Fiscal Strength Research Articles

Bail-ins and market discipline: Evidence from China

We examine the effect of bail-in event on the market discipline for Chinese banks, exploiting the bankruptcy of Baoshang Bank and subsequent write-down as a quasi-natural experiment. Using the bond data of banks from 2016 to 2021, we find that the bail-in event leads to higher issuance spreads for bonds with write-down clauses. This effect is more pronounced for bonds issued by small banks, and banks in regions with weaker local fiscal strength. A higher proportion of CoCo bond in the bank capital increase the risk-taking of small banks. CoCo bond issuance reduces the spread of Negotiable Certificates of Deposit (NCDs) after the event due to a stronger buffer effect. We underscore the role of bail-in event in imposing market discipline in an emerging economy like China.

Optimization Non-Tax State Revenue through Reutilizing State-Owned Property

Aims: This research was conducted to fill the gap in the results of previous findings regarding to the effects of product quality on reutilization decisions of the state-owned property in West Kalimantan. Reutilization of state-owned property will be one of the strategies to increase non-tax state revenue and the fiscal strength both in central and local government.
 Study Design: The research was conducted by building and testing a model that can explain the direct influences of the quality of state-owned property, organizational image, and customer value on the decision to reuse state-owned property, as well as the indirect influences of the quality of state-owned property and organizational image on the decision to reuse state-owned property by using customer value as a mediator variable.
 Place and Duration of Study: The research was conducted in the West Kalimantan region with 150 respondents. The criteria of the respondents are business owners that have been using state property to conduct business activities for at least one year. The data are collected internally at the Regional Office of the Directorate General of State Assets of West Kalimantan in 2014-2022. In addition, the external data are from partners who have reused state property.
 Methodology: The research used the quantitative approach. The sampling technique in this research is Purposive Sampling. This technique used criteria chosen by the researcher in selecting the sample. Hypothesis was tested using SEM, while the data analysis technique was done by using SMART PLS version 3 software and questionnaire processing results was done by using a 5-point Likert scale as a variable measurement scale.
 Results: The results of data analysis show that the quality of state-owned property has no impact on the decision to reuse state-owned property, but the image of the organization and customer value have an influence on the decision to reuse state-owned property. The quality of state property and organizational image are proven to have a significant direct effect on customer value. The results of the analysis regarding the role of customer value as a mediator show that customer value mediates the effect of the quality of state property and organizational image on the decision to reuse state property.
 Conclusion: The conclusion of this research is that the owner of state-owned property must conduct continuing improvement of its asset management performance that will increase the organization's image. Furthermore, proper maintenance of state-owned property according to the provisions will attract the public to use it. Government agencies that own state-owned property must also make innovations and improve service quality on an ongoing basis, increasing the useful value as well as improving the quality of the physical condition of state-owned property. Therefore, the highly satisfied customers are encouraged to use it again.

Der bundesstaatliche Finanzausgleich als Mittel zur politischen Positionierung

Abstract The renewed complaint against the federal fiscal equalisation system on the part of the Bavarian state government shows the Bavarian determination to change the previous system. Among other things, the standardisation of the real estate transfer tax and the population refinement, which are included in the calculation of the fiscal strength and equalisation measure within the framework of the fiscal equalisation system, are the focus. This article shows the importance of the federal fiscal equalisation per se and the burdens Bavaria is exposed to in the horizontal component. It becomes clear that, first, the burden is not excessive and, second, that abolishing standardisation and refinement is not feasible.

The side effects of local government debt: Evidence from urban investment bonds and corporate pollution in China

Local government debt plays a vital role in achieving financial financialization and regional economic growth. However, the environmental side effects of the debt-financed infrastructure development model have received little attention. Using a large panel data of Chinese enterprises from 2007 to 2016, we explored the relationship between local government debt in terms of urban investment bonds and corporate pollution emission. We observe that the increase in local government debt exaggerates the intensity of COD emission, equal to 26% of the average. This pollution-promoting effect remains after a series of robust checks. In heterogeneous analysis, local government debt is more likely to affect enterprises located in coastal areas, from pollution intensive industry, operating in regions with weak fiscal strength and operating in regions with low governance quality. The mechanistic exploration from government environmental governance and financial constraint reveals that the local government debt increases corporate pollution when the local fiscal finance emphasizes economy over environmental governance, which has been alleviated after the central government advocates the construction of an environmentally friendly and resource-saving society; An increase of corporate pollution is also possible when local government debt increases the financing constraints of enterprises. We also unveil the source of corporate pollution, and find that if enterprises do not actively adopt environmental strategies either in terms of “end-of-pipe” or “source prevention”, they choose to emit more to face with the onslaught of local debt. This study uncovers the environmental impacts of government debt, and explores the potential mechanisms, which can help reduce pollution from local government debt and achieve global climate governance.

No-bailout event and local bank-government nexus in China

We examine the impact of a no-bailout event on the local bank-government nexus in China in the context of a multi-level fiscal federalism. Using a difference-in-difference (DID) model, we find that the no-bailout event leads to a tighter relationship between the issuance premia of negotiable certificates of deposit (NCDs) by local banks and the fiscal strength of local governments. It also induces a higher divergence of issuance premia among cities with different fiscal strengths and local banks of different sizes. The divergence is weaker among province-level banks. We also find that the spread of urban construction investment bonds (UCIBs) decreases more in fiscally stronger cities, while that of provincial government bonds declines more in fiscally weaker provinces. The market discipline on governments is strengthened at the city level but weakened at the province level. It suggests that the decline of implicit guarantee, especially that of higher-level governments, is an essential channel for the changes of local bank-government nexus after the event.

Fiscal Fragility in Black Middle-Class Suburbia and Consequences for K–12 Schools and Other Public Services

In the United States, most local jurisdictions are challenged as they seek to maintain fiscal strength. But majority-Black jurisdictions are uniquely burdened due to legacy and contemporary racist and racialized policies and racial capitalism. Leaders in majority-Black locales make harsher budget trade-offs than those in majority-White jurisdictions as they seek to invest in public schools and other public services. I use ethnographic and publicly available data to examine how Prince George’s County, Maryland, a majority-Black and middle-class suburban jurisdiction in the Washington, D.C., region, navigates its financial constraints relative to neighboring counties with smaller Black populations. I conclude that Black jurisdictions’ fiscal limitations stem from White jurisdictions’ not bearing their proportionate share of responsibility for moderate-income and economically distressed households and fallout from uneven regional development, resulting in Black jurisdictions subsidizing White locales.

Are Sovereign Ratings Biased Against Africa?

Credit rating agencies play a crucial role in financial markets, but are often criticized for particular judgements they make. With debt sustainability in Africa coming under pressure during the COVID-19 pandemic, some market commentators renewed concerns about anti-African bias in sovereign credit ratings. Using ratings data from one of the largest agencies, and economic and fiscal data independently sourced from the IMF, this article formally tests for anti-African bias in sovereign ratings. In doing so, it focuses purely on quantitative explanatory factors, given the potential for any bias in ratings to be reflected in implicit bias within qualitative judgements made by rating analysts. However, there is no statistical evidence of bias against African sovereign over the data sample, which runs from 2016. As such, any future improvements in African sovereign ratings are likely to reflect sustained improvements in economic and fiscal strength and other factors influencing creditworthiness, rather than the removal of any prejudice against this group.

Interdependence between International Investment and Profitability of Indian Private Sector Banks: A Pragmatic Review

Appraising the Monetary effectiveness is one of the authoritative barometers to gauge the performance of private banks and it supports to conquer over the fierce & cut throat competition which in turn helps for sustainability in the long run. Through this study attempt has been made to evaluate the influence of Overseas Investment Strategy on the Financial Efficiency of Indian Banks (Private) and bring to light whether Foreign Participation has notable impact on it or not. The existing study is analytical and explanatory in nature and used both primary as well as secondary data from different sources like Govt. Body report, RBI annual report, Different Journals and on line data base. The collected data were analyzed through inferential statistical techniques like correlation, Multiple regression, f-test, t-test and Analysis of Variance (ANOVA) with the help of SPSS (18.0 versions). The study winded-up with remarks that there is no significant association among FDI and overall Financial efficiency of private sector banks including all the sub parameters like ROA, ROE, NII & NP This Study will helpful to the Authority, Indian private banks, RBI and Govt to take the remedial measures how the increased amount of FDI will be beneficial in inflating the profitability position of Indian Banks and to detect the underlying cause of non-effectiveness of FDI on Indian Banks (private).With more and more FDI inflows the Indian banking business may rise to a greater position and can achieve a better financial stability. FDI helps to achieve better profit making capability which can enhance the interest of investors and in turn reflected in more returns on equity investment in this sector. Hence, it is recommended that more & more FDI inflows should be encouraged in Indian banking sector (private) to place it a better position in the global ranking and to assure fiscal strength in India. The giveaway of this study can be perceived along three strands like Research, Policy and Practice and it is a modest attempt to apprehend the role played by offshore investment on the financial efficiency of private sector Banks of India.

On the information content of sovereign credit rating reports: Improving the predictability of rating transitions☆

In order to identify novel qualitative determinants of transitions in sovereign credit ratings, we construct six different textual sentiment and subjectivity measures using dictionary-based, and machine learning approaches on sovereign credit rating reports issued by Moody’s and Fitch in the period from 2002 to 2017. After controlling for macroeconomic and fiscal strength, soft information, as well as known sources of proximity biases, we find that, on average, these novel text-based measures improve the classification accuracy of downgrades and upgrades. The improvement is more notable for sentiment than subjectivity measures, and for downgrades compared to upgrades. Next, we find evidence that credit rating agencies seem to follow the through-the-cycle rating philosophy by taking a longer horizon into account. Finally, to the best of our knowledge, we offer the most comprehensive analysis of textual sentiment measures and their effect on sovereign credit ratings thus far.

Higher Education Funding and Student Access in the Global South

Globally, the increasing cost of university eduation, growing student enrolments and weak economic of nations have caused a reduction in public funding for university education. This decline in public funding seems to have increased tuition fees, caused deterioration of infrastructure, thereby affecting student access to university education. In the Global South particularly, Ghana and South Africa, there is the quest for universities to widen access. This is as a result of the perceived association of the activities of universities to socio-economic development. However, funds allocated by these governments to the sector is woefully inadequate. The study reveals that public universities in South Africa and Ghana rely on alternative sources such as fees of international students and non-traditional learners to enhance their fiscal strength but this seems inadequate owing to the financial strain that comes with the growth in domestic student numbers.

The Effect of Tourism and Market Institutional Policies on Tourist Visits from ASEAN Countries

Tourism industry has experienced a significant development. This can be seen from several indicators, such as the number of foreign and domestic tourist visits, tourist spending, employment opportunities and the tourism sector's contribution to national income (GDP). Indonesian Tourist Policy has been combined with Law No.10 of 2009 concerning Tourism, and operationalized by Government Regulation No. 50 of 2011 concerning the National Tourism Development Master Plan (RIPPARNAS). It coincides with the ASEAN liberalization policies. Previous economic tourism research has not accommodated the role of economic institutions as a determinant of foreign tourism demand in Indonesia. This study focuses on tourism demand from ASEAN countries. The model is expected to explain the optimization of tourism resources for development. This data panel study revealed that Fixed Effect Model (FEM) is the most appropriate econometrical model used to estimate tourism in Indonesia in ten years (2006-2015). This study revealed some similarities with previous studies, especially in strengthening the theory of demand. The relative cost of tourism which tends to be more efficient will increase the number of tourist visits. Access to communication infrastructure and the proportion of city residents in the country of origin will increase tourism demand to Indonesia. Liberalization of policies need not be feared by many people, because the institutional aspects of the market which include rules, regulations, fiscal strength and market openness will encourage the acceleration of tourism. However, this study found that tourism services in Indonesia are still inferior compare to those of ASEAN countries. This requires international tourism marketing that changes perceptions and develops adequate destinations to facilitate ASEAN community members. In addition, this study considers that modernization in rural areas and the strengthening of related policies are related to the implementation of tourism master plans to improve tourism optimization.

(Turning Rust into Gold?) Hamilton, Ontario and a Canadian perspective of shrinking and declining cities

Hamilton, Ontario, like many cities heavily dependent on manufacturing in the 20th century, experienced de-industrialization and associated change in its economic and employment fortunes, as well as comparative weakened fiscal strength. In contrast to cities in the United States though, Hamilton's population kept growing, at least slowly, and its unemployment rate never skyrocketed, even though the proportion of the population earning middle- to high-incomes declined for a time. In urban scholarship, dramatic population loss has attracted researchers to study shrinking cities, however population change fails to tell the entire story of the possible fates of rust-belt cities that also requires the analysis of economic changes. Our aim is to identify Hamilton's challenges and characteristics followed by how current political, financial and regional circumstances shape the city's development and create different circumstances for post-industrial cities. We review this using Hamilton's census data since 1951 and fiscal data, development projects, and interviews with local public officials and private business reveals the significant impact the post-industrial era and the Canadian perspective. Our findings suggest that despite differences between shrinking characteristics in Canadian and US cities, Canadian cities should receive more attention and offer a different perspective on the “rust-belt” literature.

Fiscal Distress and Banking Performance: The Role of Macroprudential Regulation

Fiscal fragility can undermine a government's ability to honor its bank deposit insurance pledge and induces a positive correlation between sovereign default risk and financial (bank) default risk. We show that this positive relation is reversed if bank capital requirements in fiscally weak countries are allowed to adjust optimally. The resulting higher requirements buttress the banking system and support higher output and welfare relative to the case where macroprudential policy does not vary with the degree of fiscal stress. Fiscal tenuousness also exacerbates the effects of other risk shocks. Nonetheless, the economy's response can be mitigated if macroprudential policy is adjusted optimally. Our analysis implies that, on the basis of fiscal strength, fiscally weak countries would favor and fiscally strong countries would object to banking union.

Biocompatible Synthetic and Semi-synthetic Polymers - A Patent Analysis.

Bioengineering has come of ages by setting up spare parts manufacturing units to be used in human body such as invasive implants and interventional controlled drug delivery in vivo systems. As a matter of fact patients on basis of their fiscal strength have the option to undergo prophylactic tactical manoeuvre for longer life spans. In this sphere of invasive implants, biocompatible polymer implants are a state of the art cutting edge technology with outstanding innovations leading to number of very successful start-up companies with a plethora of patent portfolios. From 2000 onwards, patent filings and grants for biocompatible polymers are expanding. Currently definition of biocompatibility is quite ambiguous with respect to the use of FDA approved polymeric materials. This article analysed patent portfolios for the trend patterns of prolific biocompatible polymers for capitalization and commercialization in the forthcoming years. Pair Bulk Data (PBD) portal was used to mine patent portfolios. In this patent preliminary analysis report, patents from 2000 to 2015 were evaluated using 317(c) filings, grants and classifications data for poly(vinyl alcohol) (PVA), poly(glycolic acid) (PGA), poly(hydroxyalkanoates) (PHAs) and poly(lactic acid) (PLA). This patent portfolio preliminary analysis embarks into patent analysis for New Product Development (NPD) for corporate R&D investment managerial decisions and on government advocacy for federal funding which is decisive for developmental advances. An in-depth patent portfolio investigation with return of investment (RoI) is in the pipeline.

Sovereign ratings: Determinants and policy implications for India

This paper studies sovereign rating models of Moody's, Standard & Poor's (S&P) and Fitch to identify important determinants of sovereign ratings. Ordered logit and probit are employed to check for robustness of empirical results. We found that Moody's model is most reliable (it has the highest rate of correct predictions for sample countries). Further, the sovereign ratings are robust to the choice of estimation procedures. Economic strength, inflation and governance indicators are found to be important determinants of sovereign ratings followed by fiscal strength, domestic political risk and size of banking system. The paper provides key policy suggestions for India to improve its ratings.

Moral Suasion in Regional Government Bond Markets

In the context of the German regional government bond market, this paper studies the hypothesis that governments use moral suasion to persuade home government-owned banks to hold more home government debt. The empirical approach makes use of German banks' ownership structure, heterogeneity in the states' fiscal strength and detailed bank-level panel data on German banks' state bond portfolio on the security- and bank-level for the time period Q4:2005-Q2:2014. Results show that home state-owned banks hold a significantly higher amount of home state bonds than other home banks when fiscal fundamentals of the home state are weak. Banks located in other German states hold fewer state bonds in these situations. These findings are in line with moral suasion by state governments and are robust against controlling for observed and unobserved alternative incentives for banks' (home) state bond holdings such as risk-shifting by banks, lending opportunities or information asymmetries.

Public Nursery School Costs and the Effects of the Funding Reforms in Japan

ABSTRACTUsing a panel dataset of 983 municipalities across Japan, this article investigates the impact of the funding reforms in 2004 on public nursery schools’ operating costs. We found that municipalities responded differently to the reforms, depending on their fiscal strength and city scale. In areas with relatively large populations, fiscally stronger municipalities were likely to spend less on public nursery schools in the wake of the reforms, while municipalities in smaller cities spent more. Besides, municipalities that were not compensated for the loss of the national subsidy reduced expenditures in large cities. In small cities, on the other hand, such municipalities actually increased expenditures.

City profile: Narayanganj, Bangladesh

Narayanganj, contributes to the economy, employment, and export earnings of Bangladesh. Its history, natural endowments and strategic location have made it an important hub of all major knitwear, garments, and textile industries. This profile of Narayanganj reveals that, despite its good business environment and being a top destination for foreign and local investment, industrialisation has been both a boon and a bane. Population growth, rapid urbanisation and industrialisation are major challenges causing environmental deterioration and skewed land distribution, placing pressure on the social welfare of Narayanganj's residents. The newly formed city corporation faces a lack of fiscal strength that retards the overall progress of the city. This study suggests that effective monitoring of industrial activities and a comprehensive code of conduct/norms with fiscal strength to regulate the industrial sector can mitigate present injustices to make Narayanganj a more desirable and liveable city.

Market Economy under Rapid Globalization and Rising Productivity

Market economy of enhancing business laws in contracting, bonding, insuring, legal corporate structures1, e.g. will marginalize the economic agents and tools that make market competition unfair, empower small and medium businesses and investors, and boost business activities, fiscal strength, employment, and capital transmission. Keynesian capital infusion will extend its market effect in such higher security marketplace.

Endless empire: Spain's retreat, Europe's eclipse, America's decline

Throughout four millennia of recorded history there has been no end to empire, but instead an endless succession of empires. After five centuries of sustained expansion, the half-dozen European powers that ruled half of humanity collapsed with stunning speed after World War II, creating a hundred emerging nations in Asia and Africa. Amid this imperial transition, the United States became the new global hegemon, dominating this world order with an array of power that closely resembled that of its European predecessors. As Brazil, Russia, India, China, and the European Union now rise in global influence, twenty leading historians from four continents take a timely look backward and forward to discover patterns of eclipse in past empires that are already shaping a decline in U.S. global power, including: erosion of economic and fiscal strength needed for military power on a global scale misuse of military power through micro-military misadventures breakdown of alliances among major powers weakened controls over the subordinate elites critical for any empire s exercise of global power insufficient technological innovation to sustain global force projection.