Current Money Research Articles

The Role of Objective Financial Situation and Psychological Outlook in the Relationship Between Personal Life Shocks and Financial Well‐Being

ABSTRACTExisting research examines the relationship between personal life shocks and financial well‐being primarily through the lens of objective markers of the individual's financial situation (e.g., liquidity). Little attention has been paid to the relative roles of these objective markers and more intuitive or affect‐based factors in how an individual makes sense of their financial situation post‐shock. Using longitudinal data from 1745 Australian adults, we take a dual‐process perspective to examine the roles of objective financial situation and psychological outlook as explanations for the association between the experience of a personal life shock and change in the current and future dimensions of financial well‐being. We found that the experience of a personal life shock (i.e., job loss, health emergency, occurrence of any personal shock) is associated with a decrease in present and future financial well‐being. Objective financial situation significantly mediated the association for present and future financial well‐being, while psychological outlook significantly mediated the association only for future financial well‐being. These findings suggest that an individual relies primarily on analytical, deliberative thought, especially when making sense of their situation, for their sense of current money management stress. For expected future financial security, they are more likely to use dual‐process thought, although analytical, deliberative thought plays a larger role than intuitive, affect‐based thought. These results suggest that the typical individual relies on relevant information (i.e., objective facts) in assessing their financial well‐being, an inherently subjective assessment. However, more intuitive considerations (i.e., psychological outlook) play a role when the individual attempts to anticipate their future state.

The Trends and Challenges of Money Mule Investigation by Malaysian Enforcement Agency

This article discusses the roles played by the enforcement agency, the current money mule situation, and the challenges faced by enforcement agency investigation officers in money mule investigations. An interview with informant from one of the Malaysian Enforcement Department, was conducted to gather his insights. An enforcement officer launches a money mule investigation based on the victim’s police report or Suspicious Transaction Report (STR). Investigation into money mule cases received by law enforcement agency is guided by Penal Code 424 and AMLATFPUAA 2001, which clearly expound the offence implicated in the money mule syndicate. The output from the interview is analysed under content analysis, whereupon the large amount of extracted information is summarised and arranged into important themes that address the research objective. The major challenges faced in criminal investigation include lack of cooperation from telco, delayed response from banks when requested to provide crucial information, wrong public perceptions on enforcement agency’s aggressiveness to fight money mule, lengthy investigation procedure, limited resources and lackadaisical attitude towards money mule threat. The challenges undermine the fight to eradicate the money mule phenomenon, one of the most critical financial crime threats in Malaysia. A slew of changes that enforcement agency is keen to see are proposed, including a more proactive telco regulator, a shorter processing period by banks in responding to production orders from enforcement agencies, and a steeper involvement by the media to build public awareness.

Socialization of The Importance of Knowing The Benefits of Investments and Financial Securities in Budisatriya Medan Vocational School

There are various types of investment to choose from. Starting from real investments in physical form such as land, houses and gold as well as non-real investments in the financial sector. An example of non-real investment is investment in the financial sector such as in the capital market. Many students still don't understand the benefits of investing
 For this reason, education in the form of training given to students about the benefits of financial investment and the capital market will certainly be a door to change in character for students to be braver in making various investment choices in the future. The solution offered for community service carried out at SMK S Budisatrya Medan is in the form of presenting material about the benefits of investment and various ways of making financial investments in the current money market or capital market.

The Optimum Quantity of Money in a Situation of Information Asymmetries: Evidence from Cameroon

This article is a macroeconomic assessment of the optimum quantity of money to inject into a developing economy in situation of information asymmetries. Starting from Tobin's "absolute liquidity rule", and under the hypothesis of a sub-optimal macroeconomic monetary equilibrium, a method of optimizing the money supply is proposed, based on a "monetary adjustment coefficient". It takes into account the effective growth rate, the potential growth rate and the current money supply. It appears, in the case of Cameroon, that the quantity of money in circulation is 30% lower than its optimal level compatible with the potential product, hence the need for an expansionary monetary policy, including monetary and credit easing measures. It is thus proposed to decision makers to introduce a monetary adjustment coefficient when elaborating monetary policy to be implemented in the country.

Direct and indirect effects of self-control and future time perspective on financial well-being

Financial well-being is getting more attention in research and consumer policy, but there is limited understanding of its determinants. In this study, the effects of two psychological factors (self-control and future time perspective) are studied on two components of financial well-being (current money management stress and expected future financial security). Using structural equation modelling in data from 16 countries (n = 15,773), we find that self-control and future time perspective have both direct and indirect effects on the components of financial well-being. The indirect effects are mediated by past and present financial behaviour and have smaller effect sizes than the direct effects. Self-control is the main determinant of current money management stress, while future time perspective is the main determinant of expected future financial security. Our results emphasize that financial well-being should not be treated as a one-dimensional construct. Instead, the interventions for improving financial well-being should clearly target either its present or future component and consider psychological characteristics in their design.

An Empirical Analysis of the Relationship between Key Macroeconomic Variables and Economic Growth in Nigeria (1980-2021)

This study adopts the Vector Autoregressive (VAR) model to analyze the relationship between key macroeconomic variables and economic growth in Nigeria, Using time series data sourced from the World Bank Development Indicators (WDI), for the period 1980 to 2021. The key macroeconomic variables analyzed are inflation, exchange rate and money supply. The result gives an average high R2 of 0.7000 which connotes that the overall model is a good fit. The result of the VAR analysis at lag two indicates that the variables are dynamically interacted. Starting with the growth (GDP) equation, a 1% increase in the previous year values of exchange rate, GDP, inflation, and money supply lead to a 0.3% increase, 33% increase, 3% increase, and 26% increase in current GDP respectively. Here, GDP and money are positively related. The money supply shows that a 1% increase in the previous year values of exchange rate, GDP, inflation and money supply lead to a zero per cent decrease, 8% decrease, 7% decrease and 91% increase in current money supply. The result is consistent with monetary policy given that the relationship between money supply and inflation. The equation of inflation shows that a 1% increase in the previous year values of exchange rate, GDP, inflation and money supply lead to 9% decrease, 33% decrease, 68% increase and 15% increase in the current level of inflation. The consequences of a growing inflation and high exchange rate phenomenon are so damning that Nigeria cannot afford them. Such implications are glaring in the economy of Nigeria where many negative developments were traceable to the non-availability or insufficiency of foreign exchange for businesses especially small and medium enterprises (SME’s) with a frequent rise in general price level. Therefore, the need to aptly address this ugly development by the monetary and fiscal authority cannot be overemphasized. Keywords: Money supply; economic growth; VAR model, Inflation and exchange rate. DOI: 10.7176/JESD/14-8-06 Publication date: April 30 th 2023

Money laundering conviction rate and capital formation in Nigeria

Drawing from the Financial Action Task Force (FATF, G7) recommendations and the Nigeria Anti-Money Laundering Act that provides the penance and dissuasion for crimes in Nigeria, this study sought to interrogate the efficacy of money laundering conviction rate as an instrument of anti-money laundering policy on capital formation in Nigeria. The study is hinged on contemporary deterrence theory. The study adopted the ex-post facto research design and used quarterly data from 1Q 2010 to 4Q 2019, which was sourced from the Nigerian Financial Intelligence Unit (NFIU), Economic and Financial Crime Commission (EFCC) and CBN statistical reports. Hence, Error Correction Model (ECM) was utilized to analyze the data. The findings indicate that the current money laundering conviction rate (MLCR) has a negative and non-significant effect on capital formation in Nigeria. Therefore, the study concludes that the current conviction rate is too weak to deter the act. Hence, it is recommended that the judicial system be rejigged with enabling legislation and autonomy to strengthen it to hasten the trial of such cases and ease conviction of culpable individuals, without necessarily putting innocent victims at jeopardy. Such autonomy should also be granted to the EFCC, ICPC, NFIU etc. and inter-agency synergy should be encouraged.

How mindfulness reduces BNPL usage and how that relates to overall well-being

PurposeThe purpose of this study is to examine how mindfulness reduces consumers’ buy-now-pay-later (BNPL) payment scheme usage and how that relates to their overall well-being.Design/methodology/approachThis study uses partial least squares structural equation modeling to test the hypotheses of a conceptual framework which is rooted in the extant literature, using an approximately representative sample of Australian consumers (N = 275).FindingsThis study finds empirical evidence for the ability of mindfulness to reduce BNPL usage through increasing consumers’ financial self-control and decreasing their impulse buying tendency. This study also obtains empirical evidence that greater BNPL usage is associated with lower subjective evaluations of consumers’ overall well-being by increasing their current money management stress and decreasing their expected future financial security.Research limitations/implicationsFuture research could build on the effect of mindfulness that the authors find in this study and how it could be leveraged as a protective mechanism for consumers’ financial decision-making. Such research could involve mindfulness-based interventions, such as instant messaging within smartphone applications. Doing so would also help assess causality, thus addressing the limitation of the cross-sectional nature of this study.Practical implicationsThe findings have implications for public policymakers and business practitioners. Financial counselors are encouraged to include the measurement of personality traits such as impulse buying tendency and financial self-control in intake meetings with clients and consider the benefits of offering short mindfulness training. Given the negative effect of BNPL usage on consumers’ financial and overall well-being, and the reputational risks this implies, BNPL providers are recommended to take more responsibility to ensure consumers do not fall into a debt trap, while retailers are advised to take steps to make payment processes more “mindful.”Originality/valueAlthough mindfulness has established effects on consumer behavior, its beneficial influence on consumer financial decision-making has rarely been explored. This study also contributes to a better understanding of the antecedents and consequences of consumers’ BNPL payment scheme usage. Although its prominence is increasing in daily life, and despite the concerns of consumer advocates, policymakers and regulators regarding its risks, the topic of consumers’ BNPL usage has received little attention in academic research so far. Finally, this study extends the emerging financial well-being literature by demonstrating how BNPL usage can reduce consumers’ overall well-being through the mediating effect of increasing current money management stress and decreasing expected future financial security.

An Estimation of Money Demand Function Using Nigerian Data: Implication for Monetary Policy

This study estimated Nigeria's Keynesian and augmented money demand function using time series variables from 1986 through 2021. The Keynesian money demand function is estimated by considering income and interest rates as the determinants of the money demand function. In contrast, the augmented money demand function incorporates critical variables like exchange rate, income, and interest rates. With the Robust Ordinary Least Squares estimation method, the income level exerted a positive and significant effect on money demand, while interest rate put forth a negative but insignificant impact. The a priori signs of these two variables align with the Keynesian postulation that income directly correlates with the actual money demand function. At the same time, the rate of interest has an inverse relationship. Further findings from the augmented money demand function, as reported by the autoregressive distributed lag short-run estimates, indicate that the price level and exchange rate directly and significantly affect Nigeria's current money demand function. The money demand function so estimated was reported to be stable, given the cumulative sum of squares result. A general conclusion that can be drawn from the findings is that the money demand function is income elastic but inelastic regarding interest rate, price level, and exchange rate.

CONSIDERATION OF INFLATION FACTORS IN THE TACTICS OF FINANCIAL MANAGEMENT AND EVALUATION OF INVESTMENT PROJECTS TO RESTORE WAR-LOST UKRAINIAN CITIES AND THEIR INFRASTRUCTURE

CONSIDERATION OF INFLATION FACTORS IN THE TACTICS OF FINANCIAL MANAGEMENT AND EVALUATION OF INVESTMENT PROJECTS TO RESTORE WAR-LOST UKRAINIAN CITIES AND THEIR INFRASTRUCTURE

Examining modern money creation: An institution-centered explanation and visualization of the “credit theory” of money and some reflections on its significance

Despite recent clarifications by central banks that it is indeed commercial banks that are the main creators of the money supply, money creation processes remain as confusing and opaque as ever to many. This article develops a simplified macro-visual diagram of today’s money system based on the increasingly accepted “credit theory” of money creation. It aims to explain not only how money is created and which institutions have the authority to create it; it also aims to discuss the implications of this understanding of money creation for wider issues, such as political sovereignty, inequality, and socio-economic development. Ultimately, it aims to provide a pedagogical resource upon which both technical and normative discussions about our current money system among academics, activists, and students can be based.

Soft landings: Extending the cushion hypothesis to financial well‐being in collectivistic cultures

AbstractThis study extends the cushion hypothesis to examine cultural differences in the role of willingness to take financial risk in an individual's objective financial outcomes (e.g., the experience of material hardship) and in an individual's assessment of their financial well‐being. Using data collected in South Korea, Taiwan, and the United States, we find support for a cushion (i.e., weaker relationship) in the association between material hardship and present and future financial well‐being. A cushion was also observed in a weaker association between willingness to take financial risk and expectations for future financial security but not in the experience of material hardship or current money management stress. Our results suggest that cultural context influences an individual's objective situation as well as their subjective assessment of that situation. This paper adds to existing literature by documenting a cushion effect beyond risk taking to include a person's objective financial situation and financial well‐being.

Wilhelm Lautenbach’s credit mechanics – a precursor to the current money supply debate

This article assesses the theory of credit mechanics within the context of the current money supply debate. Credit mechanics and related approaches were developed by a group of German monetary economists during the 1920s-1960s. Credit mechanics overcomes a one-sided, bank-centric view of money creation, which is often encountered in monetary theory. We show that the money supply is influenced by the interplay of loan creation and repayment rates; the relative share of credit volume neutral debtor-to-debtor and creditor-to-creditor payments; the availability of loan security; and the behaviour of non-banks and non-borrowing bank creditors. With the standard textbook models of money creation now discredited, we argue that a more general approach to money supply theory involving credit mechanics needs to be re-established.

Relating mindfulness to financial well-being through materialism: evidence from India

PurposeThe purpose of this study is to examine the relationship between dispositional mindfulness and financial well-being (FWB) and the mediating role of materialism on this relationship.Design/methodology/approachA conceptual framework is provided to support the research hypotheses. A survey with 311 working professionals from India allowed the hypothesized relationship to be tested through regression-based models.FindingsThe findings reveal that the three dimensions of FWB – financial anxiety, current money management stress and perceived financial security – are predicted by mindfulness and materialism even after controlling for several demographic variables. Materialism mediates the relationship between mindfulness and FWB.Research limitations/implicationsThe findings are subject to the usual cautions associated with self-reported cross-sectional data. Future research may incorporate mindfulness interventions to establish causal relationships.Practical implicationsThe study provides theoretical guidance to the policymakers and the financial institutions, including banks, which may focus on malleable factors beyond merely income to enhance FWB. Mindfulness is not only a trait but also could be cultivated by various physical and online-based mindfulness practices. Banks may integrate tools promoting mindfulness within their interactive web framework in order to stimulate customers' control over their daily spending through enhancing mindful awareness of present financial actions and their impact on the financial future. Thus, organizations may institutionalize such programs within their framework to help their employees cultivate greater FWB. Mindfulness promotes less anxiety related to financial decisions, which may develop customers' value as well as business opportunities for banks.Originality/valueUnlike other FWB dispositional antecedents, which become relatively stable at the formative stage, mindfulness levels can be enhanced in different age-groups. To our knowledge, this is the first study to empirically establish that mindfulness exerts its beneficial effects on FWB directly, and, through reducing materialistic motives.

Cost-effectiveness analysis and budgetary impact of the Cryptococcal Antigen Lateral Flow Assay (CRAG-LFA) implementation for the screening and diagnosis of cryptococcosis in asymptomatic people living with HIV in Brazil.

ABSTRACTCryptococcal infection is a frequent cause of mortality in Brazilian HIV-infected patients. The present study aimed to evaluate the cost-effectiveness and budgetary impact of four cryptococcosis screening strategies in HIV-infected patients with CD4+ ≤ 200 cells/mm3, in Brazil. A Monte Carlo microsimulation was used to compare the following diagnostic tests: a systematic serum cryptococcal antigen (CRAG) screening with latex agglutination (CRAG-LA), a lateral flow immunochromatographic test (CRAG-LFA), India ink staining and no intervention. The rationale was that of the Unified Health System (SUS), and the time horizon was of one year for the intervention and of five years for the budgetary impact analysis (BIA). The effectiveness outcomes were years of life and years of life adjusted for quality (QALY). The cost-effectiveness analysis showed that the two cryptococcal antigen tests were cost-effective, presenting with superior results in comparison with India ink and no screening. CRAG-LFA, compared to CRAG-LA, has an incremental cost of US$0.25 and an incremental cost-effectiveness ratio of US$73.36 (considering the US dollar equal to 5 reais, the Brazilian current money). The probabilistic sensitivity analysis between CRAG-LFA and CRAG-LA, despite showing a high agreement between the two tests, indicated the superiority of CRAG-LFA. The BIA estimated that the incorporation of CRAG-LFA would have an additional cost of approximately U$S 10.4 million dollars in five years. These findings suggest that, for the group of studied patients, the adoption of CRAG-LFA and CRAG-LA are cost-effective, while the India ink test and no intervention are less effective strategies. The BIA showed that using the CRAG-LFA test for people living with HIV (PLHIV) with CD4+ ≤ 200 cells/mm3 could reduce costs for the Brazilian Unified Health System (SUS).

EMPRESAS EXITOSAS Y NO EXITOSAS DEL SECTOR DE PRODUCTOS DE CONSUMO FRECUENTE QUE COTIZAN EN LA BOLSA MEXICANA DE VALORES: UNA CLASIFICACIÓN MEDIANTE ANÁLISIS DISCRIMINANTE MÚLTIPLE

The objective of this article is to determine the financial reasons that discriminate the companies, with a high and low financial performance, of the sector of frequent consumption products that are quoted in the Mexican Stock Market. For this, the financial statements of 16 companies were compiled from 2001 to 2017 on a quarterly basis, with which variables were calculated that include financial ratios of liquidity, indebtedness, leverage, RION, INVESTRAT. For the methodological part, an objective classification based on the cluster analysis is first proposed, and then through the discriminant analysis, concluding that there are 10 financial reasons out of 37 considered in this study, which more contribute to discrimination, being: Current money, Acid test, Leverage, Times that the exchange loss is paid, Operating cash interest, Cash operating at foreign exchange loss, Collection days, Rotation of assets, Net profit margin and Return on equity.

Future Expectations and Financial Satisfaction*

Advances in conceptualisation of financial well‐being include factoring future outlook into models, as consumers under financial stress can still expect to be better off in the future. This study applies a financial well‐being framework to Australian university students, defining financial well‐being to be made up of a set of personal attributes, current money management indicators and expectations about the financial future. We find that being least satisfied with financial situation is associated with higher likelihoods of using short‐term credit, not having a financial safety net, not being willing to take financial risks and having negative expectations of the future. The results of this study are useful for educators and policy‐makers in designing policies and programmes for university students.

Money laundering via underground currency exchange networks

PurposeThis paper aims to demonstrate how illicit funds are being laundered through underground currency exchange networks.Design/methodology/approachSixty interviews with money launderers and compliance officers were conducted to identify methods relevant to current money laundering issues. Further, a quantitative survey of 200 compliance officers was administered.FindingsThe currency exchange method is highly suitable for money launderers with access to a criminal network. It may be used for placement or pre-placement. Evidently, the vast majority of compliance officers fail to recognize the utilization of this method in their daily business.Research limitations/implicationsImplications are based on the statements of 60 interviewees, comprising both alleged money launderers and compliance officers.Practical implicationsThe study identified gaps in anti-money laundering mechanisms. The documentation of said inconsistencies aims to provide compliance officers, law enforcement agencies and legislators with useful insights into the minds of money launderers.Originality/valueWhereas most prior literature focuses on money laundering prevention methods, how money launderers operate is not illustrated. This study comprehensively overviews the issue by interviewing not only compliance officers but also money launderers. Understanding how money launderers operate is essential to effectively prevent money laundering. In particular, compliance officers must be able to view money laundering from the criminal’s perspective to sufficiently combat the issue.

A Preregistered Study of the Effect of Shopping Satisfaction during Leisure Travel on Satisfaction with Life Overall: The Mitigating Role of Financial Concerns

Despite growing interest in leisure well-being and life satisfaction, there is still limited research concerning the role of perceived financial status on leisure travel experiences. The main objective of this preregistered research is to test the prediction that satisfaction with shopping experience during leisure travel contributes to the satisfaction hierarchy moderated by financial concerns. Through two surveys of online panel members in the United Kingdom, we found that satisfaction with shopping has a positive influence on satisfaction with leisure travel, which in turn has a positive influence on satisfaction with leisure life and life overall. We also corroborated that the shopping satisfaction–leisure travel satisfaction relationship is negatively moderated by overspending on shopping during travel, while the leisure travel satisfaction–leisure life satisfaction relationship is negatively moderated by current money management stress. Finally, expected future financial security has a direct positive influence on life satisfaction overall. Theoretical and managerial implications are discussed.

Book Reviews

Carmelo Petraglia of University of Basilicata reviews “The Money Laundering Market: Regulating the Criminal Economy,” edited by Killian J. McCarthy. The Econlit abstract of this book begins: “Eight papers examine the current money laundering market, with a focus on the challenges presented by emerging technologies and markets.”