Financial Approach Research Articles

Assessing the impact of infrastructure financing on economic growth in emerging markets

The objective of this paper is to analyze the impact of infrastructure financing on economic growth in emerging markets through the application of both quantitative and qualitative research methodologies. In this study, the research will employ both primary and secondary data to investigate the impact of different structures of infrastructure financing on the performance of the economy through interviews with the stakeholders and policy documents alongside quantitative data from the World Bank and the IMF. The quantitative analysis employs the econometric models to establish the effect of infrastructure investment on the GDP growth of the selected countries, India, China, Brazil, and Nigeria. Additional secondary qualitative data obtained from interviews with policymakers and financial specialists from Brazil, India, and South Africa offer more practical information regarding the efficiency of the discussed financing approaches. This paper is therefore able to conclude that appropriate management of infrastructure investments, particularly those that involve the PPP, are central to the development of the economy. However, certain drawbacks such as the lack of regularity of data and the disparity in the effectiveness of financing instruments by the regions are pointed out. The research provides policy implications to policymakers and investors who wish to finance infrastructure in the emerging economy to enhance economic growth in the long run.

Green, Alternative or Business as Usual? Critical Geographies of Sustainable Finance

AbstractIn recent years, a growing number of contributions on green finance have emerged, not only within economic geography but also increasingly from disciplines beyond it. With this Special Issue, we aim to engage with the ongoing debate around green and sustainable finance and its challenges, including concerns over greenwashing. Our extended editorial provides structure to this complex discussion by identifying four primary strands of literature that frame the field. Two of these strands adopt a more critical stance, combining analytical approaches and rigorous assessments that question the impact and ‘authenticity’ of green and sustainable finance schemes, approaches and policies. Most of the contributions and empirical case studies featured here align with these critical perspectives, which are introduced in greater depth in the second part of this editorial.

Climate and health: a path to strategic co-financing?

Leveraging the co-benefits of investments in health and climate can be best achieved by moving away from isolated financing approaches and adopting co-financing strategies, which aim to improve the outcomes of both sectors. We propose a framework for studying co-financing for health and climate that considers the degree of integration between sector funding, and whether arrangements are 'passive', when cross-sectoral goals are indirectly affected, or 'strategic', when they are pre-emptively supported to build resilience and sustainability. We conducted a rigorous, evidence-focused review to describe co-financing mechanisms according to a framework, including the context in which they have been employed, and to identify enablers and barriers to implementation. We searched the international literature using Pubmed and Web of Science from 2013 to 2023, the websites of key health and climate agencies for grey literature and consulted with stakeholders. Our review underscores the significant impact of climate change and related hazards on government, health insurance and household health-related costs. Current evidence primarily addresses passive co-financing, reflecting the financial consequences of inaction. Strategic co-financing is under explored, as are integrative co-financing models demanding cross-sectoral coordination. Current instances of strategic co-financing lack sufficient funding to demonstrate their effectiveness. Climate finance, an under used resource for health, holds potential to generate additional revenue for health. Realizing these advantages necessitates co-benefit monitoring to align health, climate mitigation and adaptation goals, alongside stronger advocacy for the economic and environmental benefits of health investments. Strategic co-financing arrangements are vital at all system levels, demanding increased cross-sectoral collaboration, additional funding and skills for climate integration within health sector plans and budgets, and mainstreaming health into climate adaptation and mitigation plans. Supporting persistent health needs post-disasters, promoting adaptive social protection for health and climate risks, and disseminating best practices within and among countries are crucial, supported by robust evaluations to enhance progress.

Cross-Sector Support for a Policy Framework to Tackle Social Determinants of Health

This JAMA Forum discusses 4 focus areas developed by a collaborative of more than 40 organizations and experts in health care, social services, and other sectors designed to find ways to support and address social determinants of health with better program coordination and partnerships and novel financing approaches.

Numerical solutions of PDEs for corporate bond pricing: A computational finance approach

Abstract. In this paper, we will see how one can use numerical algorithms to solve PDEs, containing partial derivative terms, for corporate bond pricing. We utilise the Black-Scholes framework which involves adding stochastic interest rates and credit risk into a PDE model. Then, we will take a quick look at some different numerical methods to solve the PDE model, like finite difference methods (FDM), finite element methods (FEM) as well as standard Monte Carlo (MC) simulations. Above all, we provide some simulations to show how well they work for PDEs, and how much time it takes. We would like to highlight that numerical methods lead to more accurate and efficient bond pricing with these methods, and also that we can analyse together how well each method works under different market scenarios. The paper will end with future directions for numerical methods, which should allow including more sophisticated algorithms and machine-learning techniques that improve scalability and can be used in a real-time manner in financial markets.

Assessment of the influence of healthcare financing strategies on universal health coverage: a case of Garissa County, Kenya

Background: Universal health coverage aims to ensure that all people can use the promotive, preventive, and curative health services they need, while also ensuring that the use of these services does not expose the user to financial hardship. This study aimed to assess the influence of healthcare financing strategies on universal health coverage in Garissa County, Kenya. Methods: The research design for this study was an analytical cross-section study. The study used a mixed research methodology approach where both qualitative and quantitative data were obtained for triangulation purposes. Purposive, systematic, and simple random sampling techniques were employed to recruit study participants in this study. Results: The findings indicated that UHC coverage in Garissa County had been achieved only to a moderate extent. The results indicated that public healthcare financing had a positive and significant influence on UHC coverage in Garissa County (β=0.459; p<0.05). The results indicated that healthcare financing through aid had a positive and significant influence on UHC coverage in Garissa County (β=0.249; p<0.05). The results indicated that private healthcare financing had a negative and not significant influence on UHC coverage in Garissa County (β=-0.092; p>0.05). Conclusions: The results led to the conclusion that public and healthcare aid financing were the most appropriate financing approaches to achieve a notable improvement in UHC coverage in the county. The study also concluded that private health financing had a negative impact on the attainment of UHC.

A Critical Study of Psychology of Retail Investors

This research critically examines the psychology of retail investors, focusing on the behavioural finance approach to investment decision-making. Behavioral finance challenges the traditional assumption that investors are always rational, proposing instead that psychological, social, and cultural factors influence financial behaviours. The study aims to explore how demographic factors such as gender, age, and investment experience, along with macroeconomic conditions like interest rates and inflation, shape retail investors' decision-making processes. By analysing both quantitative and qualitative data from surveys and questionnaires, the study seeks to uncover patterns in how emotions, cognitive biases, and social networks affect investment choices across different groups. The scope of this research extends to identifying significant variations in investment behaviour based on demographics and cultural influences. Moreover, the study will test hypotheses related to gender differences in the influence of peers and interest rate changes on investment decisions. Through a mixed-methods approach, this research aspires to provide valuable insights for financial institutions and individual investors, enhancing their understanding of the psychological drivers behind market behaviour and investment strategies.

Financing diversified water strategies for megacities: the case of Mexico City and rainwater harvesting

Abstract Megacities are increasingly confronted with water supply challenges, requiring innovative and diversified management strategies to ensure sustainability. This study examines Mexico City’s Cosecha de Lluvia program, a government initiative promoting residential rainwater harvesting (RWH). This case study offers valuable lessons for other megacities facing similar water security issues. The study particularly explores result-based financing (RBF) as a promising strategy to strengthen Mexico City’s RWH sector. Despite its potential, research on RBF for water supply diversification remains limited, especially from the perspective of practitioners. To address this gap, the study employs a systems thinking approach supported by qualitative methods, including a literature review and interviews. Thematic networks analysis revealed that RBF could enhance Cosecha de Lluvia by improving monitoring and results measurement, facilitating information exchange, and increasing transparency—key factors for successful water supply diversification. While these identified benefits do not address all of Cosecha de Lluvia’s challenges and RBF could have implementation challenges, there is a clear opportunity for this financial mechanism to enhance programs like the one studied and have a positive impact on several of its elements. As part of the RBF suitability assessment, three different funding sources were evaluated—public, private, and philanthropic—to determine their effectiveness in overcoming Cosecha de Lluvia’s challenges. The findings suggest that no single source of finance markedly influences the program’s effectiveness alone. Instead, a blended financing approach that integrates all three sources is recommended as a strategy to explore further for implementing RBF in water supply diversification efforts. Overall, the study highlights the necessity of diversifying water supply to build climate resilience in megacities. While programs like Cosecha de Lluvia are crucial, significant room for improvement exists. RBF offers a promising mechanism to enhance such initiatives, and its potential merits further exploration.

Hybrid financing in a dual‐channel supply chain with asymmetric demand information

AbstractThis study delves into the interaction between hybrid financing and asymmetric demand information within a dual‐channel supply chain. In this setup, the supplier directly sells to customers and also through a capital‐constrained retailer. We investigate a unique financing approach involving a blend of bank loans and supplier equity investment to support the retailer's operational (procurement and marketing) activities. Analyzing the equilibrium strategies under both symmetric and asymmetric information settings yields intriguing insights. In the case of symmetric information, we find that the retailer's equilibrium order quantity decreases with the potential market size under hybrid financing, contrary to traditional notions. When asymmetric information is present, a higher acceptance of supplier equity investment by the retailer tends to lead to order quantity distortion downward, increasing signaling costs. Furthermore, a greater proportion of supplier equity investment prompts the retailer to order more products, ultimately boosting profits for both the retailer and supplier. This suggests that supplier equity investment can enhance supply chain efficiency and alleviate the double marginalization effect.

O27 DEVELOPMENT OF A CONCEPTUAL EVALUATION MODEL AND TESTING ITS PERFORMANCE IN HYPOTHETICAL PAY-FOR-PERFORMANCE INTERVENTIONS TO IMPROVE HYPERTENSION CONTROL

Background and Objective: Hypertension is a growing concern, particularly in low- and middle-income countries. Financial incentives, such as pay-for-performance, have shown promise in improving non-hypertension outcomes. However, their efficacy and cost-effectiveness in hypertension management, especially in low-resource contexts, remain uncertain. Our objectives were to 1) document studies exploring health financial interventions for hypertension management 2) develop a conceptual model which can facilitate future research on health financing approaches for hypertension management, and 3) assess the model's performance in hypothetical pay-for-performance interventions. Methods: Our literature review identified few studies evaluating finance interventions on hypertension management with somewhat more evidence for pay-for-performance strategies. Thus, we developed a conceptual model and assessed its performance in hypothetical scenarios of pay-for-performance schemes to enhance public hypertension care in Bangladesh. Using a state-transition modeling framework, we estimated the incentive costs and impact on cardiovascular disease burden in 18 scenarios with varying intervention coverage, blood pressure effects, and incentive rates (Figure 1). Key model inputs were derived from the 2019 Global Burden of Disease Study, the 2018 WHO STEPS survey, and WHO-CHOICE. Our primary outcome was incentive costs per health-adjusted life year (HALY) gained. Results: Based on our model, the incentive costs per HALY gained depended on the intervention coverage, intervention effect and incentive rate (Figure). If only currently treated patients were included, the most optimistic scenario (i.e., the largest blood pressure reduction with the lowest incentive rate) was estimated to cost 11,043 USD in incentives per HALY gained (Figure). If the intervention also included new, previously untreated patients while maintaining the same total incentives, the estimated incentive costs per HALY gained was 5,515 USD. Conclusions: Our model suggests that pay-for-performance interventions for hypertension care may demand substantial financial resources, but that the intervention could become more favorable with increased treatment coverage. While more studies on the impact of financial interventions in hypertension care are necessary, our model can guide planning and designing such a study.

Gender-based Acceptance of Ar-Rahnu Among Muslim Micro-Entrepreneurs

Women entrepreneurs often encounter difficulty in obtaining capital financing. Banks are hesitant to offer loans to women entrepreneurs due to their small-scale businesses. As one of the services that provide microcredit financing to entrepreneurs, Ar-Rahnu offers excellent opportunities to small entrepreneurs to acquire funds for their entrepreneurial activities. The objective of this study is to identify and analyze the acceptance of Ar-Rahnu based on gender among Muslim micro-entrepreneurs in Kelantan. Quantitative research was used in this study through the distribution of questionnaires to Muslim micro-entrepreneurs in Kelantan. Empirical research was conducted to answer all research objectives. The results were analyzed using the Statistical Package for Social Science (SPSS) version 22.0 software through descriptive statistics, and inference (t-test) was used to analyze the primary data obtained. The findings of this study found that there was a significant difference in the number of women and men entrepreneurs in Kelantan. Women entrepreneurs dominate business, particularly in large markets around Kelantan. In addition, there was a significant difference in the acceptance of Muslim small entrepreneurs in Kelantan according to gender. Thus, it was found that women entrepreneurs in Kelantan accepted Ar-Rahnu more positively than male entrepreneurs. This implies that women entrepreneurs are pivotal for the development of Ar-Rahnu in Kelantan due to their significant participation in this micro-credit scheme. It is suggested that the Ar-Rahnu institutions in Kelantan elevate their efficiency in the future by spreading the inherent benefits to entrepreneurs as one of the Islamic financing approaches. Therefore, small capital and financial problems among entrepreneurs can be overcome.

Innovations and Future Development Pathways of Internet Finance Asset Securitization in China: A Case Study of Ant Group

With the evolution of the Internet age, e-commerce giants have established small loan entities to accommodate the booming B2C business model. While these online small loan providers retain the traditional attributes of their counterparts, they are adept at addressing the financing needs of micro-enterprises and individuals. Furthermore, these digital lenders have a broader reach in terms of geography and demographic distribution and possess enhanced capabilities to assess borrowers' creditworthiness. Such strengths make them well-suited for asset securitization, an emerging financing approach. This paper will analyze China International Capital Corporation -Ant Financial special asset management program which is one of the important asset securitizations of Internet small loan in China. The analysis will focus on the basic features and innovations of the structure of the securities. In addition, various economic indicators of Ant Financial will be considered to analyze the effectiveness and risks of Ant asset securitization. This study provides both theoretical and practical insights into Ant Financial Services asset securitization. Moreover, the research has analyzed the reasons behind the suspension of Ant Group's IPO, its subsequent rectifications, as well as the future trends of internet finance in China, providing beneficial reference for other companies.

Equity Financing Potential for Leading R&D of Small and Medium-Sized Biomedical Corporations

From the perspective of small and medium-sized innovative biomedical enterprises, this study conducts a comprehensive analysis of the corporate financing capacity during the equity financing process, aiming to provide valuable insights for the successful implementation of equity financing. The study involved the distribution of a total of 400 questionnaires to Chinese venture capital institutions and SMEs of innovative drug R&D, followed by statistical analysis of the questionnaire data results. In light of the challenges faced by these enterprises during the equity financing process, such as inadequate attention to financing business plans, neglect of financing roadshows, insufficient financing expertise, reliance on single financing approaches or channels, lack of meticulous capital partner selection and enterprises raise capital prematurely, this study proposes several countermeasures. These include prioritizing the financing business plan, emphasizing the importance of the financing roadshows, adopting a diversified financing approach, and objectively determining the optimal entry point for the financing stage. Venture capital can effectively address the financing bottleneck faced by small and medium-sized innovative biomedical enterprises, thereby serving as the optimal financing channel. Not only that, but also can effectively address the bottleneck issues associated with equity financing for small and medium-sized innovative biomedical enterprises and play a pivotal role in the field of innovative drug research and development (R&D). By fostering the development of more efficient novel drugs, it can significantly contribute to the robust growth of China's biomedical industry.

Household Health Care Payments Under Rate Setting, Spending Growth Target, and Single-Payer Policies

Households have high burden of health care payments. Alternative financing approaches could reduce this burden for some households. To estimate the distribution of household health care payments across income under health care reform policies. Cross-sectional study with microsimulation used nationally representative data of the US population in 2030. Civilian, noninstitutionalized population from the 2022 Current Population Survey linked to expenditures from the 2018 and 2019 Medical Expenditure Panel Survey and 2022 National Health Expenditure Accounts were included. Rate regulation of hospital, physician, and other health care professional payments equal to the all-payer mean in the status quo, spending growth target at 4% annual per capita growth, and single-payer health care financed through taxes. Household health care payments (out-of-pocket expenses, premiums, and taxes) as a share of compensation. The synthetic population contained 154 456 records representing 339.5 million individuals, with 51% female, 7% Asian, 14% Black, 18% Hispanic White, 56% non-Hispanic White, and 5% other races and ethnicities (American Indian or Alaskan Native only; Native Hawaiian or other Pacific Islander only; and 2 or more races). In the status quo, mean household health care payments as a share of compensation was 24% to 27% (standard error [SE], 0.2%-1.2%) across income groups (median [IQR] 22% [4%-52%] below 139% of the federal poverty level [FPL]; 21% [4%-34%] for households above 1000% FPL [11% of the population]). Under rate setting, mean (SE) payments by households above 1000% FPL increased to 29% (0.6%) (median [IQR], 22% [6%-35%]) and decreased to 23% to 25% for other income groups. Under the spending growth target, mean (SE) payments decreased from 23% to 26% (SE, 0.2%-1.2%) across income groups. Under the single-payer system, mean (SE) payments declined to 15% (0.7%) (median [IQR], 4% [0%-30%]) for those below 139% FPL and increased to 31% (0.6%) (median [IQR], 23% [3%-39%]) for those above 1000% FPL. Uninsurance fell from 9% to 6% under rate setting due to improved Medicaid access, and to zero under the single-payer system. Single-payer financing based on the current federal income tax schedule and a payroll tax could substantially increase progressivity of household payments by income. Rate setting led to slight increases in payments by higher-income households, who financed higher payment rates in Medicare and Medicaid. Spending growth targets reduced payments slightly for all households.

Pengembangan Green Tourism Dengan Penerapan Green Financing Berbasis Kearifan Lokal Di Wilayah Kabupaten Mandailing Natal

This research aims to examine the potential for sustainable tourism development by implementing the Green Tourism and Green Financing approaches based on local wisdom in the Mandailing Natal Regency area. The primary focus of this study is to formulate strategies and implementation models that can enhance the positive impact of tourism on the environment and the local community. The research employs a qualitative methodology with a case study approach. Data is collected through in-depth interviews, field observations, and analysis of relevant documents. Additionally, a local potential mapping and sustainability analysis approach is used to identify opportunities and challenges in developing green tourism in the Mandailing Natal Regency. The findings indicate significant potential for developing green tourism in this area by leveraging local wisdom. The implementation of Green Financing has proven to provide the necessary financial support for sustainable tourism projects. Moreover, the integration of local wisdom in tourism management can create harmonious interactions between tourists and the local community, enhancing the tourist experience and positively impacting local economic development. The results of this research offer practical guidance for local governments, tourism stakeholders, and financial institutions in building sustainable green tourism in the Mandailing Natal Regency

On the information content of explainable artificial intelligence for quantitative approaches in finance

AbstractWe simulate economic data to apply state-of-the-art machine learning algorithms and analyze the economic precision of competing concepts for model agnostic explainable artificial intelligence (XAI) techniques. Also, we assess empirical data and provide a discussion of the competing approaches in comparison with econometric benchmarks, when the data-generating process is unknown. The simulation assessment provides evidence that the applied XAI techniques provide similar economic information on relevant determinants when the data generating process is linear. We find that the adequate choice of XAI technique is crucial when the data generating process is unknown. In comparison to econometric benchmark models, the application of boosted regression trees in combination with Shapley values combines both a superior fit to the data and innovative interpretable insights into non-linear impact factors. Therefore it describes a promising alternative to the econometric benchmark approach.

Addressing the climate–finance interaction in a new light: From green to brown assets disclosure in the banking industry

AbstractThis paper explores the contribution of the banking industry to the decarbonization of the economy in the aftermath of the Paris Agreement. To this end, two complementary indicators are proposed: a carbon balance and a fossil fuel to equity ratio. The main novelty of these indicators is that, beyond traditional approaches in green finance, they take into account the parallel endeavor of banks in fossil fuel financing (so‐called “brown assets”). The results of the inquiry are presented in various maps and graphs. Both elements show that the bank‐induced process of decarbonization is lagging behind that of other industries, which creates a significant risk of financial instability. Changing this banking behavior necessarily involves a climate‐driven reform of the prudential rules on capital requirements; however, given the magnitude of the problem, this might not be enough. Nor is it the most urgent concern. Above all, what this paper makes clear is that the appropriate measurement and disclosure of financed emissions (both “green” and “brown”) is the first crucial step for the correct assessment of climate‐related risk and forms the basis for subsequent policy action.

The role of index traders in the financialization of commodity markets: A behavioral finance approach

This paper investigates the impact of financialization on commodity prices across various markets, particularly over recent decades. We introduce a groundbreaking theoretical model that incorporates both chartist–fundamentalist traders and institutional investors, targeting trading signals in two distinct commodity markets. In alignment with empirical data, our model enables institutional investors to participate in multiple markets simultaneously through index investing. Our findings indicate that the interactions between traditional traders and index investors create price dynamics that closely mirror observed patterns in commodity markets. Specifically, index investors not only cause prices to diverge from their fundamental values but also substantially influence the trading positions of other market actors. Moreover, we elucidate the crucial role of index investors in amplifying market correlations–both among different commodities and between commodities and equities, especially during periods of intense price fluctuations. Our innovative theoretical model goes beyond conventional chartist–fundamentalist frameworks, offering a robust alternative for understanding the complex pricing dynamics of commodities at large.

A Comprehensive Analysis of Behavioral Finance and its Impact on Investment Decisions

This paper thoroughly examines behavioral finance, challenging traditional financial theories by questioning investor rationality and market efficiency. Focusing on five key phenomena—loss aversion, short-term momentum, long-term reversal, framing effect, and endowment effect—the analysis relies on real-world observations to reveal how psychological biases significantly impact investor decisions and financial markets. Loss aversion, especially evident during financial crises, highlights humans' tendency to avoid potential losses rather than pursuing equivalent gains. The study explores short-term momentum and long-term reversal, challenging market efficiency theories by illustrating how past performance influences future returns. Emphasizing cognitive biases like framing and endowment effects, the paper underscores their role in diverse investment decisions and irrational asset overvaluation based on a sense of ownership. It advocates for incorporating these biases in financial models, regulations, and investment strategies, emphasizing their importance for stakeholders to navigate the financial landscape, minimize instability, and capitalize on opportunities. The research establishes a foundation for a holistic finance approach, respecting and leveraging human behavior for market stability and benefit.

Enhancing photovoltaic module sustainability: Defect analysis on partially repaired modules from Spanish PV plants

Between 2010 and 2022, there has been a significant increase in photovoltaic (PV) solar energy installations, driven by factors such as cost reductions, technological advances, policy support and innovative financing approaches. However, this rapid growth has created a significant challenge in the form of increased PV waste generation, coinciding with global commitments to achieve carbon neutrality by 2050. The potential for reuse of decommissioned PV modules represents an environmentally sustainable way forward that requires a comprehensive assessment of technical, economic, environmental and regulatory considerations. This study focuses on evaluating the impact of defects in partially repaired PV modules from Spanish installations on their power output and efficiency, with the aim of developing strategies to increase reuse and reduce environmental impact. The research focuses on 23 crystalline silicon modules and uses established techniques to evaluate their operational condition, detect defects and assess potential safety risks. Among the defects observed, moisture-induced degradation (MID) emerges as the most prevalent, followed by cracked cells and disconnected areas in cells across different technologies. Notably, despite the presence of defects, approximately 87 % of these modules have a power loss of less than 20 %.