Stringent Policies Research Articles

The Stability of the Financial Cycle: Insights from a Markov Switching Regression in South Africa

The stability of the financial cycle is paramount for the effective formulation and implementation of macroprudential policy in South Africa. The South African Reserve Bank (SARB) and the Prudential Authority strive to mitigate excessive fluctuations in the financial cycle, recognising that a stable cycle provides more reliable signals for financial sector activity and anchors macroprudential policy decisions. However, the tightening of macroprudential policy by the SARB and the Prudential Authority during the post-2009 recovery period, despite mild signs of recovery from the global financial crisis, raises concerns about the stability of the South African financial cycle. This study aims to construct a financial cycle volatility index to assess its stability and identify the key macroeconomic drivers of financial instability in South Africa. Employing monthly data from 1970 to 2024, the study utilises a dynamic conditional correlation model and a Markov switching regression model to analyse the relationship between macroeconomic variables and financial stability. The findings reveal heightened financial cycle volatility around crisis periods and demonstrate that macroeconomic variables such as exchange rate fluctuations, price level changes, and implementing monetary and macroprudential policies can significantly increase financial instability. These results suggest a need for proactive and aggressive macroprudential policy measures in the years preceding potential crises. Moreover, the study’s findings emphasise the importance of considering macroeconomic conditions when calibrating financial cycle policies.

Change in aerosol optical depth in Chinese urban agglomerations during the early phase of dual-carbon actions

Dual-carbon policies were implemented by Chinese government to mitigate climate warming; however, changes in aerosol optical depth (AOD) during early phases of these actions (2020-2022) remain unclear. Thus, AOD variations during this period were investigated compared to the baseline (2015-2019 mean) across seven urban agglomerations (UAs) using multi-source data. Significant temporal variations in AOD anomalies (ΔAOD) were observed at annual and seasonal scales, with varying magnitudes. On average, AOD decrease by -0.210, -0.225, -0.180, and -0.038 in Beijing-Tianjin-Hebei (BTH), Yangtze River Delta (YRD), Guanzhong Plain (GZP), and Liaozhongnan (LZN), respectively. In contrast, increases of 0.041 and 0.057 were observed in Pearl River Delta (PRD) and Tianshan Mountains northern foothills (TSBP), while Lhasa metropolitan area (LS) remain stable (0.0001). In 2021, the most significant decrease in AOD was recorded in YRD, whereas the greatest declines in other urban areas were noted in 2022. The largest ΔAOD in LZN, BTH, and YRD occurred in autumn, while the peak ΔAOD in GZP was observed in spring. In contrast, the highest ΔAOD in PRD, TSBP, and LS occurred in summer. These temporal variations in ΔAOD can be attributed to dual-carbon policies, natural and meteorological anomalies, along with the impacts of stringent lockdown policies and abrupt dust events. Path analysis indicated that the effects of various drivers on ΔAOD were interconnected. When interactions among these factors were considered, their influences on ΔAOD were found to be either amplified or altered, highlighting the importance of accounting for interactions within the human-nature-meteorological system in formulation of atmospheric pollution policies. These findings contribute to a deeper understanding of ΔAOD variation mechanisms and provide valuable insights for the development of air pollution reduction strategies at the UA scale.

Measuring China’s Policy Stringency on Climate Change for 1954–2022

Efforts on climate change have demonstrated tangible impacts through various actions and policies. However, a significant knowledge gap remains: comparing the stringency of climate change policies over time or across jurisdictions is challenging due to ambiguous definitions, the lack of a unified assessment framework, complex causal effects, and the difficulty in achieving effective measurement. Furthermore, China’s climate governance is expected to address multiple objectives by integrating main effects and side effects, to achieve synergies that encompass environmental, economic, and social impacts. This paper employs an integrated framework comprising lexicon, text analysis, machine learning, and large-language model applied to multi-source data to quantify China’s policy stringency on climate change (PSCC) from 1954 to 2022. To achieve effective, robust, and explainable measurement, Chain-of-Thought and SHAP analysis are integrated into the framework. By framing the PSCC on varied sub-dimensions covering mitigation, adaptation, implementation, and spatial difference, this dataset maps the government’s varied stringency on climate change and can be used as a robust variable to support a series of downstream causal analysis.

The Perils of Policy Workarounds: Lessons from Arizona’s Return to “English-Only” Policy

ABSTRACT Language education policy in Arizona has been on a rollercoaster over the last five years. Between 2019 and 2024, the state shifted from strict English-only enforcement to loosening restrictions and encouraging dual language approaches, then back to strict English-only enforcement. In this forum piece, we use approaches from critical discourse analysis to trace the arc of Arizona’s language policy changes during this period. We discuss how benevolent policy arbiters were able to use a policy workaround to loosen Arizona’s stringent English-only policy, only to see the loosening of restrictions easily undone with the (re)election of an ideologically opposite arbiter, Superintendent of Public Instruction, Tom Horne. Through this piece, we aim to provide a cautionary tale to scholars and policymakers in other states by highlighting the potential perils of using policy workarounds to promote equity-oriented agendas.

The Impact of World Uncertainty, Environmental Policy Stringency, and Technological Innovation on Environmental Sustainability: Evidence from High-Income Countries

The Impact of World Uncertainty, Environmental Policy Stringency, and Technological Innovation on Environmental Sustainability: Evidence from High-Income Countries

Examining Impact of Inflation and Inflation Volatility on Economic Growth: Evidence from European Union Economies

Examining the economies of the European Union from 2000 to 2023, we have found no strong evidence that the inflation rate has a negative impact on economic growth. In contrast, in line with conventional economic theory, higher interest rates are associated with lower economic growth. The results remain consistent even after controlling for various control variables, non-linearities and endogeneity issues. These findings suggest that an aggressive tightening of monetary policy in the euro area, aimed at rapidly bringing inflation under control, could actually be detrimental to economic growth. Since the negative effects of monetary tightening on growth are clear, while the benefits of rapidly reducing inflation on economic growth are ambiguous, the European Central Bank must be cautious about both the intensity and the duration of monetary tightening.

Assessing the Impact of Green Environmental Policy Stringency on Eco-Innovation and Green Finance in Pakistan: A Quantile Autoregressive Distributed Lag (QARDL) Analysis for Sustainability

Environmental policy stringency, eco-innovation, and green finance play key roles in advancing sustainability, particularly in low- and middle-income countries such as Pakistan. Using annual data from 1990 to 2020, this study employs a quantile autoregressive distributed lag (QARDL) approach to explore the effects across different quantiles. The results reveal a generally negative, quantile-specific relationship between eco-innovation and ecological footprints. At lower quantiles, a 1% increase in green finance is associated with a reduction in ecological footprints ranging from 1% to 4%, demonstrating a beneficial, albeit asymmetric, relationship. As the quantiles increase, the effect of green finance strengthens, with reductions in ecological footprints reaching up to 7% at higher quantiles. Furthermore, stringent environmental policies show a more pronounced impact at higher quantiles, where a 1% increase in policy stringency leads to a reduction in ecological footprints of 5% to 8%. These findings underscore the significance of robust environmental policies, eco-innovation, and green finance as effective mechanisms for reducing ecological impacts and promoting sustainability. This study provides valuable insights for policymakers to strategize on enhancing investments in green financing and implementing stringent environmental regulations, particularly targeting industries and sectors with substantial ecological impacts. Such measures can effectively mitigate environmental degradation by adopting eco-innovation and encouraging sustainable practices, especially in areas provoking acute ecological pressures.

The EU Taxonomy and the Syndicated Loan Market

Abstract The European Union (EU) Taxonomy on Sustainable Activities is one of the most far-reaching financial market regulations to combat climate change. Using international data from the syndicated loan market, we demonstrate that firms with larger EU Taxonomy-eligible revenue shares paid lower interest rates in the years before the formal introduction of the Taxonomy. Business revenue is Taxonomy-eligible if it originates from “transitional activities” that substantially contribute to climate change mitigation. A one-standard-deviation increase in firm revenue from transitional activities is associated with 5 basis points (bp) lower loan spreads (5% relative to the standard deviation). Effects are more pronounced for firms in countries with greater climate risk exposure and more stringent environmental policies, and when lending institutions have green preferences. The effects of transitional revenue do not simply reflect a borrower’s ESG ratings or broad exposure to climate risks and opportunities. Overall, our results indicate that financial markets already priced in some of the intended effects of the Taxonomy.

Identification of drivers of global trade in plastic waste based on GCA and ISM-MICMAC model: Taking China, USA and South Africa as cases.

Plastic waste's dual characteristics of "resource" and "pollution" led to the prevalence of trade. The Global Plastic Waste Trade Network (GPWTN) is heterogeneous, and its structure is susceptible to the influence of key countries within it. However, there is a shortage of research on the key countries and trade drivers influencing GPWTN evolution. In this paper, three typical countries (China: importer - exporter; USA: exporter; South Africa: potential importer) are selected as cases. Through an extensive literature review, a comprehensive set of 22 trade drivers (TDs), including economic and social factors, environmental pressure, plastic industry, plastic waste, and policy, were identified and then evaluated and ranked using the Grey Relational Analysis (GRA) method. The results reveal that the TDs with the highest trade relevant to China are environmental taxation and NOx (Grey relation correlation, GRC=0.84). The USA was influenced by the environmental policy stringency index (GRC=0.69) and South Africa by the environmental taxation of waste and plastic products (GRC=0.91). This shows that carbon trading policies have become the highest impact driver on the USA's plastic waste trade. The coupled ISM-MICMAC (Interpretive structural modelling-Cross-Impact Matrix Multiplication Applied to Classification) method was used to identify the relationship between trade and drivers and to explore the TDs of different countries. The identified TDs are influenced by policies. The policies to reduce plastic waste production and primary plastic use, to achieve zero plastics in landfills, and to control CO2 emissions could cut the amount of plastic waste exported from China. Both multi-driver controls and single-CO2 emission controls could significantly reduce plastic waste exports, with reductions exceeding 94% in 2060. Controlling CO2 emissions would be the best option for China. For South Africa, the multi-drivers and recycling scenarios could reduce import rates by 70.83% and 66.3% in 2060. In South Africa, the implementation of policies to increase recycling rates, taxing plastics and plastic waste, etc. is the optimal choice to reduce imports.

From node to network: weaving a global perspective on efficacy and costs of non-pharmaceutical interventions

Non-pharmaceutical intervention (NPI) policies, ranging from mild measures to total isolation, were implemented worldwide during the COVID-19 pandemic. We adopt a systematic approach to guide policymakers in deploying NPI policies to mitigate the pandemic’s effects while balancing their social and economic impacts. Our results show that each NPI has an optimal duration, beyond which its effectiveness plateaus. Stricter policies require longer durations, and when sustained for the optimal period, earlier implementation is more effective. However, when this duration is unattainable, timing becomes critical, as both early and late implementation reduce efficacy. Stringent policies with insufficient durations may perform worse than less restrictive measures applied over the same period, and an NPI policy aimed at minimizing overall healthcare burden under a fixed policy duration may significantly intensify peak-time strains. Finally, as the virus becomes more transmissible and less lethal, the effectiveness gap between stringent and less restrictive policies narrows, with targeted interventions for vulnerable groups outperforming universal strict measures.

Uncovering the role of stringent environmental policies and energy transition in the achievement of SDG-13: Evidence from BRICS countries by WLMC model

Countries take measures to protect the environment as compatible with the increasing interest in climate change-related issues. In this context, this research analyzes the impact of environmental policy stringency (EPS), energy transition index (ETI), and income (GDP) on environmental quality. In doing this, the study examines BRICS countries, which are the leading developing countries that cause higher emissions, consume higher amounts of energy, and have higher economic growth, uses data from 2000/Q1 to 2020/Q4, and performs wavelet local multiple correlation (WLMC) model to investigate the relationship under time and frequency-based diverging scheme. In bivariate cases, EPS, ETI, and GDP have a differentiating impact on load capacity factor (LCF) across countries, where there are some exclusions. These factors have a generally increasing impact on LCF. In contrast, EPS has a decreasing impact at low (medium) frequency in Russia (South Africa), ETI has a declining impact at high frequency in Brazil and China, GDP has a decreasing impact at lower frequency in Russia, medium and high frequency in China, and higher frequency Brazil and South Africa. In four-variate cases, the factors have a fully increasing impact on LCF in the countries for all times and frequencies, while the impact is stronger at higher frequencies. GDP is the dominant factor in India and China, while ETI (EPS) is leading in Brazil and Russia (South Africa). Thus, the study reveals the dynamic impacts of EPS, ETI, and GDP on LCF, which diverge across times, frequencies, and countries. Accordingly, policy options for BRICS are argued.

Impact of positive and negative fluctuations in environmental policy stringency on energy security

Impact of positive and negative fluctuations in environmental policy stringency on energy security

Firm Value Impact of Global Oil and Gas Mergers and Acquisitions: The Role of Environmental Policy Framework

The oil and gas (O&G) industry is under increasing pressure to decarbonize and adopt sustainable practices. While some firms are transitioning toward renewable energy, many continue to expand their traditional O&G operations. This study examines how financial markets perceive the value creation potential of business-as-usual mergers and acquisitions (M&As) by the world’s largest O&G companies from 2000 to 2021. Using an event study methodology, we focus on the role of home-country environmental policy stringency (EPS) in shaping market reactions. Our findings reveal that higher EPS in the acquirer’s home country is associated with a greater perceived loss in shareholder value upon the announcement of traditional O&G M&A deals, suggesting that EPS signals significant operational and financial risks related to hydrocarbon investments. However, when these deals are cross-border, the adverse impact of the acquirer’s home-market EPS diminishes, indicating that expanding beyond domestic markets may help O&G firms mitigate the financial consequences of stricter environmental regulations. JEL Classification: G11, G14, G34, Q40, Q58

Rising inequality in the European Union under stringent climate policy: Internal challenges of carbon border adjustment mechanism

Rising inequality in the European Union under stringent climate policy: Internal challenges of carbon border adjustment mechanism

Effects of inflation and macroprudential policies on bank risk: Evidence from emerging economies

This study explores the relationship between macroprudential policies, inflation, and bank risk in emerging economies. Several significant findings emerge based on panel data from approximately 1400 commercial banks across 32 emerging economies over the period 2000–2018. Firstly, a positive correlation is observed between inflation rates and bank risk, suggesting that inflation increases financial instability. Contrary to their intended purpose, stringent macroprudential policies actually intensify bank risk during periods of high inflation rather than stabilizing economies. Secondly, the analysis indicates that macroprudential tools designed to moderate credit cycles significantly enhance the risk banks face from inflation. Varied impacts are observed among different macroprudential instruments: capital-related, reserve requirement, and foreign exchange-related tools counterproductively heighten bank risk during periods of high inflation. Conversely, asset-based and liquidity-focused tools effectively reduce bank risk under similar inflationary conditions.

Achieving environmental quality through stringent environmental policies: Comparative evidence from G7 countries by multiple environmental indicators

Compatible with the increasing public interest on climate change, countries have taken measures to combat climate change and support environmental sustainability. Considering this fact, this study investigates whether environmental measures, proxied by the environmental policy stringency (EPS) index, are efficient in achieving sustainability of environment in G7 countries as the leading economies; uses multiple environmental sustainability indicators, and applies quantile methods from 1991/Q1 to through 2020/Q4. The results show that (i) EPS curbs carbon dioxide emissions in France and the United States across all quantiles. Also, it has a declining effect in Germany and Italy at lower quantiles and in Canada at lower and higher quantiles; (ii) EPS declines ecological footprint in United States across all quantiles, while it curbs in Canada and Germany at lower quantiles as well as in Italy and United Kingdom at higher quantiles; (iii) EPS stimulates load capacity factor in France, United Kingdom, and United States across all quantiles and in Canada at higher quantiles; (iv) causal effect of EPS on the environment varies throughout quantiles; (v) the robustness of the results by quantile regression method is verified. Overall, the results reveal that the effect of EPS on environmental sustainability differentiates across environmental indicators, countries, and quantiles. In ensuring environmental quality, EPS is completely helpful in the United States, fully inefficient in Japan, and has a mixed effect in remaining G7 countries.

Genotyping of extended-spectrum beta-lactamase-producing Escherichia coli isolated from wastewater of dairy farms in East Java, Indonesia

Background and Aim: Extended-spectrum beta-lactamase (ESBL)-producing Escherichia coli in dairy farm wastewater represents a significant threat to environmental and public health due to the dissemination of antibiotic-resistance genes. This study investigates the molecular profiles of ESBL-producing E. coli isolates harboring blaCTX-M, blaTEM, and blaSHV genes from dairy farm wastewater in East Java, Indonesia. Materials and Methods: Wastewater samples (n = 342) were collected from six major dairy regions in East Java: Pasuruan, Malang, Tulungagung, Blitar, Batu, and Kediri. The samples underwent bacterial isolation, identification, and ESBL phenotypic screening using the double-disk synergy test (DDST). Molecular genotyping of blaCTX-M, blaTEM, and blaSHV was conducted using a polymerase chain reaction. Results: Of the samples, 69.30% (237/342) tested positive for E. coli, with 32.91% (78/237) identified as ESBL producers through DDST. Molecular genotyping confirmed ESBL genes in 28.20% (22/78) of the isolates. The genotypic distribution was 77.2% (17/22) blaTEM, 4.5% (1/22) blaCTX-M, 9.0% (2/22) blaTEM + blaSHV, and 9.0% (2/22) blaTEM + blaCTX-M. These findings highlight the dominance of blaTEM and the presence of multi-gene combinations in East Java’s dairy farm wastewater. Conclusion: The identified molecular profiles underscore dairy farm wastewater as a critical reservoir for antibiotic resistance genes, particularly blaTEM. Addressing this issue necessitates stringent antimicrobial use policies, improved wastewater management, and enhanced biosecurity measures. These findings support a One Health approach to mitigate environmental and public health risks associated with AMR. Keywords: antibiotic resistance, blaCTX-M, blaSHV, blaTEM, dairy farm wastewater, ESBL-producing Escherichia coli, Indonesia, public health.

Electricity generation from renewable and non-renewable energy sources in China: The role of environmental policy stringency, FDI, and economic growth

Electricity generation from renewable and non-renewable energy sources in China: The role of environmental policy stringency, FDI, and economic growth

Decomposition of air pollution in Indonesia

The impact of environmental damage and pollution on health and the economy has become a global concern in recent years, including in Indonesia. In Indonesia, the average number of deaths caused by air pollution is 123,000 yearly, and a decrease in life expectancy by 1.4 - 2.4 years by WHO guidelines. This study investigates the decomposition of air pollution (CO2 emissions) in Indonesia from 1995 to 2022. We imposed structural variables comprising urbanization, liberalization, and fossil-based energy. We also associate renewable energy and environmental policy stringency index to describe the decarbonization skeleton. This study uses a dynamic autoregressive distributed approach to examine the interaction between independent variables and carbon emission levels. The results show a diverse influence of urbanization, liberalization, and fossil fuel when associated with skeleton variables that impact the pattern of pollution shaping. Renewable energy is the most critical factor in promoting inclusive decarbonization, while institutional quality is central to generating robust environmental policies. The implication is that a firm commitment is needed to achieve carbon neutrality through clean technology innovation and renewable energy.

Prevalence and social determinants of smoking among men in Mauritius: a cross-sectional study

ABSTRACT Background Mauritius has implemented a range of stringent policies to control smoking and promote public health. Regular monitoring focuses on the prevalence of tobacco use, yet there is a gap in understanding its socio-economic patterns. Objective The aim of this study was to estimate the prevalence of tobacco smoking and to identify the social determinants associated with smoking among men in Mauritius in 2021. Methods This is a cross-sectional population-based study conducted by the Ministry of Health and Wellness during 2021. In total, 3622 individuals participated (response rate of 84.1%), of which 1663 were men (45.9%). The study mainly focused on men given the low prevalence of smoking among women. Daily smoking was the outcome and a series of sociodemographic and socioeconomic factors were included as independent variables. Prevalence ratios (PR) and their 95% confidence intervals (95% CI) were estimated to fulfill the study objective. Results The prevalence of smoking among men was 30.4%. People in the 25–34 age group (PR = 1.65; 95% CI: 1.12–2.41), those separated, divorced or widowed (PR = 1.57; 95% CI: 1.16–2.11), the ethnic groups Muslim-Mauritians (PR = 1.70; 95% CI: 1.00–2.89) and Creoles (PR = 1.97; 95% CI: 1.16–3.35), and those with secondary (PR = 1.29; 95% CI: 1.00–1.67) and primary education (PR = 1.47; 95% CI: 1.10–1.98) were statistically significantly associated with daily smoking. Conclusions Although a gradual decline in smoking prevalence was observed compared with the previous 2015 survey, the Ministry of Health and Wellness should persist in fortifying its anti-smoking measures and concentrate on crafting tailored interventions aimed at the vulnerable groups identified in this study.