Financial Openness Research Articles

Financial openness and energy structure transformation

Energy structure transformation is the only way for China to achieve the “dual carbon” goal, and one of the difficulties faced by energy transformation is financing. In the context of China’s steadily promoting the high-level opening-up of financial industry, this paper uses the panel data of China’s provincial level from 2010 to 2019 to systematically examine the impact of financial opening-up on the transformation of energy structure. The results show that: 1) Financial openness has a significant positive impact on the energy structure transition; 2) In different stages of energy structure transformation, as the main driving force in the initial stage of energy structure transformation is the government’s policy support, with the continuous maturity of energy structure transformation, the impact of financial openness on energy structure transformation gradually increases; 3) With different levels of economic development, the driving effect of financial openness is also different. The lower the level of economic development is, the stronger the driving effect of financial openness on energy structure transformation is due to the lack of financing channels. This paper provides a theoretical basis for China’s energy structure transformation, and also provides rich policy implications for promoting China’s financial industry to open up at a high level.

Role of foreign direct Investment and political openness in boosting the eco-tourism sector for achieving sustainability

This study aimed to examine the impact of China’s political openness index and foreign direct investment on its ecotourism index from 1985 to 2019. The findings revealed that a 1% rise in foreign direct investment had a long-term effect, increasing China’s sustainable tourism index by 0.01%. Furthermore, the political openness index played a significant role in boosting ecotourism in China over both short and long periods. A 1% increase in the political openness index corresponded to a 0.32 and 0.53% increase in China’s ecotourism index in the short and long term, respectively. Additionally, the financial openness index had a positive impact in the short and long term, with a 1% improvement resulting in approximately 0.24 and 0.23% increases in China’s ecotourism index. Key policies to advance eco-tourism in China include ensuring political stability, enhancing green financial markets through fintech and blockchain, and implementing poverty alleviation measures.

Financial Opening under the WTO Agreement in Selected Asian Countries: Progress and Issues

Financial Opening under the WTO Agreement in Selected Asian Countries: Progress and Issues

The relationship between financial risk, financial openness, trade openness, and financial development in Southern Mediterranean countries

The relationship between financial risk, financial openness, trade openness, and financial development in Southern Mediterranean countries

Do Institutional Quality and Trade Openness Strengthen the Role of Financial Openness in Financial Development?

Do Institutional Quality and Trade Openness Strengthen the Role of Financial Openness in Financial Development?

The Impact of Financial Openness on Monetary Policy Uncertainty: A Global Analysis

The Impact of Financial Openness on Monetary Policy Uncertainty: A Global Analysis

The Green Sin: How Exchange Rate Volatility and Financial Openness Affect Green Premia

The Green Sin: How Exchange Rate Volatility and Financial Openness Affect Green Premia

Dynamic Connectedness between Crypto and Conventional Financial Assets: Novel Findings from Russian Financial Market

In the dynamic landscape of the Russian digital economy and increasing financial openness, crypto assets have emerged as influential players in the financial market. The geopolitical and economic developments after a conflict with Ukraine have presented formidable challenges in the shape of financial and trade sanctions, coupled with the suspension from the SWIFT banking system, has plunged the Russian economy into a precarious situation. The current study delves into the network spillover effects between a prominent crypto asset and various financial assets including equity, exchange rates, crude oil, gold, and commodity futures using daily data from January 01, 2018, to August 31, 2023. The purpose of the study is to provide empirical and theoretical insights into countering the impact of sanctions on Russia, proposing a pragmatic solution for the Russian financial market. The research methodology involves the application of network spillover estimation and value-at-risk analysis. Notably, the findings expose a robust association between crypto and financial assets, where crypto assets play a pivotal role in transmitting risk within the financial landscape. While their impact on other financial assets remains relatively subdued, short-term correlations exhibit volatile fluctuations, often marked by sharp increases in downside risk. Theoretical implications follow the portfolio theory of asset pricing, with extreme risk spillover originating from long-run fluctuations in the crypto market, impacting market sentiment and elevating risk propagation in the Russian financial market. These results carry practical significance for payment and receipt processes, as well as trading activities with foreign countries, presenting essential insights for policymakers and investment decision-makers.

The Impact of Financial Sector Development on the Sustainable Economic Growth of Pakistan

Purpose: The study examine the impact of financial Institutions and markets development on the sustainable economic growth of Pakistan.
 Design/Methodology/Approach: Time series data of Pakistan is analyzed from 1985 to 2022 by using OLS.
 Findings: Financial institutions development particularly banks are playing positive role in the real GDP growth rate of Pakistan. Financial openness has neutral effect, intermediation and liquidity has positive effect and financial institutions expansion has negative effect on the real GDP. The financial markets development is playing negative role in the real GDP growth rate in Pakistan due to weak, fragile and inefficient market institutions.
 Implications/Originality/Value: Our study findings suggest that for a sustainable economic growth Government should encourage and support financial institutions particularly banks to increase economic activities in the country.

Cross-sectional dependence in financial openness and its influence on renewable energy consumption in Asia

Renewable energy is known for its lower environmental impact compared to conventional fossil fuels. The integration of financial openness plays a pivotal role in driving renewable energy consumption. The existing literature has predominantly overlooked the nonlinear impact of financial openness on renewable energy consumption. This study examines the nonlinear impact of financial openness on renewable energy consumption across different regions in Asia, such as Central Asia, East Asia, South Asia, Southeast Asia, and West Asia, by employing linear and nonlinear cross-sectionally augmented autoregressive distributed lag techniques. The findings of the linear analysis confirm that financial openness favorably impacted renewable energy consumption in the long run in all regions. On the other side, the nonlinear analysis highlights that an increase in financial openness promotes renewable energy consumption in all regions except West Asia. In contrast, the fall in financial openness hurt renewable energy consumption in Asia, Central Asia, and West Asia. Greenhouse gas emissions and GDP promote renewable energy consumption in almost all regions in both linear and nonlinear analysis, and ICT and trade help the consumption of renewable energy to rise in some regions. Policymakers in Asia and its subregions should focus on increasing the collaboration between the financial sectors of the Asian economies and increasing the flow of funds to renewable energy sources in Asia.

Does cycle superposition amplify bank liquidity risk under different levels of financial openness? Empirical evidence from China

PurposeThis paper aims to explore the impact of cycle superposition on bank liquidity risk under different levels of financial openness so that banks can better manage their liquidity risk. Meanwhile, it can also provide some ideas for banks in other emerging economies to better cope with the shocks of the global financial cycle.Design/methodology/approachEmploying the monthly data of 16 commercial banks in China from 2005 to 2021 and based on the time-varying parameter vector autoregressive model with stochastic volatility (TVP-SV-VAR) model, the authors first examine whether the cycle superposition can magnify the impact of China's financial cycle on bank liquidity risk. Subsequently, the authors investigate the impact of different levels of financial openness on cycle superposition amplification. Finally, the shock of the financial cycle of the world's major economies on the liquidity risk of Chinese banks is also empirically analyzed.FindingsCycle superposition can magnify the impact of China's financial cycle on bank liquidity risk. However, there are significant differences under different levels of financial openness. Compared with low financial openness, in the period of high financial openness, the magnifying effect of cycle superposition is strengthened in the short term but obviously weakened in the long run. In addition, the authors' findings also demonstrate that although the United States is the main shock country, the influence of other developed economies, such as Japan and Eurozone countries, cannot be ignored.Originality/valueFirstly, the cycle superposition index is constructed. Secondly, the authors supplement the literature by providing evidence that the association between cycle superposition and bank liquidity risk also depends on financial openness. Finally, the dominant countries of the global financial cycle have been rejudged.

Effects of trade and financial openness on inflationary pressure in Nigeria

The continuous rapid upsurge in inflationary pressure in Nigeria amidst the gradual liberalisation of the country’s trade and financial market calls for questioning of the role of trade and financial openness in the inflationary trend in Nigeria, which makes the research on this issue relevant. The purpose of this study was to determine the effects of trade and financial openness on inflation in Nigeria. In the estimation of the model built to capture the objective of the study, the fully modified ordinary least squares was employed based on the data collected from the World Development Indicators covering the period of 1981 to 2023. The results showed that trade openness and exchange rate exerted a significant negative effect on inflation in Nigeria while exchange rate showed a significant positive effect. The study concluded that financial openness had a positive significant effect on inflation while trade openness and exchange rate exerted a significant negative effect. The need for government to review their foreign trade policies in such a way that the importation of both finished and intermediate goods and services from the rest of the world can be significantly reduced by boosting local production was recommended. The study offers two-folds contributions. It provides new information on the factors that determine inflation and it specifically shows the nexus among trade and financial openness. The findings therefore revealed that higher trade and financial openness raises inflation implying openness-induced inflation. The findings from the study will be of practical value to policy makers such as those in the fiscal authorities and the Central Bank of Nigeria in devising policies to tame the current inflationary pressure in Nigeria

Stock market liberalization and stock tail systemic risk: Evidence from China’s “Mainland-Hong Kong Connect” program

ABSTRACTAs a crucial component of financial opening, stock market liberalization is a vital measure for China to advance market-oriented and open-oriented reforms. However, effective risk prevention and control must be in place as a prerequisite. Examining the ‘Mainland-Hong Kong Stock Connect’ program as a quasi-natural experiment, this study explores the mechanism through which this stock market liberalization policy affects stock tail systemic risk using a time-varying Difference-in-Differences (DID) model. The findings indicate that: (1) The ‘Mainland-Hong Kong Stock Connect’ program significantly reduces stock tail systemic risk in both Shanghai and Shenzhen stock markets. (2) The key to risk reduction lies in enhancing information transparency, corporate governance, and stock liquidity. (3) The risk mitigation effect of this policy is particularly pronounced in regions with weaker investor protection.

An investigation of financial openness, trade openness, gross capital formation, urbanization, financial development, education and energy nexus in BRI: Evidence from the symmetric and asymmetric framework

Clean energy development can bring numerous benefits, such as decreased greenhouse gas emissions, improved air quality, and increased job opportunities in the green industry. These advantages can be achieved through the collaborative efforts of all stakeholders involved. Ultimately, adopting clean energy can lead to a healthier planet and economy. Energy availability and scarcity influence the aggregated economy. The present study explores the interrelationships between financial openness, trade openness, gross capital formation, urbanization, financial development, education, and energy within the Belt and Road Initiative (BRI) nations. A panel of 56 nations has considered empirical investigation for 2002–2020. The coefficients extracted from CS-ARDL revealed a catalyst role of openness in the energy mix, especially the inclusion of clean energy both in the long run and short. The asymmetric evaluation revealed that positive negative shocks in openness lead to a positive association with energy consumption. Moreover, the asymmetric association was also exposed through the execution of a standard Wald test. The study findings show that FO, TO, and GCF are critical in energy sustainability in BRI nations. It implies that clean energy inclusion in the energy mix might be amplified, and energy sustainability may be ensured. The energy transition of Belt and Road Initiative (BRI) nations is significantly affected by financial, trade, and domestic capital adequacy. The success of sustainable energy policies is determined by several factors, which play a crucial role in countries participating in BRI projects; the findings provide insight into the complex interdependencies among the variables above and their effects on the energy dynamics within the BRI region. Furthermore, the research findings hold considerable significance for policymakers as they offer valuable insights into the possible synergies and trade-offs among these factors that can facilitate sustainable energy transitions in the BRI economies.

Unraveling Exchange Rate Volatility Impact on Economic Growth: A Study of Developing Countries through the Lens of Exchange Rate Regimes and Financial Openness

Unraveling Exchange Rate Volatility Impact on Economic Growth: A Study of Developing Countries through the Lens of Exchange Rate Regimes and Financial Openness

Unraveling Exchange Rate Volatility Impact on Economic Growth: A Study of developing Countries through the Lens of Exchange Rate Regimes .and Financial openness

Unraveling Exchange Rate Volatility Impact on Economic Growth: A Study of developing Countries through the Lens of Exchange Rate Regimes .and Financial openness

Accounting of State Grants According to International Financial Reporting Standards

Accounting for grant agreements is an important aspect of financial management for a variety of organisations, including not-for-profit, commercial enterprises, and public institutions. Accounting for grants helps to ensure financial openness and transparency in the organisation's activities. This is important to meet the requirements of stakeholders, including donors, government agencies, investors, and the public. The purpose of the study is to identify the areas of grant funds reporting in accordance with international financial reporting standards. The study found that many organisations receive grants from various sources, and this may include funds from governmental organisations and international donors. Accounting for grants helps ensure compliance with the terms and conditions that accompany the grant. Grants accounting helps organisations to effectively manage financial resources provided for specific projects or programmes. This ensures the efficient use of funds and the achievement of planned results. In addition, Grant Accounting allows you to evaluate the results and impact of projects that have been funded by grants. This helps organisations and donors understand how successful their investments have been. In general, grant accounting is important for the financial stability, transparency, and efficiency of grant-receiving organisations. It helps ensure effective management of financial resources and fulfilment of obligations to donors and other stakeholders.

Globalization and Economic Growth in Nigeria

The study examined globalization and economic growth in Nigeria from 1985 to 2021. The objectives of the study are to; determine the impact of financial openness on economic growth in Nigeria; examine the effect of the net exports on economic growth in Nigeria; and examine the impact of exchange rate on economic growth in Nigeria. Annual data was collected from Central Bank of Nigeria statistical bulletins and World Development Index. The technique of Autoregressive Distributed Lag (ARDL) model was used to analyze the data. The empirical results showed that in the long run, all the variables of globalization have positive and significant relationship with economic growth in Nigeria during the period of study. In the short run, both financial openness and exchange rate have positive relationship with economic growth in Nigeria. But net exports have negative impact on economic growth in Nigeria. Based on these findings, it was concluded that, to a great extent economic globalization significantly accelerate economic growth in the longrun in the Nigerian economy. Based on these findings, it was recommended that, there should be creation of conducive environment to encourage openness of trade through inflow of investment that will trigger economic growth. Similarly, depreciation of the exchange rate which is an indicator of global price could be an obvious instrument that helps to drive the growth process in the Nigerian economy.

Analysis of the Path and Countermeasures for the Central Bank's Digital Currency to Boost the Internationalization of the RMB

In order to meet the needs of China's economic development and international trade, and to prevent potential risks arising from the international monetary system dominated by the US dollar, China officially began the process of RMB internationalization in 2009. However, in the process of development, it faces obstacles caused by factors such as US dollar hegemony and limited financial openness in China. In recent years, China has further developed the internationalization of the RMB and achieved significant results. Among them, the issuance of the Central Bank's Statutory Digital Currency (DC/EP) in 2020 has brought a new upgrade to the RMB. As an emerging circulation method, the digital RMB has the advantages of efficiency, convenience, centralized management, and information recording, bringing a new development to the internationalization of the RMB. It can be foreseen that with the development of China's economy and technology, the digital RMB will play an important role in future development. This article aims to analyze the current development status of RMB internationalization, explore the opportunities and challenges brought by the issuance of legal digital currency by the central bank to the development of RMB internationalization, and propose corresponding countermeasures and suggestions.

Capital flight and the real exchange rate: evidence from resource scarce MENA countries

ABSTRACT We analyze the determinants of capital flight in three resource scarce MENA countries namely Egypt, Morocco, and Tunisia. Our methodology involves both the linear and nonlinear autoregressive distributed lag (ARDL) cointegration approaches, with a focus on asymmetric relationships between capital flight and the real exchange rate, to distinguish the impact of real appreciation and depreciation of domestic currency on capital flight. The results based on nonlinear ARDL approach using annual data between 1977 and 2019 indicate that in Egypt, financial openness is negatively related with capital flight, while real depreciation seems to increase it in the long run. Our findings also reveal that the real GDP growth rate, institutional quality as well as inflation are important factors affecting capital flight in Morocco, whereas financial openness and the real exchange rate influence capital flight significantly in Tunisia.