Financial Link Research Articles

Unconventional monetary policy in a nonlinear quadratic model

Abstract After the financial market meltdown and the Great Recession of the years 2007–9, the financial market-macro link has become an important issue in monetary policy modeling. We develop a dynamic model that contains a nonlinear Phillips curve, a dynamic output equation, and a nonlinear credit flow equation – capturing the importance of credit cycles, risk premia, and credit spreads. Our Nonlinear Quadratic Model (NLQ) model has three dynamic state equations and a quadratic objective function. It can be used to evaluate the response of central banks to the Great Recession in moving from conventional to unconventional monetary policy. We solve the model with a new numerical procedure using estimated parameters for the euro area. We conduct simulations to explore the (de)stabilizing effects of the nonlinearities in the model. We demonstrate that credit flows, risk premia, and credit spreads play an important role as an amplification mechanism and in affecting the transmission of monetary policy. We thereby highlight the importance of the natural rate of interest as an anchor for a central bank target and the weight it places on the credit flows for the effectiveness of unconventional monetary policy. Our model is similar in structure compared to larger scale macro-econometric models which many central banks employ.

Analysis of submissions to the EU’s public consultation on tobacco traceability and security features

Abstract Background The Illicit Trade Protocol (ITP) requires all Parties to establish a tobacco track and trace (T&T) system. In 2016, the European Commission held a public consultation on T&T implementation in which interested parties were asked to respond online to 22 multiple-choice questions and were given additional opportunities to leave comments if desired. In May 2019, the EU's T&T system became operational. This paper explores tobacco industry influence over and policy positions within the consultation process. Methods The Illicit Trade Protocol (ITP) requires all Parties to establish a tobacco track and trace (T&T) system. In 2016, the European Commission held a public consultation on T&T implementation in which interested parties were asked to respond online to 22 multiple-choice questions and were given additional opportunities to leave comments if desired. In May 2019, the EU's T&T system became operational. This paper explores tobacco industry influence over and policy positions within the consultation process. Results Of the 197 consultation responses analysed, 131 (66.4%) had financial links to the tobacco industry. 89 respondents were trade associations, 74 of which were financially linked (33 had TTC members). 29 (22.1%) of the financially-linked respondents were not transparent about their links. There was a clear divide in the policy preferences of respondents with and without a financial link. Collectively, respondents with a financial link supported an industry-operated solution. Conclusions There was an extensive lobbying effort by the tobacco industry over the EU's T&T system, with TTCs' interests being represented repeatedly through multiple trade associations. The transparency requirements regarding consultation respondents' affiliations with relevant stakeholders (such as tobacco manufacturers) should be improved for future tobacco-related consultations. Key messages There was an extensive lobbying effort on the part of the tobacco industry Several respondents with financial links to the tobacco industry did not disclose these. Collectively, respondents with a financial link to the tobacco industry supported an industry-operated solution which would not have met the requirements of the ITP.

THE SYNCHRONISATION BETWEEN FINANCIAL AND BUSINESS CYCLES: A CROSS SPECTRAL ANALYSIS VIEW

Our study bridges the gap between in previous research on the synchronization between financial and business cycles over a long period. Using the data for the UK from 1270 to 2016 we analyze the synchronization between financial and business cycles using spectral Granger causality (Breitung & Candelon, 2006). Our paper brings several important findings to the discussion on the financial and business cycle link. Our paper is the first one (to the best of our knowledge) that use data over a long period spanning several centuries. We use spectral analysis and advanced spectral analysis (SSA) and (MSSA) to study the relationship between financial and business cycles in the long run. Paper results show financial and business cycles series moves along over the medium-term spectrum. We find a strong link between the cyclical component in the output (real GDP series) and the cyclical component in the financial series (housing price, credit).

Connecting perceived economic threat and prosocial tendencies: The explanatory role of empathic concern.

Recent research suggests that perceived economic threat constitutes a valid predictor of people’s attitudes and behaviors. While accumulated empirical evidence has mostly underlined the deleterious psychological effects (e.g., reduced psychological well-being) of perceived economic threat in times of economic strain, we postulate that individuals experiencing higher economic threat linked to the Spanish economic crisis are more prone to engage in other-beneficial prosocial behavior. Across two independently collected community samples, we tested this theoretical formulation and examined the potential mediating roles of empathic concern (Studies 1 & 2) and identification (Study 2). Study 1 (N = 306) revealed that participants who descended in the social scale due to the negative national economic context were engaged in a larger number of helping behaviors over the last three months compared to participants who did not descend the social ladder—independently of several sociodemographic and ideological factors. Moreover, our data indicated these effects were driven by increased empathic concern. Study 2 (N = 588), in which two hypothetical helping-behavior scenarios were randomly administered (crisis-related vs. control), showed that participants under high perceived financial threat exhibited an undifferentiated pattern of prosociality. However, moderated-mediation analyses indicated that empathic concern explained the perceived financial threat-helping behavior link in the hypothetical crisis-related scenario but not in the hypothetical control scenario. Together, these findings extend prior literature on the psychosocial effects of perceived economic threat and the determinants of other-oriented behavior. Implications of these findings and suggestions for further research are discussed.

The fit between corporate social responsibility and corporate governance: the impact on a firm’s financial performance

This study asserts that the relationship between corporate social responsibility (CSR) and a firm’s financial performance needs to be examined with reference to the ‘fit’ between CSR and corporate governance (CG). Therefore, we develop a model to analyze the moderating effects of corporate governance characteristics (board size, ownership concentration, board gender diversity and board independence) on the CSR-firm’s financial performance link (measured by Tobin’s q). The model is tested on a sample of 17,500 observations over an 11-year period and mainly finds support for the moderated hypotheses. The findings indicate that while board size and gender diversity moderate the CSR-firm’s financial performance link positively, CSR interacting with ownership concentration negatively impacts a firm’s financial performance. In addition, we find no support that board independence moderates the CSR-firm’s financial performance link. We advance CSR research by demonstrating the moderating effects of corporate governance characteristics on the CSR-firm’s financial performance link.

Does CEO power moderate the link between ESG performance and financial performance?

PurposeBased on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial performance is moderated by chief executive officer (CEO) power.Design/methodology/approachListed corporations with reference to the German two-tier system (HDAX and SDAX) for the business years 2010-2018 (775 firm-year observations) have been included. Fixed effects panel regression analysis was conducted to analyze the link between ESG performance (in total and its three pillars) and financial performance (ROA), with special reference to the interaction of a CEO power index.FindingsWhile ESG performance has a positive impact on financial performance, the link is more pronounced by CEO power. Thus, in line with prior research on the one-tier system, CEO incentives can positively contribute to the CSR-business case in the German two-tier system. The results remain constant after conducting several robustness checks.Originality/valueA key contribution to the empirical CSR literature can be stated, as the moderating role of CEO power in the ESG–financial performance link is rather neglected in prior studies. Thus, corporate governance and sustainability should be classified as interactive aspects for the business case of a successful stakeholder management.

Designing Strategy Agent Link Using SWOT Analysis Based On Business Canvas Model Service Company: Indonesia Company Case Study

OJK (Financial Services Authority) in collaboration with Indonesia Bank issued smart services and Bank XYZ (Persero) Tbk issued Agent link which is a non-office financial transaction service and link agent is an extension of XYZ Bank and XYZ (Persero) Tbk Branch X. Total agency x in 2018 as many as 57 agents. And the performance of link agents built by Surabaya branch X office for its transaction is low compared to the branch office built by Surabaya area office. This research is conducted to analyze the strategies implemented to help increase transaction agent linkage in Surabaya X branch office using SWOT analysis based on Business Model Canvas to improve performance in terms of several aspects and for decision stage using QSPM and the result with (TAS) on external factors is greater than the internal factor TAS, that’s means the right strategy decision to improve performance of Agent Link on Bank XYZ is by extensification. method it is expected that the company can use it as a foothold in deciding policy or evaluation of improvement on company

Financial and economic development link in transitional economies: a spectral Granger causality analysis 1991?2017

Research background: The relationship between financial development and economic growth has been attracting attention in the field of economics since the times of the ?great moderation?. Previous empirical studies still fail to put forward a general conclusion on whether and how financial development affects economic growth. This is particularly true due to the lack of empirical research on the matter in question for countries in transition.
 Purpose of the article: This study aims to contribute to bridging the gap in the financial development-growth nexus in transitional economies. Understanding the mechanism behind financial development and economic growth should assist policymakers in the design of efficient economic policies or avoiding/alleviating financial cycles.
 Methods: Using Granger causality test in frequency domain, which shows to have more power over standard time domain Granger causality test, as well as gross domestic product (GDP) and the monetary base (M2 ? intermediate money), we investigated the finance-growth relationship in 19 Central, East, and Southeast European countries (CESEE) from 1991 to 2017.
 Findings & Value added: Study results show that financial development is important for growth in CESEE countries, thus supporting the ?supply-leading? theories in general for countries in the sample. Our findings indicate that the relationship between financial development and economic growth exists in CESEE countries (with one exception ? the Czech Republic) ranging from unidirectional (Albania, Bosnia and Hercegovina, Belarus, Estonia, Macedonia, Russia, Turkey), to bi-directional spectral Granger causality (Bulgaria, Croatia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Romania, Slovenia, Slovakia, Ukraine).

The Transmission of Financial Shocks on a Global Scale: Some New Empirical Evidence

ABSTRACT We examine shocks to capital flows from the United States, the Eurozone, and China. A US interest rate rise is contractionary for the United States but produces positive growth elsewhere. Cross-border claims and US interest rate shocks have been more subdued since the global financial crisis, consistent with the portfolio rebalancing hypothesis. Negative claims shocks from the Eurozone have opposite macroeconomic effects than when the same shock hits the United States due to the predominance of bank-intermediated financing in the Eurozone. Real and financial link exists between China and the Eurozone. The United States is relatively immune to shocks from China of the kind investigated here.

Financial well-being: A conceptualization and research agenda

With savings rates at record lows and inadequate long-term financial planning for retirement, financial well-being has become an important topic for individuals and households as well as for societies and countries. Research on the topic, however, remains scarce and scattered across disciplines. The present paper aims to consolidate and extend knowledge on financial well-being and makes a three-fold contribution to the discussion. First, we propose a new definition based on a perceptual perspective of financial well-being and link it to an individual's current and anticipated desired living standard and financial freedom. We then develop a framework that distinguishes key elements of financial well-being; namely, interventions and financial behaviors, consequences, contextual factors, and personal factors. We then present a research agenda to guide future research on financial well-being. This work is designed to inspire researchers to continue expanding the knowledge so that financial institutions can take measures to increase financial well-being.

When does it pay to be good – A contingency perspective on corporate social and financial performance: would it work?

The findings on corporate social and financial performance research has exposed the universal approach as tenuous and questionable, so the current approach of corporate social and financial performance research has been subject to severe criticism. Instead of exploring a universal corporate social and financial performance link, scholars have called for a contingency perspective in order to determine the conditions and context that catalyzes positive connections between the constructs.This study systematically reviews the literature on the moderators exploited in corporate social and financial performance research and finds, by and large, that a positive corporate social and financial performance association dominates, although the relationship is stronger in advanced economies and institutionalized contexts. Although research on the contingency perspective has progressed, theoretical support for this relationship is thin, and the lack of appropriate research design and stereotyped constructs thwart its positive implications.A review of the literature shows that although organizational factors seem to moderating the corporate social and financial performance relationship strongly yet industry and country factors also tend to affect this association. Important consistencies included that a dynamic business environment reinforces the corporate social and financial performance relationship. Differentiation in social responsibility practices moderates the responsibility-performance link, but not often positively. The effect of R&D intensity is equivocal, and advertising intensity did not strengthen this relationship across the level. Avenues for future research conclude our discussion.

Does it really pay to be good, everywhere? A first step to understand the corporate social and financial performance link in Latin American controversial industries

Most research studying the corporate social performance (CSP)–corporate financial performance (CFP) link has utilized developed country samples. Also, this literature has generally focused on a wide variety of industries, ignoring the fact that certain sectors – such as controversial industries – have graver social and environmental issues. Hence, a gap exists in this tradition when it comes to emerging markets and controversial industries. This paper attempts to fill this void by providing preliminary evidence and insight on the matter. Based on an exploration in six Latin American countries and five controversial industries, we find a negative bidirectional association (or a non‐significant one at best) between CSP and CFP. These results tend to contradict the mainstream conclusion of a positive bidirectional link, suggesting that institutional and market‐level forces play a major role in shaping this relationship.

Robust pricing and hedging under trading restrictions and the emergence of local martingale models

We pursue the robust approach to pricing and hedging in which no probability measure is fixed, but call or put options with different maturities and strikes can be traded initially at their market prices. We allow the inclusion of robust modelling assumptions by specifying a set of feasible paths on which (super)hedging arguments are required to work. In a discrete-time setup with no short selling, we characterise absence of arbitrage and show that if call options are traded, then the usual pricing–hedging duality is preserved. In contrast, if only put options are traded, a duality gap may appear. Embedding the results into a continuous-time framework, we show that the duality gap may be interpreted as a financial bubble and link it to strict local martingales. This provides an intrinsic justification of strict local martingales as models for financial bubbles arising from a combination of trading restrictions and current market prices.

Analysis on Corporate Social - Financial Performance Link

Study explore and investigate the influence of corporate social responsibility in multi level facets for performance outcome and corporate social behavior . Using corresponding and coordinated sample of different financial institutions. Data is collected by banks annual reports issuing during 2008-2012. To examine and verify the relationship between CSR and CFP , Regression model is used. Findings from data is revealed that positive correlation among corporate social responsibility and corporate financial performance. If financial institutions more invest for CSR practices then they will get higher performance and net profit for long lasting period.

THE MANIC-DEPRESSIVE FATHER IN GEORGE MEREDITH'SHARRY RICHMOND

George Meredith's 1871 three-volumenovel,The Adventures of Harry Richmond, follows the careers of the title character and his flamboyant father Richmond Roy, who perennially expects a court case to prove his claim to royalty. In the course of the narrative, the older Richmond changes from a comical, magical figure of enthusiasms and entertainments to a wreck of instability and loss. Roy's overindulgence, womanizing, and financial extravagance link such damaging and self-destructive behavior to an illness called in Meredith's day “circular insanity” – today known as manic-depression or bipolar disorder. From wild spending sprees to hypersexuality and delusions of grandeur, Roy's symptoms fit many of the major and associated criteria for recognizing manic-depression. Meredith begins the novel with a scene establishing clues about Roy's pathology. Though romanticized by Harry – and often by reviewers and critics as well – Roy's initial appearance reveals not a father coming in the middle of the night despite all obstacles for his five-year-old son; rather, the penniless Roy has walked in manic sleeplessness to coax money from his wealthy, neglected wife. Furious at his father-in-law's refusal to admit him, Richmond Roy then disappears into the darkness with his small son instead. The author's own family history and a character that parallels Roy in an earlier novel suggest that Meredith may have taken a personal interest in examining bipolar behaviors.

The Relationship between Financial Market Development and Foreign Direct Investment in Latin American Countries

The main purpose of this paper is to assess the impact of financial market development on Foreign Direct Investment (FDI) in Latin American countries. Financial market development and FDI are two important sources of efficient economic resource allocation in the region. We use banking sector and stock market indicators to capture financial market development. By giving greater consideration to the short-run and long-run effects of financial market development on FDI, this paper presents empirical results from a time series model of 14 Latin American countries. We find financial market development link is both short-run and long-run phenomena in majority of countries. Furthermore, our result of the causality test shows that link between FDI and banking sector development is uni-directional and the link between FDI and stock market development is bi-directional.

Creating SPOTs for Successful Aging: Strengthening the Case for Developing University-Based Retirement Communities Using Social-Physical Place Over Time Theory

Five elements are cited as being critical for a university-based retirement communities’ (UBRCs’) success: proximity to the university, two-directional programming, continuing care, a financial link to the university, and a minimum 10% resident connection to the university. We illustrate these criteria using examples from existing UBRCs. The comparisons are then contextualized in the broader framework of Social-Physical Place Over Time (SPOT) theory. SPOT theory focuses on the interactions between social and physical places among older adults. By analyzing the intersections between SPOT theory and UBRC criteria, we identify additional criteria to improve the definition of a UBRC: transportation support and facilitating activity. UBRCs offer value because they provide the social and physical place where older adults can live when they retire, thereby improving changes in individual agency and belongingness needs, which are key tenets of SPOT theory. The integration of the UBRC criteria and the SPOT theory framework builds on this relatively new meta-theory in environmental gerontology. SPOT theory effectively highlights how UBRCs benefit older adults and the community; UBRCs provide significant benefits not only to older adult residents, but also to the university communities that house them.

No CPR for CSR: A Call to Abandon Search for the “Holy Grail”

Aguinis and Glavas (2013) offer a new attempt to explain the consistently weak but consistently inconsistent findings regarding the relationship of corporate social responsibility (CSR) to financial performance. Like many others writing in the field, Aguinis and Glavas appear to believe that further efforts to categorize types of CSR will somehow identify CSR forms that are financially rewarding. In this response, I challenge four assumptions underlying the Aguinis and Glavas manuscript: (a) that CSR has received little attention in the micro literature; (b) that CSR can be meaningfully conceptualized and operationalized; (c) that a continued search for the “holy grail” of a CSR–financial performance link is likely to be fruitful; and (d) that the “peripheral–embedded” distinction is useful and appropriate.

Expected worsening or improving financial instability and the 2008 financial crisis

We focus on the external sector component of financial instability and link changes in country imbalances to GDP growth rates in ways to produce indices of expected worsening or improving financial instability at different points in time. Our results suggest that depending upon the index used and the base date chosen for comparison, different implications emerge for the linkage between external sector imbalances, perceived future instability and hence the possible onset of a financial crisis. The implication we drawn is that links between imbalances and best policy response to 2008 crisis asserted by the G20 may be more tenuous than claimed.

2012 Presidential Address—On Compassion In Scholarship: Why Should We Care?

2012 Presidential Address—On Compassion In Scholarship: Why Should We Care?