Debt Crisis Research Articles

Customer Satisfaction Towards Banking Services in Rural areas of Alirajpur District – A Study on selected Banks

The world economy is facing difficult situations such as the bankruptcy of banks and financial institutions, the debt crisis of the world's major economies, and the Eurozone crisis. The uncertainty of the situation caused the decline of major economies such as the USA and Europe. This raises some important questions about the country's survival, growth and stability. However, banks play an important role in the development of the country with the high scores and commitments they receive. Banks perform development functions and are the source of people's hopes and expectations. Banks and finance are like oxygen for freedom. Financial markets are involved in the macroeconomic and monetary policy of any country. It plays an important role in supporting companies and projects. Business dynamics in banking are very different from other businesses. They are there to analyze loan capital, monitor the user's behavior and efforts, provide risk insurance, and create assets. Therefore, this study focuses on customer satisfaction with banking services in rural areas of selected banks in Alirajpurr district. one Keywords: Customer Satisfaction, Banking Services, Indian Economy, Rural.

State Capacity and Industrial Development: A Comparative Study of Iran and Egypt (1990–2010)

Despite pursuing industrial development to solve various socioeconomic and sociopolitical issues, such as the urgent need to reconstruct war damages in Iran, the foreign debt crisis in Egypt, and population growth in both countries, statistical data show only slight progress. The graphs of the gross domestic product (GDP) growth and exports of goods and services as a percentage of GDP, which are reliable indexes for measuring industrial output, along with the rate of foreign direct investment, demonstrate numerous fluctuations and instability in the economic growth rate for both cases under the period under review. Failing to diversify the economy, Iran and Egypt still relied heavily on unproductive rents, mostly from hydrocarbon exports, at the end of this era. Why is this the case despite the national leadership putting industrial development on the agenda? This article addresses this question by examining state capacity, focusing on the internal cohesion of state authority and its relation to society. In so doing, comparative historical analysis and causal narrative method are used.

Turbulent Periods, Earnings Management and the Role of Auditors

The present study attempts to test the impact of audit, non-­audit fees, auditor tenure, auditor size, and financial distress on earnings management during turbulent periods for the five largest Eurozone countries. The motivation of the current study is to provide fresh evidence on these relationships during global financial crisis and sovereign debt crisis. We use the generalized methods of moments and ordinary least squares method for a sample of listed firms across the five largest Eurozone countries. We found that auditor tenure and auditor size carry no significant effect on earnings management during the financial crisis and sovereign debt crisis period as compared to the pre-crisis period for both cases. However, audit, non-audit fees and financial distress affect earnings management during the Eurozone crises periods. The results imply that stricter accounting regulation is needed during turbulent periods and investors should be careful with their investments.

Analyzing the impact of terrorism on tourism in Sri Lanka

While terrorism brings fear and chaos, tourism is the epitome of peace and happiness. Sri Lanka has always attracted international tourists due to tropical climate and beautiful tourist destinations. However, terrorism and the recent debt crisis have led to chaos and economic failure; in this study, the impact of terrorism, external debt, and military expenditure on international tourism in Sri Lanka have been empirically studied to unravel the dynamics. Dynamic ARDL simulation and cumulative fourier frequency causality results highlight the presence of an inverted N‐shaped association between terrorism and tourism, as well as external debt and tourism. The phenomenal results from this analysis provide essential policy suggestions for Sri Lanka for economic recovery through the promotion of international tourism.

The Relationship between Government Debt and Economic Sentiment

In recent years, the application of sentiment in the economic field has become increasingly important. In the last decades, researchers have mainly explored the macroeconomic impact of sentiment. For example, the prediction of sentiment on unemployment, GDP, and private consumption. Government debt has been a hot topic due to increasing debt in many countries around the world for a long time. Many researchers have argued that declining confidence can lead to a potential debt crisis. But little research has been done in the opposite direction, i.e., do changes in government debt affect economic sentiment (e.g., consumer confidence)? Our paper will provide an in-depth insight into the correlation between the two factors, based on data from the Czech Republic.

Does Institutional Setting Contribute to the Public Debt — Income Inequality Relationship in Developing Economies?

In the context of increasing globalization, income inequality is one severe problem in several countries because it widens the income gap between the rich and the poor, which leads to social instability. Narrowing this gap has become one of the main agendas in many developing countries to satisfy the millennium goals proposed by the United Nations. Meanwhile, government expenditure is one crucial fiscal instrument as it contributes significantly to running the economy and overcoming economic cyclicality. In particular, governance/institutional can positively adjust the public debt — income inequality relationship in developing economies. The purpose of the study to identify the impact of institutional quality, public debt and their interaction on income inequality on a balanced data panel of 34 developing economies for the period 2002–2020. For monitoring endogenous problems and serial autocorrelation in empirical equations, two-step and one-step system GMM (Generalized Method of Moments) assessments are used. The results from the study show that public debt and the quality of institutions increase income inequality, but their interaction narrows it. These results seem to be counter-intuitive. Besides, education enhances income inequality in these economies. The results of the study provide some policy recommendations for reducing the inequalities in society through public debt and the quality of institutions in developing economies. Accordingly, governments in developing economies should use spending financed by public debt to support low-income individuals through social transfers throughout economic development. Importantly, they should spend more on education and health to help the poor improve their skills and knowledge, narrowing the income difference between the rich and the poor. In particular, they should be prudent in controlling and managing public debt to avoid a public debt crisis and social instability.

Belt and Road countries’ external debt and China’s new strategies

ABSTRACT Since the Belt and Road (B&R) initiative was put forward in 2013, China has signed cooperation documents with more than 150 countries and more than 30 international organizations. The Chinese government and banks have lent a large amount to B&R countries for infrastructure development, and China’s foreign contracted projects and trade with these countries have increased significantly. However, many B&R countries face severe debt repayment problems, and China has actively engaged in debt relief. To avoid debt crises, China needs to adopt new B&R development strategies, including putting B&R development firmly on commercial principles, reducing government loans to B&R countries and restructuring debt, expanding trade with B&R countries, increasing imports from debtor countries, and encouraging private enterprises’ direct investment in these countries.

Do sanctions trigger financial crises?

We investigate the effect of sanctions on the occurrence of financial crises. We use the Classification and Regression Tree (CART) algorithm to check whether binary classification mechanism selects sanctions as a predictive factor for the different types of financial crises. We find that trade sanctions matter for the increased probability of banking crises, while military sanctions are associated with currency crises. We find no evidence of the effect of sanctions on sovereign debt crises. We furthermore indicate which variables and their respective thresholds serve as potential harbingers of financial crises.

Towards complete development finance data: Quantifying China's international education co‐operation and presence in the Global South

AbstractMotivationChina does not participate in the development co‐operation reporting mechanism of the Organisation for Economic Co‐operation and Development's (OECD) development co‐operation reporting mechanism, nor does it voluntarily publish overseas development finance data. Despite recent quantitative research on China's foreign aid to other sectors, such as health, no precedent exists for quantifying China's international education co‐operation (IEC).PurposeThis article will use AidData's Chinese Official Finance Dataset (AidData 2.0) to estimate the IEC using the OECD's internationally standardized definitions of development finance and frameworks for classifying IEC projects.Approach and methodsWe thoroughly examined all types of IEC projects, including official finance projects other than those that meet the definition of official development assistance (ODA). In our comparative analysis of educational aid between China and traditional donors, we focused on ODA‐like projects and examined the number of projects and funding amounts to determine China's IEC priorities.FindingsThe result shows that, between 2000 and 2017, China's IEC commitments totalled 1,524 education‐related international projects, representing 12% of the total international finance project portfolio, most of which are in Africa. Compared to the OECD framework, China prioritized higher education (n = 784, 51%) and education facilities and training (n = 244, 16%). An estimate of cumulative funding between 2000 to 2017 showed that China was the 10th largest donor of education aid to African countries, behind France, the World Bank, Germany, the United States, the EU, the United Kingdom, Canada, Japan, and the Netherlands.Policy implicationsThe findings of this study help our understanding of China's IEC finance. With China's involvement in education development aid growing in recent years and donors looking for solutions to developing countries' debt crises, this will allow for more effective collaboration, co‐ordination, and resource mobilization for both donor and recipient countries.

Comments by Somkiat Tangkitvanich,  on  The Sovereign Debt Crisis in Sri Lanka: Anatomy and Policy Options

Comments by Somkiat Tangkitvanich,  on  The Sovereign Debt Crisis in Sri Lanka: Anatomy and Policy Options

The Impact of Greek Debt Crisis on EU Integration and Its Enlightenment

As a very important member of the European Union, Greece has a very significant influence on the development of the European Union. The outbreak of the Greek debt crisis has a far-reaching impact on the process of EU integration. At the same time, the fiscal deficit and other economic and financial problems exposed by the Greek debt crisis have enlightenment for China and other countries. Therefore, it is of great research value to study the problems exposed in the Greek debt crisis and its impact on EU integration, and learn from these problems. This paper will first introduce the development process of the Greek debt crisis, then analyze its impact on EU integration, the way out of the Greek debt crisis, and finally discuss its reference significance to China and other places.

Comments by Fukunari Kimura,  on  The Sovereign Debt Crisis in Sri Lanka: Anatomy and Policy Options

Comments by Fukunari Kimura,  on  The Sovereign Debt Crisis in Sri Lanka: Anatomy and Policy Options

Dynamic spillover between crude oil, gold, and Chinese stock market sectors –analysis of spillovers during financial crisis data during the last two decades

The present study investigates the presence of asymmetric return spillovers among crude oil futures, gold futures, and ten Chinese stock sector markets. Time-varying asymmetric spillovers between commodities and the 10 sectors are shown by utilizing the spillover index developed by Diebold and Yilmaz (2012, 2014). Our findings indicate that the industrial and discretionary consumer sectors generate and benefit the most from spillovers. Furthermore, it has been established that the basic materials sector exhibits a net positive impact on spillovers. In contrast, oil futures, gold futures, and other sectors demonstrate a net negative impact as recipients of spillovers. Moreover, the negative return spillovers outweigh the positive return spillovers. Our analysis spans from 2000 to 2023 to include various financial crises. The spillover effects of asymmetry are impacted by various factors, including the global financial crisis (GFC), the European sovereign debt crisis (ESDC), the decline in oil prices, and the outbreak of the COVID-19 pandemic. Including gold and oil in individual equity markets can benefit equity investors. Furthermore, implementing hedging strategies is susceptible to the global financial crisis, economic slowdown, oil price decline, and the recent COVID-19 pandemic. The oil futures exhibit the greatest hedging effectiveness during the COVID-19 spread. The findings indicate that gold exhibits comparable outcomes solely in the presence of positive spillover effects. At the same time, its performance reaches its peak during the recovery phase in the context of negative spillover effects.

The Sovereign Debt Crisis in Sri Lanka: Anatomy and Policy Options

Abstract During the COVID-19 pandemic, there was a dramatic increase in national debt levels across the world, with reported cases of downgrading sovereign debt ratings and difficulty of fulfilling debt obligations (“debt distress”), heavily concentrated in low- and middle-income countries. In this context, the unfolding sovereign debt crisis in Sri Lanka has attracted worldwide attention as the canary in the coal mine for what could become a global “development” crisis. This paper examines the Sri Lankan crisis encompassing both the sources of vulnerability to the COVD-19 shock, and stabilization and structural adjustment reforms after the debt default, with emphasis on the systemic “solvency” challenge of dealing with the massive debt overhang evolved over the previous two decades. The prime focus of the Extended Fund Facility (EFF) program that Sri Lanka signed with the IMF in March 2023 is on economic stabilization through fiscal consolidation. This paper makes a strong case for combining economic stabilization with coherent structural adjustment policies to redress the long-standing antitradable bias in the incentive structure that underpinned vulnerability of the economy to external shocks.

Dynamic linkage between environmental segments of stock markets: the role of global risk factors

ABSTRACT This study evaluates the links between representative indices of companies with high environmental performance and the propensity of such indices to economic and financial shocks. Five indices, representing environmental segments and four global macroeconomic and financial variables, were analyzed over a thirteen-year period, which included various crisis moments, such as the sovereign debt crisis, the COVID-19 pandemic and the onset of the Russia/Ukraine conflict. Using dynamic and nonlinear models, our research reveals statistically significant and consistent relationships between the variables under investigation, particularly during periods of global financial and pandemic crises. The analysis revealed that the VIXCLS is the most influential global risk factor, with certain risk factors being influenced by environmental segments, particularly Alternative Energy. This influence can create conditions conducive to contagion risk and diminish the benefits of portfolio diversification. This study contributes to a deeper understanding of the connection between environmental investments and their vulnerability to significant global events and risks.

From Menace to Mundane: Moral Hazard and the Politics of the European Central Bank's Government Bond Purchases

AbstractDuring the Eurozone's sovereign debt crisis, the ideational consensus that shaped the foundation of Economic and Monetary Union (EMU) was destabilized by disagreement on unconventional monetary policies (UMPs), specifically government bond purchases. In the ECB's 2021 strategy review, however, UMPs were confirmed as standard elements of the European Central Bank's (ECB) toolbox. What happened? One argument frequently presented to question the legitimacy of UMPs is that they undermine the prior objective of the EMU of avoiding moral hazard. We analyse the politics of UMPs by focusing upon how top officials in four major Eurozone central banks have discursively constructed the relationship between the ECB's purchase of sovereign debt and moral hazard. We find that top central bank officials aligned to a large degree on the non‐necessary causal relationship between government bond purchases and moral hazard, which reinforced its legitimacy and eventual acceptance as ‘conventional’.

The asymmetric response of sovereign credit default swaps spreads to risk aversion, investor sentiment and monetary policy shocks

This paper investigates the determinants of sovereign credit default swaps spreads in the case of European countries. More specifically, it purposes to yield insight into how sovereign credit default swaps spreads respond to changes in investor sentiment, risk aversion, and monetary policy shocks during different market states. Using monthly data from May 2009 to December 2021 and running the quantile regression model, we show that risk aversion, investor sentiment and monetary policy affect the sovereign credit risk changes, and their effects vary across countries and markets states. More importantly, Risk aversion and monetary policy display the major asymmetric role in explaining CDS premia. However, limited asymmetric explanatory power is shown for investor sentiment. Furthermore, our findings demonstrate that the recent European debt crisis has significantly shaped the sensitivity of the sovereign credit risk spreads to the studied determinants. The findings of this study are helpful for investors in forecasting sovereign European credit spreads and hedging the countries default risk.

The Impact of Global Economic Policy Uncertainty on Global Grain Prices --Based on the TVP-VAR-SV Model

Grain products are essential for human survival and economies, and their price fluctuations significantly impact global economic stability. Recent frequent uncertain events have made global economic policy uncertainty a major factor in global food price fluctuations. This study choose European debt crisis, the COVID-19 pandemic, and the Russo-Ukrainian war as three typical type of uncertainty event. And used TVP-VAR-SV model to examine the impact of global economic policy uncertainty on the prices of beans, maize, rice, and wheat. The result shows policy uncertainty leads to fluctuating grain prices, with food grains (rice, wheat) and feed grains (beans, maize) reacting differently. And different types of uncertainty events have different effects, with the pandemic having the greatest effect. Finally, the paper suggests strategies for global food security, including improved information communication, policy control, early warning systems, stable economic policies, and supervision of the agricultural futures market.

Does BRRD mitigate the bank-to-sovereign risk channel?

We investigate the effectiveness of the Bank Recovery and Resolution Directive (BRRD) in mitigating the transmission of credit risk from banks to their sovereign, using CDS spreads to capture bank and sovereign credit risk for a sample of 43 banks in 8 Euro Area countries over the period 2009-2020. If the BRRD bail-in framework is credible, changes in bank default risk should not be transmitted to sovereign risk. In a novel approach we use banks earnings announcements to identify exogenous shocks to bank credit risk and investigate to what extent bank risk is transmitted to sovereign risk before and during the BRRD era. We find that bank-to-sovereign risk transmission has diminished after the introduction of the BRRD, suggesting that financial markets judge the BRRD framework as credible. The decline in bank-sovereign risk transmission is particularly significant in the periphery Euro Area countries, especially Italy and Spain, where the bank-sovereign nexus was most pronounced during the sovereign debt crisis. We report that the lower bank-to-sovereign credit risk transmission is associated with the parliamentary approval of the BRRD and not with the OMT program launched by the ECB to affect sovereign yield spreads, nor with specific bail-in or bailout cases which occurred during the BRRD era. Finally, we document that the reduction in risk transmission is most pronounced for banks classified as a Global Systemically Important Bank (G-SIB), stressing the importance of additional capital buffers imposed by Basel III.

Index for Public Administration Resilience Against Hybrid Threats

EU countries are dependent on the import of many raw materials. The geopolitical situation significantly impacts the European Union's raw materials policy. Hybrid threats are a serious challenge to security and stability in the world. They are very diverse in terms of actors, activities, or tools. The relationship between the EU's raw materials policy and hybrid threats is complex and influenced by a number of factors. In principle, however, it can be said that due to its dependence on importing raw materials from third countries, the EU is more prone to become the object of hybrid threats that these countries can use to promote their interests. The resistance of the public administration to hybrid threats is one of the important factors that can help the EU reduce the risk of threats to raw material policy by hybrid threats. The aim of the contribution is to create a new composite index, KAPA, which measures the resistance of public administration to hybrid threats. The proposed index has five dimensions – cybersecurity, resistance to disinformation, compliance with laws and security, protection against corruption, and prevention of a sovereign debt crisis. When constructing the KAPA index, we start from the apparatus of fuzzy sets. We have drawn all data from reputable, publicly available databases. According to the KAPA index, the countries ranked best are Estonia, Denmark, Finland, Sweden, and the Netherlands. The worst-ranked countries were Greece, Cyprus, Italy, Bulgaria, and Croatia. The results confirmed that fragile states, measured by the Fragile States Index FSI, are also more vulnerable to hybrid threats and have less resilient public administration.