ECONOMIC POLICY UNCERTAINTY EFFECTS ON CREDIT AND STABILITY OF FINANCIAL INSTITUTIONS

We examine policy‐related economic uncertainty effects on the availability of credit, non‐performing loans and loan loss provisions using a panel of 18 countries. We provide significant evidence that uncertainty reduces the availability of credit while leading to increases in banks' non‐performing loans and loan loss provisions, distorting sectoral stability. Our findings are economically meaningful.     

Do country risk and financial uncertainty matter for energy commodity futures?

Using an instrumental variable quantile regression technique, this paper assesses whether country risk and financial uncertainty exert an impact on energy commodity futures prices under different commodity conditional return distributions over the period from January 1994 to July 2017. We also discuss whether the correlations change with different dimensions of country risk, that is economic, financial, and political. The results reveal that country risk and financial stress do have a significant impact on energy commodity returns of futures contracts with different maturities, but their direction, intensity, and significance differ, caused by the distinct market situations and divergent channels of country risk.     

Exploring how innovation strategies at time of crisis influence performance: a cluster analysis perspective

This paper analyzes the connection between innovation activities of companies – implemented before crisis – and their performance – measured at time of crisis. The companies listed in the STAR Market Segment of the Italian Stock Exchange are analyzed. Innovation is measured through the level of investments in total tangible and intangible fixed assets in 2006–2007, while performance is captured through growth – expressed by variations of sales, total assets and employees – profitability – through ROI or ROS – and productivity – through asset turnover or sales per employee in the period 2008–2010. The variables of interest are analyzed and compared through statistical techniques and by adopting cluster analysis. In particular, a Voronoi tessellation is also implemented in a varying centroids framework. In accord with a large part of the literature, we find that the behaviour of the performance of the companies is not univocal when they innovate.     

State‐Led Financial Regulation and Representations of Spatial Fixity: The Example of the Spanish Real Estate Sector

This article offers a bottom‐up contribution to the fixity–motion literature. It aims to unravel the apparent contradiction of real estate spatial fixity in Spain, which is portrayed both as a barrier to accumulation and as a unique source of investment by different capitalist actors. Empirically, it describes the shifts in real estate ownership and changes in profit‐making strategies that have taken place across the real estate sector during the crisis years, and the role of the state in these shifts. The article asserts that the idea of spatial fixity representing a spatial barrier for accumulation does not necessarily apply in the Spanish case. It further claims that the tensions in capital circulation through real estate are not only to be found in the action of time, but in different state strategies pursued by various actors. The opposing representations of fixity are the result of state regulation of interest rates, taxation and risk weighting. The state also increasingly promotes land rents as a source of liquidity creation.     

Rise of the gold market in China: liberalisation and market development

The Chinese gold market is rapidly rising to global prominence in the recent decades. The paper reviews the history of the gold market in China and its liberalisation process amid the country’s opening to the outside world. Details of the current market structure and its main business are presented. Global impacts of the rise of the Chinese gold market are discussed.     

Stabilizing Endogenous Instability: Proposals for An Institutionalist Reform of Financial Regulation

A major and persistent question behind economic theories and related policies is whether the market can self-regulate without any restrictive exogenous intervention or whether regular and binding public regulation is necessary for ensuring the reproduction of the economic system in a sustainable way over time. This article considers this question with regard to the working of financial markets in a liberalized environment. Drawing upon an institutionalist stance, the article shows why the operation of a financialized capitalist economy usually leads to systemic imbalances and crises. The article then suggests an alternative framework for a consistent financial regulation that could prevent market actors from developing short-sighted strategies and gambling on macro stability.     

Accounting practice,fiscal decentralization and corruption

In prior studies, accounting and decentralization corruption solutions have so far been analysed in isolation. In this article, we connect these two strands of literature on corruption. Understanding this connection is important because weak financial accounting and reporting systems can inhibit monitoring incentives and thus reduce decentralization benefits in countering corruption. We argue that the effectiveness of decentralization as an anti-corruption barrier is complemented by the quality of the accounting practice in a country. Using multiple sources of data, we find that decentralization has a positive and increasing effect on reducing corruption among countries with a high-quality accounting practice. In contrast, decentralization has a negative and decreasing effect on reducing corruption among countries with weak-quality accounting practices. These findings are robust to alternative measures of accounting, decentralization and corruption and to endogeneity tests. Our findings demonstrate the crucial information role of accounting in enhancing decentralization monitoring mechanisms and in thereby reducing corruption.     

Investor behaviour and reaching for yield: Evidence from the sterling corporate bond market

We provide evidence on how corporate bond investors react to a change in yields, and how this behaviour differs in times of market‐wide stress. We also investigate ‘reaching for yield’ across investor types, as well as providing insights into the structure of the corporate bond market. Using proprietary sterling corporate bond transaction data, we show that insurance companies, hedge funds and asset managers are typically net buyers when corporate bond yields rise. Dealer banks clear the market by being net sellers. However, we find evidence for this behaviour reversing in times of stress for some investors. During the 2013 ‘taper tantrum’, asset managers were net sellers of corporate bonds in response to a sharp rise in yields, potentially amplifying price changes. At the same time, dealer banks were net buyers. Finally, we provide evidence that insurers, hedge funds and asset managers tilt their portfolios towards higher risk bonds, consistent with ‘reaching for yield’ behaviour.     

Excessive Financial Support,Real Estate Development and Macroeconomic Growth: Evidence from China

ABSTRACT

Using monthly panel data for China’s 30 provinces from 2007 to 2017, this article analyzes how level of financial support affects the interplay between real estate development and macroeconomic growth. Based on a threshold model, the results suggest that housing price increases substantially impede economic growth, but there is no significant threshold effect for the sample as a whole. On investigating regional cross-sectional variations, we found that local economic situation clearly impacts on this effect, with significant threshold effects detected in subsamples. While housing price may have positive influences on economic growth in the mid-west subgroup with appropriate financial support, more developed regions returned contrary results.