BRICS Economies Research Articles

Banking index volatility and spillover effects in G7 and BRICS economies: a quantile connectedness approach

Purpose This study aims to investigate the dynamic spillover effects of banking indices returns across G7 and BRICS economies, focusing on the period of crisis events such as the COVID-19 pandemic and the Ukraine–Russia war. This paper provides significant policy implications for investors and portfolio managers. Design/methodology/approach This study uses a quantile connectivity approach to analyze spillover effects in banking index returns across G7 and BRICS countries, focusing on extreme market conditions. Using monthly banking indices and a time-varying parameter VAR (TVP-VAR) model, the study captures dynamic volatility spillovers among 12 stock markets, offering flexibility to analyze time-varying relationships. It explores the interconnectedness of G7 and BRICS banking indices, calculating correlations and tracing spillovers using the Diebold and Yilmaz (2012, 2014) framework. The analysis highlights how structural shocks within the network impact volatility, providing insights into spillover dynamics under different market conditions. Findings The analysis reveals a high degree of connectivity between G7 and BRICS banking systems, with total connectedness exceeding 80% during extreme market conditions, especially during crises such as the COVID-19 pandemic and the Ukraine–Russia war. G7 indices, particularly those of the USA and Germany, emerge as net transmitters of risk spillovers, while Japan, although part of the G7, acts as an exception with weaker spillover transmission. In contrast, BRICS banking indices, including those of Russia, India, China and South Africa, are found to be net receivers of spillovers, underscoring their vulnerability to global financial risks. In addition, the study shows that total connectedness is symmetric, with significant fluctuations based on event-driven volatility, particularly during crisis periods. Banking systems in France, the UK, Italy and Germany act as strong diversifiers, while Japan serves as a hedge asset due to its close connectivity to other banking systems, especially the USA. Brazil’s banking index is identified as a weak diversifier and safe haven, with limited protective capacity during crises. Overall, the study emphasizes the importance of understanding global spillover dynamics, offering valuable insights for managing risk and market volatility, especially in times of crisis. Originality/value This study stands out for its use of a quantile connectivity approach to analyze dynamic spillover effects in G7 and BRICS banking indices, focusing on extreme market conditions during crises like COVID-19 and the Ukraine–Russia war. Using a TVP-VAR model allows capturing time-varying relationships and directional spillovers, revealing G7 indices as net risk transmitters (except Japan) and BRICS indices as net receivers. The findings emphasize the vulnerability of emerging markets, the diversification potential of G7 banking systems and the symmetric, event-driven nature of total connectedness. These insights provide valuable implications for risk management and policymaking in volatile global markets.

Geopolitical risk threshold in the informal economy-natural resources nexus: evidence from BRICS economies

Geopolitical risk threshold in the informal economy-natural resources nexus: evidence from BRICS economies

ESG lending, technology investment and banking performance in BRICS: navigating sustainability and financial stability

PurposeThis study examines the impact of ESG lending and technology-related capital expenditures on banking performance in BRICS economies. It assesses how these factors influence return on risk-weighted assets and nonperforming loans, providing insights into the role of sustainable finance and digital transformation in banking stability.Design/methodology/approachUsing quarterly panel data (2015–2023) from commercial banks in Brazil, Russia, India, China and South Africa (BRICS), this study employs fixed-effects regression models to estimate the effects of ESG lending and technology investment on banking performance. A robustness check is conducted by segmenting the sample into large and small banks to assess the moderating role of institutional scale.FindingsThe results indicate that greater exposure to high-ESG firms enhances banking performance by improving RoRWA and reducing NPLs. Similarly, borrowers investing in technology exhibit more substantial financial stability, leading to lower credit risk for banks. The effects are more pronounced in smaller banks, suggesting that sustainable and technology-driven lending strategies provide greater risk mitigation benefits for institutions with resource constraints.Practical implicationsThe findings highlight the strategic importance of integrating ESG and technology factors into banking credit risk frameworks. Banks should develop specialized financial products and enhance ESG and technology-based credit assessments to optimize lending strategies. Policymakers should introduce incentives to promote sustainable finance, encourage digital transformation and standardize ESG reporting across emerging markets.Originality/valueThis study contributes to the sustainable banking literature by jointly examining the impact of ESG and technology investments on banking performance in emerging economies. It provides empirical evidence from BRICS, highlighting the role of institutional scale in shaping the effectiveness of sustainable finance strategies. The results offer actionable insights for banks and regulators seeking to balance financial performance and sustainability in high-growth but volatile markets.

Leveraging industry 4.0 technologies and industrial symbiosis: Advancing circular economy practices in BRICS economies.

Leveraging industry 4.0 technologies and industrial symbiosis: Advancing circular economy practices in BRICS economies.

Main Directions and Prospects of Cooperation Between Russia and The BRICS Countries in The Agrarian Sphere

The article outlines the main areas of cooperation between the BRICS countries in the fi eld of agricultural development and food security. Based on the analysis of current scientific, methodological and analytical literature, as well as statistical and regulatory information, the work examines the main concepts that reveal the essence and content of agro-food interstate economic cooperation within the BRICS association. The article outlines the role and place of this international association in the system of global economy and interstate relations. It is noted that the BRICS association, integrating about 40 % of the world economy, is the most ambitious and dynamically developing international association with significant global political, economic and geostrategic development prospects. The work also notes that cooperation in the agricultural sector, in the production of basic food products, and in the development of rural areas is of significant importance in the development of relations within the BRICS association. The paper also substantiates the main directions of this interaction, including technology export, digital transformation, project cooperation, ensuring comprehensive security, etc. The article presents a number of recommendations for the creation and development of a food security system for the BRICS countries, ensuring the strategic sustainability of rural areas, and creating conditions and factors for effective international trade in food products between the BRICS countries. The paper also identifies the main problems and contradictions that create difficulties in implementing international economic relations in the agro-food sector within the BRICS association. The article is part of the research and development carried out to ensure the accelerated development of the BRICS economies in modern political and economic conditions.

Assessing the role of global and regional economic integration on financial inclusion among BRICS economies

Purpose The purpose of this study is to examine the impact of economic integration on financial inclusion in emerging economies. It seeks to uncover how global and regional economic integration can improve the access and usage of financial services, thereby fostering inclusive economic development. Design/methodology/approach To achieve the stated objective, the study uses principal component analysis alongside a weighted method to construct separate indexes for financial inclusion and economic integration. Additionally, it applies alternative models of panel regression analysis on the data set of BRICS economies spanning from 2000 to 2022. Findings The pooled ordinary least squares and system generalised method of moments estimates confirm that both global and regional economic integration exert a significant positive impact on financial inclusion as measured by the proxies of financial access and usage among the BRICS economies. The empirical findings indicate that, in contrast to regional integration, global economic integration plays a more significant role in advancing financial inclusion. Moreover, in terms of control variables, the empirical estimate indicates that economic growth and institutional dimensions assist in expanding the access and usage of financial services. On the other hand, technological progress, as estimated by mobile subscribers, only helps increase access to financial services within the BRICS economies. Research limitations/implications The findings of the study indicate that policymakers in BRICS economies need to prioritise global economic integration to improve financial inclusion, as it has a profound impact compared to regional economic integration. Promoting deeper global economic integration can foster better access to financial services and increase their usage. It is imperative for stakeholders and financial institutions to prioritise the development of policies aimed at enhancing global market integration and thereby improving financial inclusion in the BRICS economies. Originality/value The study is an original work as it constructs separate indexes for financial inclusion and regional economic integration. Unlike previous studies, using these indexes, this study helps us comprehend the link between economic integration and financial inclusion.

Health expenditure, governance and SDG3 nexus: a longitudinal analysis in BRICS economies

BackgroundAchieving Sustainable Development Goal 3 (SDG3): good health and well-being, requires significant health investments and effective governance. While many studies explored the influence of health expenditure and governance, little is known about how different levels of governance affect the relationship between health expenditure and SDG3 in a globalised world. Thus, this study aims to fill that gap by examining the marginal effects of health expenditure on SDG3 under varying levels of governance in BRICS economies.MethodsThis study uses quantitative data spanning a panel of 2000–2023 years. Governance is measured using worldwide governance indicators, while health spending is represented by current health costs, government health costs, and private health costs from the World Development Indicators. Data on SDG3 comes from the SDG Index. Cross-sectional dependency, stationarity and cointegration tests are employed to choose appropriate panel data models. The final results are obtained using Fully Modified OLS, while System GMM is used to address issues like endogeneity, autocorrelation, instrumentation, and causality. To ensure the results are reliable, the study also tests alternative measures of governance.Results1% increase in current and government health spending improves SDG3 by 3.92% and 2.86%, respectively, while a 1% rise in private health spending reduces it by 0.677%. This negative impact in BRICS nations is likely due to market failures in private healthcare, where profit-driven models limit access and efficiency. The positive impact of current and government health expenditure on health outcomes is comparatively weaker at lower levels of governance but private health expenditure and SDG3 are weakening by governance at different levels which is indicative of inefficiencies in resource allocation and implementation. This study supports institutional theory, which states that strong governance improves the effectiveness of public health spending, leading to better health outcomes. The study highlights how the geopolitical prominence of governance frameworks interacts to optimise the benefits of health investments, demonstrating their role as leaders in advancing global health initiatives. Thus, policymakers need an integrated approach in health investments with institutional reforms in achieving health outcomes more effectively as good governance significantly amplifies the relationship.ConclusionsThis study highlights that governance plays a key role in improving the impact of health spending on SDG3. Strong governance boosts the benefits of public health expenditure and limits the negative effects of private health expenditure. Thus, the findings stress the importance of effective governance in enhancing health outcomes in BRICS economies.

Role of technological innovation for enhancing financial inclusion to reduce income inequality in BRICS economies

Role of technological innovation for enhancing financial inclusion to reduce income inequality in BRICS economies

Data-Driven insights on the relationship between BRICS financial policies and global investment trends

This study investigates the dynamic relationship between the financial policies of BRICS nations—Brazil, Russia, India, China, and South Africa—and global investment trends. As emerging markets like the BRICS play a crucial role in the global economic growth, it is critical to understand how changing in the financial policies in these markets interact with international investment flows for both investors and policymakers. The study leverages data of economic indicators, policy measures, and global investment patterns by building regression, decision trees and deep learning models based on advanced machine learning techniques, including regression models, decision trees, deep learning methods such as Long Short-Term Memory networks and Transformers. According to the findings, there are strong correlations between fiscal, monetary and trade policies in the BRICS economies and agent behavior in the global capital market. Uncovering these patterns therefore provides actionable insights for investors to navigate the changing finance terrain of those countries better and advice for policymakers on the way to fashion policies that would attract investment. This research supports the use of data driven technique to capture the intricate economic relationship and investment prediction outcomes in the case of BRICS financial systems.

Driving Sustainable Energy Goals: Testing the Impact of Investment, Technological Innovations, and Oil Rent on Renewable Energy Development in Brazil, Russia, India, China, and South Africa Economies

Renewable energy development is paramount in supporting the transition to a cleaner environment through green transition policies. Thus, policies and measures that support renewable energy development are fundamental. To this end, studies that examine how renewable energy development is achieved have been performed, but the role of research and development, which is crucial in fostering technological innovations and the role of investment in energy in achieving renewable energy development, is lacking. Therefore, this research was employed to investigate the role of research and development and investment in energy in the BRICS economies. The data of the BRICS economies were used for the period from 2000 to 2021. This study used the ‘Methods of Moments Quantile Regression’ to ensure robust findings are presented, hence informing policies that are crucial in achieving environmental sustainability through using renewable energy in the BRICS economies. Major findings showed that investment in energy, research and development, economic growth, and the overall inflation rate raised RE use in the BRICS countries. Oil rent, financial development, and institutional quality reduced RE development. This research suggests the adoption of vigorous policies that ensure financial resources are channeled toward financing the development of RE in the BRICS economies. Through supporting investment in energy and research and development, the BRICS economies can achieve the goal of sustainable carbon neutrality.

Финансовые условия функционирования малого бизнеса в Бразилии как стране БРИКС

The paper studies the system of financial support for small businesses in Brazil. It provides a comparative characterization of the share of companies in this sector in the BRICS economies. The author’s approach to analyzing incentive programs for small and medium-sized enterprises (SMEs) in Brazil, focusing on the terms and types of financing available, is proposed. It is revealed that the mechanisms for stimulating the activities of micro and small businesses in Brazil are a whole range of measures aimed at supporting business, including various financial support instruments. It is posited that the rate of economic growth in Brazil, coupled with the contribution of SMEs, serves as an indicator of the efficacy of these support mechanisms. The important role of government programs within the framework of SEBRAE for the provision of various services and stimulation of entrepreneurship development is emphasized. Furthermore, it is identified that the Brazilian Development Bank (BNDES) constitutes a key source of financial resources for micro and small businesses. It is revealed that, despite all the actions to stimulate business development, compared with the leading countries of the world, the share of SMEs in Brazil’s GDP is still extremely small. The reasons for this can be both insufficient financial support measures from the state and the peculiarity of the country’s economy.

Evaluation of Financial Inclusion and Financial Well-Being in expanded BRICS economies

Most of the challenges to sustainable development are interconnected and systemic in nature, which makes achieving this goal particularly challenging. Research on these barriers and their solutions revealed that neither technological nor social innovation hinders the adoption of this development model. The main reason lies in the specific mechanisms for overcoming inertia, resistance to change, path dependency, and entering a new trajectory. One of the key spaces where the widest circles of the population are in close contact with new technologies is the financial sector. Fintech has significant potential to overcome these limitations, change behavioral patterns, reduce path dependence, and launch development on a new trajectory. The article provides a comprehensive analysis of these processes using the example of the expanded BRICS countries. It compares heterogeneous socioeconomic landscapes and assesses the readiness of the countries in question to master more complex development models, using digital banking as an example. The study identifies the blocking factors and suggests ways to overcome them. An interdisciplinary synthesis of the theories of narrative persuasion, evolutionary governance, and path dependence provides a new understanding of the interaction of financial systems, governance structures, and social behavior, upon which financial inclusiveness depends as a cornerstone for achieving balanced economic growth. Appendices

Crafting a Sustainable Environment through Green Energy, Financial Development and Agriculture in the BRICS Economies

Crafting a Sustainable Environment through Green Energy, Financial Development and Agriculture in the BRICS Economies

The intersection of geopolitical risks and energy investments: lessons from BRICS nations

ABSTRACT Given the increasing reliance on public-private partnerships (PPP) in energy infrastructure across emerging economies, understanding how geopolitical instability influences these investments is crucial. This study aims to assess the impact of geopolitical risk (GPR) on PPP investments in the energy sector (PPE). The study employs a panel dataset covering BRICS economies from 1985 to 2023 and utilizes the CS-ARDL model to capture both short-run and long-run effects while addressing cross-sectional dependence and heterogeneity. To ensure robustness, the GMM model is applied. The empirical results indicate that GPR has a significantly negative impact on PPE, implying that heightened uncertainty discourages private sector participation in large-scale energy projects. The causality analysis confirms a bidirectional relationship between GPR and PPP energy investments, indicating that geopolitical instability not only affects investment decisions but may also be influenced by energy sector dynamics. The findings emphasize the need for strong institutional frameworks, risk mitigation mechanisms, and strategic financial incentives to sustain PPP investments in energy despite geopolitical uncertainty. Additionally, regional cooperation and GPR insurance mechanisms could help mitigate uncertainties, ensuring long-term sustainability of energy infrastructure development. This study contributes to the literature by integrating geopolitical risk into the discourse on energy financing through PPP, a largely overlooked aspect in prior research.

Political Economy Perspective of Government Effectiveness for Clean Energy Transition: Empirical Evidence from BRICS Economies

Political Economy Perspective of Government Effectiveness for Clean Energy Transition: Empirical Evidence from BRICS Economies

The dual impact of tax evasion, does tax evasion incentivize or dampen FDI, perspectives from the emerging economies of BRICS and CIVETS blocs?

This study examines the dual impact of tax evasion on foreign direct investment (FDI) in emerging economies, specifically the BRICS and CIVETS blocs. It aims to assess whether tax evasion incentivizes or deters FDI inflows and explores the role of macroeconomic factors in this relationship. The study employs panel data analysis using World Bank data from 1991 to 2017. The econometric model incorporates key macroeconomic indicators, including public debt, GDP per capita growth, unemployment, and inflation, to evaluate their influence on FDI trends. A comparative approach assesses the differences in FDI responses between BRICS and CIVETS economies. The results indicate that tax evasion significantly negatively impacts FDI inflows, with a more pronounced effect in CIVETS economies due to weaker institutional frameworks and heightened economic volatility. Conversely, economic growth and effective public debt management positively influence FDI inflows, emphasizing the critical role of macroeconomic stability in attracting foreign investment. Additionally, inflation and unemployment emerge as significant determinants of FDI trends across different regions and periods. The findings highlight the necessity for policymakers to establish strong institutional frameworks and improve macroeconomic stability to alleviate the negative impacts of tax evasion on foreign direct investment (FDI). Enhancing regulatory mechanisms and promoting economic resilience can boost investment attractiveness and encourage sustainable economic growth. This study adds to the literature by providing a comparative analysis of tax evasion’s effect on FDI in two significant emerging economies. It delivers empirical insights into the intricate relationship between tax policy, economic stability, and foreign investment, guiding strategies for policymakers in emerging markets.

Persistence in China’s household consumption level: implications for the new growth model

In this paper, we investigate the statistical features of China’s household consumption level by calculating its degree of persistence and testing for the existence of trends in the data. Further, we contrast the results obtained in China with those corresponding to the G7 economies and in the other three countries that make up the fastest developing BRICs group, that is, Brazil, Russia and India. Our results show large degrees of heterogeneity depending on the country and the model used for the analysis though, in general, lower degrees of dependence and thus, more evidence of transitory shocks is observed in China and the rest of BRIC economies than in the G7 countries.

Energy Transition, De-Carbonization, and Capital Markets Nexus: Insights from BRICS Economies

This study investigates whether the capital markets of BRICS economies promote or hinder energy transition and de-carbonization within these regions. Using Driscoll-Kraay standard errors, we analyze the annual data from 2000 to 2021. We use Fixed Effects and Random Effects Generalized Least Squares (GLS) methods to validate our empirical results. The findings indicate that private sector credit deepening and stock market development exacerbate carbon dioxide emissions, undermining the potential for decarbonization in BRICS economies. Additionally, non-renewable energy intensity and GDP growth are found to contribute significantly to pollution emissions, further impeding decarbonization efforts within this economic bloc. The results reveal that FDI and energy transition play a crucial role in advancing de-carbonization in BRICS countries. This study proposes practical policy implications to mitigate emissions and support sustainable economic growth in the BRICS economies.

The Impact of Green Technological Innovation and Management Improvement on Environmental Quality in the BRICS Economies

This paper proposes a novel framework to analyse the How financial development or management improvement and green technological innovation influence Environmental Quality in BRICS Economies. Using data from 2001 to 2023, the study applies the Westerlund cointegration test to validate the long-term relationship between these variables. Second-generation techniques, including CIPS and CADF stationarity tests, the Pooled Mean Group (PMG) Autoregressive Distributed Lag (ARDL) model, and the Dumitrescu and Hurlin causality analysis, reveal several key findings. Results indicate strong cross-sectional dependence across countries. The PMG estimator demonstrates a significant, negative long-term association between broad money, FDI, green technological innovation, and CO2 emissions, while domestic credit to the private sector shows a positive and significant relationship with carbon emissions. The Dumitrescu and Hurlin causality test identify a non-directional, long-term causality between financial development and CO2 emissions, with unidirectional causality observed between green innovation and carbon emissions. These findings suggest that industrial, financial, and technological advancements are essential for attracting high-quality FDI in BRICS nations; however, they also highlight the adverse environmental impacts of these developments, urging prompt policy responses.

Examining the Factors Enhancing Green Growth in BRICS Economies: Interplay between Economic Globalization, Renewable Energy Use, and Government Efficiency

Studying economic green growth (EGG) and identifying its drivers have always been crucial for understanding Arabia’s sustainable economic development. Given Arabia's extensive economic globalization process, potential impacts on the country's green growth include government effectiveness and inward energy consumption. This study examines the effects of globalization, renewable energy, and institutional quality on green growth across BRICS+ countries from 1996 to 2021. This research mainly empirically explores that economic development, institutional quality, and globalization generally support green growth, while renewable energy offers long-term benefits despite short-term challenges. Non-renewable energy and environmental factors like population growth and forest areas have mixed or context-dependent impacts. Policies aimed at advancing renewable energy and improving energy efficiency have proven highly effective in reducing emissions. However, careful management is necessary to mitigate the environmental impact of free trade and dependence on non-renewable energy sources.