Increase In Interest Rates Research Articles

Comparison and design of organizational decision mechanisms

Individuals with bounded rationality may make incorrect decisions regarding innovation projects. Organizational decision mechanisms aim to minimize the impact of individual fallibility and integrate collective wisdom. In recent years, consensus mechanism has posed a challenge to the traditional hierarchy, but its superiority in different decision scenarios is still unknown. We created decision scenarios based on positions (middle manager or grassroots employee) of the proposer of the innovation project, market volatility, and decision timeliness. Simulation results using Agent Based Modeling indicate the following: If the proposer is a middle manager and decision timeliness is unimportant, consensus in low-density networks is preferred; otherwise, hierarchy is preferred. If the proposer is a grassroots employee, the best-performing mechanism, in order, is consensus in low-density networks, consensus in high-density networks, and hierarchy as the discount interest rate increases. Market volatility drives the advance of the two critical points of the discount interest rate. Furthermore, we propose a hybrid organizational decision mechanism that can balance authority and consensus. It combines the high decision accuracy of consensus with the high decision efficiency of hierarchy, addressing the long decision time in consensus and the information asymmetry and information loss in hierarchy. Simulation results show that the proposed hybrid decision mechanism is only slightly inferior to consensus mechanism when market volatility is very low or decision timeliness is unimportant.

Portfolio Optimazation Based on 10 US Stocks

The US stock market has recently become volatile because of the increase in interest rates, which arouses investors focus on portfolio optimization. This study selected 10 representative US stocks from different industries listed on NASDAQ and NYSE. This paper applies Monte Carlo simulations to determine the efficient frontier and constructs portfolios with maximum Sharpe Ratio and minimum volatility. The result showed that Lululemon Athletica Inc. possesses the largest proportion of the maximum Sharpe ratio portfolio, and the Coca-Cola Company occupies the greatest weight in the min volatility portfolio. By comparing the cumulative return of the two portfolios with the NASDAQ Composite Index, the max Sharpe ratio portfolio is found to overperform the market benchmark. In the robustness test in which 8 stocks selected from the original group of assets are taken to construct a portfolio, the same result still holds. This result may demonstrate the feasibility of portfolio management for a few investors in that period.

The Analysis of Contributions on the Housing Bubbles

In the past twenty years, the study of monetary policy and estate has become an essential component of the field of macroeconomics. The chief object of this paper examines that the loose monetary policy is not the main factor leading to the housing bubbles. With the internet bubbles bursting in the early 2000s, there was a destabilizing effect on the stock market and an increase in interest rates, causing the prices of housing to become higher. Some economists present that monetary policy plays a central role in housing bubbles but the findings in this paper would provide controversial views by analyzing the relationship between real macroeconomics in the 2000s in the U.S. and the monetary policy rule, such as Taylor Rule, Phillips Curve, Fisher Equation and the trend of aggregate demand. The change in the nominal interest rate would be higher than that in the inflation rate and real interest rate. The adjustment of monetary policy according to macroeconomics, including the unemployment rate and the extent of deflation. As a result, loose monetary policy is not the main reason for the housing bubbles.

THE WORLD IS ON THE THRESHOLD OF A NEW FINANCIAL AND ECONOMIC CRISIS

The paper provides an analysis of the current state of the world economy and a short-term forecast of its development. It is shown that the USA and the EU have become the epicenter of a new financial and economic crisis and today their economies are already in a state of stagflation, characterized by high inflation and low growth rates. The tightening of monetary policy, through aggressive increases in key interest rates by the Federal Reserve and the ECB, to curb inflation and reduce it to the target level of 2% per annum, led to a sharp reduction in investment in the economy, which, in turn, will cause recessions in 2024 with a recession depth of 1.2–1.4% in the US economy and 1.9–2.1% in the EU economy. Vanguard developing countries will only slow down slightly, and their leaders, China and India, will maintain high rates of economic growth at 4.5 and 6% per year, respectively, in the medium term. The crisis will lead to a cascade of defaults among heavily indebted, low-income developing countries. As a result, the crisis will also engulf the global economy, significantly reducing its growth rate from 5.2% in 2022 to 1.7% in 2024, with a sharp decline in global trade volumes. Recommendations are given that can contribute to a quick and successful exit from the current crisis.

The Relationship Between Continued Fed Rate Hikes and the Risk of US Government Debt

The management of interest rates by central banks is a critical aspect of economic policy, and the Federal Reserve (the Fed) holds a central role in guiding the monetary course of the United States. Over the years, the Fed has utilized interest rate adjustments to achieve diverse objectives, from controlling inflation to promoting economic growth. However, the ongoing debate surrounding the Fed's persistent interest rate hikes centers on the potential risks that may arise in relation to the US government debt. This essay delves into the implications of these interest rate hikes on the risk associated with the US government's debt. By examining the impact of increased interest rates on the cost of borrowing, market dynamics, and the challenges of debt refinancing, we can gain insights into the potential ramifications on the fiscal health of the nation. In addition, we will explore counterarguments and potential mitigating measures put forth by policymakers to balance the objectives of economic stability and debt sustainability.

The Role of Housing Costs in Central Banks’ Inflation Targeting Regimes: The Cases of the Reserve Bank of Australia and the Bank of England

Since the 1990s it has become common for central banks to be charged with using interest rates to meet consumer price inflation (CPI) targets. This article examines the cases of the Reserve Bank of Australia (RBA) and the Bank of England (BoE) and finds that whereas the RBA’s CPI target includes a housing cost element, the BoE’s does not. Moreover, it finds that contrasting treatments of housing costs produce different results, depending on whether the index includes mortgage interest as a housing cost. Whilst central banks dislike CPIs that include an element of mortgage interest because of the apparently perverse outcome of increasing interest rates, they also lack credibility by excluding such an important element of the cost of living. Credibility demands that the 30-year consensus on inflation targeting by monetary policy be replaced by a broader set of tools – including fiscal policy – to control inflation.

Stock Market Returns under the Influence of Monetary Policy in the United State

In response to the phenomenon of overheated inflation after the Covid-19 pandemic, the Federal Reserve began to continuously carry out substantial interest rate increases, which has also caused financial markets to suffer heavy losses for a time. Consequently, the emphasis of this study lies in how monetary policy such as the effective federal funds rate and quantitative easing affect the monthly return of S&P 500 index. This paper collects monthly data between July 2004 and June 2023. This paper finds that the impact of effective federal funds rate on the stock market returns is insignificant. The fourth round of quantitative easing significantly affected the stock market returns, that with the quantitative easing the stock market rerurns increase by 2.786 percent. The inflation has a significant and consistent influence on stock market returns, which decreases by 0.4% for every 1% increase in the CPI index. Therefore, the volume of quantitative easing and the pace of asset purchases significantly affect stock market returns.

The Impact of the Interest Rates Raised by Federal Reserve System on the Exchange Rate of the US Dollar Against the Chinese Yuan

On March 16, 2022, the U.S. raised interest rates for the first time in response to inflationary pressures, which announced a 25-basis point increase. After the latter four rate hikes happened in May, July, September and November, the cumulative increased total is 425 basis points. This change had a huge impact, especially on the exchange rate between the US dollar and the Chinese currency. This paper uses data on the exchange rate of the US dollar to the Chinese yuan after 2010, and ARIMA model is built to model and analyze the data in order to study the impact of the Federal Reserves interest rate hike on the exchange rate of dollar and yuan. Therefore, the analysis discovered that the Feds interest rate increase caused the appreciation of the USD and the depreciation of the CNY. Furthermore, the model helps to predict the trend of the future exchange rate, which in turn will provide suggestions for Chinas future development.

Simultaneous optimal site selection and sizing of a grid-independent hybrid wind/hydrogen system using a hybrid optimization method based on ELECTRE: A case study in Iran

This study presents a hybrid optimization approach to determine the optimal location and size of wind turbines and hydrogen storage systems in rural areas with high wind energy potential in three Iranian provinces. The study employs the ELECTRE decision-making method to select the optimal site, revealing Assadabad Nehbandan as the optimal site for wind farm implementation. The next step of simulation, compares a hybrid system with wind turbines and batteries to one with hydrogen storage, focusing on cost minimization and reliability maximization. The results show that the cost of energy in the battery-based hybrid system is 0.373 ($/kWh), while in the hydrogen storage-based system, it is 0.609 ($/kWh). Sensitivity analysis indicates that higher wind speeds decrease total net present cost and cost of energy, while increasing interest rates have the opposite effect. Additionally, the economic justification for battery-based hybrid system, with an initial cost of 5954 ($), surpasses the hydrogen storage-based system, costing 13,697 ($).

Industrial Disasters, Financial Constraints, and Innovation: Firm-Level Evidence from China

ABSTRACT This paper presents empirical evidence on the impact of industrial disasters on firm-specific innovation, focusing on the role of financial constraints. Using panel data of manufacturing firms in China from 2000 to 2013, our two-way fixed effects analyses confirm a statistically negative effect of industrial disasters on innovation in both the short run and the long run, and the negative effect is enhanced with the frequency of disasters. Another prefecture-level city panel from 2000 to 2019 further confirms the long-run and frequency-enhanced negative effect. The mechanism analysis shows that industrial disasters significantly increase interest rates and reduce bank lending to firms, which in turn reduces innovation. Moreover, ownership and size discrimination lead to asymmetric innovation effects on firms in the short and long run. Our results provide empirical evidence for the government to better allocate reconstruction funds and ensure firm innovation in the post-disaster period.

The Impact of Federal Reserve Increasing Interest Rate on ETH Market

On 16th March 2022, U.S. Federal Reserve increased the interest rate the first time, and in the whole year, U.S. Federal Reserve made seven increments on interest rate. As this will affect the value of dollar, many American financial assets were also affected by it, including ETH, one of the most famous cryptocurrencies. This paper uses the history data of ETH price from January 2018 to July 2023 and constructs ARIMA model without Federal Reserve increasing the interest rate to compare with the reality in order to comprehend how the increasing interest rate affected the price of ETH, and use the model to predict the trend of Ethereums price. With the influence of increasing interest rate, the price of Ethereum should decrease. However, after the U.S. Federal Reserve increased interest rate, the price of Ethereum went up for a while then dropped dramatically. And the reasons why this delay appears are the delay of policy and the first increment of interest rate is not attractive enough for investors to change their strategies. That can bring some inspirations to policymakers. They should acknowledge that there will be a delay in the market after the policy is released and they could give some potential signs or preferences on the new policy to reduce the shock to market. For investors, they could pay more attention on relevant policy and make use of the delay to make more money.

Fiscal and monetary policy for difficult times: MMT solutions

This article considers the current economic situation from the lens of modern money theory (MMT) and expresses a policy response rooted in post-Keynesian theory and empirical data for the US and the euro area. First, MMT supports targeted deficit spending to promote production. Increasing domestic supply will reduce the prices of goods and energy. Second, MMT advocates for reducing the interest rate to make production more profitable. Third, MMT pushes for a job guarantee and increased unionization to alleviate wage pressure. Fourth, MMT believes in rationing, postponed consumption, patriotic saving, and regulation. Increasing interest rates and limiting government deficit spending are not the only ways to address the post-COVID-19 period. We show there are better ways to restore price stability.

The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998–2023)

ABSTRACT The recent resurgence of inflation in Europe has led the ECB to increase interest rates and phase out asset purchase programmes designed to address the effects of the Great Financial Crisis. This article investigates how the ECB has adjusted its logic of responsibility throughout this series of crises. Using a topic model and in-depth analysis of speeches, we examine the ECB’s strategic framing of linkages related to inflation during three historical periods: the Central Bank Independence (CBI) era (1998–2011), the secular stagnation era (2011–2021), and the new inflation era (2021-). Our findings indicate that modifications made to the CBI’s linkages during the secular stagnation era shaped the ECB’s framing of the new inflation era in a novel way. However, despite acknowledging difficult policy tradeoffs, which they used to downplay in the past, ECB policymakers have continued to reframe its initial imperative of responsibility in the hope of avoiding policy discussions on regime change.

Relationship of Credit Risk and Profitability of Microfinance Institutions in Kenya

Microfinance institutions (MFIs) play a crucial role in offering financial services to marginalized and economically disadvantaged populations. However, these institutions face the challenge of credit risk, which has the potential to greatly impact their profitability and long-term viability. This study examined the relationship between credit risk and the financial performance of MFIs in Kenya. The study aims to investigate the connection between Capital Adequacy, Operational Efficiency, Interest Rate Spread, and the profitability of microfinance institutions in Kenya. The research utilizes a comprehensive dataset from 14 licensed and regulated MFIs in Kenya, covering the period from 2020 to 2022.The study utilized a research design based on census data. Secondary data was utilized. The Study examines the previous financial reports to find secondary data on performance. The data collected underwent analysis using both descriptive and inferential statistical tools. Given that the current study focused on the relationship study, a regression model was used as the analysis tool. The results obtained were then presented in the form of tables. The results of this study will benefit policy makers, managers, administrators, entrepreneurs, researchers, consultants, scholars, and trainers involved in strategic Microfinance Institutions. Results from the analysis suggest that the Kenyan microfinance sector encountered significant financial difficulties in the past. The profitability metrics, specifically return on assets (ROA) and return on equity (ROE), showed negative mean values of -8.89% and -8.72%, respectively. Based on the findings, it appears that MFIs incurred losses, as their assets and equity were not fully utilized. The study also discovered There is a strong positive relationship between Capital Adequacy and Operational Efficiency, as indicated by a correlation coefficient of 0.811. When Capital Adequacy increases, Operational Efficiency also increases, The correlation was highly significant, indicating a robust relationship. However, it is worth noting that there is a strong positive relationship between Capital Adequacy and Profitability Metrics, as indicated by a correlation coefficient of 0.961. Capital Adequacy has improved, leading to a significant increase in Profitability Metrics. The relationship between Operational Efficiency and Profitability Metrics was found to be highly positive, with a correlation coefficient of 0.875. The correlation between improved operational efficiency and higher profitability metrics is incredibly important. The relationship between Interest Rate Spread and Profitability Metrics has shown a strong positive correlation, with a correlation coefficient of 0.943. The profitability metrics were greatly impacted by the increased interest rate spread. The study found that it is recommended for Microfinance institutions in Kenya to diversify their income streams and give priority to improving credit risk management practices in order to effectively navigate the complexities of the sector. Additional research is needed to understand the factors that influence credit risk and profitability in the microfinance sector in Kenya.

Explore the Impact of International Monetary Policy Uncertainty on Global Financial Markets

This article delves into the influence of Feds rate hikes on global financial markets. Being the central bank of the United States, the Federal Reserve wields significant impact in global finance and macroeconomics. The policy of increasing interest rates has sparked extensive debate and apprehension as it profoundly affects the worldwide financial landscape. After thorough examination of relevant literature and research findings, we ascertain that monetary policys impact on global financial markets can be primarily understood through several key aspects: 1) The impact of interest rate hikes on the stock market is predominantly negative, which may lead to capital outflows, dampened consumer sentiment and higher borrowing costs. 2) Interest rate hikes have an impact on changes in interest rates in the bond market, which may lead to increased debt expenses and inversions. 3) The interest rate hike influences the exchange rate changes in the foreign exchange market, attracting funds into the United States, resulting in other countries facing the risk of capital outflow and currency depreciation. This article explores the global impact of the Federal Reserves interest rate hikes on financial markets and provides valuable insights for policymakers and investors. Given the potential negative consequences of rising interest rates on stock and bond markets, investors may find it prudent to adjust their portfolios accordingly. Simultaneously, it is crucial to closely monitor global economic dynamics and monetary policies while maintaining flexibility in responding to market fluctuations. By doing so, informed investment strategies can be crafted based on these observations.

Assessment on the Banking Risk Management under COVID-19

This essay explores how the banking industry in the UK has cooperated with the restoration of economic policies to stabilize the financial situation after the COVID-19 pandemic. It also analyzes how banks manage risks to prevent bankruptcy, specifically focusing on interest rate risk, credit risk, and market risk. The study uses the financial status and measures of the five major banks in the UK in 2020 and considers the impact of the pandemic, economic recession, and the Russian-Ukrainian war. The findings suggest that in order to deal with the coming risks, the banking industry needs to take several measures. In order to have a cushion to withstand possible losses, banks must first maintain appropriate core capital. Secondly, asset quality needs to be stable, which can be achieved through effective credit risk management. Thirdly, banks should focus on increasing interest rate income, as interest rates are likely to rise in the coming years. Finally, it is essential to actively manage risks, including market risks, to mitigate the potential impact of external events on the industry.

Inflation, Monetary Policy, and Economic Impact: Taking the Federal Reserve's Interest Rate Hike as an Example

The Federal Reserves interest rate hike is one of the key topics of the current research. Due to the status of the dollar in the global economy, the Federal Reserve's interest rate hike has a profound impact. Therefore, this article collected and analyzed the data of interest rate increases of the Federal Reserve in the past five years. This article discusses the reasons for inflation, as well as the impact of the Federal Reserve's interest rate hike on the foreign exchange market. This paper found that the Federal Reserves interest rate hike has almost no effect on curbing inflation. As the Federal Reserves keeps raising interest rates, less trust in the world leads to a weaker dollar and slower economic growth. With regard to the Federal Reserve continues to raise interest rates, China should take precautionary measures on the premise of ensuring its own economic development and stability. For investors should be timely attention to the Federal Reserve rate hike frequency and response.

What a Federal Reserve Hikes Interest Rates Effect Bond Price and the Enlightenment to Investors

In recent years, the Federal Reserve's series of interest rate hikes have wielded a profound influence over the intricate workings of financial markets. This article offers a succinct yet comprehensive analysis, beginning with a succinct summary of the repercussions of the increase in the Federal Reserve's interest rates affects both stock market liquidity and the bond market. This paper constructs a ARIMA model to estimate the data which not effected by Federal reserve interest rate hikes. The constructed ARIMA model not only elucidates the direct impact of these monetary policy adjustments on bond prices but also encapsulates the temporal dynamics at play. Through a meticulous examination of various time intervals, the model captures the distinct nuances of monetary policy's influence, reflecting its inherent lag and the intricate interplay with market responses. They extend to investors and policymakers, offering a practical guide for optimizing investment portfolios and shaping effective monetary strategies. As investors navigate the ever-fluctuating financial landscape, a nuanced understanding of the temporal dynamics can aid in crafting informed investment decisions. Policymakers, too, stand to benefit from these insights, as they can harness the model's revelations to formulate timely and precise monetary policies that align with the intricate pulse of the market.

Naturally occurring compounds in relieving symptoms and reducing perimenopausal risks

Metabolic disorders that are progressive in nature most significantly influence the health of postmenopausal women. Osteoporosis and cardiovascular diseases are the most important long-term consequences and seriously affect the menopausal women’s quality of life. Hot flashes, a sudden feeling of heat or burning that begins in the face, neck, upper chest or back regions, is a common reason to see a doctor. Sometimes, hot flashes are accompanied by redness of the skin, red blotches, or rapid heartbeat. In some cases, rises in local skin temperature are observed. The above symptoms are the result of impaired functioning of thermosensitive neurons in the hypothalamic region. Menopausal hormone therapy is the gold standard for pharmacotherapy of various menopausal symptoms. However, it has different absolute and relative contraindications, as well as patients’ refusal of treatment mainly due to hormone phobia, that have resulted in a situation where 30% of menopausal women take hormone replacement therapy and only 15% continue to take it for a long period. Patients often insist on a natural approach to symptom relief and need evidence-based information about different hormonal and non-hormonal treatment options. Concerns about potential side effects of the hormone replacement therapy resulted in increased interest rates for phytoestrogens to manage menopausal symptoms. A rational fixed dose combination of phytoestrogens and micronutrients is a well-tolerated alternative preparation to support the health of perimenopausal women, which can be used with virtually no restrictions.

Don’t Look Up: House Prices in Emerging Europe

Abstract This paper investigates how housing prices respond to economic, financial and demographic conditions in emerging markets in Europe. We use quarterly data covering 10 countries over the period 1998–2022 and implement a panel quantile regression approach to obtain a granular analysis of real estate markets. Overall, economic, financial and demographic developments explain real house price growth in emerging Europe, with income growth having the most significant impact. Quantile regression estimations show that income growth matters more for higher quantiles of the property market. We also find that an increase in short-term or long-term interest rates has a price-dampening impact, indicating that a higher cost of borrowing is associated with lower real house price growth. These results indicate that the downturn in house prices could deepen with the looming economic recession and soaring interest rates.