Increase In Debt Research Articles

Does public debt moderate government spending – informal economy nexus? Evidence from the Asian countries

PurposeThe purpose of this study is to explore the relationship between government spending, public debt and the informal economy. In addition, this paper investigates the moderating role of public debt in government spending and the informal economy nexus.Design/methodology/approachBy utilizing a data set spanning from 2000 to 2017 of 32 Asian economies, the study has employed the dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS). The study is also extended to consider the marginal effects of government spending on the informal economy at different degrees of public debt.FindingsThe results indicate that an increase in government spending and public debt leads to an expansion of the informal economy in the region. Interestingly, the positive effect of government spending on the informal economy will increase with a rise in public debt.Originality/valueThis study stresses the role of government spending and public debt on the informal economy in Asian nations. To the best of the authors' knowledge, this study pioneers to explore the moderating effect of public debt in the public spending-informal economy nexus.

External Debts as Panacea to Economic Growth Challenges in Selected Eastern African countries: An Application of the Autoregressive Distributed Lag Model

Foreign aid has significantly influenced medium- and long-term development initiatives in Eastern African countries. Project aid and non-project aid are the two main categories that describe foreign economic assistance (loans, credits, and grants). The primary aim of foreign aid has been to supplement the internal resources needed to quicken the economic development of the nations in Eastern Africa. This study investigated the influence of external debt on the economic growth of Eastern African countries (Kenya, Uganda, Rwanda, Burundi, and Tanzania) using the autoregressive distributive lag mode and panel data (1970–2020). The findings revealed that external debt had a significant adverse effect on economic growth. In Burundi, an increase in external debt reduces GDP by 5% in the short run, while in the long run, it reduces GDP by 19%; in Tanzania, it decreases GDP by 22%; and in Kenya, it reduces the GDP by 13%. Conversely, the findings indicated that the increased level of external debt positively influenced Uganda's GDP (0.03%) but was not statistically significant. Therefore, it is recommended that Eastern African countries source their income, apart from more external concessional debt, through bilateral or multilateral arrangements to plug into their budget deficits. Also, it is recommended that East African governments develop their external debt initiatives that offer further profitable investment opportunities to repay their foreign debt gradually. Moreover, strategies in the East African countries must be geared towards strengthening revenue mobilization to provide avenues to balance their external debts. For instance, improving the informal sector in these countries is a viable base for increasing revenue through taxes.

External Debt and Poverty Headcount Ratio in West African Countries: Does Governance Matter?

This paper analyses the link between external debt and poverty headcount ratio in the fifteen (15) West African countries, taking into account governance. Using the feasible generalized least squares (GLS) panel method for the period 1996-2021, we find that an increase in external debt contributes to the worsening poverty headcount ratio in the region. Then, enhancing governance while borrowing external funds does improve the poverty level. The regression shows that in West African Countries, governance indicators as well as the composite index of governance and the interaction term (governance composite index* external debt) contribute significantly to the reduction of the poverty rate. Therefore, there is a need for West African governments to be cautious when borrowing external funds and work towards sustainable debt management to prevent negative effects on poverty rates. In addition, the level of good governance should be improved in external debt management and poverty ratio reduction.

Is government debt a burden on workers' income share? An investigation on Italian dynamics

This paper aims to explore if there is a connection between public debt and wage share; the intention is to contribute to the literature regarding both the efficacy of fiscal policy and financialisation of economics. The paper examines the case of Italy between 1960 and 2019, a rather long period during which the country, much like many other advanced economies, was affected by the contemporaneous presence of deteriorating public accounts and a reduced share of national income going to labour. The empirical analysis employs a long run dynamic technique and finds that an increase in debt decreases wage share, challenging the effect of fiscal policies on employment and national income. However, when distinguishing between the components fuelling debt, the estimates reveal controversial outcomes: primary deficit increases wage share, while interests in public debt decrease it. The results are consistent with the changes in policy strategy that occurred in three subperiods and suggest that public debt should be managed, accounting for the reciprocal effects of fiscal and monetary policy and considering the introduction of a common safe asset to preserve labour income.

What are the determinants of the financial and social performance of MFIs in Togo? Does gender borrower matter on financial performance?

Using the panel generalized method of moments, we scrutinize the key factors of financial and social performance of Microfinance institutions (MFIs) in Togo. We report that a higher increase in equity leads to MFIs' financial sustainability while an increase in debt leads to unsustainability. Furthermore, the increase in staff expenditure and operational efficiency decreases financial performance. Interestingly, in the context of Togo, the percentage of male borrowers contributes more strongly to the profitability and sustainability of MFIs than female borrowers. However, in terms of loan repayment, female borrowers contribute more to the sustainability of MFIs than male borrowers

Examining the Impact of External Debt, Natural Resources, Foreign Direct Investment, and Economic Growth on Ecological Sustainability in Brazil

Although some recent papers have explored the impacts of external debt on environmental sustainability, the impacts of external debt on the load capacity factor (LCF) have been ignored. In this regard, this work aims to examine the influence of renewable energy, FDI, and external debt on the LCF in Brazil over the period 1970–2021; this indicator implies the country’s strength to promote the population based on current lifestyles. This paper uses the novel augmented autoregressive distributive lag (A-ARDL) technique. The findings from the A-ARDL show that renewable energy positively influenced ecological sustainability by promoting the LCF by 0.451% in the short run and 0.038% in the long run. In addition, the findings show that an increase in the rent of natural resources promotes the LCF. In contrast, the outcomes illustrate that an increase in the external debt led to an adverse impact on ecological sustainability by decreasing the level of LCF by 0.093% in the short run and 0.162% in the long run. Furthermore, the findings demonstrated that FDI negatively affects the ecological sustainability quality by reducing the LCF in the country. The study provides beneficial recommendations to policymakers in Brazil for achieving sustainable development in Brazil.

Pengaruh Produk Domestik Bruto Pengeluaran Pemerintah dan Tingkat Kurs terhadap Utang Luar Negeri di Indonesia

The increase in foreign debt in Indonesia occurs almost every year. This is of course a burden on the government itself. This study aims to analyze how much influence gross domestic product, government spending and exchange rates have on Indonesia's foreign debt. The data used in this study is secondary data in the form of time series data from 2018 to 2022. The analytical method used is the classical assumption test and hypothesis testing. The classic assumption test includes the data normality test, multicollinearity test, heteroscedasticity test and autocorrelation test. While testing the hypothesis includes the t test and f test. The results of this analysis indicate that government spending has a positive, partial and simultaneous effect on Indonesia's foreign debt. GDP and Exchange Rate have a positive effect, not partially and simultaneously have an effect on Indonesia's Foreign Debt.

MONITORING OF THE PUBLIC DEBT OF UKRAINE UNDER THE CONDITIONS OF MARITAL STATE

Abstract. Public debt exists as an economic and legal phenomenon in most countries of the world, as a rule, it is formed as a result of financing the deficit of the national budget. For countries with effective public debt management institutions, it is an engine of rapid economic development. In many countries, the creation of public debt is associated with the government's attempts to improve the socio-economic conditions of people's lives by modernizing infrastructure, developing education, science, health care, improving social welfare, etc. Public borrowing is a source of investment, a means of reducing the negative impact of external factors, and a fairly effective incentive that helps accelerate the growth of the country's economic potential. Thanks to borrowing, our country received additional resources to meet public needs, overcome а certain technological lag in national development, and outline prospects for economic growth. But on the other hand, such borrowings can become a debt burden, since the economic situation in the country does not allow for effective repayment of debts, which in turn only deepens the country's debt problem. Thus, the main problem of public borrowing, in our opinion, is a real threat of reliance on the state and creditors, which has a stable upward trend. In the conditions of war, national obligations, mainly to foreign countries, are growing rapidly. Inefficient management of public debt can lead to economic instability in countries. In our opinion, an increase in external public debt can lead to a decrease in the state authority of Ukraine in the international economic arena and cause mistrust and doubts about the state's ability to ensure the timely fulfillment of its financial obligations.

ОРГАНІЗАЦІЯ КОНТРОЛЮ ДЕБІТОРСЬКОЇ ЗАБОРГОВАНОСТІ АВІАЦІЙНИХ ПІДПРИЄМСТВ В УМОВАХ АНТИКРИЗОВОГО УПРАВЛІННЯ

The operating checking system does not provide sufficient information for determination of anti-crisis management measures and absence of structured and clearness in organization of control results in the biased idea about the state of debt and absence of effective terms of work with debtors, that assists the increase of hopeless debt, unstable financial state and loss of solvency of aviation enterprises. Thus, there is a requirement in the improvement of organization the internal control of account receivable and improvement of anti-crisis management measures in relation to it. A research aim is an improvement of organization the control of aviation enterprise account receivable and determination of its influence on measures of anti-crisis management. Methodological basis of research became the methods of dialectics, methods and principles of scientific cognition, instruments of economic analysis in relation to forming of certain methodologies of realization of control of account receivable and its intercommunication with anti-crisis management, that allow to accept correct administrative decisions in war and post-war periods with the aim of proceeding in potential of enterprises aviation to industry. The basic hypothesis of research became the supposition in relation to the possible providing of financial firmness of aviation enterprises by the improvement of organization of internal control of account receivable and creation of objective base for the acceptance of correct decisions from anti-crisis management. Exposition of basic material. In the article the state of organization the control of account receivable is investigational among the enterprises of aviation industry, the basic tendencies of changes are certain, organization of control the account receivable is improved, importance of the worked out measures is reasonable, its connection is marked with anti-crisis management and necessity of concordance its processes with control of account receivable. Originality and practical meaningfulness are confirmed by the offered measures in relation to the improvement of organization the control of account receivable, by its adaptation within the framework of activity of enterprises of aviation industry and its intercommunication with the processes of anti-crisis management. Conclusions and prospects of further researches. It is well-proven that the process of organization the control of account receivable appropriately to carry out, going out ranging of debtors after its solvency. A report is offered after the basic structural elements of control of account receivable and clear and structured organization of internal control is given, that allows positively influencing on forming of anti-crisis measures. Further researches will be sent to adaptation offered approach near organization of internal control of account receivable of enterprises of national economy recognition political and economic changes and state of environment of subjects of business activity according to the carried out measures of anti-crisis

Tax Cuts Impact on the Economy from the Perspective of Debt and Exchange Rate

In September of 2022, the newly inaugurated British Prime Minister, Liz Truss, introduced an ambitious policy involving significant tax cuts to stimulate the economy swamped by the COVID-19 pandemic. Regrettably, her ambitious plan eventually led to financial insolvency and catastrophically impacted on the UK's economic growth. Through the rigorous examination and analysis of data, this article primarily attributes her failure to the absence of consumer confidence and the outflow of capital, which were consequences of the substantial currency devaluation caused by the surging government debt. Then, the article draws comparisons between the UK's tax cut and successful case studies from the United States and China, which effectively managed the side effects of expansive tax cuts or similar policies that led to substantial increases in government debt. The findings argue that tax reduction policies cannot yield favorable outcomes unless they are the US with global currency status or in nations like China which can largely eliminate the currency devaluation by a governmental control on exchange rates.

Pengaruh Profitabilitas, Likuiditas, Struktur Aset, dan Pertumbuhan Penjualan Terhadap Struktur Modal pada Perusahaan Sektor Consumer Goods Industry yang Terdaftar di Bursa Efek Indonesia Tahun 2019-2022

This research aims to test and analyze the influence of profitability, liquidity, asset structure, and sales growth on capital structure in companies in the consumer goods industry sector. This type of research is quantitative research with a sample of companies in the consumer goods industry sector. The independent variables used in this research are profitability, liquidity, asset structure, and sales growth, while the dependent variable in this research is capital structure. The sample in this study was 32 companies using the purposive sampling technique. The data analysis method used is multiple regression analysis. Based on the results of research conducted with a sample of 32 companies, it can be concluded as follows: (1) The profitability variable has a significant positive influence on capital structure because the company is carrying out expansion which requires a lot of funds to encourage increased profits in the future. (2) The liquidity variable has a significant negative influence on capital structure because sector companies that have high liquidity means they can pay short-term debt, so they tend to reduce total debt, which ultimately will make the capital structure smaller. (3) The asset structure variable does not have an influence on the capital structure because most of the company's fixed assets are financed with the company's internal funds. An increase in fixed assets is not always followed by an increase in long-term debt. (4) The sales growth variable does not influence the capital structure because sales tend not to be supported by an efficient increase in the company's capital, resulting in operational costs that are too high

Market Consequences of Sovereign Accounting Errors

This paper investigates the market consequences of sovereign accounting errors, opening a new area of research on sovereign accounting quality in the accounting literature. Eurostat, a division of the European Commission, provides semiannual assessments of financial reports produced by the member states of the European Union (EU) and issues reservations that detail financial reporting errors. Using a sample of Eurostat reservation issuances across 28 EU countries from 2004 to 2018, we find that sovereign bond yields abnormally increase during a reservation announcement window, especially when a reservation explicitly mentions deficit or debt, when it quantifies the extent of the errors’ financial impact, or when the errors relate to recent fiscal data. Consistent with a home bias after the release of negative news, we find that domestic holdings of sovereign debt increase after the issuance of a reservation. Overall, our evidence suggests that sovereign accounting errors have significant market consequences and raises further questions for future research in sovereign accounting quality. This paper was accepted by Ranjani Krishnan, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00724 .

Impact of Tax Revenue and Government Expenditure on Public Debt in Eastern Europe

This paper scrutinizes whether government borrowing in Eastern Europe is grounded on the need to provide infrastructure and public amenities as provided in the budget or is triggered by government deficit budgeting. European Union countries have experienced accelerated growth in public debt in the last half a century despite growing tax revenue and cuts in public spending. The purpose of this paper is to investigate the direct and indirect links among public debt, tax revenue and government expenditure in four Eastern European member states from 1998 to 2022 using secondary statistics collected from the World Bank and Eurostat. The paper utilizes a fully modified ordinary least squares (FMOLs) approach and Dumitrescu-Hurlin causation tests to examine the long-run relationship between the factors. For the robustness check, the Levin-Lin-Chu (LLC) unit root test was used to specify the stationarity of each series. In addition, Kao cointegration estimation was used as a robust long-run estimator. The results indicate that directly, a reduction in tax revenue and an increase in government spending increase public debt in the long run. Indirectly, simultaneous tax revenue increase and government spending increase will lead to budget deficit cuts, which will in turn reduce public borrowing. The finding confirms that the adverse impact of public spending on government debt holds only for countries with less tax revenue collection. The study recommends that government and policymakers develop strategies and policies for long-term debt management geared at reducing public debt to match the gap between tax revenue and government expenditure thereby cutting endless public borrowing and anticipated budget deficit.

Investigating the Relationship between Debt Burden Servicing and Infrastructural Development in Nigeria.

This study evaluates debt burden and servicing as it relates to infrastructural development in Nigeria for the period 1992-2021. The study embraced annual time-series data and employed the Fully Modified Ordinary Least Squares (FMOLS) estimation techniques to examine the relationship between the variables. The findings revealed that there exist a positive and significant relationship between domestic debt and infrastructural development; as well as external debt and infrastructural development. The implication of the findings is that increases in domestic and external debt of the federal government leads to an increase in Infrastructural development. More so, a significant and strong relationship was established between infrastructural development, domestic debt, external debt and exchange rate, while all the dependent variables were found to be responsible for 81% variation in the state of infrastructural development in Nigeria. The study, therefore, concluded that domestic and external debt remains strong and active variables driving infrastructural development in Nigeria. It suggested that Public debt should be used for the purpose for which it was borrowed for and such, debts should be used on the basic infrastructural development that will help to improve on the business environment and economic output making for ease of repayment

The impact of small business on sustainable development in the Vuca- and Bani-worlds

The article is devoted to the presentation of scientific results of the author’s research and development of scenarios for the development of small business in Russia under the conditions of VUCA and BANI worlds. The authors analyze the impact of small business on the process of sustainable development. According to the results of the scientific publication it was argued that the life cycle of small business in Russia is in complex turbulent conditions resulting from the manifestation of VUCA-and BANI-factors and their multiplication as a result of overlapping each other: challenges and threats to sustainable economic development of the Russian Federation in conditions of global military and political turbulence and market fluctuations; the state policy of building a digital economy and scaling the activities of marketplaces; Chinese “soft” and “hard” power. The prospects of the scientific research are the analysis of possible effects of the established “black swans”: the collapse of the Eurozone due to the sharp increase in sovereign debts of the countries and deterioration of the financial state; the launch of the center of Islamic finance in Istanbul as a counterweight to the established world financial centers; the forcing by Russia and its allies (primarily China and India) of the processes of launching digital currencies and (or) the approval of a new single currency in contrast to the dollar and the euro.

Dívida corporativa de longo e curto prazo e incerteza da política econômica no Brasil

Abstract This article aimed to investigate the relationship between economic policy uncertainty (EPU) and long- and short-term debt of Brazilian firms traded on the Brasil, Bolsa, Balcão (B3) stock exchange. The discrepancy in previous results raises questions about the current understanding of the relationship between debt and EPU. Separate analyses of long- and short-term debt provide different insights into how corporate decisions are affected. This discrepancy challenges our existing understanding of the complex dynamics between debt and EPU. The research sample consists of 163 Brazilian firms listed on the B3 between 2010 and 2019 on a quarterly basis. The baseline models considered long- and short-term debt as endogenous, taking into account firm and country characteristics. We employed a two-stage system generalized method of moments (GMM-sys) panel approach to deal with potential endogeneity in the estimates. As the debt market plays a crucial role in corporate valuation and performance, it is increasingly important to study the dynamics of long- and short-term corporate debt amidst the challenges triggered by the spread of EPU in the business environment. Clarifying how both long- and short-term debt perform under such pressure is particularly relevant since it reinforces already observed and potential implications for corporate adaptability in the use of external funds. The impact of this study lies in revealing the coexistence of firms’ cautious decisions in seeking representative funds and the conservative position for corporate investments regarding uncertainties that surround economic policy. The findings suggest that higher levels of EPU are associated with a decrease in the use of long-term debt and an increase in short-term debt. In response to increased EPU, companies tend to rely less on long-term debt and instead opt for increased use of short-term debt. These results hold consistently across different proposed specifications.

Что происходит с образовательной системой США?

The article examines a complex of different types of problems that the Joe Biden administration faced when pursuing a course in the field of education, identifies painful points in its system, shows the ratio of successes and failures in educational policy and the extent to which the White House has taken into account changes in the demand for graduates in the labor market USA and in the perception of young Americans about the value of a university. Higher education in this country is considered a source of pride and the key to unlocking the American Dream. American universities rank nineteenth out of the top thirty in the world’s university rankings, and nine of the most successful universities are located in this country. However, behind this facade lies the accumulation of financial, personnel, social and racial problems in educational institutions. An analysis is given of the decline in the attractiveness of college in the eyes of the younger generation of Americans, caused by some devaluation of the diploma on the labor market, the rising cost of education and the increase in student debt on loans. In turn, the factors for the high cost of education are: the cycle of supply and demand, inflation, bloated administrative, teaching staff and university staff, whose work is ultimately paid for out of the pockets of students and their parents. An alternative to college and university that offers a faster and much cheaper route to a career in the form of short-term online courses and technical education schools is becoming popular among a significant portion of the younger generation. A special section is devoted to the analysis of the political and intellectual movement called Critical Race Theory, which has penetrated the curriculum of schools and colleges in many American states and identified another line of division in American society.

The Influence of Working Capital Turnover and Debt to Equity Ratio on Return on Asset

The Covid-19 pandemic in 2020 caused the performance of the pharmaceutical subsector to fluctuate. From these results, it can be seen that the Return on Assets of pharmaceutical subsector companies has decreased and Working Capital Turnover has also decreased. The low working capital turnover was due to a decrease in current assets and an increase in current debt used to finance company projects. A low working capital turnover ratio means that working capital processing is not running well, whereas a high working capital turnover ratio means that the company's working capital is functioning effectively. This research aims to know the influence of Working Capital Turnover and debt-debt-equity ratio on Return on Assets in companies' subsector pharmacy period 2017-2022. Data analysis techniques used that is analysis Descriptive and Verifiable using the Assumption Test Classic, Multiple Linear Regression Test, Analysis Coefficient Correlation, Analysis Coefficient Determination, and Hypothesis Testing. The results of this research show that the Working Capital Turnover Variable has partially no influence on the Return on Assets and the Debt to Equity Ratio variable has Partial influential negatively on the Return on Assets Overall Simultaneous Working Capital Turnover and Debt to Equity Ratio affect the Return on Assets.

Uwarunkowania rozwoju stosunków finansowo-kredytowych krajów bloku radzieckiego z Zachodem w latach 80. XX wieku

Economic relations between Comecon countries led by the Soviet Union (communist bloc) and OECD countries (Western Europe, the USA, Canada and Japan) in the 1980s were characterized by deep stagnation in all areas of mutual cooperation. This was due to many negative factors interconnected in a short time. They were very diverse in terms of nature, range and durability of impact. The article contains an analysis of the development of the financial and credit relations of the Soviet bloc countries with the West in the 1980s in the existing political and economic conditions of East-West relations. The financial and credit dependence of the socialist countries was very clear and intense at that time. Its elimination or reduction as a result of the development of connections in other directions was only partially possible. Its negative impact also covered areas vital for individual economies. In addition, it was of a long-term nature, which made this type of dependence useful as an economic instrument for political purposes, both in the aspect of short-term and long-term pressure on the implementation of political intentions. When analyzing the entirety of East-West economic contacts, one cannot omit the problem of the debt of the Comecon countries, which largely determines the development of all areas of cooperation. In the 1980s, in Comecon-OECD credit relations, two trends clearly intersected: negative and positive. A negative trend was manifested in the increase in debt burdening the economies of many Central and Eastern European countries. This was caused by an increase in payment liabilities for servicing debts resulting from the postponement of loan repayment dates.

Consolidated Budgets of the Subjects of the Russian Federation in the First Half of 2023. Budget Risks are Increasing

The performance of the consolidated budgets of the subjects of the Russian Federation in the first half of this year was characterized by real growth rates of income taxreceipts and only nominal growth personal income tax receipts.The increase in federal transfer receipts was partly determined by the financing of the budgets of the new regions of the Russian Federation. In addition to the growth of economic activity, the dynamics of own revenues of regional budgets in the first half of the year was influenced by factors such as the cancellation of income tax payments within consolidated groups of taxpayers and the accelerated procedure for personal income tax reimbursement.The growth of expenditures of regional budgets lagged behind the growth of revenues, but significantly outpaced last year’s figures, which resulted in a reduction in the surplus of subfederal budgets compared to the previous year. The trend towards an increase in the volume of state and municipal debt has continued against the background of an increase in debt to the Ministry of Finance of the Russian Federation. The growth of public debt is taking place both in relatively prosperous regions and in problematic ones. The reduction in the volume of debt obligations by individual subjects of the Russian Federation cannot yet change the overall picture. The approved law on the federal budget for 2024 and subsequent years assumes a reduction in federal support for regional budgets against the background of an increase in spending needs and contains significant risks for the execution of sub-federal budgets.