction industry. Third, in terms of research methods a modified contingent claim analysis approach to bankruptcy risk indicators is adopted for this study, thus overcoming the problems of data frequency, market sentiment and financial data fraud, which are issues that are ignored by most relevant studies.

The purpose of this study is to provide a textual approach to quantify the perception of uncertainty from management side and investigate how firms manage their overseas investment dynamics when perceiving an increase in economic policy uncertainty (EPU).

Using a textual analysis approach, the study evaluates firm-level perception of EPU. Based on the data from China's listed firms between 2007 and 2018, it examines the association between firm-level perception of EPU and overseas investment using probit model and fixed effects regression with robust standard error adjusted for heteroscedasticity and clustered by firm.

The study finds that the level of EPU perceived by individual firms is heterogeneous. Moreover, it finds that firm-level perception of EPU is positively associated with firms' overseas investment. When perceiving an increase in EPU, firms are more likely to invest abroad and their overseas investment is more diverse. Further analysis shows that the positive association between firm-level perception of EPU and overseas investment is weaker in firms with higher financing cost, investment irreversibility and management incentive but stronger in firms with more intensive industry competition. However, it does not find significant difference in the impact of firm-level perception of EPU on overseas investment of state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). The results are robust to using alternative measures of primary variables and to endogeneity concerns.

First, although the data on outward foreign direct investment (OFDI) at the national and provincial levels are comprehensive, the data on OFDI at the firm level are still relatively scarce. As the firm-level OFDI data become available, future study could be extended to OFDI flow. Second, future study could use other information disclosed by firms to evaluate their perception of EPU from host countries and examine the impact of bilateral EPU on overseas investment. Third, by evaluating firm-level perception of uncertainty in terms of a particular type of economic policies, such as fiscal policy, monetary policy, trade policy and foreign investment policy, future study could probe the sources of EPU affecting firms' overseas investment.

First, although uncertainty increases the volatility of firms' investment activities, firms can recognize and seize investment opportunities in an uncertain economic environment and make profits through resource integration. Second, as the association between firm-level perception of EPU and overseas investment depends on firm and industry characteristics, firms with higher financing cost, investment irreversibility and management incentive should be more cautious when making overseas investment decisions during uncertainty times. Third, governments should increase the transparency and the stability of their economic policies to help firms plan their investment policies.

The study extends the literature related to EPU measurement by constructing a firm-level perception index of EPU based on firms' annual reports using a textual analysis approach. Moreover, it sheds some light on the mechanism of how firms modulate their overseas investment activities under uncertainty.

The purpose of this paper is to construct an index for systemic risk in China.

This paper develops a systemic risk index for China (SRIC) using textual information from 26 leading newspapers in China. Our index measures the systematic risk from 21 topics relating to China’s economy and provides narratives of the sources of systemic risk.

SRIC effectively predicts changes in GDP, aggregate financing to the real economy and the purchasing managers’ index. Moreover, SRIC explains several other commonly used macroeconomic indicators. Our risk measure provides a helpful monitoring tool for policymakers to manage systemic risk.

The paper construct an index of systemic risk based on the information extracted from newspaper articles. This approach is new to the literature.