Financial Stability Research Articles

The Role of Crypto Assets in the Traditional Banking System and Its Impact on Financial Stability

The Role of Crypto Assets in the Traditional Banking System and Its Impact on Financial Stability

Comparative Analysis of Digital Banking and Financial Inclusion in the United States: Opportunities, Challenges and Policy Implications

This study explores the role of digital banking in promoting financial inclusion in the United States, assessing its opportunities, challenges, and policy implications. Using a comparative analysis of secondary data, policy reports, and literature reviews, the research evaluates how digital banking services have improved financial access, particularly for underserved populations. The findings indicate that digital banking has expanded financial inclusion by offering mobile banking, digital wallets, and contactless payment solutions, reducing dependency on physical bank branches. It was found that regulatory frameworks from institutions such as the Federal Reserve and FDIC have encouraged innovation whilst ensuring consumer protection and financial stability. However, significant challenges persist, including cybersecurity threats, digital literacy gaps, and disparities in broadband access, which hinder equitable financial inclusion. Additionally, the complexity of regulatory compliance slows fintech adoption, limiting the reach of digital financial services to underbanked communities. Notwithstanding these obstacles, the result revealed that digital banking continues to transform the financial landscape. Fintech firms and traditional banks are leveraging artificial intelligence, blockchain, and open banking to enhance service accessibility. The study highlights that bridging the financial inclusion gap requires collaborative efforts among policymakers, financial institutions, and technology providers.

Behavioral Patterns in Micro-lending: Enhancing Credit Risk Assessment with Collaborative Filtering and Federated Learning

Credit risk assessment uses finance-based behavioural patterns for micro-lending purposes and organizations. The repayment behaviour and credit stability patterns are analyzed across varying repayment tenures and financed amounts. Due to limited borrower data and fluctuating financial patterns, micro-lending platforms have substantial hurdles when it comes to effectively evaluating credit risk. This article introduces a Collaborative Filtering Method using Lending Pattern Analysis (CFM-LPA). The proposed method is enhanced through collaborative federated learning, enabling the analysis of these patterns. This approach evaluates the return rate, credit limit, and consumer response behaviours. Federated learning processes one or more of these factors to assess diverse lending patterns. Based on these evaluations, the behavioural factor is updated for each return period, influencing the credit risk for subsequent return periods and supporting the financial stability of micro-lending operations. The model is trained individually on the identified factors, allowing the behavioural factor to be filtered. New credit risks are identified using this filtered factor from the previous return period. These insights help define new behavioural patterns for the specified credit limit. The proposed method enhances risk detection accuracy by 14.03% and improves return rate analysis by 13.28% across financed amounts. The above abstract is also graphically presented.Graphical

American Protestant Missionaries in Korea between 1884 and 1942, from the Perspective of Immigration

Between 1884 and 1942, about 1,000 American Protestant missionaries came to Korea. Most of them were young, religious, and educated people from various socioeconomic classes. It was their enthusiasm for overseas missions that made them decide to be missionaries, but it was the economic stability provided by the boards of foreign missions which allowed them to actually live as missionaries for a long time in Korea. Overseas missionary work was both a calling and a well-paid job, and therefore, missionaries’ lives in Korea were far from lived in hardship. They built their own communities, maintained the American middle-class lifestyle, and enjoyed a model family life with many children. Adopting the Korean way of life was considered unhealthy or inappropriate. Their lives were criticized by non-missionary Westerners, and sometimes by themselves, for being too luxurious, but it enabled them to engage in missionary work for a long time. Of course, they did not always live comfortably and freely throughout their time in Korea. When Japanese rule began, they also came under Japanese control and interference. Some were arrested, imprisoned, and even tortured. However, instead of returning to the US, they lived in Korea for as long as possible, sometimes for generations. In short, from the perspective of immigration, American Protestant missionaries were immigrants who came to Korea in search of a better life. There they experienced the joys of God’s work that they could not enjoy in the US, and not as poor and lonely missionaries, but as middle-class professionals with families and financial stability.

Examining the relationship between financial performance indicators and capitalization ratios: Analysis of Ghana's banking sector

Purpose: This study examines the relationship between the capitalization ratio and business profitability, particularly its effect on return on assets (ROA) and return on equity (ROE). Capitalisation is crucial for financial growth and operational stability; however, an imbalance in the capital structure can adversely affect profitability. This study examines the essential issue of optimising capitalisation to improve firm performance, particularly under fluctuating economic conditions. Method: This study employs a quantitative research approach to analyse firm-level data and to examine the relationship between capitalisation and profitability, with E-veiw as the analytical tools for regression analysis. The results indicate that elevated capitalisation ratios correlate with diminishing profitability and lower equity returns, highlighting the danger of excessive leverage. Overreliance on debt financing increases financial and operational risks, restricts liquidity, and reduces shareholders’ net returns. Results: This research provides practical recommendations for corporate executives and governments. Businesses are urged to use balanced capital structures to improve financial flexibility and secure sustainable returns. Policymakers must strengthen regulatory frameworks to promote prudent financial management and mitigate the dangers linked to excessive debt financing. Contribution: This study contributes to the literature by offering empirical information regarding the relationship between capitalization and profitability, specifically in emerging markets. The work's novelty is in its concrete advice that links academic frameworks to practical financial strategies.

The Role of Uncertainty, Regulatory and Economic Environment and Quantitative Tightening in Banks’ Performance

ABSTRACTThis study analyses the implications of uncertainty, the regulatory and economic environment, and the monetary policy regime for bank performance. Employing multiple indicators of bank performance and underlying explanatory factors, we used a novel set of empirical approaches including Fixed Effects, Random Effects, Panel Fully Modified Least Squares (FMOLS), Panel Dynamic Least Squares (DOLS), and the Generalised Method of Moments (GMM). Considering the data of both developed (G7) and emerging (E7) economies from 2001 to 2020, our results reveal that uncertainty, leverage, capital adequacy, monetary policy, economic growth, inflation and the exchange rate have significant implications for various aspects of bank performance. We also find significant differences between the developed and developing economies' banking sector performance. In the context of uncertainty, the findings have vital implications for the banking sector in emerging and advanced economies, monetary and prudential policymakers, and stakeholders of financial stability.

Navigating Graduate Education Pathways: Cultural Wealth and the American Dream in Hispanic Students’ Academic Aspirations

ABSTRACT Hispanic bachelor’s degree attainment has risen by 6.4% since 2012, yet only 5.5% of U.S. graduate students are Hispanic. This ethnographic study explores graduate aspirations among low-income Hispanic former dual-enrollment students in South Texas. Using Yosso’s (2005) Cultural Wealth Model, it examines six forms of cultural capital shaping their trajectories. Findings highlight dual enrollment as a key pathway but reveal mentorship gaps. Participants challenge traditional success, valuing resilience and financial stability. This study underscores the need for culturally responsive mentorship and institutional support, offering asset-based strategies to enhance Hispanic students’ social mobility and academic success.

ANALYSIS OF FINANCIAL SYSTEM STABILITY IN INDONESIA: A PRINCIPAL COMPONENT ANALYSIS APPROACH

This study uses Principal Component Analysis (PCA) to analyze the stability of Indonesia's financial system using 15 indicators from banking financial institutions and financial markets. The PCA technique is applied to each variable included in the components of bank financial institutions or non-bank financial institutions into several main factors that have the same variant value. The first principal component (PC1) successfully captured around 38 percent of the total variability and became the dominant indicator for financial system stability in Indonesia. In addition, from the banking financial institution indicators, NIM and LDR became factors that had quite an influence on PC1, indicating that profitability and banking intermediation activities still played a role in the dynamics of financial system. Furthermore, the interplay between Credit Default Swaps (CDS), exchange rates, and stock market indicators like the IHGS could provide deeper insights into how these elements influence investor sentiment and overall financial stability. Therefore, more comprehensive policy steps are needed to strengthen the resilience of the financial system, including stabilizing the bond market, managing exchange rate risk, and strengthening monetary and macroprudential policies to face future economic uncertainty.

Crypto assets as a threat to financial market stability

Crypto assets as a threat to financial market stability

Leveraging Multi-source Data for Local Government Financing Vehicles Debt Risk Assessment Via Random Forests

Local government financing vehicles (LGFVs), in China, are pivotal indirect financing channels for urban development projects. However, the significant debt accumulated by these vehicles presents considerable long-term risks, including challenges to fiscal sustainability, threats to financial system stability, and disruptions to regional economic development. Timely monitoring of LGFV debt risks is essential for enabling effective interventions. This study develops a robust risk evaluation system for LGFVs by leveraging multi-source data and employing the Random Forest (RF) machine learning algorithm. We collected and analyzed a sample of 1584 Chinese LGFVs from a major state-owned bank. Through an examination of the mechanisms underlying LGFV debt risk and a review of relevant literature, we identified seven primary categories and 20 key risk indicators to construct our risk indicator system. After comparing several machine learning algorithms, we selected the RF algorithm to build the LGFV debt risk prediction model due to its superior performance. Our findings emphasize the External Guarantee Ratio, GDP growth rate, and proportion of the tertiary industry as critical risk indicators. The model evaluation demonstrates high accuracy, underscoring its significant potential for practical application. This study contributes to the management of local government debt risks and introduces a novel methodology with potential applicability in other areas of risk management.

Role of Green Financing in Enhancing Financial Stability of Commercial Banks in Ghana

Purpose: The purpose of this article was to analyze role of green financing in enhancing financial stability of commercial banks in Ghana. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Green financing in Ghana is in its early stages, with limited immediate profitability for commercial banks. However, adopting green finance practices can enhance banks' long-term financial stability by mitigating environmental risks and aligning with global sustainability trends. Initiatives like the Ghana Sustainable Banking Principles, adopted by all 24 commercial banks, aim to integrate environmental and social considerations into banking operations, promoting resilience and stability. Unique Contribution to Theory, Practice and Policy: Stakeholder theory, institutional theory & resource-based view (RBV) may be used to anchor future studies on the role of green financing in enhancing financial stability of commercial banks in Ghana. Commercial banks should develop green finance risk assessment tools to evaluate environmental risks associated with loan and investment portfolios, reducing exposure to high-risk sectors affected by climate change. Central banks and financial regulators should implement green capital adequacy requirements, ensuring that commercial banks allocate a minimum percentage of their loan portfolios to green projects to promote sustainable financial stability.

Do financial regulators act in the public’s interest? A Bayesian latent class estimation framework for assessing regulatory responses to banking crises

Abstract When banks fail amidst financial crises, the public criticizes regulators for bailing out or liquidating specific banks, especially the ones that gain attention due to their size or dominance. A comprehensive assessment of regulators, however, requires examining all their decisions, and not just specific ones, against the regulator’s dual objective of preserving financial stability while discouraging moral hazard. In this article, we develop a Bayesian latent class estimation framework to assess regulators on these competing objectives and evaluate their decisions against resolution rules recommended by theoretical studies of bank behaviour designed to contain moral hazard incentives. The proposed estimation framework addresses the unobserved heterogeneity underlying regulator’s decisions in resolving failed banks and provides a disciplined statistical approach for inferring if they acted in the public interest. Our results reveal that during the crises of 1980s, the US banking regulator’s resolution decisions were consistent with recommended decision rules, while the US savings and loans (S&L) regulator, which ultimately faced insolvency in 1989 at a cost of $132 billion to the taxpayer, had deviated from such recommendations. Timely interventions based on this evaluation could have redressed the S&L regulator’s decision structure and prevented losses to taxpayers.

Статистический анализ состояния фондового рынка Российской Федерации

The impact of external sources of financing, such as oil prices and foreign capital inflows, on stock market dynamics and volatility is analyzed. Special attention is paid to the relationship between the stock market and the socio-economic development of the country, as well as the consequences of the crisis for financial stability. The results of the work emphasize the need to develop strategies to increase the stability of the stock market and reduce its vulnerability to external shocks, which is important for ensuring economic stability and growth in Russia.

The Influence of Working Capital Management, Market Risk, and Investment Strategy on Profitability With Financial Distress As an Intervening Variable (Study on Companies With Special Notations Listed on The Indonesia Stock Exchange For The 2019-2023 Perio

This study aims to examine the influence of working capital management, market risk, and investment strategy on profitability, with financial distress as an intervening variable. The research is conducted on companies with special notations listed on the Indonesia Stock Exchange (IDX) during the period of 2019-2023. Quantitative Research Methods The research uses quantitative analysis with an associative quantitative approach, which is research that asks about the relationship between two or more variables. The analysis is carried out using a quantitative approach with Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM-PLS) through Smart PLS 4.0 software. The results show that working capital management and investment strategy have a positive and significant impact on profitability, while market risk and financial distress negatively affect profitability. Furthermore, financial distress plays a significant mediating role between the independent variables and profitability. The model demonstrates a strong predictive ability with an R² value of 0.65 for profitability and 0.57 for financial distress. These findings suggest that efficient working capital management and appropriate investment strategies contribute to higher profitability, while market risks and financial distress pose a threat to the financial stability of companies.

The Impact of Mutual Funds on Pakistan's Stock Market, Economy, and Investor Risk Diversification

This research focuses on the effects of mutual funds on the stock exchange, Pakistan’s economic growth, and the diversification of investors’ risks. It is to investigate the impact of the mutual fund on stock return, growth and help the investors in managing their financial risks. The study adopts a quantitative research strategy; whereby descriptive statistics, hypothesis testing, and regression analysis have been used to analyse mutual funds and their coefficients. The data was obtained through administering structured questionnaires to the investors and the financial professionals in order to assess their perception on the role of mutual fund. The findings suggest that mutual funds have a significant influence in increasing the liquidity of the stock market and improving the economy. Among all these factors, market liquidity came out as the most dominant factor affecting the stock market performance, supporting literature review research conducted elsewhere. However, it was very difficult to fully ascertain the fact that mutual funds effectively help in reducing the volatility of the stock market. In the same way, there are the benefits of risk diversification but these do not explain the trends of stock market. Another limitation was the low investors’ awareness of mutual funds, and a lack of adequate financial literacy were other factors affecting the study.The results indicate recommendations for enhanced financial literacy, better financial regulation, and the availability of different types of mutual funds. To make mutual funds more effective and accessible, efforts must be made to increase investment in digital platforms and decrease the cost of transactions. Implementing the concept of mutual funds is essential for increasing variability in the financial market and for the development of the economy in Pakistan. Thus, measures to address these regulatory imperfections and the lack of awareness among the lower levels of the population are crucial to unlocking it. This suggests that future research should attempt to determine the effect of mutual fund investments on long-term financial stability.

Optimizing SME Financial Performance Through Supply Chain Financing: An Integrated Approach to Working Capital and Cash Flow Management

Large businesses among Small and Medium Enterprises regularly encounter problems financing their development and operational stability. Supply Chain Financing (SCF) provides an innovative fund program which enhances SME financial security by improving cash flow operations and working capital management functions. The research analyzes the financial performance effects of Supply Chain Financing (SCF) as it impacts liquidity measurements together with working capital efficiency and profitability performance along with cash flow stability metrics. The study analyzes barriers to adoption which include staff unawareness about SCF combined with financial institution trust issues and regulatory hurdles and concerns about the additional costs of SCF.The research employed quantitative approaches through the combination of primary and secondary data collection methods. Research authors built a theoretical model that explained SCF adoption effects on financial performance through working capital management and financial intermediation theory. Financial stability increased notably and all risk factors decreased notably through the implementation of Supply Chain Finance (SCF). Traditional financing methods generate better results than supply chain finance when processing efficiency and cost-effectiveness factors are considered.Research into specific SCF applications for various industries should combine analysis of fintech solutions and human behavior patterns that impact SCF adoption. Research outcomes present useful knowledge about SCF implementation that benefits SMEs together with financial institutions and government authorities to establish better financial stability.

PROFITABILITY AND FINANCIAL LIQUIDITY ON THE EXAMPLE OF THE FOOD INDUSTRY COMPANIES

Given the importance and unique characteristics of food industry enterprises, identifying the relationship between financial risk levels and business efficiency is a key theoretical issue. Existing research findings on this subject remain inconclusive, highlighting the need for further investigation. This study aims to examine the relationship between profitability ratios and financial liquidity levels. The analysis is based on data from the annual financial statements of 16 joint-stock food industry companies listed on the Warsaw Stock Exchange for the period 2014-2018. To determine significant differences in profitability ratios – sales profitability, asset profitability, and equity profitability – depending on current liquidity levels, a non-parametric Kruskal-Wallis rank ANOVA test was applied. Additionally, post-hoc tests were used to identify which specific groups of companies, categorized by liquidity level, exhibited significant differences in profitability indicators. The findings indicate that financial liquidity levels significantly differentiate selected profitability indicators. Companies with the highest levels of current liquidity recorded significantly higher sales profitability and asset profitability compared to those with lower liquidity levels. Maintaining higher financial liquidity not only ensures financial stability, which is essential for long-term business development, but also contributes to increasing shareholder wealth.

DETERMINING THE SYSTEM OF INDICATORS OF MACROECONOMIC DEVELOPMENT OF UKRAINE IN THE POST-WAR PERIOD

The article examines the need to define a system of indicators of Ukraine's macroeconomic development in the postwar period. It is recognized that macroeconomic indicators are the basis for building strategies that can not only restore the post-war Ukrainian economy, but also ensure its sustainable hybrid development. The main macroeconomic indicators of Ukraine are considered. It is established that macroeconomic stability in the postwar period is the basis for effective economic reforms. The forecast macroeconomic indicators of economic and social development of Ukraine for the period 2025-2027 are presented. The main indicators that play an important role in analyzing the macroeconomic development of Ukraine in the postwar period are proposed, namely: assessment of economic losses, identification of priority sectors for recovery, evaluation of reform effectiveness, forecasting of economic dynamics, attraction of international investors and creditors, ensuring financial stability, social research on war. It is established that indicators of macroeconomic development not only help to assess the current state of the economy, but also predict future development, ensuring sustainable post-war economic growth. This strict supervision allows to temporarily adjust public policy, attract insufficient investments and ensure stable socio-economic development in the difficult post-war environment. Thus, the need to define macroeconomic indicators in the postwar period is driven by the need to effectively manage the process of economic recovery, ensure social and financial stability, and attract foreign investment and assistance. Proper analysis and monitoring of macroeconomic indicators will eliminate the possibility of adjusting economic policy, thereby contributing to the country's growth and development. Indicators of Ukraine's macroeconomic development in the postwar period allow us to assess the level of economic recovery, the stability of the financial system, and the effectiveness of government policy. By closely monitoring these indicators, it will be possible to make informed decisions on how to restore the country and ensure sustainable development in the future.

Public Debt and Banking Sector Stability in Nigeria

In the last decade, the Nigerian debt burden has been increasing at an unsustainable rate. Debt management is also perceived as an important factor that underpinned the stability and credibility of the banking financial sector. This study examined the impact of public debt on banking sector financial stability in Nigeria from 1986-2023. The variables include, banking sector stability index, public debt/GDP ratio, consumer price index and government expenditure, consumer price index, and GDP growth. The sources data were the Central Bank of Nigeria and National Bureau of Statistics. The techniques utilized in the study include the autoregressive distributed lag model and the Granger causality test. Finding showed that public debt has a negative and significant impact on bank stability, while the Granger causality results show that while public debt does not predict banking stability, banking sector stability is a leading indicator of changes in public debt. Based on the findings, government should adopt more prudent debt management strategies to reduce the negative impact of public debt on banking stability. This could include limiting excessive borrowing and ensuring fiscal discipline to prevent short-term financial market disruptions and long-term instability in the banking sector. Key word: public debt, banking sector stability, consumer price index, GDP growth

ADMINISTRATIVE AND PRODUCTION-ECONOMIC ACTIVITIES OF THE JOINT STOCK COMPANY IN THE CURRENT CONDITIONS

Management of production and economic activity is one of the most important mechanisms for achieving the strategic goals of the enterprise. Optimization of management processes allows to reduce the level of uncertainty in the market, increase the financial stability of companies and ensure their competitiveness. Management of the activities of a joint-stock company involves a comprehensive approach to making management decisions that affect production and economic processes. Competent management ensures efficient management, stability of the enterprise and its ability to adapt to changes in the market environment. The purpose of the article is to study the peculiarities of the management and production and economic activity of a joint-stock company in modern conditions and to develop measures for the formation of an effective system of enterprise management to ensure long-term business effectiveness and promote its development. To carry out the research, general scientific and special methods were used: a systematic approach - in the study of the theoretical foundations of the management and production and economic activity of a joint-stock company in modern conditions; tabular - for calculating the main indicators of the production and financial activity of JSC «Podilsky Cement»; statistical analysis - during the analysis of the process of production and economic activity of the joint-stock company, in particular, the comparison of indicators of different reporting periods and business conditions; expert - in assessing the mutual influence of income and expenses on the formation of financial results, opportunities and threats for managing the activities of a joint-stock company; abstract-logical – in the process of identifying means of increasing the efficiency of management of the enterprise's activities. A study of the activities of JSC «Podilsky Cement» shows that the production and economic processes of the company are aimed at ensuring economically justified, legal and market-oriented production. The main emphasis is on planning, development, improvement of products, their implementation and profit making. The article examines the historical tour and current state of JSC «Podilskyi Cement» highlights the main economic and financial problems of the cement industry. It was established that the management of the efficiency of production and economic activity is one of the key directions of the enterprise, regardless of its size and field of activity. The importance of managing the efficiency of the company's activities to ensure its successful development is substantiated. The efficiency of the enterprise's production activity, which is defined as the ratio between the obtained results and the spent resources, is analyzed. Thus, the functioning of a joint-stock company is an important factor in economic development, as they contribute to the attraction of investments, stimulate innovation and ensure the sustainable development of business in the conditions of a globalized market.