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Abstract - Financial Fragility and Central Bank: Are Minsky’s Crisis and Austrian Business Cycle are Complementary?
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Abstract: This article explains why Minsky’s post-keynesian explanation tells only one side of the crisis’ story. Indeed, the financial fragility of markets explains mainly the activity of Central bank i.e. the lender of last resort which increases the moral hazard phenomena and the socialization of risks. The regulated capitalism is, in this perspective, the cause of market instability and financial fragility. Indeed, moral hazard encourages commercial banks to take risks. In that respect, the economic policies implemented to manage the crisis of 2008 are inadequate. Keywords: Economic crisis, Minsky, central bank, capitalism by fiat and financial instability.Download Full Article |
Abstract - Financial Sector Development and Poverty Alleviation in the SADC Region
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Abstract: Financial development is widely regarded as another conduit through which poverty can be reduced. The study empirically examines the relationship between financial sector development and poverty reduction in SADC countries utilising the Generalised Method of Moments technique for the period 1980 to 2017. The empirical results indicate that the effect of the different measures of financial sector development on poverty in the SADC region is mixed. Six out of nine financial development variables have a negative effect on poverty in the SADC region. In terms of financial depth, the empirical results reveal mixed outcomes. Results on financial system stability confirm the notion that a stable financial system is beneficial to the poor. The results also reveal that financial inclusion or access to financial services significantly reduces poverty in the SADC region. The results thus suggest that financial sector development is beneficial to the poor when it is inclusive and stable. The results imply that policies aimed at ensuring a stable financial system, which is also inclusive, should be pursued if the poor are to benefit from the financial system. Keywords: Financial sector development, poverty, GMM. |
Abstract - Firm History and Managerial Entrenchment: Empirical Evidence for Vietnam Listed Firms
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Abstract: Managerial entrenchment occurs when managers are able to manipulate financing decisions to support their own interests rather than those of shareholders. Such possible actions can involve deception and fraud. Furthermore, the market timing activity is explained by managers’ financing decisions through which companies choose to raise debt or equity to finance their investment opportunities. Nevertheless, the relationship between managerial entrenchment and leverage ratio, together with the link between market timing and leverage ratio, have not been considered carefully and investigated in the Vietnamese context. The paper provides empirical evidence of the effect of managerial entrenchment and market timing through firms’ histories on leverage ratio in Vietnam using a sample of 289 non-financial firms listed on the Ho Chi Minh Stock Exchange (HOSE) during the period 2006-2017. OLS, GMM and the endogenous switching methods are used for estimating the models. Findings from the paper indicate that there is a negative relationship between managerial entrenchment and leverage ratio, and that there is a negative effect of firm history, including financial deficit, various timing measures, and stock price history on the leverage ratios of Vietnam’s listed firms. Keywords: Managerial entrenchment, Firm histories, Leverage ratio, Endogenous switching, HOSE. |
Abstract - Financial Supervision and Bank Profitability: Evidence from East Asia
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Abstract: The growing fragility of the financial system has led to the increasing importance of financial supervision’s role. In particular, the financial supervision regime is expected to promote bank performance and maintain financial stability. Unfortunately, studies on the relationship between banking supervisory regimes and bank performance are still limited. To address this issue, this paper focuses on the following four aspects of banking supervision:(i) the structure of supervisory frameworks, (ii) the independence of supervisory institutions (iii) the scope of supervisory role; and (iv) the authority of central banks in the banking sector. We use country-specific data for seven East-Asian countries and data for 39 individual banks in those countries over the period of 2006–2011 to examine how different financial supervision regimes in the region influence bank performance. The results show strong evidence that the existence of a single bank supervisor, instead of multiple, will enhance bank profitability. Mean while, there is a mixed result regarding the role of central bank independence in improving bank profitability. Furthermore, the authority of central banks in the banking sector and the scope of bank supervision do not show strong relationship with bank performance. Keywords: Supervision, Bank Regulation, Bank Profitability.Download Full Article |
Abstract - Fiscal Policy and Economic Performance: A Review
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Abstract: The economic implications of government expenditure have been shown to be significant and broad. In particular, government spending has been shown to enhance long-run economic growth by increasing the level of human capital and Research and Development (R&D) expenditure, and by improving public infrastructure. On the other hand, there is evidence that a greater size of government spending may be less efficient and therefore not necessarily associated with a better provision of public goods and higher levels of economic growth. Moreover, it is likely that the size of government expenditure and its composition are associated with key aspects of the quality of growth, such as income inequality and environmental sustainability. This paper presents a review of the theoretical and empirical literature on the relationship between fiscal policy and economic activity, both in terms of long-run economic growth and short-term output fluctuations. In general, empirical evidence on these relationships is not robust and remains inconclusive. Keywords: Fiscal policy, Economic growth, Government Expenditure, Taxation.Download Full Article |
