Bank lending channel in a dual banking system: Why are Islamic banks so responsive?

We examine the interest rate sensitivity of both deposits and credits at Islamic and conventional banks in Turkey. We find that the bank lending channel is especially operative for Islamic banks. Impulse responses for conventional and Islamic banks reveal that Islamic bank depositors’ sensitivity to policy rate changes is substantially larger than that of conventional bank depositors. Next to heavily dependence on deposit funding, we consider that inertia in Islamic bank deposit rates impedes these banks to keep those depositors who consider the opportunity cost of monetary policy rates is unbearable. On the lending side, we obtain similar results, implying that tight monetary policy leads to a larger contraction in Islamic bank credits. This finding is a reflection of the favourable attitude of Islamic banks towards small and medium‐sized enterprise (SME) financing. When similar relationships are analysed for currency and inflation shocks, we again find larger responses for Islamic banks showing the cyclical nature of SME credits.     

Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy

Scholars of financialisation have argued that the emergence of finance-led grow regimes requires new instruments for effective conduct of economic policy. In this scholarship, central banks have been seen as the most promising actors to utilise one of the most synergetic policies, the maintenance of high and stable prices of financial assets. Since the financial crisis of 2007–8, central banks of the developed world have adopted various unconventional monetary policy measures that serve this function. But will these unconventional measures become institutionally legitimate and institutionalised as conventional practice, as suggested necessary by scholars of financialisation? In this paper, we answer to this question by studying the institutional legitimation of the Federal Reserve’s Quantiative Easing (QE) programmes. We argue that the QE programmes have been legitimated successfully but with institutional legitimation strategies, which cause institutional pressures that question the potential of QE from becoming a regular policy instrument and practice.     

The distinct contribution of investment promotion agencies’ branch offices in bringing Chinese multinationals to Europe

This study uncovers the distinct contribution of investment promotion agencies’ (IPAs) overseas branch offices in advancing and even creating foreign direct investment. It offers a novel categorisation of IPAs depending on location and headquarter/branch status, and conceptually connects the known functions of IPAs with the advantages set out by the OLI paradigm. Empirical examination of longitudinal data from 29 European IPAs finds that the activities of their branches in China instilled greater awareness and confidence in Chinese multinational enterprises about their ownership- and European location-specific advantages. This contribution of IPA branches is especially salient in emerging economies with newcomer investors.     

服务业对外直接投资的出口效应——基于我国微观企业的研究

文章基于我国服务业上市企业数据，采用多维固定效应模型，探讨和分析了我国服务业OFDI对服务贸易出口的影响，经研究发现：第一，服务业OFDI通过吸收东道国先进技术经验提升企业生产率水平和避开东道国服务贸易壁垒降低贸易成本，促进企业服务贸易出口增长；第二，我国服务业OFDI显著提升了企业服务贸易出口的二元边际，具体而言，整体上服务业OFDI会促进服务贸易出口增长4.82%，同时会提升企业的出口概率；第三，我国服务业OFDI"出口效应"存在明显的区域和行业的异质性，具体表现为：生产性服务业和消费性服务业OFDI存在显著的"出口效应"，其OFDI带动服务贸易出口的增长分别为5.68%和3.52%，而公共服务业则不存在显著的"出口效应"；东部地区和中部地区服务业OFDI存在显著的"出口效应"，其OFDI带动区域服务贸易出口的增长分别为4.97%和3.56%，而西部地区则不存在显著的"出口效应"。上述研究结论对化解我国服务贸易出口增长困境和完善服务业对外直接投资政策机制具有一定的启示意义。     

Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging

In this paper we analyse the determinants of Japanese outward FDI stock for the period 1996–2017. This period is especially relevant as it covers a process of increasing economic globalization and two financial crises. To this aim, we consider a large set of candidate variables based on the theory as well as on previous empirical analysis. Our sample includes a total of 27 host countries. We select the covariates using a data-driven methodology, the Bayesian Model Averaging (BMA) analysis. Moreover, we also analyse whether these determinants change depending on the degree of development (emerging vs developed) or the geographical areas (EU vs East Asia) of the countries considered. We find that Japan's FDI can be explained by a wide variety of variables, that include not only the typical gravitational ones but also institutional and macroeconomic variables, including those that measure financial development. Moreover, Japanese FDI can be explained by both horizontal and vertical FDI motives in the groups of countries analysed. However, in developed, and more precisely, EU countries, horizontal FDI strategies are predominant, whereas for East Asian and emerging countries, there is more evidence in favour of vertical FDI.     

A new wavelet-based ultra-high-frequency analysis of triangular currency arbitrage

We develop a new framework to characterize the dynamics of triangular (three-point) arbitrage in electronic foreign exchange markets. To examine the properties of arbitrage, we propose a wavelet-based regression approach that is robust to estimation errors, measurement bias and persistence. Relying on this wavelet-based (denoising) inference, we consider various liquidity and market risk indicators to predict arbitrage in a unique ultra-high-frequency exchange rate data set. We find strong empirical evidence that limit order book, realized volatility and cross-correlations help forecast triangular arbitrage profits. The estimates are statistically significant and relevant for investors such that on average 80−100 arbitrage opportunities exist with a short duration (100−500 ms) on a daily basis. Our analysis also reveals that triangular arbitrage opportunities are counter-cyclical at ultra-high-frequency levels: arbitrage returns tend to increase (decrease) in periods when volatility risk and correlations are relatively low (high). We show that liquidity-driven microstructure measures, however, appear to be more powerful in exploiting arbitrage profits when compared to market-driven factors.     

International Real Estate Investment and Urban Development: An Analysis of Korean Activities in Hanoi,Vietnam

Foreign Direct Investment (FDI) has been recognised as a major influence upon urban development within emerging economies. As the focus of production shifted toward higher skills and advanced technologies, expatriate high-skilled employees of the Multinational Enterprises (MNEs) began to play a significant role in FDI projects and recipient cities begin to experience urban development associated with residential development and community services for the settlement of these expatriate staff. This research reports on the experience of Korean investment in real estate following earlier projects in manufacturing activity in the Hanoi Capital Region. Korean investors are currently the largest FDI source in Vietnam and Hanoi has been favoured by them. The purpose of this research is to examine that the urban impact of manufacturing FDI on a recipient city is magnified by its connections with Real estate FDI (RFDI) in a way that it spurs (1) intensified real estate development, (2) the creation of new urban cores, and (3) new commuting patterns. The clustering of Korea-specific residential development and service functions is a contribution to change in Hanoi. The Korean-built housing complexes have transplanted Korean-style housing design into gated communities and the residents continue their Korean life-styles with easy access to language-specific community facilities. This research sheds light on the coalescent nature of RFDI with overall FDI via flows of MNEs and expatriate staff that can generate direct and indirect spatial impacts at project, city and regional scales.     

Credit risk pricing and the rationality of lending decision-making within dual banking systems: A parametric approach

The reduction of non-performing loans, and making correct provisions for them, plays a primary role in the management and minimization of banking credit risk. However, these actions depend primarily upon the cost at which banks may dispose of these bad loans. Hence, this study aims to perceive the price of banks’ credit risk via estimating the shadow price of non-performing loans. We assess and compare the perceived price of the credit risk of Islamic and conventional banks operating in 9 countries from the Middle East and Asia, using a quadratic directional distance function. Following this, we evaluate the impact of different settings of directional vectors on shadow prices by conducting a risk-sensitivity analysis. Applying bootstrap regression, the factors affecting NPLs’ prices are further investigated. The paper concludes that the estimation of the shadow prices of bad loans can provide important elements in favor of credit risk management and, therefore, credit risk mitigation.     

Using reputation for corporate sustainability to tackle banks digitalization challenges

The new landscape in the financial sector, characterized by fierce competition and the entrance of new technological players, has forced banks to speed up their digital transformation. However, for banks, digitalization entails challenges that can hinder the potential benefits and compromise their survival. In this context, we argue that the reputation generated by corporate sustainability (RCS) may offset these digitalization drawbacks. In particular, we find that the combination of RCS and digitalization facilitates in transforming the organizational nature of banks by simultaneously narrowing their boundaries and expanding their scope. We empirically confirm our hypotheses by analyzing a panel of 110 multinational banks from developed countries.     

外商直接投资、区域创新与城市化发展研究

基于2000—2017年省际面板数据,运用静态面板与门限面板模型,通过建立以政府干预、市场化进程为门限变量的回归模型,实证分析了外商直接投资与区域创新对我国城市化发展的影响。研究结果表明:外商直接投资、区域创新对城市化发展有积极的带动作用,同时,外商直接投资对区域创新的作用由替代效应向互补效应转变;政府干预对外商直接投资存在双重门限效应,对区域创新存在单一门限效应;市场化对外商直接投资存在单一门限效应,但对区域创新存在双重门限效应。基于以上结论,进一步提出促进城市化发展的建议。