Regional Financial Stability Research Articles

Оценка финансовой безопасности домохозяйств арктических регионов Российской Федерации на микроуровне

Analyzing household financial security is closely related to the formation and analysis of financial resources and their allocation. This study aims to analyze the financial security of households in the Russian Arctic regions at the micro level. Key objectives include exploring various approaches to defining and evaluating household financial security, developing a system of coefficients to measure this security, applying it to Arctic regions over time, and identifying common risks and threats to household financial security in these regions. The study synthesizes existing research on household financial security, providing a comprehensive perspective on its definition and assessment. Household financial security is assessed from two angles: first, by evaluating an individual household's financial resources and its ability to cover current expenses, save, and withstand unexpected financial shocks; second, by considering its role in regional financial stability and socio-economic development. For a thorough analysis, the study proposes categorizing financial security into manageable and unmanageable levels. Results from applying the developed coefficients reveal a disparity among Arctic regions: three regions exhibit high financial security, two regions face critical levels of insecurity, and the remaining regions fall into the average category. The study identifies key threats to financial security in each region, with low purchasing power being a common problem for all regions. The study finds that households prioritize securing their financial stability before investing their financial resources into regional development, underscoring the need for ongoing monitoring of financial conditions. The role of government in supporting household financial security is also emphasized. The practical significance of this study lies in its potential to inform the development and adjustment of regional socio-economic programs based on the findings.

Central bank digital currency, financial technology level and regional financial stability

This study delves into the relationship between the issuance of central bank digital currencies (CBDCs) and regional financial stability. Through empirical analysis, we find that the pilot policy of digital yuan has a significant positive impact on financial stability. Further analysis of regional heterogeneity reveals that cities in central and western China, which have a weaker financial foundation, experience more pronounced improvements in financial stability under the digital yuan pilot compared to eastern regions. Additionally, the level of financial technology plays a crucial moderating role in enhancing the effects of the digital yuan pilot policy, particularly in central and western regions. These findings provide valuable insights for policymakers, aiding in the more precise and efficient promotion of digital currency pilots and related financial technology development.

Construction and analysis of regional financial stability index in China: Regional system status, difference measure and spatio‐temporal variation

Construction and analysis of regional financial stability index in China: Regional system status, difference measure and spatio‐temporal variation

Assessing financial stability in Southeast Europe (SEE): An econometric perspective

In the last decade, the global financial landscape, including Southeast Europe's eleven diverse economies, has been significantly impacted by multiple financial crises. These crises have led to economic downturns, unemployment spikes, and unstable financial structures. This study investigates financial stability and risks in Southeast Europe from 2012 to 2021, focusing on Albania, Bosnia and Herzegovina, Bulgaria, Cyprus, Montenegro, Greece, Croatia, North Macedonia, Kosovo, Serbia, and Turkey. It aims to identify factors influencing financial stability amid distinct economic challenges posed by global crises. Utilizing the Financial Stability Index (FSI) as the dependent variable, alongside the Banking Stability Index (BSI), inflation rate, GDP, and public debt as independent variables, the research employs data from the World Bank and The Global Economy. Analysis through STATA software and methods like OLS, OLSR, FE, RE, and GMM reveals the critical role of banking in financial stability, with a robust BSI positively impacting it, while inflation poses additional risks. The study advises Southeast European policymakers to prioritize banking stability and economic growth to enhance financial stability, while also managing inflation and public debt to reduce future financial risks. Our findings suggest that a one-unit increase in the BSI is associated with a 3.35-unit increase in the FSI, highlighting the banking sectors significant influence on regional financial stability. High public debt levels, conversely, are found to correspond with reduced financial stability, with a strong negative correlation of -0.634 between FSI and public debt. These findings underscore the importance of robust banking systems and sound fiscal policies in maintaining financial stability in the face of economic adversities.

COMPARATIVE ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE GOVERNMENTS OF THE CITY OF BEKASI AND THE CITY OF SURABAYA BEFORE AND AFTER COVID-19

The aim of this research is to analyze the comparative financial performance of two institutions government in the four main financial years, namely 2019, 2020, 2021 and 2022. This analysis is to understand how the pandemic has impacted several aspects of financial performance, such as income, budget expenditure, deficit, etc. This study uses a descriptive quantitative method by observing a number of financial ratios, including the independence ratio, effectiveness and efficiency ratio, activity ratio and growth ratio. Bekasi City's financial performance is more stable after the pandemic with a maintained surplus and an optimal ratio of independence, effectiveness and shopping activities. While Surabaya is very independent and fantastic in terms of income & expenditure, its spending activity ratio is inferior to Bekasi and experiences large deficits every year. Therefore, this research has an important objective to identify significant changes in the APBD of these two cities before and after the COVID-19 Pandemic, as well as to explore the factors that contributed to these changes, so that they can make a positive contribution in maintaining regional financial stability and supporting efforts for sustainable economic recovery.

Asian stock market volatility and economic policy uncertainty: The role of world and regional leaders

This paper investigates the relative influence of the United States, China, Japan and the European Union on Asian stock markets from the perspective of economic policy uncertainty (EPU). The empirical setting assumes that stock markets evolve through high- and low-volatility regimes with a probability driven by EPU in these leader countries. The main result of the paper indicates that Chinese EPU surpasses Japanese and US EPU as the main driver of Asian stock market volatility, except in the South Korean and Hong Kong stock markets. Moreover, Chinese policy-specific uncertainty indices, such as monetary, fiscal, trade and exchange rate policies play a significant role but in the most developed financial markets only. These result provides further evidence that China’s economic and financial ties with its near neighbors are deepening, which has important implications for the regional institutions tasked with promoting and monitoring regional financial stability.

Research on Modeling Analysis and Risk Early Warning of Regional Financial Stability Based on VAR Model--Taking Henan Province of China as an Example

Abstract This paper synthesizes the influencing factors of financial stability in Henan Province, selects indicators from both internal and external aspects, and determines the index system of economic stability in Henan Province. On this basis, the entropy method is utilized to attach weights to each indicator, and the impulse response and Granger causality test in the VAR model is used to detect the financial stability of Henan Province. In addition, considering that financial risk early warning is critical to the economic security of the country and Henan Province, the principal component analysis method is further used to screen the risk warning indicators, construct a VAR model for financial risk early warning in Henan Province, and analyze the financial risk based on the comprehensive risk warning score. The results show that the risk status of banking financial institutions (16.3252) is relatively poor, while the complete risk status of financial guarantee institutions (42.62864) is at the warning level, and the VAR model accurately reveals the financial stability and risk status of Henan Province. This study provides theoretical knowledge for the modeling analysis of financial stability and risk early warning research in Henan Province, which is of great practical significance for improving the effect of local financial supervision in Henan Province and maintaining the stable operation of finance in Henan Province.

Parliamentarians and Normative Power Diffusion

Abstract Are parliamentarians involved in normative power diffusion? This case study of Japanese parliamentarians’ international activities shows how they engage in international norm diffusion at interparliamentary meetings in a way that multiplies the normative power efforts of Japan’s government. While parliamentarians are neither official foreign policy actors nor diplomats, they actively promote topics that support Japan’s normative power interests and employ mechanisms identified for normative power diffusion. Thus, parliamentarians become multipliers of Japan’s normative power efforts and have the ability to reach legislators in Japan’s key partner countries. This paper argues that, when abroad, Japanese legislators adopt the identity of an international representative of Japan, who supports promoting Japan’s interests in various areas, such as climate change, overseas agricultural investments, or regional financial stability.

Indirect Determinants Analysis of the Protein Intake Status of Stunted Under-Five Children at the Kedundung Health Service, Mojokerto City, Indonesia

The highest prevalence of stunted in the Kedundung Health Center working area in Mojokerto City exceeds the Stunting Prevalence Threshold. Stunted is influenced by the adequacy status of nutritional intake consumed by children, especially the level of protein nutrition intake. Both indirect and direct factors influence protein intake status. This research aims to identify indirect factors using quantitative cross-sectional method. This research used secondary data on stunted under-five children at the Kedundung Health Center, with more than 48 under-five children. The sampling technique used is nonprobability-purposive sampling, which then eliminates missing data through technical data analysis using the Chi-square correlation test. The results obtained for the five independent variables studied, the variable family income level, the father’s education and the mother’s education, have a significant relationship. The father’s employment status variable can not be concluded. The father’s employment status in the literature is related to protein intake through the father’s role in regulating the low protein intake of under-five children. The mother’s employment status variable has no significant relationship with the intake status of under-five children. Mothers do not have sufficient knowledge and skills to regulate under-five children’s intake patterns, including prioritizing food spending and controlling the adequacy of protein intake. The implications of this study show that the family’s economic conditions and the parent’s knowledge affect the protein intake status of under-five children; also, regional financial stability impacts the family economy.

MEASURING THE PERFORMANCE OF ISLAMIC BANKS THROUGH RISK PROFILE, EARNING, AND CAPITAL

The emergence of COVID-19 as a global pandemic has impacted slowing economic growth, which has also affected regional financial and banking stability in East Kalimantan. This study aims to describe the results of measuring the performance of Islamic Commercial Banks using the risk profile, earning & capital method. The research population is Islamic banks operating in the Samarinda area of ​​East Kalimantan, and the research sample selection is purposive sampling. The study results show that the measurement in terms of the risk profile aspect shows an average rating of 2, "Good," and 3, "Fair enough." While the average rating on the FDR ratio is rated 2, "Good," a rating of 3 is "Enough Good," and a rating of 1 is "Very Good." Furthermore, in terms of earning assessment, by looking at the ROA, ROE, and BOPO ratios after being ranked, the results show that ROE and BOPO ratios rank 4 and 5. In contrast, NOM is rated 1, while the ROA ratio continues to fluctuate from rank 1 to rank 5, meaning that bank performance Sharia law differs in generating returns on assets. This is a note, as well as opportunities and challenges for banks to be able to compete with other banks. Furthermore, capital assessment is rated "Very Good," which means that it has met the standards set by Bank Indonesia and the Financial Services Authority.

Imbalances of Interests of Subjects of Economic Security at the Macro- and Meso-levels

The aim of the study was to consider from a managerial point of view the imbalances of interests of stakeholders within the regional space, aimed at identifying the interests of individual groups, as well as determining their impact on business development and strategic assets of the region. The research hypothesis is that the presence of conflict zones seriously affects the state of economic security and presupposes the adjustment of the existing strategic vector of the region’s economic development. Research methods — analysis of scientific literature and regulatory legal acts, synthesis. The results consist in proposing a conceptual model for managing the balance of interests in the system of ensuring economic security. It has been proved that a scientifically grounded system of interaction between subjects of the regional economy, taking into account the principles of harmonizing their interaction and the optimal combination of regional interests, will ensure the economic security of the region within the framework of the trajectory of socio-economic development of the region for a long period. Conclusions: when coordinating the interests of all economic entities, eliminating tense conflict zones, and implementing measures to neutralize threats to regional economic security, a significant amount of organizational and intellectual resources will be released, which were used in the struggle to realize their own interests by any means. With their targeted use, the vital interests of the region and municipalities will be more reliably protected, regional financial stability will be preserved, and external protection from the destabilizing effects of the external environment will be formed.

Empirical study on the correlation between real estate environmental engineering price fluctuation and regional financial stability

Empirical study on the correlation between real estate environmental engineering price fluctuation and regional financial stability

Digital economy era: the role of the telecommunications sector in frequency-dependent default risk connectedness

We use frequency-dependent connectedness measures to study the role played by the telecommunications (telecoms) sector in sectoral default risk connectedness at three frequency bands, i.e. the short-, medium-, and long-term financial cycles. We extend credit risk spillovers analysis from the time domain to the frequency domain. Our findings indicate that investors in the global CDS sector index market have different investment horizons, but they prefer to process default risk information mainly within one week. In the within-region analysis, except for North America, the telecoms sector plays a significant role in transmitting net credit risk to the other sectors, especially in the short-term financial cycle. In the cross-region analysis, the European telecoms sector is the major net default risk transmitter on all three frequency bands. Our study has noteworthy empirical implications for consumption-based asset pricing models, cross-sector credit risk connectivity, and regional financial stability.

The Impact of the US Interest Rate Hike on Emerging Market Economies and the Belt and Road Initiative

AbstractSince the end of 2015, the US Federal Reserve has raised its benchmark interest rate nine times. This has led to capital outflows and asset depreciation in many emerging market economies. The present paper examines the factors that determine the financial volatility of emerging markets in the face of external shocks. By calculating the capital flows of 30 emerging markets from 1990 to 2018 and conducting panel regression, this paper finds that countries with good infrastructure facilities, a sound banking system and high economic growth have significantly lower cross‐border financial risks. An implication from the empirical analysis is that emerging countries would benefit greatly by actively taking part in the Belt and Road Initiative. The framework of the Belt and Road Initiative allows emerging countries better access to China's massive consumer market to promote trade and long‐term growth. Their quality of infrastructure can be improved through cooperation with China in infrastructure investment. They can also jointly establish a cooperative financial framework to enhance regional financial stability. These strategies will reduce systematic financial risks and counteract the negative impacts of US interest rate hikes.

Depositor preference and deposit insurance schemes — challenges for regulatory convergence and regulatory coordination in Asia

This article examines the main challenges for achieving regulatory convergence and coordination for depositor preference rules and explicit deposit insurance schemes at the regional level in Asia. The increasing regionalisation and integration of banking activities in Asia, as reflected in initiatives such as the ASEAN Banking Integration Framework, suggest a need for co-operation in the area of depositor protection in order to maximise the benefits of banking integration and achieve regional financial stability. However, the level of integration and financial stability is likely to be limited by national regulatory sovereignty and control over depositor protection mechanisms and the absence of a political commitment for ex ante cost-sharing and burden-sharing at the regional level.

Regional Financial Integration in ASEAN in the Comparative Perspective

ASEAN regional financial integration evolves within four domains: the banking sector, liberalizing foreign direct investments, liberalizing capital flows, and ensuring regional financial stability. Progress so far has been limited. Regional integration as concerns the liberalization of capital markets and, in particular, the banking sector, proceeds with the most difficulty. By most criteria, ASEAN is well positioned to benefit from deeper financial integration. Comparative analysis also demonstrates that there is a substantial ‘learning factor’ in this technically complicated field: while ASEAN learns about the EU, the Eurasian Union is taking a close look at ASEAN’s experience of integration of the financial markets.

Strengthening the Global Financial Safety Net: Challenges and Prospects

ABSTRACTThe paper shares the idea on the current global financial circumstance; whereas rapid financial globalization was a basic source of the systemic risks of the global financial crisis, the world economy is even more integrated in the aftermath of the global crisis. It emphasizes the importance of the global community to strengthening the GFSN to respond to a crisis. Kim argues that the GFSN should be a multi-layered structure, and only a single layer alone would not be sufficient to handle the global crisis due to its impact of economic damage. More specifically, the paper suggests a multi-layered structure of the GFSN as follows: self-insurance with foreign exchange reserves, bilateral currency swaps by central banks, RFAs already influencing regional financial recourse and stability in several regions, and global arrangements, such as the IMF facilities.

Global Financial Stability Index

We develop a monthly Global Financial Stability Index (GFSX) that incorporates the global stock market outlook, momentum, and overall risk. Refining the financial stability concept presents challenges because of the many different approaches researchers have pursued, as well as the availability of periodic data. The stock market is the nervous system for the overall economy that anticipates key issues with a precision of some months to the future, especially pitfalls in the financial system, so we use time series data of 23 countries to form global financial market portfolios and create a measure of risk adjusted financial stability (risk adjusted stationary probability for a good state) that predicts future stability. The intuition behind our GFSX model is that we view financial stability as the likelihood that the financial market will operate in a steady state that reflects global risk and momentum. We also develop regional financial stability indexes, including Europe and Asia, and we examine the cross sectional sensitivity of industry sectors to the GFSX. Our results show that the regional financial stability indexes are highly correlated with GFSX, furthermore, our GFSX provides information that existing indexes do not (such as VIX). We also demonstrate that there is significant variation in conditional GFSX sensitivity across some sectors: specifically, sectors Toys, Recreation, Smoke Tobacco Products, and Mines Non-Metallic are positively sensitive to financial stability; while sectors Soda, Candy, Coal, and Gold and Precious Metals are industries that are negatively sensitive to financial stability.

The effect of North Korean threats on financial markets in South Korea and Japan

This paper examines the effects of North Korean threats, as measured by the proprietary North Korean Threat Index (NKTI), on financial markets in South Korea and Japan. We examine the effects of the threats on stock markets, foreign exchange markets, and overnight interest rates. We consider causality in mean and variance tests to determine any link between the NKTI and financial variables. The causality-in-mean test results indicate the presence of a causal link running from North Korean threats to stock returns and exchange rate returns in both countries, but no significant link to the overnight interest rate in either country. The causality-in-variance test results indicate no significant impact emanating from North Korean threats. Integrating the North Korean economy into the global economy stands to eliminate these threats and thus to contribute to regional financial stability.

Азиатская валютная единица: в поисках оптимальной структуры валютной единицы

The article examines the prospects of monetary integration in East Asia and the specific issue of the Asian Currency Unit (ACU) that could potentially become a core element of Asian monetary integration in the long run. The research explores main initiatives underlying financial cooperation and key obstacles hampering monetary integration in the region. The concept of Asian currency unit was introduced by the East Asian countries as one of the mechanisms aimed to ensure regional financial stability. Being a weighted average of regional currencies ACU is highly negatively affected by the volatility of Asian currencies’ exchange rates. That’s why the main aim of the article is to find the “optimal ACU currency basket structure” with minimal variance able to deliver stability in intra-regional exchange rates. The paper offers the author’s attempt to answer three main questions. First, what kind of criteria/macroeconomic indicators must underlie the ACU basket computation. Second, what national currencies should be included in this basket. Third, what weights are to be attributed to the national currencies for achieving an optimal basket structure. The research considers five alternative configurations of the ACU basket. The best one should be neither too rigid nor too volatile; it must be a compromise solution meeting interests of the main regional actors. Initial estimates of the ACU currency weights are based on the RIETI concept that is based on consideration of three main economic indicators, namely, the member countries shares in the aggregate GDP, foreign trade and outward investment. The author complemented the basic methodology by an extra criterion – countries’ shares in aggregate international reserves. The final conclusions on the optimal ACU basket composition are made through the analysis of the aggregated variation coefficient for each alternative set of the national currencies. The coefficient is calculated according to the original method developed by the author. The calculations are based on the national currencies’ monthly exchange rates data generated for the period January 2009 – February 2014. The analysis results in proposition of an optimal ACU basket structure with the calculated optimal countries’ weights. The author gives the recommendations for higher efficiency and regional financial stability.