Periods Of Economic Downturn Research Articles

Forecasting Equity Premium in the Face of Climate Policy Uncertainty

ABSTRACTThis study examines the role of the US climate policy uncertainty (CPU) index in forecasting the equity premium, employing shrinkage methods such as LASSO and elastic net (ENet) to dynamically select predictors from a dataset spanning April 1987 to December 2022. Alongside CPU, other uncertainty predictors like economic policy uncertainty (EPU), geopolitical risk (GPR), and the volatility index (VIX) are considered to assess their complementary roles in out‐of‐sample (OOS) equity premium forecasting. The results reveal that while CPU alone cannot consistently predict the equity premium, it provides crucial complementary information when combined with other predictors, leading to a statistically significant OOS of 1.231%. The relationship between CPU and the equity premium is time varying, with a stronger influence observed during periods of economic downturn or heightened uncertainty, as demonstrated by wavelet coherence analysis. This study also identifies CPU's significant impact on industry‐specific returns, particularly in climate‐sensitive sectors, offering valuable insights for investment strategies and risk management in an era of increasing CPU.

A Comprehensive Study on the Effects of Microfinance Institutions’ Activities on Economic Growth of India

India has supported social banking for a long time. Policy directions to rapidly expand rural branches, mandate credit allocations for priority sectors (including agriculture), deliver large subsidy oriented credit programmes to serve marginal communities and poor households and control interest rates have been tried for over 35 years. For these purposes, microfinance industry is set to reach new heights. With superlative growth numbers in a period of economic downturn, the sector has come to attention of a wider range of investors. The rapid growth of the microfinance sector in the last few years has completely changed its complexion and nature. The growth has transformed microfinance: from being a sub-set of the development sector it has become a sub-set of the financial services industry. In the last two years competition amongst microfinance institutions (MFIs) as well as with the Self Help Group (SHG) movement has emerged India. This paper discusses the role of microfinance industry in country‟s economic growth in terms of its GDP. It also discusses the changed scenario in the competitive environment and the issues in microfinance institutions. Karl Pearson‟s coefficient of correlation is used to determine the role of microfinance in country‟s growth, which state a very high correlation between these two.

‘Smartness’ narratives: A critical discourse analysis of smart eldercare in urban China

AbstractThe rise of smart technology, endorsed by government institutions and recognised for its societal benefits and potential for urban management, has carved a niche for smart eldercare. However, discourses around smart care vary among stakeholders, leading to a constant (re)production of it. This paper investigates three overlapping and sometimes converging stakeholders' (governments, corporations and capital investors) discourses in defining ‘smart eldercare’, arguing that these discourses significantly influence the promotion, implementation and acceptance of smart eldercare in urban Chinese communities. Government entities view smart eldercare as an efficient tool for facilitating community‐based population governance and providing a social safety net. In contrast, eldercare corporations view smart eldercare as a powerful narrative to attract investment and secure government funding, while also serving as a means of surveilling in‐home care labour. For capital investors, eldercare stands out as a burgeoning and resilient sector, encompassing latent values that warrant careful consideration, especially during periods of economic downturn. Through the lens of discourse analysis, this study underscores the tensions between different discourses and the ways it produces ‘smartness’ in urban China. This paper advocates for understanding ‘smartness’ as a complex, multifaceted concept shaped by diverse stakeholder discourses and socio‐economic‐political contexts, necessitating flexible, context‐sensitive interpretations through discourse analysis. To advance ongoing debates in geography on smart care, smart cities and ageing, this paper reveals how these stakeholder discourses co‐produce the notion of ‘smartness’ in urban eldercare, while highlighting the socio‐political dynamics underlying technology‐driven governance in China.

How economic downturns affect legal markets

ABSTRACT Periods of economic downturn are of keen interest to the law. The legal literature primarily focuses on how laws and legal markets affect – by contributing to or abating – economic downturns. This focus has left a sizeable gap in the literature analyzing the converse: how economic downturns affect law practice. The conventional wisdom is that economic downturns harm legal markets overall, and transaction practices in particular, but supporting data are not well studied. This paper helps fill the empirical gap by surveying and interviewing Bay Area attorneys from various law firms on their perception of the effects of economic downturns on legal markets. We find evidence to support the conventional wisdom at a high level of generality, but the granularity of our data lead to findings that significantly complicate the general picture. We find, for example, that personal-injury litigation is negatively affected by economic downturns, investment-management law is resilient, and healthcare transactional work can be positively affected. Our study reveals a highly complex picture of the effects of economic downturns on legal markets, effects that are dependent upon a constellation of factors. Overall, our study offers a more nuanced understanding of economic downturns and the legal profession.

How does regional GDP manipulation affect livelihood investment?

People’s livelihood serves as the primary impetus driving all social activities. Faced with intense regional competition and stringent assessment, regional governments often resort to manipulating GDP figures. This study investigates the repercussions of such economic distortion on residents’ welfare. Our findings reveal a significant negative relationship between regional GDP manipulation and investment in livelihood improvements. This correlation is particularly pronounced during the initial phase of officials’ tenure and diminishes when officials serve in their hometowns. Moreover, we observe that the reduction in livelihood investment is exacerbated during periods of economic downturn. These conclusions contribute to the existing literature on regional GDP manipulation and livelihood investment, shedding light on the potential implications for residents’ welfare.

SPACs and the COVID-19 pandemic: Evidence from Korea

We examine how the COVID-19 pandemic affected the mergers of special purpose acquisition companies (SPACs) in Korea, where SPACs—since their introduction in 2010—have played a significant role in private company public listings. After the COVID-19 outbreak, SPACs were less likely to merge, but for those which chose to do so, merger announcement returns were on average higher, particularly for those that waited to merge until after the stock market recovered its pre-pandemic value. We also find evidence that SPAC holding period returns from the SPAC’s initial public offering to merger consummation (or liquidation, in the case of SPACs that failed to complete a merger) were on average higher after the outbreak. Overall, our results suggest that, despite their limited lifespan and agency issues, SPACs may operate more efficiently and perform better during periods of economic downturn.

Migrant children and inequality in twenty‐first‐century Spain: The risk of living with no working adults in times of crisis

AbstractThis article analyses the impact of the crises on the level of inequality between native and migrant origin children in twenty‐first‐century Spain. We use microdata from the Spanish Labour Force Survey (2000–2022) to study the risk for migrant and native children of living in a household with no working adults. We hypothesize that the assimilation of the immigrant population—after more than two decades in the country—might have contributed to reducing the impact of the COVID‐19 crisis. Results show that the 2008 crisis substantially increased the gap between migrant and native children, while the impact of the pandemic has been milder. Moreover, social origin has a stronger protective effect for native children compared with children with a migrant background, especially during periods of economic downturn. However, we find that among children of low social origin, migrant children are less likely to live in a household with no working adults.

Dividend payout and corporate transparency: Do CSR governance mechanisms matter?

In this paper, we investigate whether dividend payout is associated with corporate transparency (i.e., CSR reporting and assurance) and whether CSR mechanisms (i.e., CSR committee and executive CSR compensation) moderate this relationship. The data covering the period between 2002 and 2019 was retrieved from the Thomson Reuters Eikon and country, industry, and year fixed-effects logistic regression analysis was used to analyze the relationships. The results underline that CSR reporting and assurance are positively associated with dividend payout and CSR committee and executive CSR compensation moderate this relationship significantly. Further analyses indicate that the dividend payout and CSR reporting and assurance relationship is robust to endogeneity concerns, regional samples, and economic downturn periods. In addition, we find that different CSR mechanisms have differential moderating roles in Anglo-Saxon and non-Anglo-Saxon countries; while CSR committee functions a better-moderating role in non-Anglo-Saxon countries, executive CSR compensation performs a better-moderating role in Anglo-Saxon countries.

The resilient self-employability of women and senior people after sudden economic shocks

In recent times, various crises have negatively affected the financial stability, job security, and health of countless individuals. According to research, different factors that operate at both the individual and contextual levels can play a prominent role in influencing people's self-employment during periods of economic downturn. This study investigates the changes in the likelihood of self-employment by gender and age across various contexts following sudden shocks. By analyzing the intersection of occupational choice and business cycle theories, this research offers insights into how crises affect people's ability to work for themselves. Using a sample of over 250,000 individuals from sixteen countries and applying a multilevel binary logistic regression analysis, the results confirm that women and older individuals are less inclined to be self-employed in general. However, unexpected economic recessions may lead to a slight increase in their likelihood of self-employment. Furthermore, when women and seniors live in a higher GDP per capita context, this context positively moderates the relationship between gender, age, and the propensity for entrepreneurship. These findings offer valuable insights for policymakers seeking to promote resilient self-employment among vulnerable individuals for post-crisis recovery.

Dynamic Capital Structure Adjustment: An Integrated Analysis of Firm-Specific and Macroeconomic Factors in Korean Firms

This research investigates the factors influencing the capital structure of 271 non-financial firms listed on the Korean Stock Exchange (KSE) over a broad period from 1995 to 2021, encompassing both stable and crisis conditions. Employing a dynamic panel data model and the generalized method of moments (GMM) estimation, we address the endogeneity issue introduced by the inclusion of lagged dependent variables. Our research integrates firm-specific internal factors with macroeconomic external variables to provide a comprehensive understanding of the influence of varying economic environments on capital structure. Our study suggests that in times of economic stability, the capital structure decisions of a firm are more influenced by internal factors such as profitability. However, in periods of economic downturns, it is the external macroeconomic market conditions that tend to have a greater impact on these decisions. It is also noteworthy that both book leverage (BL) and market leverage (ML) exhibit quicker adjustments during stable periods as opposed to periods of crisis. This indicates a higher agility of firms in adapting their capital structures in stable, normal conditions. Our findings contribute to the existing literature by offering a holistic view of capital structure determinants in Korean firms. They underscore the necessity of adaptable financial strategies that account for both internal dynamics and external economic conditions. This study fills a gap in current research, presenting new insights into the dynamics of capital structure in Korean firms and suggesting a multifaceted approach to understanding capital structure in diverse economic contexts.

ECONOMIC CONDITIONS OF THE DEMAND FOR INVESTMENT AND WORKING CAPITAL LOANS FOR MICRO-ENTERPRISES – RESEARCH FOR POLAND DURING COVID-19

Aim: The study aims to find an answer to the question of whether and how the economic indicators in the industrial processing, construction, trade, and services sectors reflect changes in the market size related to investments and working capital loans for micro-enterprises. Methods: The study used data on investment and working capital loans and data on economic conditions. Monthly data for the years 2019–2021, covering the period of the COVID-19 pandemic, were used for the analyses. The estimation of dynamic models was carried out using the Generalized Method of Moments (GMM). Results: The conducted research showed that economic factors play a significant role in shaping the demand for investment and working capital loans in the micro-enterprise sector, but the impact of the economic situation was more significant in the case of investment loans than working capital loans. In periods of economic prosperity, micro-enterprises are more likely to take out investment loans than in periods of economic downturn. Micro-enterprises’ propensity to take out working capital loans is more dependent on their current situation and expectations regarding the demand for products and services. Conclusions: The research revealed differences in the characteristics of the factors significantly influencing the demand for credit, depending on the sector to which the indicator is concerned. The research shows that access to external financing is crucial for the functioning, survival, and expansion of micro, small, and medium-sized enterprises. The research fills the literature gap by showing how the economic situation in individual industries affects the credit market for the micro-enterprises sector.

Government Expenditure and Economic Growth Nexus in Ghana

Purpose: Economic growth is widely regarded as a crucial indicator of economic advancement within a nation, as it has significant implications for the provision of state benefits, the improvement of living standards, and the generation of employment opportunities. The present study employed a time series analysis spanning from 1983 to 2018, focusing on Ghana, in order to comprehensively examine the diverse impact of both aggregate and disaggregated government expenditure and debt on the country's economic growth.
 Methodology: The study conducted initial examinations, including unit root tests, cointegration tests, and correlation matrices, to determine the statistical reliability and validity of the data series for the research. The long-run parameters were estimated using the two-stage least square regression method, the autoregressive distributed lag method, and the threshold regression method.
 Findings: Based on our research, it has been determined that government expenditure exerts a positive and statistically significant influence on overall economic growth. However, when examining the disaggregated effects, it becomes evident that consumption expenditure has a positive and significant impact on economic growth, whereas capital expenditure has a negative effect on economic growth.
 Unique Contribution to Theory, Practice and Policy (Recommendations): In relation to the prevailing economic conditions characterised by periods of prosperity or recession, it is evident that the government should prioritise its attention towards external debt rather than domestic debt during times of economic expansion. Moreover, during periods of economic downturn, it is imperative for the government to prioritise foreign direct investment as a means of financing its budget, rather than relying on debt

Active market labour policies towards people with disabilities

This article examines the active employment policy for persons with disabilities of working age, ensuring the transition from social security to employment in welfare states. In the first part of the study, based on international research and EU statistics, the reasons for such a transition, the goals, and the principles of active employment policy in welfare states with social democratic, conservative-corporatist, and neoliberal models are revealed. Criteria and methods for assessing employability are presented to distinguish between persons with disabilities and the unemployed, followed by their allocation to programmes with temporary or permanent forms of support. The pathways for entering the labour market are shown, oriented towards insiders (individuals with preserved or temporarily impaired employability) and outsiders (persons with disabilities with low employment prospects). The socio-demographic characteristics of persons with disabilities affecting their productivity and employability, and determining their needs for selective support measures, are reflected. The principles of “offensive” and “defensive” active employment policies in relation to such individuals, increasing the likelihood of employment and retention in the labour market, are studied and revealed. This includes the obligations of the state, employers and persons with disabilities, aswell as incentive and punitive measures. The volume of public funds allocated to employment policy, the main directions in the expenditure classification system: services, active and passive measures are presented. The structure of expenditures and the purpose of each type of active employment measures for persons with disabilities are revealed, including job creation, start-ups, sheltered and supported employment, rehabilitation, employment incentives, and training. The priorities of active measures for persons with disabilities and employers, which contribute to their employment and retention in the labour market in welfare states with different models, are identified. The trends in the development of active employment policies over the past decade, strategies to increase its effectiveness, priorities for passive and active measures during periods of economic downturn are analysed. The results of the impact of active policies on the employment of persons with moderate and severe disabilities, as well as the consequences of changes in the accessibility of social security for disability and unemployment during the transition from social security to employment, are shown.

Cash conversion cycle across industries

The purpose of this research is to assess whether the Cash Conversion Cycle differs between industries, by looking at Days Inventory Outstanding, Days Sales Outstanding and Days Payables Outstanding. This research provides an overviewof Cash Conversion Cycle in two different industries and discusses how each component influences Cash Conversion Cycle. It uses a sample of 172 data points (43 firms) from multinational companies operating worldwide. Based on data retrieved from Bloomberg and from the annual reports of 23 Fast-Moving Consumer Goods companies and 20 major airline companies, a univariate and bivariate (correlation) analysis was done. The analyses for both industries cover four years, from 2009 to 2012, a time span that includes a period of economic downturn. The findings suggest that Cash Conversion Cycle differs between industries. It also differs depending on the size of the company. While its components – Days Inventory Outstanding, Days Sales Outstanding and Days Payables Outstanding – directly affect Cash Conversion Cycle, there are also other factors at play, such as inventory costing system, bargaining power with suppliers and customer credit policies. The economic downturn, and particularly the specificities of each industry make this overview relevant. The research addresses managers who should take Working Capital Management decisions, which can extend or reduce Cash Conversion Cycle, as it contributes to a better understanding of how the size of a firm, its inventory system, liquidity, and payables are associated to the Cash Conversion Cycle and consequently affect companies’ profitability.

Trajectories of financial distress during the COVID-19 pandemic and their associations with mental health and substance use outcomes in a cohort of young adults.

The COVID-19 pandemic has led to unprecedented life disruptions among young adults, including increased job insecurity and financial strain. Mental health problems and substance use have also increased during the pandemic, with young adults particularly vulnerable to experiencing these challenges. This study examines trajectories of financial distress among young adults during the pandemic and their associations with depression, anxiety, and hazardous alcohol and cannabis use. Data from 473 young adults (ages 22-29) recruited in the Northwest United States were collected from April/May 2020 to July/August 2021. Financial distress trajectories were identified using growth mixture modeling. Negative binomial models were used to examine associations between financial distress trajectories and distal outcomes of depression, anxiety, alcohol, and cannabis use. Three distinct trajectories were identified, revealing Low, Moderate, and High financial distress experiences. Individuals with "Moderate" and "High" trajectories showed significantly greater depressive and anxiety symptom scores compared with those in the "Low" financial distress trajectory group. Trajectories were not associated with subsequent levels of alcohol or cannabis use. Young adult mental health remains a priority during periods of economic downturn. Providers must be aware of the psychological challenges imposed by financial distress among young adults to address worsening mental health symptoms.

Economic recession, illicit drug use and the young population: a systematic literature review and meta-analysis.

Economic recessions impact on drug use through different channels, with potential conflicting outcomes. Previous studies have reached mixed outcomes, and a clear and comprehensive picture is difficult to depict. We use a systematic review of literature - conducted in accordance with the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) guidelines - and a hierarchical mixed-effects meta-analysis to provide a comprehensive quantitative assessment of the relationship between business cycle and the use of drugs by young populations. The heterogeneity of studies was assessed by the I2 statistic, and the publication bias was evaluated with contour-enhanced funnel plots. We identify 25 studies, published over the period 2008-2020. These articles carried out an empirical analysis of the impact of the business cycle on illegal drug consumption in Organisation for Economic Co-operation Development (OECD) countries. Most of the studies (17 studies) covered the 2007 financial crisis. Among the outcomes, 9 studies traced a countercyclical relationship between economic recessions and drug use, 3 showed a procyclical relationship and 13 studies found mixed results. Unemployment was the most widely used variable to assess macroeconomic conditions in most of the studies (21 studies). The meta-analysis shows a partial correlation of .03 (95% confidence interval (CI): .0147-.0453) between the unemployment rate and drug use among young individuals. Therefore, we conclude that, on average, recessions tend to boost drug use. This impact is more marked with cannabis use than it is with cocaine, opioids or other drugs. This study provides robust evidence that in periods of economic downturns, the young populations tend to increase the use of illegal drugs, with cannabis as their main preference. Therefore, in periods of economic severity, society may particularly benefit from implementing widely reaching public prevention programmes and demand reduction interventions, targeting this subgroup of the population.

Water sector resilience in the United Kingdom and Ireland: The COVID-19 challenge.

The outbreak of COVID-19 led to restrictions on movements and activities, which presented a serious challenge to the resilience of the water sector. It is essential to understand how successfully water companies responded to this unprecedented event so effective plans can be built for future disruptive events. This study aimed to evaluate how the water sectors in the UK and Ireland were affected from a holistic sustainability and resilience-based perspective. Using pre-COVID data for 18 indicators of company performance and comparing them to the first year of the pandemic, the direction and magnitudes of change varied across companies. Financial indicators were significantly negatively affected, with interest cover ratio, post-tax return on regulated equity, and operating profit, exhibiting the greatest average declines of 21%, 21%, and 18%, respectively, a trend that would be dangerous to provisions and company operations if continued. Despite this, service and environmental indicators improved during the first year of the pandemic, exemplified by unplanned outage, risk of sewer storm flooding, and water quality compliance risk decreasing by a mean average of 37%, 32%, and 27%, respectively. Analysis using the Hicks-Moorsteen Productivity Index concluded that average productivity increased by 35%. The results suggest that the water sector was relatively resilient to the COVID-19 pandemic in terms of services, but adverse effects may have manifested in a deteriorated financial position that could exacerbate future challenges arising from exogenous pressures such as climate change. Specific advice for the UK water sector is to scrutinize non-critical spending, such as shareholder payments, during periods of economic downturn to ensure essential capital projects can be carried out. Although results are temporal and indicator selection sensitive, we recommend that policy, regulation, and corporate culture embrace frameworks that support long-term resilience to since the relative success in response to COVID-19 does not guarantee future success against differing challenges. This study generates a timely yet tentative insight into the diverse performance of the water sector during the pandemic, pertinent to the water industry, regulators, academia, and the public.

Occupational class suicide risk: 12-year study of national coronial data.

Previous research showed that the Global Financial Crisis (GFC) was associated with a widening disparity in suicide rates between lower-class occupations and the highest-class occupations in Australia. There has been no research investigating whether this trend continued post-GFC. This study aimed to investigate suicide rates by occupational class among employed Australians aged 15 years and over, between 2007 and 2018. A population-level retrospective mortality study was conducted using data from the National Coronial Information System. Adjusted suicide rates were calculated over the period 2007 to 2018. Negative binomial regression models were used to assess the relationship between occupational class, gender and time, comparing post-GFC years (2010-2012, 2013-2015 and 2016-2018) with GFC years (2007-2009). Relative to the GFC period of 2007-2009, a significant reduction in suicide disparity between managers and other occupation groups was only observed among male labourers (rate ratios (RR) = 0.65, 95% CI 0.49-0.86) and male technicians/trades workers (RR = 0.73, 95% CI 0.56-0.96) for the period 2013-2015. Skilled manual and lower-skilled occupational classes remain at elevated risk of suicide in Australia. While a decreasing divergence in suicide rates was only observed between labourer and manager occupational classes post-GFC, this trend was not maintained over the later part of the study period (2016-2018). There is a need to further understand the relationship between contextual factors associated with suicide among the employed population, especially during periods of economic downturn.

Financial Constraints of the Pro-environmentally Oriented Firms in the Covid-19 Crisis

Environmentally oriented firms are more pressed for resources in general, especially during periods of economic downturn. Since their business plans are frequently more innovative, they are perceived as riskier by financial institutions. Furthermore, the recent global COVID-19 crisis was not primarily related to financial disruptions, and most governments provided generous and widespread support to different segments of their economies. However, the evidence on the degree to which firms were faced with access to finance problems during this crisis is still scarce. This paper aims to explore the extent to which environmentally-oriented firms in post-transition economies are disproportionally affected by the financial constraints related to the market disruptions caused by COVID-19 pandemics compared to non-environmentally oriented firms. The World Bank Enterprise Survey 2019 has been used to investigate this issue. Based on this data source, an indicator of firm environmental proactivity is developed. The firms’ financial constraints in the pandemic period are evaluated based on the responses from the three survey rounds of the World Bank COVID-19 follow-up enterprise survey, covering different stages of the pandemic. The post-transition countries in the analysis are heterogeneous, consisting of both EU members (Bulgaria, Croatia, Slovakia, and Slovenia) and EU accession countries (Bosnia and Herzegovina and Serbia). The lowest percentage of firms having an environmental strategy was found in Croatia, while the highest percentage is in Slovenia. Based on the results, it can be concluded that firms adopting environmental strategies in analyzed countries mostly follow regulations and/or chose low-cost measures.
 Keywords: financial constraints, pro-environmental orientation, post-transition, COVID- 19

Asymmetric adjustment of clean energy demand in the OECD countries

ABSTRACT This paper investigates the asymmetric demand for clean energy for a panel of OECD countries. We construct a price index for clean energy based on information on the energy composition of electricity generation, and focus on the possibility of non-symmetric clean and dirty clean consumption due to rising and falling energy prices, and to positive income growth and negative income growth. Using an Autoregressive Distributed Lag (ARDL) model that encapsulates both long-run equilibrium among energy demands, energy prices and income, and short-run dynamics. We find evidence that clean energy demand adjusts more aggressively to a price decline than a price rise. In addition, we find that clean energy consumption is more responsive to negative income changes than to positive income changes. A climate policy implication is that policy should account for reversal effect of clean energy consumption during periods of economic downturn.