Search results
1 – 10 of over 2000Nan Li and Liu Yuanchun
The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to…
Abstract
Purpose
The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to shifts of China’s financial mechanisms in the post-crisis era, conventional ways of FCI construction have their limitations.
Design/methodology/approach
The paper suggests improvements in two aspects, i.e. using time-varying weights and introducing non-financial variables. In the empirical study, the author first develops an FCI with fixed weights for comparison, constructs a post-crisis FCI based on time-varying parameter vector autoregressive model and finally examines the FCI with time-varying weights concerning its explanatory and predictive power for inflation.
Findings
Results suggest that the FCI with time-varying weights performs better than one with fixed weights and the former better reflects China’s financial conditions. Furthermore, introduction of credit availability improves the FCI.
Originality/value
FCI constructed in this paper goes ahead of inflation by about 11 months, and it has strong explanatory and predictive power for inflation. Constructing an appropriate FCI is important for improving the effectiveness and predictive power of the post-crisis monetary policy and foe achieving both economic and financial stability.
Details
Keywords
Thomas Marois and Hepzibah Muñoz-Martínez
This paper aims to expose the economic and political relations of power disguised in the concept of financial risk as institutionalized in post-crisis economic policies and…
Abstract
This paper aims to expose the economic and political relations of power disguised in the concept of financial risk as institutionalized in post-crisis economic policies and practices. We do so by examining, from a historical materialist approach, the actors and social struggles implicated in the aftermath of crisis in Mexico and Turkey. We argue that Mexican and Turkish state authorities have targeted workers so that they may disproportionately bear the costs of financial uncertainty and recurrent crises as workers, taxpayers, and debtors in the aftermath of the 2008–2009 crisis. We emphasize, though, that there are important institutional mediations and case study specificities. Mexico’s reforms that target labor as one of the main bearers of financial risk have been locked into legislation and constitutional changes. Turkey’s policies have been implemented in a more ad-hoc manner. In both cases under contemporary capitalism, we see risk as not confined to national borders but as also flowing through the world market. We further argue that the World Bank Report 2014 Risk and Opportunity: Managing Risk for Development emerges out of and reflects such real world responses to crisis that have been predominantly shaped by advocates of neoliberalism, to the benefit of capital. As an expression internal to global capitalism, the World Bank Report functions to legitimize the exploitative content of contemporary financial risk management policy prescriptions. In response, democratized financial alternatives that privilege the needs of workers and the poor are required.
Details
Keywords
Qamar Uz Zaman, Waheed Akhter, Mariani Abdul-Majid, S. Iftikhar Ul Hassan and Muhammad Fahad Anwar
This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.
Abstract
Purpose
This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.
Design/methodology/approach
The authors analyse the data of 395 listed manufacturing firms from Pakistan with 2,370 firm-year observations. The sample is divided into subsamples, namely bank-affiliated, non-bank-affiliated and stand-alone firms. Fixed and panel effect regression models are applied to determine the during, pre-crisis and post-crisis effects on corporate capital structure.
Findings
The robust results of the study reveal that non-bank-affiliated firms have different leverage determinant behaviours with a greater reliance on size, tangibility and profitability. However, bank-affiliated firms seemed to show greater immunity from a crisis compared to other firms. Simultaneously, the stand-alone firms remained at a disadvantage subject to internal financial ties of group-affiliated firms and form a base of market imperfection.
Practical implications
This study's findings imply that financial managers should contain better ties with financial institutions to enhance financial immunity in worse time of financial crisis or COVID-19 global calamity. On the regulation front, these findings call for critical policy regulations to govern the internal ties with financial institutions to create a level playing field for the corporate sector.
Originality/value
To the best of the authors’ knowledge, this study is the first to investigate determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms. This work is also novel to explore corporate debt of bank-affiliated and non-bank-affiliated firms during the financial crisis.
Details
Keywords
Mukund Narayanamurti and Jonathan A. Batten
Post-crisis policy measures in Asia have focussed on banking sector and market reform. The paper argues that in order to propel growth, banking and market reform in Asia must be…
Abstract
Post-crisis policy measures in Asia have focussed on banking sector and market reform. The paper argues that in order to propel growth, banking and market reform in Asia must be undertaken with the view that they are not mutually exclusive competitive tradeoffs. Rather banks and markets must be viewed as complementary supportive pillars in a financial system. Additionally, legal and functional reform must be undertaken simultaneously. The paper proposes that a likely consequence of doing so will enable creating a four-pillared multi-dimensional growth paradigm in the region to help restore and promote growth.
D.M. Nachane and M. Shahidul Islam
The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset…
Abstract
Purpose
The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset deflation. The purpose of this paper is to focus on how the crisis impacted the four major economies of South Asia, viz. Bangladesh, India, Pakistan and Sri Lanka and how, by a combination of swift actions on the monetary, fiscal and exchange rate fronts, the worst consequences of the crisis were averted.
Design/methodology/approach
The regulatory and supervisory systems in these four economies are then benchmarked against certain desirable norms, which have emerged out of post‐crisis international deliberations.
Findings
It is felt that the South Asian regulatory systems perform fairly well vis‐à‐vis these norms.
Practical implications
The paper also touches upon the major highlights of the crisis impact, policy responses and post‐crisis recovery in the Southeast Asian region.
Originality/value
The several similarities and the few contrasts between the two regions on these aspects are also presented.
Details
Keywords
Rafiqul Bhuyan, Deanne Butchey, Jerry Haar and Bakhtear Talukdar
We investigate the relationship between chief executive officer (CEO) compensation and a firm's financial performance in the insurance industry to determine CEO pay policies that…
Abstract
Purpose
We investigate the relationship between chief executive officer (CEO) compensation and a firm's financial performance in the insurance industry to determine CEO pay policies that are more effective in promoting specific financial corporate goals.
Design/methodology/approach
Considering different components of executive pay, we investigate the latter’s relationship with the corporate performance of the insurance industry using the generalized method of moments (GMM) model developed for dynamic panel estimation. Our data encompasses the periods before and after the 2008 financial crisis.
Findings
We observe that after the crisis the insurance industry experienced a major change in executives’ compensation packages. While CEOs’ compensation was primarily based on bonuses pre-crisis, the average size of the bonus was reduced to one-third of the level, stock awards and nonequity incentives were doubled and option awards increased almost 70 percent in the post-crisis period. It is also evident that the work experience of CEOs and the firm's financial performance play a significant role in determining CEO compensation. As the CEO becomes more experienced, stock awards and option awards replace cash bonus.
Originality/value
The paper finds supporting evidence for the agency-related problem in the insurance industry and the convergence of interest hypothesis, suggesting that a firm's market valuation rises as its managers own an increasingly large portion of the firm. To align the interest of owners with that of management, managers should be converted into owners via stock ownership. The paper addresses a topical issue regarding pay and performance and the effect of the financial crisis in the insurance industry.
Details
Keywords
Md Akther Uddin, Abu Umar Faruq Ahmad and Fatima El Morabit
Willi Semmler and Aleksandr V. Gevorkyan
Emerging markets are said to have sustained relatively well in the recent global crisis. There are several factors that help explain this popular view, such as, for example…
Abstract
Emerging markets are said to have sustained relatively well in the recent global crisis. There are several factors that help explain this popular view, such as, for example, perceived separation from key international financial centres. Still a lot is to be digested in the crisis aftermath with immediate implications for financial markets and real economy. This chapter offers a unique insight into dynamics within transition economies via an extended blended fiscal–monetary policy rules model with possibility of foreign reserves targeting and foreign currency-denominated debt dynamics. Calibration is based on actual data and is done under various targets and financial risk conditions. Prudent monetary policy and fiscal policy initiatives within current context drive the choice of targets. That may help dampen negative impacts of the crisis and thwart potential currency run. This chapter advances three possible post-crisis scenarios, each with unique solution for reserves, exchange rate, sustainable debt and output levels. Categorizing between net exporters and net importers based on countries' external positions, group-specific results are derived. While both groups are susceptible to exchange-rate risk affected by a multitude of shocks due to their fragile financial system, net importers risk high inflation, but net exporters over-borrowing. This chapter contributes to the literature on global financial crisis, macroeconomic policy, and role of nominal targets and foreign reserves in emerging markets.
Details
Keywords
Montfort Mlachila and Sarah Sanya
The purpose of this paper is to answer one important question: in the aftermath of a systemic banking crisis, can the expected deviations in credit supply, liquidity, and other…
Abstract
Purpose
The purpose of this paper is to answer one important question: in the aftermath of a systemic banking crisis, can the expected deviations in credit supply, liquidity, and other bank characteristics become entrenched in that they do not converge back to “normal”?
Design/methodology/approach
Using a panel data set of commercial banks in the Mercosur during the period 1990-2006, the authors analyze the impact of crises on four sets of financial indicators of bank behavior and outcomes – profitability, maturity preference, credit supply, and risk taking. The authors employ convergence methodology – which is often used in the growth literature – to identify the evolution of bank behavior in the region after crises.
Findings
A key finding of the paper is that bank risk-taking behavior is significantly modified leading to prolonged reduction of intermediation to the private sector in favor of less risky government securities and preference for high levels excess liquidity well after the crisis. This can be attributed to the role played by macroeconomic and institutional volatility that has nurtured a relatively high level of risk aversion in banks in the Mercosur.
Originality/value
To the best of the authors’ knowledge, using convergence methodology is a relatively novel approach in this area. An added advantage of using this approach over others currently used in the literature is that the authors can empirically quantify the rate of convergence and the institutional and macroeconomic factors that condition the convergence. Moreover, the methodology allows one to identify – in some hierarchical order – factors that condition persistent deviation from “normality.” The lessons learned from the Mercosur case study are useful for countries that suffered systemic banking crises in the aftermath of the global financial crisis.
Details
Keywords
Anthony Fee, Susan McGrath-Champ and Helena Liu
The purpose of this paper is to introduce a conceptual model that integrates multi-disciplinary research in relation to crisis management, and to consider its application for…
Abstract
Purpose
The purpose of this paper is to introduce a conceptual model that integrates multi-disciplinary research in relation to crisis management, and to consider its application for international human resource managers in preventing and managing the evacuation of expatriate staff during crises.
Design/methodology/approach
The paper critically reviews and distils research into crisis and evacuation management, and examines its relevance to a generic framework of international human resource roles. The paper evaluates this body of literature and suggests potential research avenues from an international human resource perspective.
Findings
The review reveals a dearth of research on emergency evacuation of expatriates from a human resources perspective. The paper articulates a framework that delineates what role human resource managers could, or should, play during crisis preparation and response. This framework aims to establish a basic “roadmap” for use by practitioners and researchers.
Originality/value
Focusing on the human (rather than business) implications of crises, the paper links crisis management literature to the role of international human resource managers in supporting the health, safety, and security of international assignees during crises. A framework is presented which enables managers to map their current (and potential) contributions to preventing and managing expatriate evacuation. From this, several avenues of future research are drawn.
Details