Economic Volatility Research Articles

Digital Transformation in the Agri-food Sector: A Comparative Analysis of Industry 4.0 Innovations by Italian Sustainability Leaders

The agri-food sector is a key actor in the Italian economy and plays a crucial role in rescuing and accelerating progress towards the Sustainable Development Goals (SDGs). However, diverse sustainability challenges including environmental conservation, economic volatility, political changes and regulatory constraints affect the agri-food company’s competitiveness and their ability to face global sustainability challenges. Exploiting digital innovation is then essential. By facilitating more efficient management of resources, reducing waste and improving supply chain transparency, digital innovations contribute to more sustainable, inclusive and resilient agri-food systems. This paper aims to understand the ongoing digital transformation of the Italian agri-food sector through a comparative analysis of innovative practices by Italian agri-food companies that are recognized as sustainability leaders. Among the Industry 4.0 (I4.0) technologies, sensors, blockchain, cyber security, and artificial intelligence appear to be the most adopted I4.0 solutions to help companies influence the social, economic and environmental dimensions of sustainable development.

Gig Workers: A Comprehensive Analysis of the Rise, Challenges, and Future of the Gig Economy

The gig economy, defined by temporary contracts, freelance employment, and independent contracting, has seen substantial growth in the global labour market during the last twenty years. Gig workers function independently of conventional full-time employment, enjoying flexibility but sometimes missing access to benefits like job security, healthcare, and retirement plans. This study examines the evolution of the gig economy, analysing the many forms of gig employment, its catalysts, the influence of technology, and its consequences for both workers and employers. The analysis will address the issues encountered by gig workers, such as economic volatility, insufficient legal safeguards, and the ambiguity of employer-employee dynamics. The study will analyse worldwide reactions, regulatory patterns, and the future direction of gig employment considering governmental changes and technology improvements.

Capital adequacy and financial stability: A study of Nigerian banks' resilience in a volatile economy

Capital adequacy and financial stability: A study of Nigerian banks' resilience in a volatile economy

Risk Typologies and Their Mitigation in Banking: A Study of Azerbaijani Banks

Abstract This paper explores the typologies of risks in the banking sector and examines the strategies employed to mitigate them, with a focus on Azerbaijani banks. The study identifies key risk categories, including credit risk, market risk, liquidity risk, and operational risk, each of which plays a critical role in the financial health and profitability of banks. The research highlights that credit risk, driven by loan defaults, remains the most significant concern for Azerbaijani banks, while market risks, particularly from currency fluctuations, also pose major challenges. Effective risk mitigation strategies, including collateralization and diversified lending practices, are essential to maintaining stability in this emerging market. Additionally, the study emphasizes the importance of integrating modern risk management technologies and adhering to international regulatory standards. Azerbaijani banks that adopt advanced monitoring systems and proactive risk management frameworks demonstrate improved financial performance and resilience in the face of economic volatility. The findings underscore that well-implemented risk management practices are crucial for enhancing profitability and ensuring long-term sustainability in the banking sector.

Research on the Current Situation and Development Strategy of Green Finance Driven by the “Carbon Peaking and Carbon Neutrality” Goals

This article examines the current state and future direction of green financing in relation to the aspirations of “Carbon peaking and carbon neutrality”, with the application of the SWOT analysis framework to comprehensively examine the current situation of green finance, pointing out that its development has not only significant advantages and broad opportunities, but also faces multiple challenges and potential disadvantages. The analysis shows that under the catalysis of the “ Carbon peaking and carbon neutrality “ goals, green finance has received policy preferences and resource injection at the national level, and the market has shown a momentum of accelerated development. Under the guidance of policies, state-owned banks are actively exploring the innovation of green financial products, and international cooperation is becoming increasingly close, becoming the engine to promote the progress of green finance. However, the road ahead for green finance has not been easy. Problems such as lack of standardization, policy and economic volatility, lack of professional talent and technology, and low market awareness have become stumbling blocks to the deepening development of green finance. In view of these challenges, this paper deeply studies the development strategies of green finance and puts forward targeted suggestions, aiming to provide useful inspiration for scholars and practitioners in the field of green finance, help make breakthroughs in the theory and practice of green finance, and contribute to the construction of a green and low-carbon future economic system.

Energy Transition in the Middle East and North Africa Region: Regional Solutions for Climate Change Challenges Amid Economic Sanctions

As the world grapples with the urgent priority of transitioning to a net-zero future, there exists a shared need to make all efforts to reduce anthropogenic greenhouse gas emissions, mostly caused by burning fossil fuels. The Middle East and North Africa (MENA) region plays an important role because of its oil and natural gas output. Additionally, this region has experienced significant conflict and numerous wars. This article will focus on one of the many challenges that some key states in the MENA region, with a main focus on Iran, are facing in their energy transition. Several countries in the MENA region are or have recently been subject to some form of economic sanctions. Sanctions appear to have had a material impact on these countries’ abilities to fulfill their contributions to transitioning to a net-zero economy. Research suggests that the chief obstacles they face regarding that transition is the lack of access to the latest technologies, a dearth of financing, limited or often no direct investments in low carbon industry, diplomatic isolation, and the concomitant economic volatility caused by sanctions, which in sum, take away from the financial capacity of a target country to save and invest for the transition to net zero. Therefore, it is crucial to revisit sanctions laws and policies, ensuring that they do not hinder the global community from achieving its climate goals. This article proposes establishing a regional ‘climate savings account’ to serve as a strategic mechanism to balance geopolitical interests and environmental goals.

Sewage Treatment Equipment Supply Chain Collaboration and Resilience Improvement Path Analysis: Collaborative Decision-Making, Information Sharing, Risk Management

Since the dawn of the 21st century, supply chains (SCs) have faced an array of unprecedented challenges, encompassing economic volatility, escalating geopolitical conflicts, intensified trade disputes, and persistent environmental degradation. These challenges have imposed immense pressures on SCs, amplifying both the risks and occurrences of disruptions. In response to these critical demands, there has been a substantial increase in academic, industrial, and governmental focus on the resilience and recovery capabilities of SCs. In this context, the supply chain (SC) for sewage treatment equipment has been significantly affected. This study aims to systematically investigate collaborative strategies and mechanisms for bolstering the resilience of manufacturing SCs within the sewage treatment sector, with particular attention to collaborative decision-making, information sharing, and risk mitigation throughout the SC lifecycle. Following a comparative analysis of various methodologies, this paper employed the structural equation model (SEM) and subsequently conducted a comprehensive survey of manufacturers specializing in glass fiber sewage treatment systems, yielding 385 valid responses. Through this data, a structural equation model was developed to analyze pathways for resilience enhancement. A thorough analysis of the results indicates that Supply Chain Collaboration (SCC) and collaborative decision-making are instrumental in strengthening Glass Fiber Sewage Treatment Supply Chain Resilience (SCR) through the implementation of effective information sharing and risk management practices. These findings contribute to the theoretical framework of SCC and SCR by clarifying the influence of collaborative practices while also providing practical guidance for the governance and strategic management of sewage treatment equipment enterprises and their associated SCs. The conclusions drawn from this study can guide us in establishing a more resilient and sustainable SC ecosystem, making it more directive and capable of mitigating complex disruptions.

The Role of Risk Management in Promoting E-Commerce and Public Health in Emerging Markets

This study explores the role of risk management in enhancing e-commerce and public health in emerging markets. As these sectors evolve rapidly, they face multifaceted risks influenced by economic volatility, regulatory inconsistencies, and technological advancements. Through qualitative analysis, key themes such as risk awareness, regulatory challenges, technological adaptation, and stakeholder collaboration are identified. The findings reveal a heightened awareness of risks among stakeholders, especially in light of recent global events such as the COVID-19 pandemic. However, inconsistent regulations and inadequate technological infrastructure present significant barriers to effective risk management. Recommendations include establishing cohesive regulatory frameworks and investing in technology and training to empower stakeholders. By fostering collaboration among businesses, government entities, and healthcare organizations, emerging markets can create resilient systems that enhance public health outcomes and promote sustainable economic growth. This study contributes to the existing literature by providing a comprehensive overview of the current status and future prospects of risk management in e-commerce and public health, offering valuable insights for policymakers and practitioners.

Trade facilitation, market size, and supply chain efficiency of Taiwan semiconductor companies.

In an environment marked by global economic volatility and geopolitical uncertainties, the stability of Taiwan's supply chain takes on heightened importance, particularly given Taiwan's crucial role in the global semiconductor supply chain. In recent years, semiconductor companies in Taiwan have faced increasing inventory pressures, which will reduce their competitiveness and increase operational costs over the long term. Although previous studies have explored the influence of trade facilitation on macroeconomic and trade efficiencies, its specific impacts on the semiconductor industry have been less frequently addressed. This study integrates corporate inventory, trade facilitation, and geopolitical factors within a unified analytical framework to construct a model that explores mediating and moderating effects. This study conducted regression analysis on data from 52 Taiwan-listed integrated circuit companies from 2014 to 2022. Contrary to traditional findings that trade facilitation decreases inventory in other industries, it predominantly fosters inventory accumulation within Taiwan's semiconductor sector by expanding market size, thereby affecting supply chain efficiency. Moreover, geopolitical factors were found to intensify the effects of trade facilitation on corporate inventory. Elevated geopolitical risks lead to greater inventory accumulation, which ultimately threatens long-term competitiveness and diminishes the semiconductor industry's advantage in Taiwan, further influencing supply chain efficiency. Consequently, this study recommends that to more accurately forecast market size, semiconductor companies in Taiwan are encouraged to expand their manufacturing investments in Chinese mainland. Additionally, the prudent handling of cross-strait relations by the Taiwan authorities is an important strategy to mitigate geopolitical risks affecting the semiconductor supply chain.

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.

Regulatory Effects of the Combinations of Aggregate and Structural Monetary Policy Instruments: an application of New Keynesian DSGE model to China

This paper selects Chinese macroeconomic data from the first quarter of 2009 to the first quarter of 2020 and employs a New Keynesian dynamic stochastic general equilibrium model that incorporates the financial accelerator mechanism, price stickiness, and invisible government guarantees. The regulatory effects of different combinations of monetary policy instruments are compared from five perspectives: the shock effect of monetary policy, the magnitude of economic volatility of non-monetary policy shocks, the Central Bank loss function, the gap in the distribution of household income, and the heterogeneous firm external financing premium. Our findings indicate that the regulatory effects of the aggregate price-based and structural quantity-based monetary policy instrument combination are optimal, a conclusion that is further supported by the robustness test. It is therefore recommended that the Central Bank consider the potential benefits of a combined approach to aggregate and structural monetary policy instruments, with a view to enhancing credit availability for the real economy. This paper represents a significant contribution to the field, as it is the first to explicitly propose four distinct monetary policy instrument combinations, thereby overcoming the limitations of previous studies that have focused on a single instrument or a narrow range of instruments. The paper also contributes to the theoretical understanding of monetary policy instruments.

Saving Honest Entrepreneurs through the Second Chance Policy in Ghana

This paper analyses the existing legal frameworks on insolvency in Ghana and how they sufficiently provide to save honest entrepreneurs during financial reforms. Financial sector reforms are a welcomed mechanism to foster financial sector efficiency for sustainable growth. During the period of decision-making in financial sector reforms, it is expected that some business concerns would have their lifespan terminated. Notwithstanding, recent episodes of financial deregulation have revealed unintended consequences of demobilising the sector which has affected innocent entrepreneurs. The aftermath of the financial sector reforms has passed the Corporate Restructuring and Insolvency Act, 2020 (Act 1015). This paper aims to address the issue of whether or not the existing legal framework benchmarked against the Capital Adequacy, Asset quality, Management, Earnings, Liquidity (CAMEL) framework absolves honest entrepreneurs in such a period as against fraudulent entrepreneurs. The paper adopted the doctrinal legal research approach using distinct research tools including data from primary sources, statutes, journal articles, online resources and other obligatory tools. It finds that recent financial sector reforms did not segregate the fraudulent entrepreneur from honest entrepreneurs to make room for the CAMEL to save the latter. It concludes on how a second chance policy can be developed along with existing statutes to settle and save honest businesses in periods of economic volatility.

Analyzing the socially sustainable impacts of private investments in the mining sector in rural areas

This study examines the effect of private investment in the mining sector on social sustainability across nine ASEAN countries from 2005 to 2021 using the CS-ARDL panel data approach. The results indicate a negative relationship between private mining investment and social sustainability, with reductions of 0.15% in the short term and 0.59% in the long term, due to environmental degradation, income inequality, and economic volatility. A 1% increase in rural GDP also leads to declines in social sustainability by 0.03% and 0.17% in the short and long term, respectively, underscoring the need for eco-friendly economic activities. Additionally, inflation reduces social sustainability, while rural internet access significantly improves it. To encourage sustainable investment, policies should focus on green finance, sustainable literacy, risk mitigation, and rural economic growth aligned with sustainable development principles.

The collateral link between volatility and risk sharing

We show that the effect of aggregate volatility on idiosyncratic risk sharing depends on the nature of collateral sustaining insurance. While volatility increases the value of public assets—more useful for consumption smoothing—it decreases the value of private assets—more exposed to aggregate variation. Hence, a more volatile economy weakens risk sharing when collateral composition is biased towards private assets. When applied to financial intermediaries that rely heavily on private collateral to share risks, aggregate instability is more likely to induce financial instability. We empirically show that the sensitivity of risk sharing to aggregate volatility indeed depends on the collateral composition as predicted by the theory.

Exploring the Relationship Between Banking Development Facets and Economic Volatility: Evidence from Developing Nations

Exploring the Relationship Between Banking Development Facets and Economic Volatility: Evidence from Developing Nations

Are government budgets a visible stabilizer? Evidence from China since the tax-assignment reform

PurposeThis study quantitatively examines the relationship between economic fluctuations and government budget size in the context of China’s fiscal decentralization, drawing inspiration from theoretical predictions of the Keynesian view and empirical studies on other economies.Design/methodology/approachThe panel comprises 31 provinces or equivalents in mainland China, spanning from 1994 to 2019. Diverse estimation strategies including two-way fixed effect regression, the generalized method of moments (GMM) and threshold regressions are, utilized.FindingsThe results suggest that under the “tax-assignment system”, neither the central government’s fiscal transfers nor the provincial budgetary revenues or expenditures help reduce economic volatility. Surprisingly, some regression outcomes suggest that government size measures destabilize business cycles.Originality/valueWhile the study does not provide supportive evidence for the stabilizing effect of public budgets in Chinese provinces, it promotes a rethinking of the government’s intricate role in macroeconomic stabilization in the context of China’s fiscal decentralization.

Unveiling economic resilience: exploring the impact of financial vulnerabilities on economic volatility through the economic vulnerability index

While earlier studies have explored the relationship between economic vulnerability and economic resilience, they have repeatedly overlooked the significance of financial vulnerabilities within the economic vulnerability index, and the effects of financial and economic vulnerabilities on economic volatility. An attempt is made in this study to close this research gap by conducting a detailed analysis of the relationship between financial vulnerabilities, economic vulnerability and economic volatility, stressing the significance of tweaking prevailing vulnerability indices to fully encapsulate its multidimensional nature in developing countries. Employing panel data for 142 countries over the 2002 to 2022 period and a robust econometric approach like the Driscoll and Kraay fixed effect method, the study reveals that financial vulnerabilities yield significant coefficients to influence economic volatility, thereby accentuating their significance in the Economic Vulnerability Index. Sub-group analyses reinforce the need for incorporating financial variables in vulnerability investigations. Moreover, the causality tests reveal that all the variables and indices meant to capture the economic and financial vulnerabilities Granger causes economic volatility across the sample. In essence, this study fills a critical gap in existing research by demonstrating, that financial vulnerabilities significantly influence economic volatility, underscoring the imperative of integrating financial variables into vulnerability assessments for policymakers and scholars focusing on sustainable development. This study contributes to a broader understanding of economic vulnerability by highlighting the crucial role of financial vulnerabilities in driving economic volatility, suggesting a fundamental reconsideration of existing vulnerability assessment frameworks for policymakers and researchers focused on sustainable development frameworks. By uncovering the causal relationship between financial vulnerabilities and economic volatility across a diverse set of countries, the findings underscore the imperative of integrating financial factors into vulnerability investigations to enhance resilience and stability in developing economies.

Nice to value. Unraveling the nexus between management accounting use and financial performance: A quantitative study of SMEs

ABSTRACT This study investigates the intricate relationship between management accounting (MA) practices and financial performance (FP) in small and medium-sized enterprises (SMEs) in Italy and Germany, offering practical insights for practitioners and policy makers. Despite the theoretical benefits of MA practices like cost accounting, budgeting, and key performance indicators, their implementation in SMEs remains limited. Prior research suggests that SMEs often rely on informal control systems due to resource constraints and a lack of familiarity with MA tools. The COVID-19 pandemic and recent European conflicts have stressed the need for robust MA practices to navigate economic volatility and enhance resilience. Using a quantitative approach, data were collected via questionnaires from 238 SMEs in Italy and Germany, targeting chief financial officers, board members, and majority shareholders. The analysis, employing partial least squares structural equation modeling, reveals a significant positive impact of MA practices on FP. Factors such as resource availability, training, and the culture of control play crucial roles in this relationship. These findings underscore the strategic importance of MA in driving organizational performance and highlight the need for SMEs to adopt these practices more comprehensively. This study offers valuable guidance for SME managers in enhancing operational efficiency and strategic decision making. Moreover, it provides policy makers with evidence-based recommendations to support SME growth and resilience through targeted training programs and resource allocation, ensuring a robust framework for economic stability and development.

DYNAMICS OF THE UKRAINIAN BANKING SYSTEM’S ATTRACTION AND USE OF CASH SURROGATES

This study is devoted to the analysis of transformations in the use of monetary surrogates within the Ukrainian banking system from 2015 to 2023. Through an extensive examination of financial data, key factors driving the rising prevalence of electronic money and cryptocurrencies have been identified. This phenomenon unfolds against a backdrop of profound technological shifts and economic volatility, compounded by regulatory challenges. The findings underscore a strong interconnection between technological advancements, changes in consumer behavior, and the evolution of the regulatory framework. A notable increase in the volume of electronic money transactions, coupled with the significant expansion of the cryptocurrency market, points to a paradigm shift from traditional banking services towards novel financial instruments. Specifically, electronic money, cryptocurrencies, and digital tokens are emerging as prominent alternatives to conventional currency, offering users avenues for conducting transactions and preserving value amid economic instability. The research also provides an in-depth analysis of the regulatory hurdles confronting financial institutions and government agencies, particularly regarding adherence to anti-money laundering (AML) protocols and know-your-customer (KYC) regulations, alongside the imperative to safeguard consumer rights amid heightened cryptocurrency market volatility. Furthermore, this study addresses the potential long-term ramifications of the proliferation of monetary surrogates on Ukraine’s banking system, including shifts in conventional banking practices, potential risks to financial stability, and implications for monetary policy. Despite notable progress in the integration of new financial technologies, several unresolved challenges persist, particularly concerning the provision of adequate regulatory support for innovation while maintaining the stability of the financial system. In conclusion, this research offers a valuable contribution to the understanding of how technological development and socio-economic changes are reshaping financial systems in emerging economies, with a particular focus on Ukraine. The insights derived from this study may prove instrumental for policymakers and financial institutions as they navigate the evolving conditions and challenges of a rapidly transforming financial landscape.

The conjoint effects of corporate social responsibility performance and report tone on financial constraints: Evidence from China

Using corporate social responsibility (CSR) disclosure data from Chinese A-share listed firms between 2008 and 2022, we examine the conjoint impact of CSR performance and the tone of CSR reports on financial constraints. The research reveals a significant negative correlation between CSR performance and financial constraints, indicating that the better a firm's CSR performance, the fewer financial constraints it faces. The tone of CSR reports is also negatively correlated with financial constraints. It has a synergy effect with CSR performance, enhancing the alleviating effect of CSR performance on financial constraints. After conducting a series of robustness tests, such as addressing endogeneity and substituting variables, the main results remain robust. Furthermore, relative importance analysis shows that the impact of CSR performance on financial constraints is significantly greater than the impact of the tone of CSR reports. In additional analysis, we also examine the effects of corporate disclosure of creditor protection information, the presence of deficiencies in information, and firm transparency. Against the backdrop of heightened economic volatility and escalating risks, our findings offer valuable guidance on how firms can strategically utilize social responsibility measures to mitigate financial constraints.