Debt Problems Research Articles

External Debt and Economic Growth of BRICS Nations: How can BRICS Integration help them?

This study examines the relationship between external debt and economic growth in the BRICS countries. It explores how BRICS integration can aid these economies and newly joined countries in solving the debt problem. Using the latest panel data techniques and country experiences, we employed the panel mean group method (PMG) and interrupted time series analysis (ITSA) for South Africa, who joined in 2010. Results show a negative relationship between external debt and economic growth at the group level, with mixed results for individual countries. Using individual country experiences, valid implications are drawn for debt-stressed countries like Ethiopia and oil-rich nations like Saudi Arabia. Integrating new member countries in BRICS can overhaul the existing system towards broader perspectives of reforms in global financial institutions. Integration into the BRICS association can benefit these countries through reforms in global financial institutions, fairer debt restructuring, joint investment projects, macroeconomic coordination, debt management knowledge sharing, innovative financing, and collective advocacy for debt relief to enhance stability and resilience.

Determinants of External Debt in Developing Countries: The Case of Algeria

Background: Developing countries seek to eliminate external debt problems towards financial obligations with a view of alleviating the debt burden to avert economic volatility in the context of debt accumulation. Since the beginning of the 1970s, developing countries, including Algeria, have experienced rapid growth in external debt accumulation in an effort to finance domestic deficits and not enter into economic recession. All these reasons ignore the topic of external debt as an interesting topic of study. This study attempts to analyse and measure some of Algeria's external debt indicators during the study period. Purpose: This research paper focuses on identifying the determinants of external debt in Algeria. Methods: The study utilized the autoregressive distributed lag (ARDL) model and cointegration test to analyze both short- and long-term relationships among the study variables from 1990 to 2021. Results: The findings show that the exchange rate and government spending significantly and positively impact external debt in the long run, whereas GDP per capita and foreign direct investment are significantly negatively correlated with external debt. The short-term results align with those of the long term. Conclusions: The paper advises that the Algerian government and other developing countries should assess their foreign debts, rationalize government spending, diversify their economies, and enhance their investment climates.

The Analysis of the Necessity and Impact of Property and Inheritance Taxes in China

The purpose of this paper is to explore the necessity and possible impact of the implementation of property tax and inheritance tax in China based on the Western tax system and the existing experience and background in China. After understanding the provisions of the Western tax system, the comments of Western people, and the results of relevant experiments in China, we found that China’s existing economic structure may create a number of problems and the low level of asset mobility of a small number of high-net-worth individuals and their small contributions to social and economic consumption also require a new tax for social wealth redistribution. Property tax and inheritance tax would be the right solution to local debt and social equity problems.

A Study of Debt Problems in the Chinese Real Estate Industry

This paper will focus on real estate industry in China, uses Evergrande group as a case to compare with another Chinese real estate company Vanke and a real estate company of United State which is AvalonBay Communities, Inc. This paper will introduce the background of real estate industry in China, and base on the case which is bankruptcy of Evergrande Group to throughout the causes find out the issues of real estate in China, in causes is discuss of three factors: Industry characteristics, financing channels, loan evaluation, analysing what make Evergrande can owe a massive $2.4 trillion in debt, and analysing the United States real estate industry not usually having such high leverage. Essay will tell the strategy of real estate companies in China usually do. The strategy led to Evergrande group bankruptcy and compare with Vanke uses what strategy avoid debt crisis. Finally, conclude the chaos of real estate industry in China reflected by Evergrande group, recognise the issues of Evergrande group and prevent the significant consequence occur again.

PARENTAL OVER-INDEBTEDNESS AND YOUTH CRIME IN SWEDEN: A NATIONWIDE REGISTER-BASED STUDY

Very little is known about whether a child’s delinquency can be related to a parent’s economic problems in terms of financial indebtedness. This would seem to be an important research gap, not least at a time when the repercussions of the 2008 global financial crisis are still being felt by many people. This study concerned boys and girls born in 2002 who had a parent with a registration date for a debt in the Swedish Enforcement Authority register between 2016 and 2017 (n = 3,284). We determined whether the adolescents had been convicted of a crime during the 3-year period when they were 15 to 17 years old, and compared their records with a sample from the general Swedish population (n = 16,435). Results from logistic regressions show that children who, at age 15 to 17, had a parent with debt problems were approximately one and a half times more likely to be convicted of a crime than children who were unexposed to registered debts of parents (OR = 1.55), irrespective of other well-established criminogenic risk factors observed prior to the parent’s date of registration at the Enforcement Authority. The results provide support for the notion that financial challenges and problems with creditors may be an important proximate risk factor of delinquency.

Analyzing the Threshold Impact of Public Debt on Economic Growth: an Investigation of the New Member States within the European Union

This paper aims to analyze the impact of public debt on economic growth in eleven EU new member states (NMS) from Central and South-Eastern Europe for the period 2000-2019. More specifically, we investigate if there is evidence of a non-linear (quadratic) relationship in this group of countries. Having in mind different economic and financial development, historical connections, and geographical proximity, we split them into three more homogenous groups: Balkan countries (BAL-4), Baltic countries (B-3), and Visegrad countries (VIS-4). The results of our study in all models indicate a statistically significant non-linear impact of public debt ratios on annual GDP per capita growth rates. The results across all models show a significant non-linear impact of public debt ratios on annual GDP per capita growth rates. Further, the calculated debt-to-GDP turning point, where the positive effect of accumulated public debt inverts into a negative effect, is roughly between 42.7%-58% of GDP, dependent on which sub-group we have analyzed. In general, the research may contribute to a better understanding of the problem of high public debt and its effect on economic activity in the new EU.

Technical debt in AI-enabled systems: On the prevalence, severity, impact, and management strategies for code and architecture

Context:Artificial Intelligence (AI) is pervasive in several application domains and promises to be even more diffused in the next decades. Developing high-quality AI-enabled systems — software systems embedding one or multiple AI components, algorithms, and models — could introduce critical challenges for mitigating specific risks related to the systems’ quality. Such development alone is insufficient to fully address socio-technical consequences and the need for rapid adaptation to evolutionary changes. Recent work proposed the concept of AI technical debt, a potential liability concerned with developing AI-enabled systems whose impact can affect the overall systems’ quality. While the problem of AI technical debt is rapidly gaining the attention of the software engineering research community, scientific knowledge that contributes to understanding and managing the matter is still limited. Objective:In this paper, we leverage the expertise of practitioners to offer useful insights to the research community, aiming to enhance researchers’ awareness about the detection and mitigation of AI technical debt. Our ultimate goal is to empower practitioners by providing them with tools and methods. Additionally, our study sheds light on novel aspects that practitioners might not be fully acquainted with, contributing to a deeper understanding of the subject. Method:We develop a survey study featuring 53 AI practitioners, in which we collect information on the practical prevalence, severity, and impact of AI technical debt issues affecting the code and the architecture other than the strategies applied by practitioners to identify and mitigate them. Results:The key findings of the study reveal the multiple impacts that AI technical debt issues may have on the quality of AI-enabled systems (e.g., the high negative impact that Undeclared consumers has on security, whereas Jumbled Model Architecture can induce the code to be hard to maintain) and the little support practitioners have to deal with them, limited to apply manual effort for identification and refactoring. Conclusion:We conclude the article by distilling lessons learned and actionable insights for researchers.

Rising global public debt as a factor of world monetary system’s enhanced instability

Based on the analysis of statistical data, the article covers the dynamics and changes in the structure of global public debt, which plays an essential role in ensuring and maintaining financial stability. The authors conclude that the problem of sovereign debt is of a deep nature, since it is associated with the dominant model of economic development that encourages the growth of credit dependence that is not backed by real assets. Within the framework of the credit model of economic development, any measures taken to solve debt problems will be cosmetic in nature, therefore, in the coming years, the growth of global public debt will continue, the instability of the global monetary and financial system will increase, the likelihood of crisis situations (up to sovereign defaults) will persist.

Debt load as a fundamental factor of changes in the conditions of global economic development

The relevance of the problems investigated in the article is determined by the fact that the world economy fragmentation worsens its dynamics, but its actual fragility became relevant after the global crisis of 2008–2009. In this regard, developing countries are increasingly characterized by extreme risks associated with the global markets’ instability – not only commodity markets, but also financial ones, where the innovative derivatives expansion has increased the speculators’ role, thereby making commodity markets more volatile. The overall situation is aggravated by debt problems in many countries. The purpose of the study is to investigate the nature and extent of the debt burden that has developed in the global economy in recent years and to assess the key challenges facing the monetary policies of countries around the world in order to counter the rising debt burden. The main results of the study include the assessment of the scale and nature of the debt burden in terms of its negative impact on global economic development, identification of the relationship between the business cycle passage and the debt accumulation in foreign countries, as well as the main directions of prospective monetary policy that will contribute to the debt burden reduction in the foreseeable future.

Understanding Vulnerability to the Poverty Premium: An Analysis of Factors Influencing Use of High-Cost Credit Among Low-Income Individuals

Introduction & BackgroundAccess to affordable credit is essential for individuals living on low incomes to participate in society fully. However, due to their limited credit history and volatile incomes, many cannot access mainstream sources of credit, such as credit cards and personal loans. As a result, they often must rely on more expensive sources of credit such as payday loans, doorstep loans or rent-to-own loans. This leads to them paying more for credit, also referred to as the poverty premium. Incurring the poverty premium exacerbates the financial challenges faced by already vulnerable individuals and can lead to a cycle of financial distress. Identifying the behaviours and factors that lead to a need for high-cost credit can help in identifying individuals who are most vulnerable to incurring the poverty premium. Objectives & ApproachTo achieve this, we rely on anonymized Open Banking transaction data from 100,000 individuals provided by a UK-based social lender.Given the latent nature of vulnerability, we identify indicators of vulnerability to poverty premium which include frequency of overdraft use, previous debt problems, low financial resilience, and indebtedness. We use a copula-based approach to create an index of vulnerability to poverty premium. This is based on weighting the individual indicators using their Spearman rank correlation coefficient. We use a fixed effects model to identify the factors that contribute to this vulnerability, where the index of vulnerability is the dependent variable. Relevance to Digital FootprintsWe use a rich and granular dataset on individual financial transactions to address a key social issue. The findings from this study can inform policy and industry efforts to promote greater credit affordability for these vulnerable individuals. This is particularly important due to the renewed concerns regarding the increased use of high-cost credit by individuals living on low incomes due to COVID-19 and the increased cost of living. ResultsOur findings show that variables related to the financial profile of an individual are important driving factors of the vulnerability to poverty premium. These include the number of salary sources, frequency of salary receipt, benefit receipt and savings frequency. Other variables related to spending behaviour such as gambling, volatility in fixed expenses and high transaction counts all have positive relationships with this vulnerability. Conclusions & ImplicationsThis study is a first step towards examining the determinants of vulnerability to poverty premium by analyzing an Open Banking transaction data set. The innovative feature of this work is the creation of an index of vulnerability to poverty premiums based on various indicators of financial distress and high-cost credit use. Our findings on the relationships between the individual's financial profile and the vulnerability to poverty premium suggest that policymakers should consider targeting interventions for individuals with specific profiles to alleviate the need for high-cost credit. For example, programs to promote regular savings or financial education for gamblers and people with volatile spending behaviour can help assist these individuals manage their finances better.

The grand bargain on local government debt: Evidence from China's intergovernmental relations

IMPACT This article provides a deeper understanding of policy implementation in local government, highlighting the key role of subnational governments in public risk governance. In fiscally centralized countries with significant local government debt problems, officials at the central government level cannot effectively mitigate local government debt risks solely through restrictive financing policies. The authors explain why policy-makers at the central government level in these countries need to revaluate the structure of the local government financial system.

External debt vulnerability in developing countries: the economic and policy perspectives

PurposeThe purpose of this study is to empirically investigate how external debt vulnerability has affected the economy of emerging countries over time, with particular reference to Sub-Saharan African countries. It also deals with the policy issues associated with the economic effects.Design/methodology/approachThe techniques of dynamic ordinary least squares and fully modified ordinary least squares are used in this investigation, covering the period 1990–2022. A panel of 43 Sub-Saharan African countries is used in the study.FindingsThe estimation results reveal that external debt vulnerability impacted negatively on economic growth, thus validating the concerns raised about the debt problem in Sub-Saharan Africa. Furthermore, the results revealed that domestic credit and openness of economy played a passive role and were therefore unable to cushion the adverse effect of debt vulnerability. Capital stock, however, stands out as the only variable that played a significant positive role in facilitating economic growth. The results are considered to be highly reliable for short-term forecast of economic growth and formulation of relevant policies.Originality/valueOver the years, economic analysts and stakeholders have expressed concern about the inadequate ratio of foreign reserves to external debt in developing countries. The effect of this external debt vulnerability on the economy of these countries has yet to be given sufficient attention by researchers. In view of this perceived void, this current study is carried out to determine the economic and policy consequences of the problem.

PROSPECTS FOR THE DEVELOPMENT OF THE ELECTRICITY MARKET OF UKRAINE IN THE CONTEXT OF EUROPEAN INTEGRATION

The article is devoted to the problems of the transition of the Ukrainian electricity market to a new market model. Such a transition is due to the intentions of further integration of the energy markets of Ukraine and the EU. The transition to a new model of the electric energy market is accompanied by the appearance of new market participants, as well as new financial and economic relations between them. The purpose of the article is to study the theoretical provisions and systematize the main prospects for the development of the electricity market of Ukraine in the context of European integration. The article analyzes the current state of the electric power industry. It was revealed that more than half of the electricity in 2019-2020 was produced at nuclear power plants. The main consumers of electricity were the residential sector and industry. Systematized main problems of the electricity sector: significant role of the state in the market, lack of transparency in setting tariffs for electricity supply services, existence of debts of market participants and electricity consumers. Attention was drawn to the problem of debts of participants in the electricity market. Prospects for the development of the electric power sector in the context of European integration are highlighted: synchronization of legislation, diversification of energy supplies, implementation of a transparent price regulation mechanism. It is also important for Ukraine to use the EU's experience in creating a stable common energy market. The integration of the energy markets of Ukraine and the EU will contribute to the diversification of Ukraine's energy supply and the introduction of new technologies. This process will take place based on the internal energy market of the EU, which will promote investments, energy security and self-regulation in the market.

Assessing whether China will experience the lost decade of Japan

ABSTRACT Japan’s lost decade has long puzzled economists, specifically as to what brought it about. As China’s current economic conditions resemble Japan’s in the 1980s, this has prompted concern China might suffer a similar fate. This paper identifies that the response of the Japanese central bank toward the Plaza Accord, which is unfettered lending was the key factor of lost decades. By contrasting Sino-US and Japan-US trade wars, this paper argues that China will not fall foul of the same situation of accepting a new Plaza Accord. By comparing China’s bubble economy now with Japan’s bubble economy in the 1980s, this paper argues that the fallout from a burst Chinese bubble is expected to be less severe than Japan’s early 1990s. Furthermore, by analyzing the two countries’ respective debt problems and aging populations, it is concluded that these issues pose no significant threat to Chinese economic growth in the short term.

Analysing legal responses to coerced debt

Abstract This paper analyses legal responses to the problem of debt taken out due to coercion within an intimate relationship. Coerced debt differs from other forms of domestic abuse, as it involves a contractual relationship between the victim and a third-party lender. Legal responses must consider whether the victim should be released from her contractual obligation. The paper employs a theoretical lens of vulnerability and relationality, examining lenders’ duties to combat coerced debt, as well as contractual doctrines of undue influence and duress, which allow victims to have transactions set aside under certain circumstances. The paper argues that victims are being failed by an inadequate legal response. The law views vulnerability as an exceptional state and relationality as a constraint, rather than inherent features of the human condition. Through the social construct of the ‘free market’, lenders are consistently favoured by the law, with little obligation to ensure that transactions are free from coercion. The paper concludes with a call for the state to take greater responsibility for coerced debt and to allocate the risk differently than it currently does. This will promote higher levels of resilience for victims and allow them to escape abusive relational contexts.

Зовнішній державний борг україни на сучасному етапі: дорожня карта управління

The article examines the issue of improving the road map for the management of external public debt in wartime. Managing foreign public debt during wartime requires a comprehensive and strategic road map to address such circumstances’ unique challenges and risks. We offer a road map for managing external public debt in wartime, which considers the international debt relief initiatives analyzed in the post-war reconstruction of Europe. This roadmap provides a comprehensive approach to managing Ukraine’s external debt in wartime conditions and provides a framework for decision-making and adaptation to changes in the economic environment. It is aimed at preserving financial stability and ensuring economic stability in the conditions of military conflict. International debt relief initiatives in the post-war recovery of Europe are singled out, which can serve as an example for reducing the debt burden in Ukraine. The only way to ensure external debt security in the war and post-war period in Ukraine is to increase the economic growth rate and carry out reforms within the framework of the implementation of the Recovery Plan of Ukraine, which would increase the credit rating and reliability of the state. Ukraine’s participation in international cooperation is vital in managing external public debt and supporting economic development goals. For Ukraine, the fundamental way to solve the public debt problem will be to achieve stable and adequate economic growth. This will contribute to an automatic reduction of the debt-to-GDP ratio and an increase in tax revenues to the state budget without the need for excessive burden on businesses and individuals. The country’s debt security risks are identified and characterized. Keywords: debt, external public debt, road map, management, state.

MONITORING OF THE PUBLIC DEBT OF UKRAINE UNDER THE CONDITIONS OF MARITAL STATE

Abstract. Public debt exists as an economic and legal phenomenon in most countries of the world, as a rule, it is formed as a result of financing the deficit of the national budget. For countries with effective public debt management institutions, it is an engine of rapid economic development. In many countries, the creation of public debt is associated with the government's attempts to improve the socio-economic conditions of people's lives by modernizing infrastructure, developing education, science, health care, improving social welfare, etc. Public borrowing is a source of investment, a means of reducing the negative impact of external factors, and a fairly effective incentive that helps accelerate the growth of the country's economic potential. Thanks to borrowing, our country received additional resources to meet public needs, overcome а certain technological lag in national development, and outline prospects for economic growth. But on the other hand, such borrowings can become a debt burden, since the economic situation in the country does not allow for effective repayment of debts, which in turn only deepens the country's debt problem. Thus, the main problem of public borrowing, in our opinion, is a real threat of reliance on the state and creditors, which has a stable upward trend. In the conditions of war, national obligations, mainly to foreign countries, are growing rapidly. Inefficient management of public debt can lead to economic instability in countries. In our opinion, an increase in external public debt can lead to a decrease in the state authority of Ukraine in the international economic arena and cause mistrust and doubts about the state's ability to ensure the timely fulfillment of its financial obligations.

Проблемы и перспективы реализации политики справедливого энергетического перехода в ЮАР

South Africa is the one of leading African economies and the one of the major global greenhouse gas emitters. Actively participating in international climate and energy frameworks, South Africa sets an ambitious goal of achieving net zero emissions by 2050. The climate agenda is a sphere of crucial importance for South Africa due to explicit systemic vulnerabilities of the national economy in the face of expected changes. This article analyzes problems and prospects in achieving South Africa’s climate policy goals, as well as the availability of resources necessary to achieve these goals. The analysis finds that South Africa does not possess the resources to achieve its climate goals. South Africa remains dependent on polluting fossil fuels, especially coal, due to enormous available natural deposits. Climate financing covers only a portion of necessary financial placing. In the long run, established international agreements may aggravate the country’s international debt problem. South Africa’s leaders recognize the necessity of climate-related policy measures, but such measures cannot be characterized as the main drivers of the country's development.

Soaring public debt: Return of financial repression and high inflation?

The global economic crisis caused by the COVID-19 pandemic has once again shown the key role of fiscal stimulus. At the same time, in many developed countries, stimulating monetary policy was limited by the already achieved zero interest rates. But the fight against the consequences of the coronavirus with fiscal policy instruments had a negative effect in the form of an increase in the state budget deficit and, as a result, in public debt. According to the Institute of International Finance (IMF), by the end of 2022, global debt reached $297 trillion, or 349%. The public debt in the world reached 102% of GDP in 2022, which is a historically high value since the 1960s. In 2023, global debt continued to grow in nominal terms: according to the IMF, in Q1 2023, it has already increased by $8.3 trillion to $305 trillion. The risks of rapid growth in public debt in developed and developing countries were even before the COVID-19 pandemic. But after a period of stimulus fiscal measures in 2020—2021 the public debt problem has worsened, raising fears that the practice of financial repression could become a reality for the next decade. Accelerating global inflation increases incentives for governments to use financial repression to eliminate the public debt burden. At the same time, financial repression, in turn, may imply a decrease in the effectiveness of the inflation targeting policy, as a result of which there are risks that high inflation will become more sustainable.

Enterprise Management and Risk Assessment Analysis Practice

Finance is the core competitiveness of the country. Since the reform and opening up, China's financial industry has developed rapidly and made historic achievements, but there are still many contradictions and problems that make it difficult to meet the requirements of high-quality economic development. First, the debt problem: China's enterprises, local governments and household sectors are all facing considerable debt pressure. Some enterprises and local governments have hidden debts, and the debt of the household sector is also increasing. This poses a risk to the stability of the financial system.Second, financial institution risk: Some financial institutions have risks, including credit risk and liquidity risk. Some non-bank financial institutions have relatively low capital adequacy ratios and are potentially at risk of default.Third, financial chaos: some financial chaos problems still exist, such as illegal fund-raising, online financial fraud and so on. These issues challenge the effectiveness of financial regulation and public trust in the financial system.Fourth, structural problems in the financial system: there are some structural problems in China's financial system, such as insufficient interaction between the banking sector and the capital market, and relatively low efficiency of financial resource allocation. These problems constrain the development of the financial system and sustainable economic growth.