Foreign Transactions Research Articles

A novel central bank digital currency framework design for offline and foreign transactions based on blockchain

Purpose Fiat money production necessitates physical commodities, increasing costs and its flow is challenging to monitor, making it vulnerable to criminal exploitation. Cryptocurrencies offer decentralized solutions, but their decentralization has led to illegal activities. Current cross-border transactions face high costs, resource intensity and lack of instant currency transfers. Offline transactions are essential in unreliable networks. Design/methodology/approach Here, the authors proposed the methodology to perform offline transactions based on card, quick response (QR) code and a foreign transaction framework with universal identification (UID) to perform cross-border transactions using blockchain-dependent central bank digital currencies (CBDCs). Implications for the financial system are also analyzed. Findings The proposed CBDC framework reduces illegal transactions, corruption and the cost of producing fiat money; eases overseas transactions; and eventually increases international tourism, trade and business between countries. It also reduces the processing fees. Offline framework found useful for performing retail-level transactions. Research limitations/implications The research methodology may face limitations due to diplomatic relations, political instability, sanctions and the need for robust offline transaction infrastructure. Practical implications The proposed CBDC framework simplifies debt and insurance management, tax collection, international trade, tourism and global stock market participation. However, implementing CBDCs in low-income countries presents challenges like extensive training, infrastructure and user acceptance issues. Social implications The adoption of CBDCs can enhance financial stability by reducing corruption and illegal transactions through improved traceability and monitoring, thereby curbing activities like terrorism. Originality/value Common framework for foreign transactions is based on the UID, and offline transaction framework is based on the sender’s QR code for multiple user applications.

Macroeconomic dynamics and Panel VAR -Analysis in Developing Countries

This study applied the Panel Vector Autoregressive Model (PVAR) to examine the macroeconomic dynamics impact of variables. PVAR examined the results by taking the Data from seven Developing countries; Indonesia, Mexico, Chile, Denmark, China, Israel, and India. Based on this study, five variables are included to run the Panel VAR i.e., Inflation, short-term interest rate, RGDP, Official reserves, and exchange rate Volatility. Developing countries faced lots of difficulties thus examining which variable reflects a high effect to improve countries’ infrastructure. Therefore, this study performs the Panel VAR, Variance decomposition, and Impulse response thus stating that inflation and short-term interest have a high impact on developing countries, whereas, RGDP and official reserves have a low impact, resultantly the volatility rate fluctuating highly when little change in inflation and interest rate occurs. Additionally, monetary policy, foreign transactions, and economic growth are also included in this paper. Because inflation relates to the monetary policy, short-term interest rate relates to investors’ opportunity, RGDP relates the economic growth, and official reserves reflect foreign transactions or support.

The Impact Of Accounting Standards for Foreign Currency Transactions and Financial Statements Translation on Auditing Procedures: The Case of Iraq

This paper aims to convey the notion of auditing, its relevance, and the report's function in strengthening the recipients' trust. It also tries to study accounting rules for foreign currency transactions and interpret and unify financial statements for overseas entities. The research aims to study and analyze accounting for foreign transactions and the translation of financial statements in public sector corporations, the research sample, and compare these accounting treatments with those that should be included in the relevant accounting standards. The objective meaning of the word auditing is based on the fact that auditing is a search for the truth since this is the core of the auditing process. Auditing is fundamental to all operations, and its presence dates back to antiquity and the first civilizations. This study aims to shed light on the concept of foreign transactions, the translation of financial statements, the presentation and discussion of problems arising from them, the accounting standards for accounting for transactions in foreign currency, the translation and consolidation of financial statements for foreign units, their impact on auditing operations and what is reflected in the auditors' report. In addition to investigating the reality of accounting for transactions in foreign currency and translating the financial statements of public firms, the sample research also examines the validity of accounting for transactions in foreign currency. The findings indicate that the financial statements of the public sector enterprises comprising the study sample do not fairly represent their work and financial status outcomes.

Analysis of Foreign Trade Movement and its Impactin Exchange Rate Dinar the Iraqi for the Duration (2004-2021)

The research aims to study and analyze foreign trade indicators in Iraq, and their impact on the Iraqi dinar exchange rate. Therefore, the research problem was formulated to answer the question: Does foreign trade movement affect the Iraqi dinar exchange rate? Therefore, the time series was analyzed and the significant relationship between foreign trade indicators and the exchange rate was estimated using the VAR model and the Granger test. The test results for the VAR model showed that there was an effect of the volume of foreign trade on the exchange rate of the parallel Iraqi dinar during the research period. The researcher suggested several Recommendations, the most important of which are: The Monetary Authority in Iraq must take effective steps commensurate with the volume of demand for the dollar, especially in the currency sales window and the inclusion of small traders in foreign transactions that take place via the electronic platform to achieve stability in the exchange rate of the Iraqi dinar against the dollar, and to bridge the gap between the exchange rate Formal and parallel.

Hedging Decision and Value of Public Companies Indexed at LQ45 Indonesia Stock Exchange

This study was conducted to reveal empirical facts on the impact of hedging decisions using derivative instruments on firm value and financial performance by using a sample of public companies listed on the LQ45 Index of the Indonesia Stock Exchange. The results of hypothesis testing reveal that hedging by using derivative instruments has a significant negative effect on firm value. This finding partially supports the conclusion of research conducted by Lenee and Oki (2017). However, this contradicts the findings of Alan and Gupta (2018) and Lenee and Oki (2017), who conclude that the use of hedging can minimize the volatility of foreign transactions and has a positive effect on increasing firm value. In line with the results of a research review conducted by Geyer-Klingeberg et al. (2021), there are contradictory results due to various factors that make the research findings inconsistent. Bachillera. et al. (2020) describe controversial results due to country specificity and different hedging types.

From Well-Side Meetings to Pelican Strategy: A Context-Based Approach to Combat Corruption

This article takes up the question of what strategy is to be used among different communities to eradicate corruption across borders. The debate between two legal scholars, Steven Salbu and Philip Nichols, over the viability of extraterritorial application of anti-bribery laws remains thought-provoking when we look at the effectiveness of the OECD Anti-bribery Convention or FCPA in curbing corruption. Empirical research shows that firms from countries with extraterritorial legal restrictions do not necessarily refrain themselves from paying bribes in foreign transactions. This article ties the Salbu-Nichols’ debate, ISCT, mediating institutions theory, and Pelican Gambits strategy together to structure a context based anti-corruption framework. It builds on ISCT’s authenticity and legitimacy principles to give context of the norms in order to apply various strategies to combat corruption. This article is by no means to promote elimination of laws or regulations of corruption or acquiescence of illegitimacy of corruption in international business. Instead, the framework emphasizes the importance of the interactive dynamics between a firm and its community when designing anti-corruption strategy in a global environment.

An Empirical Case Study of Foreign Asset & Derivatives Leverage Effect on the Shipbuilding Firms

Purpose – This study aims to analyze the foreign asset leverage effect on Korean shipbuilding companies’ foreign profitability and maintain the appropriate foreign asset size for reducing exchange risk. Design/Methodology/Approach – As a research method, a simple average difference comparison method was used to estimate and compare the difference from the total average value for each variable. Our paper proceeds in presenting serial-stage analysis considering exchange risk factors through estimation on transformation of foreign transactions & derivatives including annual trends of foreign asset and industrial characteristics. Findings – The value of the foreign asset leverage effect on shipbuilding companies was -36.4, and the result was more negative than other industries. This is because ship manufacturing companies focus more than 85% of their sales on overseas transactions and have large amounts of transaction units. Especially, the proportion of the gains from the derivatives book valuation process accounts for 109.8% of the net foreign profits. Research Implications – We need to introduce an independent credit rating system for foreign currency accounts which reflect the relating stability of the foreign currency denominated transaction on global business companies. From a long-term perspective, the exchange risk management of global companies requires relationships and mutual understanding with stakeholders in addition to financial hedging tools.

FX Law and Regulations in Korea: Problems and Prospects

Abstract The last two decades of the Korean foreign exchange market regulations, especially aftermath the 1997 Asian financial crisis, can be characterised by an increased emphasis on the capital account liberalisation and deregulation. Although several new types of regulatory measures were implemented to enhance market resilience in the midst of the 2008 global financial crisis, strict control measures were largely eased in order to facilitate cross border trades. However, there are still many remaining unresolved problems and the rapidly changing financial environment poses new challenges for legal institutions surrounding the foreign exchange market. This contribution aims to shed some light on the Korean government’s efforts to facilitate foreign transactions, while maintaining equilibrium in the balance of payments and stabilising the value of currency by regulating the external shock-sensitive market. It also offers some insight for the authorities to consider to improve the legal system by providing an in-depth analysis of the recent notable changes in the regulatory landscape.

Panda Games: Corporate Disclosure in the Eclipse of Search

We show that firms strategically alter their disclosures when investors’ access to information via search engines is interrupted. We conduct a textual analysis and exploit an exogenous event—Google’s 2010 surprising withdrawal from mainland China, which significantly hampered domestic investors’ ability to search for foreign information but did not affect their cost to access domestic information. Following Google’s exit, Chinese firms’ announcements on foreign transactions become more bullish relative to domestic transactions. Optimism in disclosure is especially rosy if the press releases are conveying negative news or are issued by poorly governed firms. This effect is mitigated in the presence of foreign investors or analysts affiliated with foreign brokers who are not subject to foreign information censorship by the government. The increase in search cost also appears to leave domestic news media and financial analysts more vulnerable to the influence of corporate disclosure. These optimistic announcements allow insiders to harvest higher returns from selling their shares and are associated with a higher likelihood of corporate misconduct. This paper was accepted by Gustavo Manso, finance. Funding: This work was supported by the National Natural Science Foundation of China [Grants 71272072 and 71572042]. X. Yu gratefully acknowledges financial support from the Arthur M. Weimer Fellowship. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4521 .

Analisis Faktor-Faktor yang Mempengaruhi Cadangan Devisa Periode 2000-2019

Foreign exchange reserves is foreign currencies that are reserved at the central bank for the purposes of financing development and foreign transactions such as imports, foreign debt payments, investments and other financing. Foreign exchange reserves are very influential on the economic activities of a country. The amount of foreign exchange reserves can be used as an indicator to assess the country's resilience in facing the economic crisis. This study aims to determine the impact of exports, imports, inflation, exchange rates, foreign investment and foreign debt on Indonesia's foreign exchange reserves during the period 2000-2019 using the Ordinary Least Square approach. The results show that exports, foreign investment, and foreign debt have a positive effect on foreign exchange reserves, while imports and exchange rates have a negative effect on foreign exchange reserves. Meanwhile, inflation has no effect on Indonesia's foreign exchange reserves during the 2000-2019 period.

Cross‐border and domestic minority acquisitions and financial constraints: Reaping big benefits from small shareholders

AbstractResearch Question/IssueDo the motivations of cross‐border minority acquisitions differ from those of domestic minority acquisitions? We examine and compare the underlying motivations for and consequences of domestic and cross‐border minority acquisitions by analyzing data from transactions that took place across 31 countries over a 13‐year period.Research Findings/InsightsUsing a sample of 11,926 domestic and cross‐border minority acquisitions, we show that the interplay of financing and country‐level governance motives is the main driver of such deals in both settings. We find that financially constrained firms are more likely to engage in both domestic and cross‐border minority acquisitions, even in the face of higher information asymmetry and transaction costs that international transactions entail. In the wake of either domestic or cross‐border deals, financially constrained firms' long‐term debt increases; their short‐term debt, cash holdings, and equity decrease. The greater likelihood of minority acquisitions of financially constrained firms is explained by the degree of corporate governance institutions in the country in which the targeted firm is based and by differences in levels of creditor and shareholder protections between the home countries of the targeted and acquiring firms involved. Our results remain robust after controlling for alternative explanations such as the contracting motive, the gravity model of foreign transactions, economic development levels, and differences in tax and exchange rates.Theoretical/Academic ImplicationsOur results extend prior literature on mergers and acquisitions that have focused solely on control transfers or domestic deals. We provide empirical evidence for the importance of jointly considering financing and governance motivations in seeking to explain domestic and cross‐border minority acquisitions and their consequences in alleviating financial constraints. We provide new evidence on how firm‐ and country‐level characteristics interact to affect minority acquisitions.Practitioner/Policy ImplicationsOur results offer valuable insights for business policy by highlighting how firms can circumvent financial constraints through partial integration, especially in cross‐border settings. The results also offer evidence of beneficial ex post outcomes for targeted firms' leverage and liquidity. In terms of public policy, the results show that minority shareholder protections improve the equity market and provide a positive externality to the debt market through a certification effect.

External expansion of the dairy market: Arguments "for" and "against"

The Russian agro-industrial complex is the most important branch of the national economy participating in the program of import substitution and ensuring food security of the country.
 At the moment, the Ministry of Agriculture of the Russian Federation is implementing an export-oriented model of agricultural development. In the article, the author analyses the dynamics of foreign trade operations in the dairy food market. The information base for the integrated assessment was the data of Rosstat and the Customs Service on group 04 Dairy products TNVED. The dairy industry within the country shows progressive growth — gross production has been increasing since 2017. However, domestic agricultural producers cannot cover the domestic need for milk and dairy products. As a result — an increase in foreign economic operations. The analysis showed an increase in exports and imports. This is due to the influence of many factors. Factors and trends affecting their volumes in the short and long term were identified — the composition and structure of the balance of milk and dairy products resources, average per capita household income, average prices for dairy products, milk consumption per capita per year, volumes of foreign trade operations, etc. The built dynamic econometric models made it possible to distinguish limiting factors for each type of foreign economic transactions. For imports, these are average consumer prices for milk and annual consumption of dairy products per capita. For export — average consumer prices for dairy products. By influencing these factors, it is possible to ensure an increase in demand and supply in the dairy industry.
 The conclusions made in the article can be used to develop and substantiate state agri-food policy.

Container traffic: East African case

The article reveals the historical features of foreign trade and its transport support in the East African region. In the course of the study an analysis of the export-import cargo flows structure in East Africa both in the colonial period and at the present time has been carried out. The region infrastructure facilities, including seaports, have been considered, their attractiveness for investments and doing business has been taken into account. The current level of container line service for providing the foreign economic transactions transport component has been shown and the main East African ports by level of line service and container turnover have been identified. The main problems and opportunities for increasing East African trade supplies and their logistics services have been revealed.

Tindak Pidana di Bidang Perbankan dalam Transaksi Perdagangan Luar Negeri dengan Menggunakan Letter Of Credit

Letter of Credit/LC is an interbank payment transaction instrument whose legal arrangements have been established both nationally and internationally. In this study, the writer wants to know how the regulation of criminal acts in the banking sector against foreign transactions through letters of credit, and the criminal sanctions that make the issuing bank a victim in foreign trade transactions using the letter of credit , uses this type of normative research. sources of primary, secondary, and tertiary rules. This thesis uses the type of search, recording and documentation Analysis of legal sources is carried out systematically using legal arguments and the results are presented descriptively. The conclusion is that the regulation of foreign trade crimes through Letter of Credit is regulated in UPC-DC600 and PP No. 1/1982 as well as Law No. 10/1998 on banking. Sanctions for violating foreign transactions through a Letter of Credit can be subject to criminal sanctions and fines in accordance with the provisions of Article 49 (1) of Law No. 10/1998.

ARE DOMESTIC FIRMS EXPOSED TO SIMILAR CURRENCY RISK AS INTERNATIONAL TRADING FIRMS?

This paper reports key findings about currency risk using two samples of listed firms: one sample with zero foreign currency revenues, hence having zero-currency risk; and the other sample with positive revenues in foreign currencies from foreign transactions. The latter is therefore, exposed to currency risk. Asset pricing theories predict that stocks of currency-risk-exposed firms should suffer significant currency risk, while those firms with zero-currency-risk should not have any effect from currency risk since currency transactions across borders is nil. The latter hypothesis has yet to be tested explicitly, so there is a gap in the literature. We report stock returns are significantly affected not just for firms with foreign-currency revenues but also for firms with zero foreign-currency transactions. These findings are useful to top management of all businesses to undertake currency-hedge plans for both domestic and international trading firms.

The Effect of Non-Interest Income on the Performance of Selected Deposit Money Banks in Nigeria

This paper investigated the effect of non-interest Income on the performance of 6 selected deposit money banks in Nigeria, between 2015 to 2019. A panel regression model was used to determine the effect of non-interest income of the DMBs’ profitability. The variables used are: fee income, commission income, e-income, and foreign transaction income which also influence the profitability of banks were considered in the model for the study using Tobin-Q as the independent variable. The analyses was done using a panel regression model on the EViews 10+ software. The coefficients reveal that with fee income as a ratio of total non-interest income (F-IN/TINC) has a positive effect on bank financial performance with slope coefficient of 6.0995 and significant at 5% (p=0.000), while that of E-income as a ratio of total non-interest income (E-IN/TINC) has a positive effect on bank financial performance with slope coefficient of 6.6879 with p value of 0.0002). Similarly, foreign transaction income as a ratio of total non-interest income (F-IN/TINC) has a positive effect on bank financial performance with slope coefficient of 6.0995 p-value of 0.000. This implies that increases in Fee based -income, E-based income and foreign transactions-based income will result in an improvement in bank financial performance. However, the operating income as a ratio of total non-interest income (OP-IN/TINC) has a negative effect on bank financial performance with slope coefficient of - 2.6035 with p-value of 0.000 at 5% critical value. The study therefore recommends among others that deposit money banks should be actively involved in customer analysis and market research in order to develop those products and services that will continually satisfy majority of their customers so as to generate high non-interest income from such service.

Summaries of Papers in This Issue

Summaries of Papers in This Issue

العلاقة التبادلية بين سعر الصرف وأسعار الأسهم دراسة تطبيقية في سوق اسطنبول للأوراق المالية للمدة 2005-2020

The study aims to analyzing the reciprocal relationship between the nominal exchange rate of the Turkish lira versus the U.S. dollar and the stock prices of the companies listed on the Istanbul Stock Exchange (ISE) expressed in the general market index for the period from 2005 to 2020 with 192 monthly observations, based on the traditional theory and the theory of portfolio balance model in theoretical interpretation for that relationship, aiming to identify the effect of the exchange rate on stock prices, as well as to analyze the causal relationship between those variables and to identify which of them is the cause or which is the result, using the Autoregressive Distributed Lag (ARDL) model. The research found that the exchange rate has a positive effect on stock prices in the long term, despite the emergence of the negative impact in the short term, but the long-term relationship has corrected the course of the short-term relationship with a time period not exceeding one month, in addition to proving that this relationship takes one direction. From the exchange rate towards stock prices, that is, the exchange rate is the reason and stock prices are the result, therefore the results of this research helps investors to predict future trends of stock prices depending on the exchange rate changes, and it also enables the companies, especially those with foreign transactions, to manage price risks the exchange rate in order to avoid its negative impact on its share price, as it represents an obstacle to achieving its main goal of maximizing the share price

Foreign Employment, Income Shifting, and Tax Uncertainty

ABSTRACTWe examine the effect of foreign employment on two outcomes—income shifting and the tax uncertainty of foreign transactions. Using a hand-collected sample of employment disclosures, we partition our sample into firm-years with a higher or lower degree of foreign employment. Using two distinct income shifting models, we document that, on average, a high degree of foreign employment is associated with greater tax-motivated income shifting out of the U.S. We also posit and find that a high degree of foreign employment enhances the economic substance of foreign transactions, reducing the tax uncertainty associated with foreign income. We conduct additional analyses to mitigate selection bias concerns, and we use exogenous changes to the costs and benefits of income shifting using foreign employment to strengthen identification. Our results highlight firms' use of employees as part of a tax-efficient supply chain and how foreign employment enhances income shifting opportunities between jurisdictions.

Analysis of typologies of money laundering in fulfillment of export transactions

Despite the high level of state control, the sphere of international trade is attractive to malefactors and can be used to with-draw dirty money abroad, or invest it in the legal economy under the guise of honestly earned income. To successfully solve the problem of laundering the proceeds of crime in the course of foreign economic transactions, a systematic approach and scientific understanding of the empirically obtained results are required. The purpose of the article is to study the current trends in the laundering of proceeds from crime in the conduct of foreign economic activity and methods of counteraction.The paper considers the application of typological analysis in economics and other sciences. The author considers and systematizes typologies of legalization of monetary funds by means of price manipulations – by indicating the underestimated or overstated customs value of goods in the accompanying documentation, as well as by performing pseudo-export operations. The study concludes that the money laundering schemes have typical features, and the typological analysis can increase the effectiveness of the efforts of state bodies in the fight against illegal operations. The article defines the specificity of the analysis of financial monitoring objects, which is due to the high latency of deviant subjects and their activities, the large volume and heterogeneous nature of the information requiring analysis and interpretation, high requirements for professional knowledge and practical experience of expert analysts, as well as significant time costs for the analysis of each individual subject.