Economic Volatility Research Articles

Perceived inflation in the Vietnamese economy: New points in methodology and applications

Researching and developing methods to measure perceived inflation is an indispensable requirement for the monetary policy management of the State Bank of Vietnam, especially in the context of interest rate amplitudes. remains at the lowest level in history in Vietnam. This study was conducted in that context with the goal of developing a tool to measure perceived inflation based on a solid methodological foundation. The result is the creation of a new measure, integrating the psychological 'gain-loss' effect of consumers on price fluctuations. In particular, the final product is an integrated website, allowing automation of the research and analysis process. The results of the study provide evidence of overstated consumer inflation perceptions during periods of economic volatility, when perceived inflation is significantly higher than the headline inflation (CPI). These findings not only have academic value but are also important in supporting the State Bank of Vietnam in evaluating and operating monetary policy, especially in identifying and dealing with fluctuations in perceived inflation in the economy. From the results of this study, we call for participation and suggestions from the experts, with the aim of minimizing the undesirable effects of inflation and supporting the maintenance of a stable inflation rate, contributing to Vietnam’s economic growth in 2024.

The Role of Legal Counsel in Managing Corporate Crises

In the context of increasing corporate crises due to economic volatility and regulatory complexities, the role of legal counsel has become increasingly significant. This study aims to explore the comprehensive roles and responsibilities of legal counsels during different phases of corporate crises, emphasizing their strategic importance in not only navigating but also preempting such crises. This qualitative study utilized semi-structured interviews to collect data from 25 legal professionals across various industries. Participants were selected through purposive sampling to ensure a broad representation of experiences and insights. The study aimed for theoretical saturation and employed NVivo software for data analysis, enabling a thorough thematic analysis of the transcribed interviews. Four main themes were identified: Preventive Legal Strategies, Crisis Response and Management, Post-Crisis Analysis and Learning, and Legal Team Dynamics and Support. Each theme contained multiple categories detailing specific activities and responsibilities, such as Risk Assessment, Policy Development, Immediate Legal Actions, Communication Management, Legal Review, Process Improvements, Team Coordination, and Emotional Support. These categories encapsulate the proactive and reactive strategies legal counsels employ to manage and mitigate corporate crises. The study highlights the integral and expansive role of legal counsels in managing corporate crises, from preventive strategies and immediate crisis responses to post-crisis evaluations and team dynamics management. Legal counsels not only ensure compliance and mitigate risks but also strategically guide their corporations through crises, significantly impacting corporate resilience and sustainability.

Navigating Uncertainty: Assessing the Impact of Financial Risk Management on Organizational Performance: Evidence from Insurance Companies in Pakistan

In an era marked by economic volatility and global uncertainties, the effectiveness of financial risk management strategies is crucial for businesses, particularly in the financial services industry. This research investigates the relationship between financial risk management (FRM) practices and organizational performance, specifically within the insurance sector in Pakistan. Moreover, the study aims to explore the role of financial risk management in enhancing the performance of insurance companies operating in the Pakistani market. It establishes a research model based on Financial Risk Management (Market Risk, Operational Risk, Liquidity Risk, and Legal Risk) and Organizational Performance (ROE). Researchers surveyed 13 insurance companies in Pakistan using non-probability and convenience sampling techniques and analyzed the data using EViews. The results indicate a significant and meaningful link between organizational success and financial risk management. This study seeks to incorporate best practices and focuses on developing a comprehensive understanding of the influence of organizational performance and financial risk management strategies.

Measuring Economic Resilience of Tourism Villages: A Spatiotemporal Analysis of Pre and Post-Covid-19 Pandemic

Tourist village plays an important role in rural development in Indonesia. Nevertheless, tourist village is also prone to external shocks such as national and global economic volatilities and recent public health events of the Covid-19 pandemic. This study attempts to analyze a temporal variations of tourist village economic resilience from pandemic shock in 24 tourist village destinations covering the period of 2019-2022 in Indonesia. A synthetic composite index of the Adjusted Mazziotta-Pareto Index (AMPI) was used to measure resilience, followed by clustering analysis to determine the typology of the resilience. The resilience index was composed of capacity and performance dimension related to resilience. The results show that most villages were severely affected in the first year of Covid-19, yet they recovered afterward, as indicated by positive differences in the AMPI index before and after Covid-19. This result shows that tourist villages in Indonesia have a tendency of strong capacity and performance to recover from the pandemic shock. The economic components of the capacity and performance were able to readjust after the pandemic indicating that these components are relatively adaptable to the shocks. The indicator that has the most significant influence on the typology of resilience in the performance dimension is the number of visitors. Meanwhile, the Development Village Index (DVI) indicator is the most significant influence on the capacity dimension.

Competence of project management professionals according to type of project: a systematic literature review

Globalization and economic volatility changed the dynamics of production chains, which required new organizational arrangements from companies, leading them to projectization. Additionally, project professionals are managing increasingly complex projects, which demand an extensive and specific set of competences. In this context, this paper aims to identify the competences of project professionals by project type. A systematic literature review was carried out using the Scopus and Web of Sciences academic databases. The research corpus consisted of 209 articles published between 1989 and 2022. As a result, this research identified 173 competences distributed in 14 different project types; some competences have a greater significance for a given project type. As a contribution, when dealing specifically with projects and competences, project professionals, companies, and educational institutions can learn about the fundamental competences by type of project, improve the processes of selection and diagnosis of the professional, adapt educational programs, or even establish plans for project professionals career.

Credit Resource Misallocation and Macroeconomic Fluctuations in China: From the Perspective of Heterogeneous Financial Frictions

Abstract In China, state-owned firms exhibit easier access to external credit but have lower productivity than private firms. We construct a dynamic general equilibrium model incorporating heterogeneous financial frictions to investigate their impact on credit resource misallocation and macroeconomic fluctuations in the Chinese economy. A calibration of our model suggests that heterogeneity in financial frictions can reduce macroeconomic volatility. The mechanism is that heterogeneity in financial frictions induces the procyclicality of credit resource misallocation within entrepreneurs, thus the procyclicality of productivity loss. The stabilization effect depends on the relative magnitude of the impact of the shock on credit resource misallocation within entrepreneurs compared to its impact on the output. In addition, we show that the cost of the stabilization effect of heterogeneity in financial frictions is that it reduces the economy’s aggregate TFP and output at the steady state. Our results imply that neglecting heterogeneity may overestimate the impact of financial frictions on economic volatility in previous studies.

Can phone surveys be representative in low- and middle-income countries? An application to Myanmar.

For decades, in-person data collection has been the standard modality for nationally and sub-nationally representative socio-economic survey data in low- and middle-income countries. As the COVID-19 pandemic rendered in-person surveys impossible and unethical, the urgent need for rapid monitoring necessitated researchers and statistical agencies to turn to phone surveys. However, apart from pandemic-related factors, a variety of other reasons can render large segments of a population inaccessible for in-person surveys, including political instability, climatic shocks, and remoteness. Such circumstances currently prevail in Myanmar, a country facing civil conflict and political instability since the February 2021 military takeover. Moreover, Myanmar routinely experiences extreme weather events and is characterized by numerous inaccessible and remote regions due to its mountainous geography. We describe a novel approach to sample design and statistical weighting that has been successfully applied in Myanmar to obtain nationally and sub-nationally representative phone survey data. We use quota sampling and entropy weighting to obtain a better geographical distribution compared to recent in-person survey efforts, including reaching respondents in areas of active conflict. Moreover, we minimize biases towards certain household and respondent characteristics that are usually present in phone surveys, for example towards well-educated or wealthy households, or towards men or household heads as respondents. Finally, due to the rapidly changing political and economic situation in Myanmar in 2022, the need for frequent and swift monitoring was critical. We carried out our phone survey over four quarters in 2022, interviewing more than 12,000 respondents in less than three months each survey. A survey of this scale and pace, though generally of much shorter duration than in-person interviews, could only be possible on the phone. Our study proves the feasibility of collecting nationally and sub nationally representative phone survey data using a non-representative sample frame, which is critical for rapid monitoring in any volatile economy.

Macroeconomic Impacts of Global Oil and Commodity Price Shocks on the Economy of Pakistan

The effects of oil and commodity price shocks on Pakistan's real exchange rate, inflation rate, government spending, money market rate, and industrial output are examined using monthly data from 2000-2017. Using the vector autoregressive (VAR) paradigm, we do an empirical investigation. Impulse response functions and generalized prediction variance decompositions are used to analyze the effect that fluctuations in oil and commodities prices have on Pakistan's economy. When the world oil price (LWOP) causes shock in the global oil market, the real exchange rate (LRER) shows a negative impulse response function. As a result of the rising cost of crude oil throughout the globe, inflation has been on the rise. Industrial output falls, the real exchange rate rises, and interest rates and inflation go up as a result of shocks. Despite increased industrial production, commodities prices have seen repercussions. Pakistan's interest rate follows shocks by rising for a prolonged period, much as the money market rate (MMR)or interest rate. After oil and commodity price shocks, governments tend to increase their spending. The real effective exchange rate is the primary source of economic volatility, as shown by generalized impulse response functions. Pakistan's economy has been hit hard by the shocks, especially the aftershocks in the currency rate. A depreciating currency rate is being seen in Pakistan. The real effective exchange rate is the main cause of fluctuations in the economy, as demonstrated by tools called generalized impulse response functions.

Arbitrage in Port Operation and Maritime Performance in Nigeria

The study examined arbitrage in port operation and maritime performance for period of (32) years spanning through 1990 to 2022. The independent variable employed in study (INFRSK), (EXCHR), (MNSP), and (TRB) meanwhile, the dependent variable is MRTGDP. Data were collected from CBN Statistical bulletin 2022. The study adopts the OLS methodology. Data set was described using descriptive statistics, correlation analysis and inferential analysis. The finding shows EXCHR and TRB have positive and significant relationship with MRTGDP while INFRSK and MNSP disclose negative relationship with MRTGDP. The study further recommends that stable macroeconomic policies should be adopted by port operators in order to maintain the macrocosmic risk variables, such as the rate of inflation, the value of the dollar, and the rate of Treasury bills, at a level that is helpful and consistent with marine performances. Also Despite the limited progress that has been made thus far, economic volatility has remained the biggest threat to the performance of the maritime industry. As a result, we offer strategic recommendations for driving port operating arbitrage.

The inverted-u-shaped impact of fintech development on bank risk: A study of liability structure and economic uncertainty

In the evolving landscape of financial digitization, the implications of fintech development on commercial bank risk are increasingly vital. This research rigorously examines the depth and breadth of fintech's influence, particularly emphasizing the interplay between liability structures and periods of economic flux. A methodical econometric analysis was undertaken, analyzing panel data from 2011 to 2021, spanning 281 commercial banks. This research encompasses 15 national banks, 266 regional banks, 52 listed entities, and 229 unlisted institutions. Analysis leveraged the capabilities of Stata 17.0 software. The findings depart from a linear interpretation. Instead, fintech's impact on bank risk follows an inverted "U-shaped" trajectory—initially escalating risk, then mitigating it. The liability structure emerges as a consequential intermediary in this dynamic. Moreover, the influence of fintech varies depending on the bank type and equity composition. In times of economic volatility, this relationship is further accentuated. These insights hold paramount significance for commercial banks amid the current digital revolution. They provide a roadmap for judiciously balancing risk in a time when fintech innovations are dominating, ensuring resilience and adaptability in an unpredictable financial domain.

Supply Chain Finance in SMEs A Conceptual Analysis

This paper addresses the relatively new concept of supply chain finance (SCF) and its application in SMEs. The flow of financial resources in supply chains is most important and has become the focus of study. As a result, the integration of finance and supply chain management has opened new business areas for banks as well as financial and logistics service providers. Supply Chain Finance solution can create a 'win-win' situation for both buyer and supplier. So this research article focuses on the study of supply chain finance (SCF) in SMEs.
 Despite the fact that small and medium-sized enterprises (SMEs) in India account for over 62 million jobs and approximately 30 percent of the country's GDP, the great majority of them lack access to affordable loans from traditional banks. They are so often left with little choice but to resort to informal lenders, who charge usurious interest rates in order to meet their borrowing demands. Small and medium-sized enterprises (SMEs) are particularly vulnerable to the negative effects of the credit gap, which include but are not limited to higher costs, lower profits, slower growth, and a lack of resilience in the face of economic volatility (Iyer, 2021). Here, supply chain financing (SCF) could be helpful in bridging the trust gap by equipping lenders with more resources to manage credit risk and broadening the scope of financing to include vast pools of poorly understood MSMEs. SCF provides buyers and sellers with risk mitigation solutions based on technological advancements in order to reduce financing costs and increase company efficiency. Since SCF is still in its infancy, there is a pressing need to make this facility accessible to the vast majority of MSMEs so that they, in turn, can benefit from the positive effect it has on the performance of currently-adapted firms.

The impact of news about COVID-19 on the dynamics of the Russian stock market

Subject. The article addresses the Russian stock market during the COVID-19 pandemic. Objectives. The study aims at empirical substantiation of the influence of tonality of news about COVID-19 published in official sources and social networks, on the Russian stock market. Methods. We employ a set of methods and procedures to assess the sentiment of downloaded news texts and tweets and to model the dynamics of general and sectoral stock indices (bag-of-words method, Markov-switching GARCH models, evaluation of text tonality using EcSentiThemeLex dictionary). Results. The paper reveals the influence of the tone of coverage of events related to COVID-19 pandemic in news sources and social networks on changes in stock prices of Russian companies. We substantiated the existence of industry specifics in terms of the degree of influence of the tone of news and tweets on stock price dynamics. The findings can be used by investors and issuers to model and predict changes in securities prices, and complement the theory, by underpinning the significance of the tonality of messages in the news and social networks for the dynamics of the Russian stock market. Conclusions. Changes in the emotional tonality of news and social media posts about COVID-19 impacted the stock market of the Russian Federation. The models enabled to prove that in a volatile economy, not only the information published about the coronavirus is significant for the stock market, but also the dynamics of the number of cases.

Impact of climate change on household development resilience: Evidence from rural China

The adverse impacts of climate change have emerged as one of the primary threats to human development; however, the climate change economic impact evaluation literature has mostly estimated effects under an assumption of full certainty. This article aims to estimate the long-run impact of climate change on household development resilience. To do so, we use the China Health and Nutrition Survey, which contains detailed longitudinal socioeconomic information from 1989 to 2015, and matches them to weather data. We find that climate change negatively impacts household development resilience. This negative impact stems from both a decline in upward mobility of households and an increase in downside risks. In other words, the rise in temperatures not only reduces the pace of household economic growth but also amplifies economic volatility, elevating consumption risk for households. The effects are driven by the decrease in agricultural production output and the risk of off-farm income. However, longer-run adaptation has offset 22.09% of the short-run effects of climate change on household development resilience. In contrast, climate adaptation mitigates household welfare loss to a greater extent through agricultural input adjustments and income diversification in the long run.

Role of Risk Assessment and Mitigation in Strategic Planning in Nigeria

Purpose: The aim of the study was to investigate the role of risk assessment and mitigation in strategic planning in Nigeria.
 Methodology: The study adopted a desktop methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library
 Findings: The study on risk assessment and mitigation in Nigerian strategic planning reveals a recognition-action gap in organizations. Despite understanding the importance of risk management, many lack a structured approach to address threats. Common risks include political instability, security concerns, corruption, regulatory changes, and economic volatility. To improve decision-making and stakeholder value, the study recommends a more integrated and systematic approach to risk management within Nigerian organizations.
 Unique Contribution to Theory, Practice and Policy: Game Theory, Resource-Based View (RBV) Theory & Institutional Theory may be used to anchor future studies on the role of risk assessment and mitigation in strategic planning in Nigeria. Nigerian strategic planning should create context-specific risk maps that outline the geographical distribution of risks and vulnerabilities within the country. Nigerian policies should prioritize investments in building resilience to identified risks.

Business cycles, sectoral price stabilization, and climate change mitigation: A model of multi-sector growth in the tradition of the Bielefeld disequilibrium approach

Sectoral price stabilization is critical in the pressing context of de-globalization and the climate crisis. Strategic price controls may be effective in reducing economic volatility, but fail to curb emissions, unlike quantity controls such as rationing consumption. In contrast, carbon pricing may accelerate decarbonization, but generate inflationary pressures. In order to evaluate the effectiveness of sector-oriented policies in stabilizing sectoral prices and accelerating the low-carbon transition at the same time, this paper employs a novel environmentally-extended, data-driven dynamic model of multi-sector growth based on the Bielefeld disequilibrium approach to the microeconomic stability of competitive economies. The general composite model allows to empirically characterize the network structure and intensity of dynamic price-quantity interactions at the sector level, which capture heterogeneous firm behavior by integrating long-run Walrasian price and classical quantity dynamics coupled with short-run Keynesian features in the form of target rate of return pricing and demand-led investment. A Bayesian hierarchical model on US BEA data empirically estimates the linear adjustment coefficients and stable combinations are computed. The US economy is shown to feature a highly hierarchical network structure of intermediate production that is particularly vulnerable to micro-economic shocks driven by wars and climate change. Tax-subsidy schemes are shown to be the most effective in stabilizing sectoral prices and economy-environment interactions.

Target date funds as asset market stabilizers: evidence from the pandemic

Abstract Target date funds (TDFs) provide retirement investors, many of whom are unsophisticated or inattentive, with age-appropriate exposures to different asset classes like stocks and bonds. To maintain exposures, TDFs trade actively against market returns, buying stock funds when the stock market does poorly, and selling when the market does well (Parker et al., 2023, Journal of Finance). This paper shows that trading by TDFs was a significant stabilizing force in US equity markets during the unprecedented economic volatility of the COVID-19 pandemic period. Specifically, TDFs – now comprising a quarter of all 401(k) plan assets – caused significant contrarian investment flows across asset classes, flows that were not undone by enrollment of TDF investors or by discretionary actions by TDF managers. Mutual funds with large ownership by TDFs had more stable funding through the pandemic, and stocks that had greater indirect ownership by TDFs had lower co-movement with the market and lower volatility during the pandemic period.

Challenges of circular design adoption in the Nigerian built environment: An empirical study

The architecture, engineering, construction, and operation (AECO) sector significantly contributes to natural resource depletion, pollution, and climate change impacts. The design stage is crucial in the circular economy (CE) approach in the AECO sector. Adopting CE in design faces various challenges, including sociocultural, technical, economic, regulatory, organizational, and technological aspects, among other. Despite increasing research in this area, there is a scarcity of studies addressing these barriers in the Nigerian built environment (NBE), especially at the design firm (DF) level. The study investigated the challenges of CD adoption in the NBE. Through a survey of 307 architectural and engineering DFs in Lagos, Nigeria, data collected were analysed using descriptive and inferential statistical methods. Economic and knowledge-related challenges emerged as the most significant. The findings were attributed to the newness of CD in the NBE, lack of technical CD knowledge, and short-term mindset of the client, influenced by high resource and construction costs due to the current volatile economy and the issues of high foreign exchange in Nigeria. The study recommended promoting public awareness, training of DFs, establishing voluntary stewardships, regulatory frameworks, and incentives, developing pilot projects and forming international collaborations to expedite CD adoption. The outcomes have the potential to facilitate the development of a CD implementation framework in the NBE. By offering new and valuable insights into CD challenges in developing countries’ AECO sector, and proposing practical enablers for overcoming the unique barriers in the NBE during the implementation process, the study contributed to the global discourse on CD adoption.

Time-varying disaggregation of the income-emissions nexus: New evidence from the United Kingdom

This paper's objective is to investigate the validity of the Environmental Kuznets Curve (EKC) hypothesis utilizing three unique approaches in this era of accelerating climate change and economic volatility. The first step is to introduce and employ a new cointegration test which allows smooth and sharp structural changes through a dummy variable and a Fourier function. Using a time-varying causality approach, the second stage is to assess the EKC hypothesis's validity for each year of a given period, as opposed to the entire period. The third stage is to conduct time-varying analyses not only of the effect of Gross Domestic Product or aggregate income on environmental degradation but also of the effects of the four major economic units' incomes, namely those of the government, non-financial corporations, households, and the rest of the world. This research derives three conclusions using the United Kingdom as a case study from 1830 to 2016. The impacts of aggregate income and the incomes of the three economic units on carbon emissions are consistent with the EKC hypothesis. Second, each of these effects occurs at different times. Thirdly, the EKC hypothesis regarding the association between the nation's trade income and carbon emissions cannot be validated. To provide policymakers with a dynamic, unit-specific, and effective strategy for mitigating environmental degradation, the paper proposes testing the EKC hypothesis for each year over a specific time period, as well as for the effects of both aggregate income and the disaggregate income of four major economic units.

Diversification and bank stability: Role of political instability and climate risk

Amid the changing regulatory environment, economic volatility, and environmental complexities, the banking industry has experienced significant transformation. In this scenario, diversification has arisen as a critical risk management approach. This research investigates the intricate dynamics between bank diversification strategy and stability, particularly concentrating on the influences exerted by political uncertainty and climate-related risks. Our study examines the effect of bank diversification strategies on bank stability by using a sample of 271 banks operating in the MENA countries during the period 2009–2020. We also analyze how political instability and climate risk impact the nexus between diversification and bank stability. Our results show that the impact of enhancing banking diversification on stability is mixed. The bank's income and assets diversification improve the bank's stability. In contrast, diversification benefits appear to be deteriorating with the increase in non-interest activities-the so-called 'dark side of diversification.' While political instability and climate risk significantly affect the bank's stability and reduce the benefits of the bank's diversification strategy. Furthermore, the impact of diversification on bank stability varies across banks due to differing size and market power levels. Notably, the adverse impact of bank diversification on stability is more pronounced in conventional and GCC countries than in Islamic and non-GCC countries. The study offers significant policy implications for bank regulators to identify measures needed to address the risks of climate change in the banking sector and improve the stability of banks.

Comparing the Performance of Developed and Emerging Market Equities during Economic Downturns

Purpose: This study compares developed and developing market stocks during the Russia-Ukraine crisis, a time of high geopolitical tensions. Economic downturns are complicated by geopolitical, financial, and natural disasters. A relevant case study to analyze equities market divergence under geopolitical uncertainty.
 Design/Methodology/Approach: This research quantifies stock market indexes, daily returns, and volatility indicators using historical financial data. Performance indicators, volatility patterns, and risk-return characteristics are compared across established and developing market stocks. The analysis seeks to determine if geopolitical tensions during the war increased market volatility and to understand market segment reactions. The analysis uses cumulative returns, average returns, standard deviations, volatility indexes, and the Sharpe ratio.
 Findings: It is found that clear geopolitical tensions during the crisis affected market volatility differently in established and new economies. This is because industrialized economies are financially stronger than developing ones. The Sharpe ratio allowed detailed market sector comparisons of risk-adjusted returns. This comparison showed investors' possible trade-offs between rewards and dangers.
 Implications/Originality/Value: These findings affect investors seeking educated strategies, politicians creating effective actions, and market participants managing risks. This research improves decision-making and risk management amid economic volatility by evaluating geopolitical events and stock market behaviors.