Financial Diversification Research Articles

Unveiling the Future of Retirement: The Opportunities and Obstacles in Modernizing Pension Schemes Across Africa

This systematic review offers a holistic understanding of the prospects, challenges, and best practices in modernizing pension schemes across Africa. With a rising aging population, pension schemes are vital for financial security, societal well-being, and poverty alleviation. The study addresses literature gaps by exploring economic implications, assessing elderly frailty, and investigating quality of life impacts. Following PRISMA guidelines and using the PICOS framework, multiple electronic databases were searched for papers published between February 2010 and April 2022, focusing on African pension schemes. Thirty-one studies met the eligibility criteria and were included in the analysis. Findings indicate that while pension schemes improve mental health, food security, and societal structures, they face challenges such as data scarcity, financial sustainability, social dynamics, and institutional barriers. Best practices include tailored interventions, financial flexibility, and healthcare integration. This paper uniquely synthesizes multiple disciplines, providing an integrated perspective and filling a significant literature gap. The study introduces models considering economic, psychological, and health-related variables, enhancing theoretical understanding. For practitioners, it offers adaptable best practices for regional and cultural contexts in Africa, including financial diversification, healthcare integration, and legal clarity. The societal impact extends to the elderly, their families, and communities, providing critical insights for policymakers to design effective, sustainable pension schemes to improve the quality of life for Africa’s aging population.

Does Macroeconomic Moderate The Effect of Risk and Diversification on Financial Stability? Evidence from Islamic Commercial Bank

<em><span>Islamic banking's financial stability can improve efficiency and health and be able to withstand shocks originating from internal and external factors. This study analyzes the impact of risk, diversification, and inflation on the financial stability of Islamic banking. By using monthly time series data from 2018–2022, the analysis method used is multiple linear regression and moderate regression analysis (MRA) using the Eviews version 10 application. The results showed that the credit risk variable (NPF) has a significant negative relationship to financial stability (Z-Score). As well as the liquidity risk variable (FDR), financing diversification has a significant positive effect on the financial stability of Islamic banking (Z-Score). Macroeconomic variables (inflation) can strengthen the effect of financing diversification and weaken the effect of liquidity risk (FDR), but inflation cannot moderate the effect of credit risk (NPF) on the financial stability of Islamic banking (Z-Score). This study introduces a new theoretical approach to the conceptual relationship between variables. The findings can serve as a reference for monetary authorities in considering the impact of inflation in setting financial stability policies.</span></em>

Bank financing diversification, market structure, and stability in a dual-banking system

This paper examines the effects of bank financing diversification and market concentration on bank stability in Malaysia. Our study is unique as it investigates these effects within a banking industry that has undergone major restructuring due to the introduction and rapid penetration of a new banking type, Islamic banking. Despite its recent history, Islamic banking, having benefited from strong government support, has grown to command more than a third of the market share. The extensive realignment caused by such industry disruption makes the study of such effects on banking stability highly relevant and interesting. The study investigates 24 conventional and 18 Islamic banks in Malaysia from 2003 to 2019. Our results reveal differences in the above dynamics between the two bank types. Increasing diversification up to a moderate level enhances the stability of conventional banks, but only in less-concentrated markets. Very high diversification levels, however, impair their stability. For Islamic banks, stability seems unresponsive to financing diversification. Furthermore, while market concentration negatively affects the stability of conventional banks, Islamic banks appear to benefit from market concentration. These findings withstand our robustness tests using alternative measures of the key variables. Further examination suggests that these dynamics may have a temporal dimension. Our findings imply that a policy based on a single regulatory framework emphasizing increased diversification and competition across the industry may not be appropriate for all banks. Conventional and Islamic banks may require different regulatory treatment.

The Role of Financial Development in Reducing Income Inequality in Selected Asian Countries

The present study investigated the effects of financial development on income inequality for three income level groups across 12 Asian countries (areas) from 1980-2020. The three groups comprised countries with low, moderate, and high economic development. Using the Quantile-on-Quantile (QQ) approach, The findings showed that the impact of financial development on income inequality differed across the income level groups of the 12 selected Asian countries. The results suggested that financial development exacerbated income inequality in underdeveloped countries, while for moderately developed countries, financial development promoted income equality. Except for South Korea, the other countries in the high economic development group showed that financial development exacerbated income inequality. Therefore, the impact of financial development on income should be examined by groups, in which moderately-developed countries could devote more attention to promoting income equality through reforms focusing on the development of financial diversification and the enhancement of financial depth.

Firms’ borrowing costs and neighbors’ flood risk

AbstractThis study examines whether Italian firms exposed to physical climate risks incur additional borrowing costs due to spatial spillovers. Using a sample of 419,040 firm-year observations from 2016 to 2019, we find a positive relationship between a firm’s cost of debt and its neighborhood’s average exposure to climate risk. According to our findings, the costs associated with neighborhood climate risk are as relevant as those associated with a firm’s direct risk, with small businesses being the only ones affected by spillover effects. These results may be explained by small enterprises’ lack of financial diversification, poor bargaining power, and strong reliance on credit from financial intermediaries.

The Influence of Financing Diversification and Financial Performance on the Risk of Islamic Commercial Banks in Indonesia

This study aims to examine the influence of financing diversification, which includes six financing contracts of Islamic banks in Indonesia and financial performance on credit risk represented by NPF in Islamic commercial banks using regression panel data in 2018-2022. The results of this study indicate that there is an insignificant positive influence on financing diversification and financial performance partially on credit risk in Islamic banking in Indonesia. However, financing diversification and financial performance together have a significant influence on credit risk, which is currently a concern of the Islamic bank financial services authority in Indonesia. The financial performance measurement indicators in this study only focus on ROA, and this indicator may have limitations in measuring the financial performance of Islamic banking.

The rise of the remote metropolitan branch campus – Definitions, motivations and models

AbstractThis paper explores the concept of the university remote metropolitan branch campus (RMBC). Drawing on approaches used to frame international branch campuses, it proposes a first definition for an RMBC, distinguishing it from a wider group of domestic ‘Satellite Campuses’ that includes multi‐campus universities within regions. Using interviews with 10 RMBC directors in London, it explores motivations for their creation and approaches used to organise and resource these ventures, as well as to attract and teach students. It concludes that the dominant reasons for creating RMBCs relate to financial diversification, reputation, reach and business engagement, but that in some cases the repositioning of an RMBC has been strategically reactive in response to external changes in its operating environment. Whilst there is evidence for a range of organisational models amongst London‐based RMBCs, there are key commonalities around the students attracted, the programmes offered and approaches to teaching and learning. RMBCs in London are growing and thriving, but face challenges from market entrants and uncertain future UK Government policy.

Does Diversification and Restructuring Reduce Non-Performing Financing?

Research Aims: This research aims to identify the influence of MSMEs and non-MSMEs financing diversification, as well as financing restructuring, on non-performing financing (NPF). Methodology: This study utilizes a quantitative research method with secondary data, including Asset Quality Reports and Financial Ratio Reports accessed through the Financial Services Authority (OJK) from 2018 to 2022 for 10 Islamic commercial banks in Indonesia on a quarterly basis. Non-Probability Sampling was used as the sampling technique, and data analysis was conducted using panel regression with the Fixed Effect Model through Eviews 12 software. Research Findings: The empirical results indicate that both MSMEs and non-MSMEs credit diversification do not have a significant impact on reducing credit risk in Islamic banks in Indonesia. However, restructuring has an impact on non-performing financing in Islamic banks in Indonesia. Theoretical Contribution: This study contributes to the literature by examining the relationship between diversification of MSME and non-MSME financing and financing restructuring. With this research, it is hoped that Islamic banks will pay more attention to minimizing problematic financing to maintain the stability of their financial performance. Research limitation and implication: In practical terms, these findings suggest that policymakers may consider implementing a concentration strategy for financing in specific sectors. If diversification is to be continued, further policy adjustments may be necessary.

Activity Diversification, Performance, And Profitability In Islamic Banking

Diversification of financing in Islamic banking is a strategy to improve performance. However, can the diversification of financing carried out by Islamic banks increase profitability? And is financing diversification able to reduce financing risks? The study wanted to prove these two theories by using data from the Islamic Banking Report for the 2016-2021 Period using the HHI indicator to diversify financing. Three categories of financing diversification are contract-based, financing-based, and economic sector-based. Profitability in the study was measured using the ROA ratio and the risk of bad debts with the NPF ratio. The result of this study is that the diversification of contract-based financing affects ROA in a negative direction and has a positive effect on NPF. On the other hand, financing diversification based on the use of financing does not affect increasing profitability and has a positive impact on the risk of bad debts. Meanwhile, sector-based financing diversification has a significant effect on increasing profitability and has a significant negative impact on reducing the risk of bad debts in Islamic banks.

Formation of the system of financial support of higher education institutions in Ukraine

In the conditions of a military challenge, the financial system of Ukraine is under significant pressure, which also affects the supply of universities. The purpose of the article is to analyze the formation of the system of financial support of higher education institutions in Ukraine. System analysis, comparison, modeling became the main methods for writing research. The research used indicators of expenditures of the consolidated budget of Ukraine. In the results, the role of the inflationary challenge in the financial support of higher education institutions of Ukraine was traced, and it was established that in fact the real volumes of budget financing of the industry (at the level of 7% of GDP) were never reached. Ensuring financial diversification is an important aspect for overcoming negative manifestations of lack of funds. The article traces separate methods: the introduction of a targeted tax, independent financial activity and the help of patrons, implementation of joint projects with private structures, receiving international financial assistance. With the help of content analysis, the strengths and weaknesses of all the proposed paths were determined. The conclusions state that in the conditions of martial law, the last two items are the most relevant sources of filling university budgets.

Studying the role of fiscal policy to utilize natural resources development: Leads to sustainable development goals

Every country's primary economic objective is to accomplish sustainable economic growth. In this area, there has been much discussion of the significance of natural resources in the research; moreover, there has yet to be much research on how these resources affect the monetary inclusion of emerging nations. This research utilized China's management of funds, technological development, and unpredictability of economic strategy to examine the viability of the resources curse theory concerning financial growth. Quantile autoregressive distribution lag (QARDL), a cutting-edge methodology, was used to evaluate the asymmetry relationship between variables from 1970 to 2015. The resources constraint theory, which contends that the rents from environmental assets constrain economic advancement, is backed up by research data for China. Volatility in economic strategy also harms financial growth. Contrarily, financial diversification and technical advancement sped up economic development and offset the drawbacks of environmental assets. According to the results, appropriate natural resource utilization, funding redistribution at local administration levels, and a shift towards green initiatives should all be put in place as semiconducting short- and long-term marketing strategies and regulatory requirements to turn the blight into a full endorsement.

International Finance and Geopolitics

ABSTRACTRecent events, notably financial sanctions imposed on Russia by the USA and its geopolitical allies together with mounting economic and political tensions between the USA and China, have highlighted the role of geopolitics in shaping global monetary and financial relations. What these developments imply for the future will turn on how US–China tensions play out. In what follows I consider two scenarios: the status‐quo scenario and the breakdown‐in‐relations scenario. The former would see ongoing but very gradual international reserve and financial diversification from the dollar to the renminbi. The latter see a bifurcation of the international financial system into two silos centered on the respective currencies, with highly disruptive implications for the global economy.

Integration Analysis of Sharia Stock Price Index in Indonesia, Malaysia, China and The United States Islamic Capital Markets

Purpose – This study aims to determine the effect of Dow Jones Islamic Word Malaysia Index (DJMY25D), Dow Jones Islamic Market China (DJICHKU) and Dow Jones Islamic Market Index (DJIMI) on Indonesian Sharia Stock Index (ISSI.JK) for the 2018-2022 period. Design/methodology/approach – The exogenous variables in this study include DJMY25D, DJICHKU and DJIMI. Meanwhile, the endogenous variable is ISSI.JK. In the DJMY25D, DJICHKU, DJIMI and ISSI.JK variables it is calculated by the percentage growth in closing prices at the beginning of the month. The population in this study is the Global Islamic Index which is part of the Dow Jones Global Index which consists of 34 countries using purposive sampling technique. In addition, Ordinary Least Square (OLS) Regression Analysis was used in the data analysis method. Findings – The results of this study indicate that simultaneously DJMY25D, DJICHKU and DJIMI have a significant effect on ISSI.JK. Partially, DJMY25D and DJICHKU have an effect on ISSI.JK but not significantly. while DJIMI has a significant effect on ISSI.JK. Research limitations/implications – his research is limited by the integration of Indonesian Islamic stocks with several Malaysian, Chinese and American Islamic stocks. There are several other countries where the Islamic stock market may be integrated with Indonesian Islamic stocks, but in this study only uses diversification of financing based on contracts and usage due to limited data and research time. Practical implications – The integration of ISSI.JK and DJIMI sharia stocks may be useful for market players and regulators to consider the DJIMI stock market in estimating market price movements and volatility of the Indonesian sharia stock market. Originality/value – This study provides new insights on the integration of Islamic stocks in Malaysia, China, America and Indonesia in 2018-2022.

English

How to develop a low-carbon and environmentally friendly agricultural economy under the conditions of financial diversity is a realistic problem that appears in the context of the current era. In this manuscript, taking cities in western, central and eastern China as examples, the entropy method was used to systematically study the impact of financial diversity on the development of low-carbon and environmentally friendly agricultural economy. Through this study, a low-carbon environmental protection agricultural development factor index system based on financial diversification was constructed, and the entropy method was used to determine the weight of agricultural financial indicators. The results showed that the indicators of agricultural economic and financial ecological diversification ranged from 2.315 to 4.872, with an average value of 3.214. The financial diversity of eastern urban areas was higher than that of central and western cities. The development level of China's low-carbon environmental protection agricultural finance varies greatly from region to region, and there is a large room for balanced development. The regression analysis of low-carbon environmental protection agricultural economic development factors showed that the financial ecological diversity in the eastern region has a significant inhibitory effect on the development of low-carbon finance; the financial ecological diversity in the central region is conducive to the development of low-carbon agricultural finance; the financial ecological diversity in the western region is negatively related to the development of lowcarbon agricultural finance. Financial diversity has a good positive correlation with urban carbon emissions. Although complex financial diversity optimizes the structure of the agricultural economy, it also emits excessive agricultural carbon emissions, which is detrimental to the sustainable development of cities. The output value of the coal industry also has a good positive correlation with urban carbon emissions. The reduction of carbon emissions should speed up the transformation of coal-based energy companies and the development of new energy sources. Environmental protection investment has a weak positive correlation with urban carbon emissions, and environmental protection investment is far from being able to match the increase in carbon emissions. This research can be used for the construction and optimization of agricultural economic indicators

Financial Diversification and Implications of Growth Reviewing MENA Economic Policies

Purpose: This article analyses the scope and the need for financial diversification in the Arab region and shows the current challenges and plans for countries to diversify. Methodology: It reviews current policies and obstacles which may implicate the process of diversification, and well as re-iterates the benefits of doing so in both the short and long term and the need to consider economic diversity for sustainability. Implications: As oil and gas prices fluctuate and shrink in the global markets and the remaining resources are depleted, relying on other sectors has become the vision for the progress of MENA countries. Some have accepted the challenges and invested in developing their infrastructure, as and other parts of their economies while, others in the region are yet to take action. This research will aid in developing efficient policies aligned with global indices. Limitations: The research used pre-existing information from multiple sources and did not have access to uniform comparisons between countries selected. Findings: Finally, the article concludes with recommendations for policy makers to consider for a positive trajectory in financial diversification and overall economic growth. Keywords: Financial Diversification, MENA, GCC, Policy, Economic Development, Sustainable Development.

Financing investments in the regional structure in the face of crisis phenomena in Poland

Purpose: Assessment of changes in the size of investment outlays and territorial diversification of investment activity in the conditions of crisis phenomena, broken down by selected groups of entities forming the national economy in Poland. Design/methodology/approach: The method of critical analysis of the literature on the subject and the method of comparative analysis in the field of empirical and statistical data in the generic and territorial arrangement according to selected categories of regional and subregional units. Findings: The financial diversification of the scope of investment activity of groups of entities operating in the national economy was indicated, in detail in terms of the central and local government subsectors. The scale and directions of changes in spatial disproportions of investment potential in regions and subregions in Poland were identified, taking into account changes resulting from the observed crisis phenomena in the period 2010-2021. Research limitations/implications: The presented research results are limited by the availability of empirical data in detailed territorial systems. Due to the currently observed dynamic changes and economic turbulence, it is advisable to constantly update data and further analyzes in the conditions of ongoing crisis phenomena. Practical implications: The practical dimension of the analysis refers to possible applications in the preparation of diagnoses and plans for socio-economic development at various levels of public administration competence. Social implications: The results of the research may provide information for public sector entities supporting the processes of programming public investments in order to achieve socio economic cohesion, reduce social disparities and improve the living conditions of the population. Originality/value: The paper contains the results of analyzes on the consequences of crisis phenomena affecting the national economy and the ability of its selected components to undertake investment outlays. The applied territorial approach provides new knowledge that can be used in further detailed scientific research and in the decision-making process regarding the conduct of investment policy at the national and regional level. Keywords: investments, regional development, economic crisis, public sector. Category of the paper: Research paper.

THE SECTORAL FINANCING DIVERSIFICATION AND THE PROFITABILITY OF ISLAMIC BANKING IN INDONESIA

This study investigates the influence of sectoral financing concentration on the profitability of Islamic banking in Indonesia. The data is aggregated by Indonesian Islamic banks from January 2015 to June 2021. Islamic banks are divided into two, namely Islamic commercial banks and Islamic window banks. The study used Autoregressive distributed lag (ARDL) and Panel Mean Group (PMG). The results showed that sectoral financing concentration increased the profitability of Islamic commercial banks while diversification of sectoral financing boosted the profitability of Islamic window banks. In addition, this study also showed that size and inefficiency negatively affected the profitability of Islamic commercial banks and window banks. This result implies that the right sectoral financing policy for Islamic commercial banks is financing concentration. This strategy implies that Islamic commercial banks must build competitiveness in certain sectors of the economy. For this reason, there is a need to increase the skills of the worker to build a competitive advantage in the sector that is the focus of financing. In comparison, sectoral financing diversification is more applicable for Islamic window banks. To support this diversification strategy, banks must conduct good supervision in the financing, especially sectoral financing based on profit-sharing contracts.

Loan and financing diversification and bank stability in dual-banking systems

Our investigation of 46 conventional and 22 Islamic banks from the Gulf Cooperation Council (GCC) countries during 2008–2021 reveals that sectoral diversification effects on stability are nonlinear and different for the two bank types. While Islamic banks’ stability is worsened only by moderate levels of diversification, conventional banks’ stability is enhanced by high levels and impaired by low levels of diversification. Furthermore, diversification acted as a stabilizer during the global financial crisis but exacerbated the adverse effects of the Covid-19 pandemic. Although regulators usually call for bank diversification, our results imply that it can be a double-edged sword.

Financial diversification of banking activities

Financial diversification of banking activities

The impact of economic indicators on an international financial diversification: a long term investment approach

ABSTRACT Pakistan is one of the developing countries, whose investors invest out in diversifying long-term portfolio investments in unpredictable nature of the international market. The long-term viewpoint is lacking a systematic study from a perspective of economic indicators (inflation, interest and exchange rate). To address this gap the study attempt to develop a framework for investors of Pakistan by using inferential statistics and Sharp’s performance (SHP) techniques. The findings perceived influence of economic indicators on long-term portfolio investment (based on holdings: Stock and Bond), results indicated USA with (high-risk high return) and UAE (low-risk low return) and find both countries best investment option to invest for long term.