Quantitative easing and the post-crisis surge in financial flows to developing countries

This paper examines gross financial inflows to developing countries between 2000 and 2013, with a focus on the potential effects of quantitative easing (QE) policies in the United States and other high-income countries. We find evidence for potential transmission of QE along observable liquidity, portfolio balancing, and confidence channels. Moreover, we find that QE had an additional latent effect over and above these observable channels, one that survives an array of robustness tests, retains its significance across different types of financial flows, and which cannot be attributed to changes in expectations or elasticity. Our baseline estimates place the lower bound of a QE effect at around 5 percent of gross inflows above trend, for the average developing economy, which is a magnitude comparable to a one standard deviation change along the traditional channels. We also find evidence of heterogeneity among different types of flows; portfolio (especially bond) flows tend to be more sensitive than FDI to our measured QE effects.     

Bank productivity growth and convergence in the European Union during the financial crisis

This paper examines the bank productivity growth and integration process for the 28 EU countries during three main phases of the financial crisis: the U.S. subprime crisis (2007–2008), the global financial crisis (2009–2010) and the sovereign debt crisis (2010–2012). We extend the Malmquist Productivity Index by applying an additive two-stage DEA model. This allows us to explore the sources of growth in different stages of production. Furthermore, we assess the integration of European banks by analyzing the β-convergence and σ-convergence of the two-stage Productivity Index. Our results show a productivity growth during the U.S. subprime crisis, but a consistent decline during the global financial crisis. The loss of competitiveness of the European banking system is due to the drop in growth of the performance stage and technical change. Finally, we find a strong convergence pattern during the financial crisis, mainly driven by the catch up process of some Eastern countries and the drop in performance of Western countries.     

The regulatory environment and financial constraints of private firms in the European Union

This study analyzes the influence of the institutional environment on firms' capital structure in the European Union (EU). Unlike other research, we focus on private firms and include data from all EU countries from 2010 to 2018. We split the sample into groups of small and large firms, which we consider financially constrained and unconstrained, respectively. Throughout the study, we posit that institutional effects on financing policies vary with size, with the effects being greater for constrained firms as they face more financing frictions. We also run regression models controlling for firm-level characteristics and relevant macroeconomic factors. Our findings reveal that a high-quality regulatory environment negatively affects firms' leverage, whereas social corruption has the opposite effect. Moreover, the efficiency of enforcing commercial contracts and developing the financial system positively influences firms' leverage.     

Organizational ambidexterity and financial performance in the banking industry: evidence from a developing economy

Journal of Financial Services Marketing - The paper examined the relationship between organizational ambidexterity on the attitude of employees and the financial performance of the banking sector...     

Perceptions and characteristics of financial statement users in developing countries: Evidence from Iran

We examine the perceptions and characteristics of users of corporate financial statements in Iran. We provide evidence based on a survey of seven different user-groups. Our results suggest that annual reports are regularly used as a basis for making investment and other economic decisions. As in many developing countries, users depend more heavily on information obtained from the published annual reports than on advice from stockbrokers and acquaintances or on tips and rumors. While respondents differed in their rating of the importance of different sections of the annual report, the overall results showed that they ranked the income statement, the auditors’ report, and the balance sheet as the three most important parts of the annual report (in that order). There is a weak level of consensus among bank loan officers, tax officers, and auditor groups about the importance of several information items. Most users believe that a delay in publishing annual reports, lack of reliability of the information, and lack of adequate disclosure are the main concerns with corporate financial reports in Iran. The evidence on Iran is relevant to other developing countries in the Middle East and beyond.     

Forecasting inflation in the European Monetary Union: A disaggregated approach by countries and by sectors

Inflation in the European Monetary Union is measured by the Harmonized Indices of Consumer Prices (HICP) and it can be analysed by breaking down the aggregate index in two different ways. One refers to the breakdown into price indexes corresponding to big groups of markets throughout the European countries and another considers the HICP by countries. Both disaggregations are of interest because in each one, the component prices are not fully cointegrated, having more than one common factor in their trends. The paper shows that the breakdown by group of markets improves the European inflation forecasts and constitutes a framework in which general and specific indicators can be introduced for further improvements.     

The dark side of transparency in developing countries: The link between financial reporting practices and corruption

This paper examines the impact of financial reporting practices on corruption obstacles for about 150,000 firms across 143 mostly developing countries from 2006 to 2019. We document a strong positive relationship between the production of audited financial statements (AFS) and corruption obstacles (CO) faced by the firm. We argue that in a corrupt business environment, rent-seeking bureaucrats use the credible financial information to optimize their bribe demands. Our baseline results remain robust after addressing endogeneity concerns. We further show that country-level institutional quality has a moderating effect on the AFS-CO relation. The evidence from surveying entrepreneurs also provides qualitative support for our empirical findings. Our study sheds light on a previously under-explored adverse consequence of transparency - exposure to corrupt bureaucrats where institutions are weak.     

Determination of inflation in an open economy Phillips curve framework: the case of developed and developing Asian countries

This paper investigates the determination of inflation in the framework of an open economy forward-looking as well as conventional backward-looking Phillips curve for eight Asian countries – Japan, Hong Kong, Korea, Singapore, Philippines, Thailand, China Mainland and India. Using quarterly data from the 1990s to 2005 and applying the instrumental variables estimation technique, we find that the output gap is significant in explaining the inflation rate in almost all the countries. Furthermore, at least one measure of international competitiveness has a statistically significant influence on inflation in all the countries. The differences in the developed and developing world are highlighted by the significance of agriculture related supply shocks in determining inflation in the case of developing countries. For all countries, the forward-looking Phillips curve provides a better fit compared to the backward-looking variant.     

Tail risk in the European sovereign bond market during the financial crises: Detecting the influence of the European Central Bank

Since 2008, the European Central Bank (ECB) is conducting an expansionary monetary policy on an unprecedented scale. The consequence is a historical low interest rate environment in the eurozone and inflated prices for the majority of euro area government bonds. This paper presents a study of the tail behavior of triple-A rated euro area government bonds during the financial crisis 2007/08, the European sovereign debt crisis and the episode of expansionary monetary policy by the ECB. First, the analysis determines whether daily returns of euro area government bonds exhibit fat tails. Second, tests are conducted for variation in tail risk among euro area government bonds with different maturities. Third, it is estimated whether the tail behavior has significantly changed during the financial crisis, the European sovereign debt crisis and the resulting market interventions by the ECB. The study is based on daily data of the spot yield curve for triple-A rated euro area government bonds with a remaining maturity from three months to thirty years. Evidence is found for fat tails for the left-and right-hand side of the return distribution for all considered bond maturities in the sample. Moreover, the results indicate a convex term structure of tail risks and a structural change in the tail behavior of short-term bonds with a remaining maturity of less than one year during the past two crises. In contrast, the test outcomes for the majority of the considered long-term bonds do not indicate any significant change in the tail behavior, despite the introduction of unconventional asset purchase programs by the ECB which directly target these securities.     

Bank performance and convergence during the financial crisis: Evidence from the ‘old’ European Union and Eurozone

This paper investigates the process of banking integration in the EU15 countries and the Eurozone by testing for convergence in bank efficiency among commercial banks. We use a two-step approach: First we estimate efficiency by applying an innovative methodological approach that treats banks’ non-performing loans as an undesirable output. Second, we apply the Phillips and Sul (2007) panel convergence methodology to assess the convergence process in European banking. Our results indicate an overall decline in efficiency and no evidence of group convergence following the financial crisis. However, we find the presence of club formation with typically weak convergence. The heterogeneity displayed by the transition parameters for the individual countries and the notable decrease in competition levels post 2008 highlight the impact of the financial crisis on the integration process.     

Accounting infrastructure and accountability in the management of public expenditure in developing countries: A focus on Nigeria

Accountability in the control and management of public funds is one of the most sensitive aspects of the activities of government in all democracies. Hence, the 1999 Constitution of the Federal Republic of Nigeria contains provisions relating to legislative powers and control over public funds. However, the required level of accountability in public expenditure has not been achieved in Nigeria. The situation has remained worrisome even though the country does not lack in the appropriate laws and regulation required to bring sanity into the system. Though there have been some bold steps and initiatives in the recent past by the government by strengthening existing institutions and creating new ones with responsibility for fraud and other controls, the issue of weak accounting infrastructure has not been addressed. The paper argues that accountability in public expenditure can more easily be realized within the context of a sound accounting infrastructure and a robust accounting profession and not in the multiplicity of laws and anti-corruption agencies; all of which are reactive in nature. Therefore, the paper reports on the current state of accounting infrastructure in Nigeria, and conclude with an assessment of the existing agencies and current reform initiatives in ensuring accountability in public expenditure in Nigeria.     

The reaction of the U.S. and the European Monetary Union to recent global financial crises

This paper analyzes the responses of the United States and the economies of the Economic and Monetary Union (EMU) to the financial and economic crisis of 2008–2009. The crisis illuminates the fundamental structural problems within the EMU, the European Union and the United States and the scale and scope of interconnections among the world economy. The paper focuses on the reactions of the real sector to the financial disturbances in these economies. Both comparative static and dynamic methodologies are used in order to appraise the scope and pace of adjustments in response to the global crisis.     

Real and monetary convergence between the European Union’s core and recent member countries: A rolling cointegration approach

We use rolling cointegration to measure the convergence of base money, M2, the CPI and industrial output between Germany and France and recent EU members and some transition countries that are now joining the EU. Countries that joined the EU previously exhibit time-varying cointegration with the core countries over the 1980–2000 sample period. Cointegration for the transition economies was comparable for M2 and prices, but not for monetary policy and industrial output. Thus a peg to the Euro soon after accession is feasible for the East European countries, but the benefits of joining the Euro zone are as yet limited.     

Control over accounting standards within the European Union: The political controversy surrounding the adoption of IFRS 8

This paper presents an analysis of the struggle for power within the international accounting arena by examining a highly politicised debate surrounding the adoption of International Financial Reporting Standard (IFRS) 8, Operating Segments, which saw the European Union (EU) attempting to contest the authority of the International Accounting Standards Board (IASB). Informed by a broadly institutional approach, the paper reports the results of interviews with preparers, legislators, regulators, auditors and users about the introduction of IFRS 8 and focuses on how the European Parliament (EP) required the European Commission (EC) to initiate its own consultation procedures as part of a new endorsement process. Findings from this study highlight how the debate over the adoption of IFRS 8 led to the EU implementing a structure that is arguably more aligned to the European tradition of State involvement in the regulatory process. In this sense, while the EU's position vis-à-vis the IASB remains relatively weak, they have, however, initiated a forum whereby the pronouncements of the IASB can be contested.     

Integration of financial and management accounting systems: The mediating influence of a consistent financial language on controllership effectiveness

Two fundamental options exist for management accounting system (MAS) design: Either financial records can be used as a database for management accounting (integrated accounting system design), or the MAS can be based upon a separate system, i.e., a third set of books beside financial and tax accounting records. Since the 1990s, many German-speaking firms have changed from the second to the first option, which has instigated a highly controversial debate.Our paper contributes to this debate by empirically analyzing (1) whether the integration of financial and management accounting has a positive impact on controllership effectiveness, and (2) what causal inferences relate both variables. We use structural equation modelling for a sample of 149 dyads surveyed from German top 1500 firms. We identify no significant effect of the technical aspects of MAS integration, but a fully mediating influence of a consistent financial language on controllership effectiveness. Our results thus imply that consistency with financial reporting is an important property of MAS design from management's point of view.     

Bank crisis management and resolution after SVB and Credit Suisse: Perspectives from India and the European Union

The March 2023 bank failures of Silicon Valley Bank, Signature, and Credit Suisse, which caused turmoil in financial markets and led to regulatory and central bank intervention, revived the debate about the effectiveness of the bank crisis management, resolution, and deposit insurance legal framework established after the Global Financial Crisis. Although the March 2023 events did not escalate into a full-blown financial crisis, they drew attention to certain areas of the current framework, where improvements may be needed. These areas include the need for financial regulation and supervision to focus more on small- and medium-sized banks as potential sources of systemic market events; to review the adequacy of the current deposit insurance regime and the treatment of uninsured deposits; and to provide more clarity about the order of creditor claims in case of bank resolution/insolvency. This article reviews the events of March 2023 and the key lessons from these events and discusses how these lessons could shape the frameworks for bank crisis management and resolution in India and the European Union. The two jurisdictions are in the process of updating their laws in this area, and the March 2023 events could influence the relevant decisions.     

全球金融危机下的中国:转型之痛

一场被很多经济学家认为只会在金融市场欠发达的新兴经济体才会发生的金融危机,突然间在美国成了现实--令人难以置信的现实,超出大多数人的想象.     

欧盟直接税协调的最新进展

本文详细介绍了欧盟《税收一揽子计划》的内容、原则、目的、具体实施办法等，并评说了成员国对这一计划的不同反应以及欧盟在直接税协调道路上的艰难与坎坷，指出了这一计划的深远意义。     

The impact of bond market development on economic growth before and after the global financial crisis: Evidence from developed and developing countries

This paper investigates the impact of bond market development on economic growth before and after the global financial crisis in 44 selected countries. A dynamic model based on endogenous growth theory is employed for the study for the period 1990–2017. We find robust evidence that the global financial crisis has distorted the link between bond market development and economic growth: before the global financial crisis, the bond market's impact on economic growth was positive; after the global financial crisis, the evidence is mixed. The main finance–growth channel by which proceeds from the bond market are eventually allocated to the most productive investments appears to be broken.