Determinants of the West African economic and monetary union's banks going-public decision: empirical evidence on the role of macroeconomic factors

This research seeks to investigate the determinants of the going public decision in the banking industry by looking at the macroeconomic factors. For this purpose, we resort to a vector error correction model (VECM). Empirical findings indicate that in the West African Economic and Monetary Union, inflation, interest rate and stock market index return are the main factors that explain banks decision to go public. Moreover, findings show that GDP Granger causes the IPO decision. In the light of these findings, it is therefore essential that WAEMU, through its monetary institution, continue to work towards controlling price stability. The authorities also need to make efforts to improve national wealth.

У статті розглядається процес створення в ЄС Банківського союзу в контексті поглиблення фінансової інтеграції держав-членів та розбудови повноцінного Економічного і монетарного союзу. Банківський союз створено з метою недопущення в майбутньому руйнівних наслідків фінансово-економічної кризи, формування надійної основи єдиного внутрішнього ринку ЄС, забезпечення стабільності єдиної європейської валюти. Банківський союз є результатом політичного компромісу, досягнутого між ключовими інститутами ЄС та державами-членами під час інтенсивного переговорного процесу та на основі розробленої Європейською Комісією дорожньої карти. Ключовими елементами Банківського союзу є Єдиний механізм банківського нагляду, Єдиний механізм роботи з проблемними банками та Програма гарантування депозитів. Банківський союз передбачає суттєве підвищення ролі і відповідальності Європейського центрального банку та посилення координуючої функції Європейської Комісії. Попри певні недоліки Банківський союз має вирішальне значення для виживання єврозони і всієї європейської економіки.

The purpose of this paper is to explore the relationships between income inequality, economic growth and the main macroeconomic factors in Tunisia. We investigate two effects: the effect of inequality on growth, and particularly, the effect of growth on inequality. Also, attention has been focused on the role of the monetary policy, via introducing money supply as an independent variable, in affecting inequality and growth. Our empirical study is based on a series of annual data from 1975 to 2015 using the Dynamic Ordinary Least Squares (DOLS) method in order to estimate the cointegrating equations. The findings of the paper show that income inequality increase economic growth in Tunisia. Other factors having significant positive effect on economic growth include money supply and life expectancy at birth. However, inflation rate, primary education and unemployment have statistically significant and negative effect on economic growth. On the other hand, the results indicate that money supply, inflation rate, unemployment and savings are positively and significantly related to income inequality, whereas, life expectancy at birth and gross fixed capital formation decrease inequality in Tunisia. The policy implications of these results are discussed.

This study investigated the moderating role of macroeconomic factors in the relationship among CFV and DMS by considering a sample of 380 listed non-financial firms of Pakistan over a period from (1999-2018). Ordered probit regression and executed some standard econometric techniques such as two-way fixed effect, generalized method of moments (GMM), to explain the robustness of main findings. The study findings endeavor that role of macroeconomic factors weakens the CFV relationship with DMS. In addition, carried out a conditional analysis to analyze the effect of cash flow volatility on debt maturity structure at different percentiles (25th, 50th,75th) of macroeconomic variables. The conditional effects results indicate that when inflation, money supply and interest rate vary from low to high level, the inverse effect of cash flow volatility on debt maturity structure is determined. However, when a country experiences higher economic growth the direct effect of cash flow volatility on the debt maturity structure is determined. this research findings suggest some recommendations in the subsequent ways: Firstly, firms when facing variation in the earning level may mitigate their financial distress, cost of bankruptcy by choosing short-term maturity debts. Secondly, the role of macroeconomic factors should be considered by the financial managers in the decision-making process as it effects the firms DMS. Thirdly, non-financial firms, banks, financial institutions may lessen their risk of non-performing loans by limiting their financing when experiencing high CFV.

This study investigated the moderating role of macroeconomic factors in the relationship among CFV and DMS by considering a sample of 380 listed non-financial firms of Pakistan over a period from (1999-2018). Ordered probit regression and executed some standard econometric techniques such as two-way fixed effect, generalized method of moments (GMM), to explain the robustness of main findings. The study findings endeavor that role of macroeconomic factors weakens the CFV relationship with DMS. In addition, carried out a conditional analysis to analyze the effect of cash flow volatility on debt maturity structure at different percentiles (25th, 50th,75th) of macroeconomic variables. The conditional effects results indicate that when inflation, money supply and interest rate vary from low to high level, the inverse effect of cash flow volatility on debt maturity structure is determined. However, when a country experiences higher economic growth the direct effect of cash flow volatility on the debt maturity structure is determined. this research findings suggest some recommendations in the subsequent ways: Firstly, firms when facing variation in the earning level may mitigate their financial distress, cost of bankruptcy by choosing short-term maturity debts. Secondly, the role of macroeconomic factors should be considered by the financial managers in the decision-making process as it effects the firms DMS. Thirdly, non-financial firms, banks, financial institutions may lessen their risk of non-performing loans by limiting their financing when experiencing high CFV.

This study aims to empirically examine the relationship between key macroeconomic factors—financial development, inflation, interest rate, trade openness, and exchange rate—and their influence on FD in Pakistan. By analyzing the period from 1993 to 2023, the research seeks to provide a comprehensive understanding of how these variables interact and impact financial development in the country. The study utilizes secondary time series data gathered annually in Pakistan between 1993 and 2023. The data for all variables was sourced from the World Bank. An Ordinary Least Squares (OLS) analysis was employed due to its optimistic and holistic perspective, which is critical for this investigation. The study examines the correlation and regression analyses to determine the relationships between financial development and the selected macroeconomic variables. The correlation analysis revealed a moderate positive correlation (0.523) between FD and the selected macroeconomic variables. The regression analysis provided that inflation and TO have a positive effect on FD. On the other hand, EXCR and INTR have a negative effect on FD. Furthermore, the study identified a unidirectional causal relationship between inflation rate, TO, and FD, whereas a bidirectional causal relationship was observed between INTRs, EXCRs, and FD. The findings of this study have significant implications for policymakers in Pakistan. Understanding the positive impacts of inflation and TO, as well as the negative impacts of INTRs and EXCRs, can help in formulating strategies to foster FD. Policymakers can use these insights to create a more conducive environment for financial growth by adjusting macroeconomic policies accordingly. This study contributes to the existing literature by providing empirical evidence on the role of macroeconomic factors in shaping FD in Pakistan over a span of three decades. It highlights the importance of considering multiple economic indicators and their interrelationships to understand FD comprehensively. This research also lays the groundwork for future studies to explore these dynamics in other developing and emerging economies.

A banking union for Europe: Making a virtue out of necessity

Banking Union- an European Project with Certain Success Prospects

The banking union in Europe was proposed in 2012 as one of the key measures to address the structural weaknesses of the Economic and Monetary Union. It was introduced at a time of a serious regulatory overhaul of the financial sector in all developed parts of the world. Now that its implementation has started with the launch of the Single Supervisory Mechanism and the start of the Single Resolution Mechanism it is time to review what is the state of play of the elements of the banking union and to analyse the effects of its implementation on the Eurozone banking sector. The paper looks at each one of the pillars of the banking union. Then the author analyses the current state of the Eurozone banking sector and tries to identify how the introduction of the banking union has influenced on the developments within that sector. The paper argues that the Eurozone’s banking sector has become more stable, better capitalised and its risks more controlled than in 2008 but this is at the expense of profitability. The Eurozone banking sector continues to exhibit a high level of non-performing loans. In part, this can be attributed to the banking union and the challenges it poses to the banking sector.

Chapter 10 tackles the banking union necessarily concomitant to a monetary union given the present technologies of payment and exchanges. It presents the three facets of such a union: supervision, resolution and deposit insurance. The specificities of such a banking union come from the necessary bonds coming from a unique currency and a unique central bank. A banking union needs to address the financial cross-border spillovers existing in a monetary union which create increased contagion effects and heighten banking fragility.

The ever increasing of public debt has been affecting the financial stability of both high and low income countries for years and is a considerable subject to various author all around the world. The aim of this study is to understand which all factors influence the public debt in lower middle-income countries using DGMM regression method. With the dataset of 40 countries during the 1996-2015, the study provides empirical evidences on the role of macroeconomic factors on changes of public debt in lower middle-income countries, including trade openness, interest rates, budget surplus, inflation, economic growth, foreign direct investment, infrastructure, scale of the financial system. However, the unemployment rate does not have any impact whatsoever on debt to GDP ratios of these countries for over the period.

Explaining Supranational Entrepreneurship Under the Juncker Commission: Fiscal Union vs. Banking Union

In the wake of a sovereign debt crisis, which was itself preceded by a banking crisis, the European Union (EU) is in the process of creating a banking union for the euro area. Such an integrated financial framework is considered necessary for completing Europe’s economic and monetary union. Why? Is a banking union for the euro area (and the EU more broadly) really necessary? This article argues that a banking union in Europe may not be necessary for the euro’s survival and functioning but it is likely to help reduce inherent tensions in the system. Without an effective banking union, financial integration is costlier and it puts all the pressure for financial stability on the European Central Bank’s shoulders.

The decision adopted by the 28 European Union (EU) Member States in June 2012 on the establishment of the banking union expresses clear political support to the idea of common Europe. Is such a pretentious EU project an important historic step towards further integration, particularly in terms of the financial sector? Will the banking union reconsolidate the connections within the economic and monetary union and create better conditions for economic growth? After three decades of deregulation of monetary policy, which has taken the European financial situation to the verge of a precipice, it is above all important to take precautions to avoid in the future any destructive developments similar to those that occurred in the years after 2008.

The Banking Union, which formally commenced its operations on 4 th November 2014, is an institutional response of the European Union to the financial crisis of 2008–2009. From the institutional economics perspective it has been a breakthrough comparable to the decision on the establishment of economic and monetary union. The aim of the paper is to analyze some institutional change related to the process of integration of banking sector in the euro zone countries within the architecture of the Banking Union. The focus of the analysis is on the fit between existing institutions, to a large extent formal one meaning legal framework to a newly introduced regulations. We employ a descriptive analysis which is frequently used as the method within new institutional economics. Through scrutiny of institutional development we come to the conclusion that the banking union is not well-designed institutional scheme for potential crisis ahead. In particular, we argue about potential weaknesses of the process due to the adjustment of new framework to the existing institutional conditions. The major risks come from complexity of previous institutional settings and replaying them with the new harmonized set of regulation that are accompanied this diversity of informal institutions in different Member States as well as not harmonized set of sanction system. However, we envisage that such changes are necessary in order to avoid externalities caused by complicated and overlapping institutional design of the Banking Union.