Financial Reform Research Articles

Positive impacts of green finance on environmental protection investment: Evidence from green finance reform and innovations pilot zone

After long-term development, the global economic level has improved significantly, but environmental issues generated by early extensive development seriously threaten the survival of human beings. China, in particular, urgently needs to promote sustainable development through green finance policies. For this reason, this paper regards the 2017 eight pilot zones in five provinces for green finance reform and innovations (GFRIs) as a quasi-natural experiment, and explores whether it can encourage investment in environmental protection in heavily polluting enterprises by using difference-in-differences-in-differences (DDD) model. The paper finds that: First, GFRIs can bolster investment in environmental protection in heavy polluting enterprises. The results remain consistent after several robustness checks, covering the placebo test, PSM-DID test and so on. Second, mechanism tests find that the policy promotes environmental protection investment by alleviating financing constraints and cutting financing costs. Third, heterogeneity analysis shows that the promotion effect of GFRIs on environmental protection investment is more pronounced for provinces with higher percentages of secondary industry GDP, large-scale enterprises, and enterprises with better ESG management. This paper demonstrates the beneficial influence of GFRIs on promoting the transformation of heavy polluting enterprises and provides suggestions for the improvement of such policies.

Performance-based funding and institutional practices of performance prediction

ABSTRACT Since the financial crisis in 2007–2008, higher education systems across Europe have increasingly become subject to performance-based funding reforms. Performance-based funding in higher education thus constitutes one of the most tangible and widespread examples of how performance data are incorporated into governance instruments in educational governance, and in consequence, how a mundane management practice like budgeting has become a data practice. This article investigates how university managers predict their future performance in the context of budgeting. In order to understand the enacted relations between the present and the future implied in practices of prediction, the article analyzes the meticulous and often invisible practices of prolonging individual data points into the future in two case studies, encompassing long-term budgeting in a Danish and a Norwegian university. The analysis shows that these prolongation practices differ across the two cases, involving serial and continuous temporalities, respectively. However, in both cases, the prolongations are made up of various calculations, regulations, sensations and affectivities, which then become constitutive in the sense that the resulting long-term budgets severely restrict the room for maneuver of managers. The article thus conceptualizes these data practices as preemptively restrictive and prospective decision loops, affecting decision-making in the present.

Entrepreneurial Intentions in the Absence of Banking Services: The Case of the Lebanese in Crises

This paper investigates the complex factors hindering entrepreneurial aspirations in Lebanon, focusing on the absence of a functional financial system and its impact on entrepreneurial intentions. Drawing on surveys conducted with 325 Lebanese participants across three generations, using ordinal regression, the research reveals crucial determinants of entrepreneurial intentions, emphasizing the roles of entrepreneurial attitude, the absence of banking sector services, optimism, risk propensity, and age. Positive attitudes and optimism correlate with stronger intentions; however, the weakened economic situation and lack of a functional financial system diminish this positive correlation. Demographic factors like gender and education do not significantly influence intentions. In addition, the study reveals differences in entrepreneurial intentions determinants across the three generations of X, Y, and Z. This study underscores the urgent need for financial system reforms in Lebanon to enhance stability while advocating for financial literacy programs and private sector initiatives to empower entrepreneurs and expand their businesses.

Do pilot zones for green finance reform and innovation avoid ESG greenwashing? Evidence from China

As ESG investments have grown, many companies are emphasizing them to impress capital markets and consumers with their responsibility and environmental consciousness. However, managers in unethical companies greenwashing ESG reports to keep clients. The present investigation employs quasi-natural experiment data obtained from a sample of 1200 Chinese A-share listed companies spanning the period from 2011 to 2021 to examine how the Green Finance Reform and Innovation Pilot Zone (GFRIPZ) affects ESG greenwashing. GFRIPZ can prevent publicly traded companies from ESG greenwashing. The statistical analysis of heterogeneity demonstrates that GFRIPZ in non-state-owned, mid-west, heavy-polluting, manufacturing industries reduces ESG greenwashing. GFRIPZ suppresses corporate ESG greenwashing better in companies with severe financial constraints and a poor corporate reputation. GFRIPZ's inhibition of corporate ESG greenwashing is enhanced by internal and external monitoring. This study shows how financial markets affect firms' ESG greenwashing. It helps implement GFRIPZ theoretically. It also recommends raising listed companies' awareness of ESG disclosure and reducing corporate ESG greenwashing.

Current Status, Problems and Optimization Suggestions of Financing Mechanism for Urban and Rural Residents' Health Insurance in China

The financing mechanism for urban and rural residents' health insurance has continued to develop, with the financing method further refined on the basis of quota financing, the financing level raised year by year in line with individual contributions and financial subsidies, and the financing responsibility shared by the government and gradually strengthened in terms of individual responsibility. However, the current financing mechanism for urban and rural residents' health insurance is faced with the dilemmas of irrational financing method, insufficient financing level, and unbalanced financing responsibility. In light of this situation, it is recommended that the fixed-ratio financing reform be promoted step by step, that a sound mechanism be established for scientifically determining the financing level, that the sense of individual responsibility be strengthened and the financing responsibility be gradually equalized.

Does green finance reform hit urban employment? — Evidence from China's green finance pilot policy

This study aimed to examine the impact of China's Green Finance Reform and Innovation Pilot Zone policy on urban employment trends. The policy was used as a quasi-natural experiment to understand its influence on the average annual employment dynamics across Chinese cities from 2013 to 2022. We employed a staggered Difference-in-Differences (DID) model to examine the policy's effect on urban employment carefully. Our findings indicate that the green finance pilot policy stimulated employment growth at the city level. Subsequently, we discuss the contrasting firm-level effects. Interestingly, the green finance pilot policy has a negative impact on firm-level employment growth. Moreover, the influence varies significantly depending on regional financial development, corporate factor intensity, and ownership structures. This difference between city-level and firm-level outcomes is due to labor shifting from firms with high environmental and social risks to those with lower risks and reallocating labor from secondary to tertiary industries. These findings suggest that green finance reforms have nuanced effects on employment. While they may dampen growth at the firm level, they could foster growth at the city level. Our study provides empirical insights that could help refine the green finance pilot policy and optimize urban industrial structures.

Does stock market liberalization promote entrepreneurship?

This paper investigates the impact of stock market liberalization on entrepreneurship using non-financial firm-level data from 2007 to 2022. The results show that increased stock market liberalization promotes entrepreneurship by alleviating financial constraints, reducing corporate risk-taking, and enhancing corporate social responsibility. With a one percent increase in stock market liberalization, entrepreneurship improves by 8.60 percent. These findings remain robust even after replacing variables, changing model specifications, and addressing the endogeneity concerns. We also find the positive impact of stock market liberalization on entrepreneurship is more pronounced for firms with higher financing constraints, governance efficiency, industry competition, and eastern regions. This study underscores the significance of thoughtful financial market reforms in promoting entrepreneurship and ensuring high-quality economic development.

Green finance policy and labor demand: Evidence from China

Using the implementation of “Green Finance Reform and Innovation Pilot Zone” (GFPZ) policy as a quasi-natural experiment, we investigates the impact of the GFPZ on enterprises' labor demand by considering 2009–2021 data for a sample of listed firms. The results show that the implementation of this policy has increased labor demand in pilot zones. After controlling for endogeneity and testing robustness, we find that the results remain valid. Furthermore, the mechanism test results show that the implementation of GFPZ policy has a positive impact on the labor demand of enterprises by improving operational capability, enhancing development prospects, and optimizing social evaluation. However, it reduces labor demand by exacerbating the financing pressure on enterprises. Additionally, further analysis reveals that the GFPZ policy contribute to the improvement of labor quality. The impact of policy was more significant for manufacturing enterprises and enterprises located in cities with high environmental pressure.

Governance through exit: Pension fund reform impact on real earnings management of portfolio companies

Theoretical models predict that the threat of outside blockholder exit can mitigate agency problems and force managers to undertake actions that would maximize firm value in the long run. We examine whether the institutional blockholder exit threat curbs managerial misbehavior and short-termism reflected in real earnings management. Our study exploits a natural experiment—the Polish pension fund reform of 2013 that encouraged pension funds to trade more actively and imposed a real threat of exit on their portfolio companies. Using a difference-in-differences approach, we provide evidence that the reform significantly decreased the level of real earnings management in “treated” companies, that is, companies with open-ended pension funds (OFEs) playing the role of blockholders. The effect was more significant for firms in a multiple blockholder setting, firms under common ownership, and firms with higher insider’s stakes. Moreover, we confirmed that treated companies that decreased real earnings management in the post-reform period experienced the increased long-term operating performance.

Digital Financial Inclusion, Capital Mismatch and High-Quality Development of the Real Economy

Based on the analysis of the mechanism of digital inclusive finance affecting the high-quality development of the real economy, this study empirically examines the direct effect and spatial spillover effect of digital inclusive finance on the quality of real economic development using the spatial Durbin model with the provincial data from 2011-2022 and examines the mediating effect of capital mismatch. The study finds that: digital inclusive finance has a positive driving effect on the quality of real economic development, with positive total and direct effects, but negative spatial spillover effects; capital mismatch is an important mechanism for digital inclusive finance to promote the high-quality development of the real economy. Therefore, it is recommended that the government create a digital inclusive financial ecosystem, deepen financial market reform, and promote the high-quality development of the regional real economy.

What shapes populists’ economic policy impact? An analysis of financial market reform in Hungary and Poland

ABSTRACT The paper seeks to understand the factors that shape populist radical right parties’ economic policies. While there is a good understanding of how these parties’ core ideology of nativism and authoritarianism shapes social policies, we know less about economic policies. With few exceptions, the insights of this literature have also not travelled to East-Central Europe, despite the strength of the populist right in this region. Instead, authors writing on the region focus on the social coalitions forged by populist parties as an explanation for policies. These authors however do not focus on the role of populism in policymaking. Our paper therefore asks whether the ideological literature can travel to economic policies as well, and specifically to the cases of Hungary and Poland. Drawing on the evidence of financial market reforms under the Fidesz and PiS rule in Hungary and Poland, and a congruence analysis testing the predictive power of existing approaches, we show that a combination of ideological and material factors is needed to explain observed economic policies.

Study on the Development of Offshore RMB Market and Its Impact on the International Financial System

The internationalization of the Chinese yuan responds to challenges with the US dollar's dominance, spurred by events like the subprime crisis and unlimited quantitative easing. China's economic stature necessitates yuan's global role. Its journey involves five stages, from border trade usage to SDR inclusion and presence in global indices. Offshore markets are pivotal, facilitating capital flows and meeting investor needs. Financial regulatory reforms align with market dynamics, enhancing transparency and stability. This study explores the symbiotic relationship between yuan internationalization and financial regulatory reforms, offering theoretical insights and policy recommendations for China's financial evolution and yuan's global ascent.

Sustaining progress towards universal health coverage amidst a full-scale war: learning from Ukraine.

In the aftermath of Russia's military response to the 2014 Revolution of Dignity, the government of Ukraine implemented a package of health financing reforms underpinned by universal health coverage (UHC) principles. By the time of Russia's full-scale invasion of Ukraine in February 2022, the new systems and institutions envisaged in the reforms were largely established. In this Commentary article, we explain how these attributes strengthened the Ukrainian health system's response to the impacts of the war. Ukraine's experience highlights the role that health financing arrangements, designed in accordance with UHC principles, can play in strengthening health system resilience.

Exploratory analysis on payment mechanisms to Community Mental Health Centers in Chile using mixed grounded theory.

Research on psychiatric deinstitutionalization has neglected that reforms in this field are nested in a health system that has undergone financial reforms. This subordination could introduce incentives that are misaligned with new mental health policies. According to Chile's National Mental Health Plan, this would be the case in the Community Mental Health Centers (CMHC). The goal is to understand how the CMHCpayment mechanism is a potential incentive for community mental health. A mixed quantitative-qualitative convergent study using grounded theory. We collected administrative production data between 2010 and 2020. Following the payment mechanism theory, we interviewed 25 payers, providers, and user experts. We integrated the results through selective coding. This article presents the relevant results of mixed selective integration. Seven payment mechanisms implemented heterogeneously in the country's CMHC are recognized. They respond to three schemes subject to rate limits and prospective public budget. They differ in the payment unit. They are associated with implementing the community mental health model negatively affecting users, the services provided, the human resources available, and the governance adopted. Governance, management, and payment unit conditions favoring the community mental health model are identified. A disjointed set of heterogeneously implemented payment schemes negatively affects the community mental health model. Formulating an explicit financing policy for mental health that is complementary to existing policies is necessary and possible.

Application of Mobile Telephony to Improve Medication Adherence in Type 2 Diabetes Patients

Therapeutic failure, poor quality of life and high economic costs have been linked to poor adherence to medication in Type 2 diabetes (T2D) patients. This paper aims to assess patients’ glycemic control, knowledge of T2D and adherence to medications, and evaluate the impact of mobile telephone-based intervention on these indices. A one-year retrospective review of pharmacy refill records was followed by a 6-months’ randomized controlled intervention conducted among 121 T2D patients in a secondary health care facility in Nigeria. Participants were assigned to control (n = 60) and intervention (n = 61) groups. The intervention comprised twice-weekly short message service (SMS) follow-up messaging to the intervention group alongside usual healthcare services. Control group received no SMS. Primary (HbA1c) and secondary (knowledge and adherence) outcome indicators were measured and compared pre- and post-intervention. The same copy of questionnaire was administered at baseline and post-intervention to both groups. Chi-square test was used to examine association of variables while two-sample t-test was conducted to compare mean pre- and post- intervention scores in both groups at p<0.05. The study revealed that intervention significantly improved glycemic control (HbA1c reduction) (p = 0.01). For the control group, mean pre- and post- intervention knowledge scores were 2.798 and 3.118 respectively (t = 1.1368, p = 0.2705) while intervention group recorded 2.714 and 4.193 respectively (t = 5.6772, p<0.001) on a 5-point Likert scale. Pre- and post- intervention adherence scores for control group were 3.804 and 4.013 respectively, (t = 0.2343, p = 0.8182) while intervention group had 3.430 and 6.859 respectively (t = 6.3216, p>0.001) on the 8-point Morisky Medication Adherence Scale (MMAS-8). The study concluded that patients initially had poor glycemic control, fair knowledge of T2D and low adherence to medications. SMS intervention significantly improved all three indices. Policy reforms in healthcare financing is recommended for sustainable provision of mhealth follow-up in diabetes care.

COVID-19 pandemic, oil prices and Saudi stock market: empirical evidence from ARDL modeling and Bayer–Hanck cointegration approach

In 2020, the world experienced several significant events, including the coronavirus (COVID-19) pandemic and the collapse of international crude oil prices. The rapid spread of this pandemic has dramatic impacts on financial markets all over the world, thereby increasing market risk aversion in an unprecedented way since the subprime financial crisis. The decline in stock markets implied volatilities of equity and oil prices, thereby heightening turmoil in global financial markets despite comprehensive and substantial financial reforms. To this end, we investigated the likely effects of this pandemic on the Saudi stock market while controlling for oil prices based on daily data for a period from 1/1/2020 to 19/9/2022. To ascertain the existence of a long-run equilibrium relationship between the variables, we applied autoregressive distributed lag (ARDL) modeling and the error correction model, with this ultimately revealing the existence of strong cointegration in the long run. The ARDL bounds test was found to be robust by combined cointegration tests, thus providing further evidence of a strong relationship in the long run. Granger causality tests also yielded evidence of causality between the variables in both directions. The total COVID-19 confirmed cases and oil prices also caused movements in stock returns in the short run. Our findings have some prominent implications for asset managers and policymakers to improve stock market efficiency and boost global economic activity. Saudi authorities can consequently remove the regulatory and legal obstacles to develop their stock market and better improve the risk management, which will allow to make quick decisions in response to any oil price volatilities. Policymakers should also adopt proactive strategies that can comfort stock investors’ anxieties over the increasing oil price volatilities. Finally, the findings should be treated with some cautions because of the limited sample size and the tests’ statistical inference. Nevertheless, they do open opportunities for further studies to look in more detail at how the COVID-19 pandemic affected, over the short and long run, monetary and fiscal policy coordination, financial stability, and various other macroeconomic indicators in Saudi Arabia.

Improving access to primary health care through financial innovation in rural China: a quasi-experimental synthetic difference-in-differences approach

BackgroundInadequate financing constrains primary healthcare (PHC) capacity in many low- and middle-income countries, particularly in rural areas. This study evaluates an innovative PHC financing reform in rural China that aimed to improve access to healthcare services through supply-side integration and the establishment of a designated PHC fund.MethodsWe employed a quasi-experimental synthetic difference-in-differences (SDID) approach to analyze county-level panel data from Chongqing Province, China, spanning from 2009 to 2018. The study compared the impact of the reform on PHC access and per capita health expenditures in Pengshui County with 37 other control counties (districts). We assessed the reform’s impact on two key outcomes: the share of outpatient visits at PHC facilities and per capita total PHC expenditure.ResultsThe reform led to a significant increase in the share of outpatient visits at PHC facilities (14.92% points; 95% CI: 6.59–23.24) and an increase in per capita total PHC expenditure (87.30 CNY; 95% CI: 3.71-170.88) in Pengshui County compared to the synthetic control. These effects were robust across alternative model specifications and increased in magnitude over time, highlighting the effectiveness of the integrated financing model in enhancing PHC capacity and access in rural China.ConclusionsThis research presents compelling evidence demonstrating that horizontal integration in PHC financing significantly improved utilization and resource allocation in rural primary care settings in China. This reform serves as a pivotal model for resource-limited environments, demonstrating how supply-side financing integration can bolster PHC and facilitate progress toward universal health coverage. The findings underscore the importance of sustainable financing mechanisms and the need for policy commitment to achieve equitable healthcare access.

Learning in Lending: The World Bank’s Organisational Learning Journey in Albanian Health Financing Reform Projects, 1994–2022

Abstract Fostering a learning culture is crucial for aid and development organisations to address the complexities and uncertainties in their operating environments. This case study examines the World Bank’s learning processes in lending projects, focusing on the Albanian health financing reforms from 1994 to 2022. Using the Learning in Lending conceptual framework developed by the World Bank’s Independent Evaluation Group, the qualitative analysis of World Bank documents and reports offers valuable insights into the dynamics of learning processes in health projects. The findings illustrate a feedback loop process encompassing three distinct steps and reveal three types of learning: learning into lending, learning while lending, and learning from lending. By shedding light on the intricacies of the World Bank’s learning processes in health lending projects, this study not only deepens our understanding of how the organisation learns from its experience but also highlights the shortcomings and limitations of the process. Moreover, it emphasises the dual value of learning for multilateral and aid organisations, such as the World Bank, namely improving project results and addressing challenging developmental issues.

Can performance-based financing improve efficiency of health centers in Ethiopia? A Malmquist Productivity Index analysis

IntroductionThe Ethiopian government has introduced several healthcare financing reforms intending to improve efficiency. Piloting implementation of performance-based financing is one of these actions. The purpose of this research is to assess the efficiency of healthcare facilities that have implemented performance-based financing compared to those that have not.MethodsEfficiency was measured using a nonparametric data envelopment analysis and the Malmquist Productivity Index technique. Total factor productivity change, technical change, and technological change are compared across eight sampled healthcare facilities that are implementing performance-based financing and eight that are not in Ethiopia.ResultsHealth facilities implementing performance-based financing have a mean technical efficiency score of 64%, allowing for a potential 36% reduction in inputs without affecting outputs. Their scale efficiency is 88%, indicating a potential 12% increase in total outputs without expanding facilities. In contrast, facilities not implementing performance-based financing have a mean technical efficiency score of 62%, with a potential for 38% input reduction without affecting outputs. Their scale efficiency is 87%, suggesting a potential 13% increase in total outputs without scaling up facilities. Among the 16 healthcare facilities observed, seven experienced a decline in the mean total productivity, while one remained stagnant. The remaining eight facilities witnessed an increase in productivity. The healthcare facilities implementing performance-based financing showed a 1.3% decrease in mean total productivity during the observed period. Among them, five showed an increase and three showed a decrease in the total factor of productivity. The mean total factor of productivity of all healthcare facilities not implementing performance-based financing remained stagnant over the three-year period (2019–2021), with four showing an increase and four showing a decrease in total productivity.ConclusionsThe study concludes that implementing performance-based financing did not improve productivity levels among healthcare facilities over three years. In fact, productivity decreased among the facilities implementing performance-based financing, while those not implementing it remained stagnant. This shows health facilities that implement performance-based financing tend to utilize more resources for similar outputs, contradicting the anticipated efficiency improvement.

Opini Audit, Nilai Aset, Dan Kemandirian Daerah Sebagai Determinan Audit Delay: Studi Empiris Pada Pemerintah Provinsi Di Indonesia 2018-2021

Since 2003, Indonesia has gone through a financial reform. Based on Law No. 13/2004, the Audit Board of Indonesia (BPK) is required to submit the audit report (LHP) including the audit opinion to the Regional People’s Representative Council (DPRD) no later than 2 (two) months after the unaudited financial report is submitted by the local government. This becomes BPK's guideline in completing its audit to avoid delays. During 2017-2021, the audit opinion on local government financial reports (LKPD) has increased. This increase in opinion includes an increase in the unqualified opinion (WTP) to 92.4% of the 2021 financial statements from 76% in 2017. This study aims to answer research gaps related to the effect of audit opinion, local government size through asset value as a proxy, and local autonomy on audit delay. Furthermore, it is important to obtain empirical evidence about the effect of opinion, local government size, and local autonomy on audit delay.