Stability Of Financial System Research Articles

The Moderating Effect of Macroprudential Policies on the Relationship Between the Effectiveness of the Board of Directors in Shaping the Bank's Risk-Taking Behavior

Macroeconomic instability in 2020 caused by COVID-19 can affect the stability of the country's financial system and trigger risks to banking performance. The implementation of macroprudential policies and the effectiveness of the board of directors as policy implementers can be one of the solutions to this problem. The purpose of this study is to see how the influence of macroprudential policies and the effectiveness of the board of directors in shaping bank risk-taking behavior. The method used is panel data regression method and moderation regression with a sample of 43 banks listed on the Indonesia Stock Exchange including banks that consistently published their financial statements for the last five years. The results showed that partially only the effectiveness of the board of directors and company size affected bank risk-taking behavior, while macroprudential policies, macroprudential policies that moderate the effectiveness of the board of directors, and inflation were considered to not affect bank risk-taking behavior, this was due to differences in bank-specific characteristics, the effectiveness of corporate governance, policy implementation in the form of policy easing and tightening, and the interaction between macroprudential policies and monetary policy. However, simultaneously the independent variables and control variables have a significant influence on bank risk-taking behavior.

Assessing the Impact of Derivatives on the 2008 Financial Crisis and the Effectiveness of Subsequent Regulatory Reforms

The 2008 financial crisis was a global financial catastrophe that reflected the misuse of financial derivatives in financial markets, such as credit default swaps, asset-backed securities and collateralized debt obligations, exposing significant weaknesses in the global financial system. These financial instruments were designed to hedge against debt risk, but their lack of transparency and massive misuse ultimately led to the accumulation of systemic risk that accelerated the financial crisis. Since then, regulatory authorities around the world have realized the necessity for stronger regulatory frameworks, and a series of significant reforms have been implemented, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, the European Market Infrastructure Regulation in the European Union, and the Basel III international regulatory framework, with the objectives of increasing transparency in financial markets and improving the risk management measures of financial institutions. This paper will explore the role of derivatives in the 2008 financial crisis and examine the effectiveness of these regulatory measures introduced after the crisis in enhancing stability of financial system.

Do CBDCs promote financial inclusion and strengthen the monetary regulations?

Digital currencies are impacting the financial lives of people and countries around the world; particularly developing countries see the retail Central Bank Digital Currencies (CBDCs) as an opportunity to increase financial inclusion and introduce new monetary policy implementation mechanisms. The decision to launch a digital currency mainly depends upon the goals and objectives being set by the Central Bank of any respective country. Digital currencies help to implement monetary policy more effectively to achieve the financial system stability. Kazakhstan is the leading economy in the Commonwealth of Independent States region; the digital payments market is changing rapidly in Kazakhstan, being driven by fintech innovations and public investments in payment technologies. In this article, we thoroughly discussed how launching of “Digital Tenge” is promoting financial inclusion and strengthening the monetary regulations across Kazakhstan. We took the case of Kazakhstan because it’s the first country from Central Asia which took the initiative of launching digital currency, and the National Bank of Kazakhstan has already announced that implementation of “Digital Tenge” would be completed in Kazakhstan by the end of 2025. The implementation of a “Digital Tenge” as a CBDC in Kazakhstan would expand the range of financial services being available to the nation. Having direct authority over the digital currency will empower the National Bank of Kazakhstan to adopt more efficient monetary policy, exerting influence over interest rates, money supply, and general economic stability. Furthermore, by providing digital financial services to marginalized communities, the digital Tenge would also help to solve the difficulties of financial inclusion in Kazakhstan. The article provides the possible policy routes for the governments of developing countries and the financial regulators about adopting CBDCs for promoting financial inclusion and to strengthen the monetary regulations.

Data-driven credit risk monitoring: Leveraging machine learning in risk management

This review explores the evolution of credit risk monitoring, tracing its journey from traditional qualitative assessments to the current integration of machine learning (ML). It highlights how the integration of ML and big data has introduced unprecedented capabilities for analyzing extensive datasets and detecting subtle patterns beyond human capacity. These advanced technologies enable more accurate, efficient and dynamic credit risk predictions through techniques such as random forests, gradient boosting and decision trees. The transformative potential of these methodologies in credit risk assessment was critically examined, addressing challenges such as legacy system integration, data quality and regulatory compliance. It emphasizes the importance of incorporating forward-looking macroeconomic indicators to comply with applicable financial reporting standards and regulatory requirements. Furthermore, it highlights the necessity of ensuring model transparency to maintain trust and compliance. By leveraging the power of big data and ML, the study shows that financial institutions can achieve more precise and proactive risk assessments, enhancing decision-making processes and mitigating potential risks. This comprehensive review provides valuable insights for stakeholders, guiding the implementation of advanced analytical techniques to improve credit risk management. Ultimately, it underscores the potential for a more robust, efficient and stable financial system through the strategic application of ML and big data analytics. Keywords: Credit Risk Management, Financial Services, Machine Learning, Big Data, Financial Transformation.

The deposit insurer’s capacity assessment in the context of impact on the financial system stability

The paper is devoted to the development of a scientific and methodological approach to determining the indicators of the deposit insurer's ability to influence the financial system stability. The scale and complexity of the tasks of ensuring the immediate and gradual reconstruction of Ukraine, high dynamics and proper quality of economic growth, the functioning of the economy in the conditions of war and a constant external threat actualize the issue of increasing domestic investment potential and intensifying the transformation of household savings into investments. It creates challenges for the deposit insurance system. In the research structural and logical analysis, induction, comparison, and relative values were used. The capacity of a deposit insurer in the context of its impact on financial stability should be considered in the context of operational, resource and payment capacity, each of which can be assessed by an appropriate indicator. The operational capacity reflects the ability of the deposit insurer to influence the situation in the deposit market and perform the function of deposit guaranteeing. The normative value of the operational capacity indicator in Ukraine is proposed to be set at the level which, in the conditions of the dynamic banking sector of Ukraine and the deposit market as its component, will allow considering the slightest deviations of the indicator (μ+2σ). The resource capacity reflects the coverage level of guaranteed deposits by the insurer's financial resources. The normative value of the resource capacity indicator in Ukraine is proposed to be set at the level of 0.8%, which meets the requirements of Directive 2014/49/EU of the European Parliament and of the Council. The payment capacity reflects the sufficiency of the deposit insurer's financial resources to pay compensation to depositors in the future. The normative value of the payment capacity indicator in Ukraine, by analogy with the indicator of the ratio between insurance technical reserves and the average value of insurance payments, is proposed to be set at least 1 in annual terms and not less than 12 in monthly terms.

The Effect of Macroprudential Policies on Financial Stability

Purpose: The general objective of the study was to investigate the effect of macroprudential policies on financial stability. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the effect of macroprudential policies on financial stability. Preliminary empirical review revealed that macroprudential policies were crucial in mitigating systemic risk and enhancing financial stability. It found that tailored approaches, considering specific economic conditions, were necessary for these policies to be effective. Coordination with other regulatory measures and continuous adaptation to evolving financial landscapes were also essential. The research highlighted the importance of robust regulatory institutions and effective enforcement mechanisms, particularly in emerging markets, to address challenges such as regulatory capture and limited institutional capacity. Overall, the study emphasized the need for a dynamic and adaptable macroprudential regulatory framework to maintain a stable and resilient financial system. Unique Contribution to Theory, Practice and Policy: The Financial Stability Hypothesis, Regulatory Capture Theory and Agency Theory may be used to anchor future studies on macroprudential policies on financial stability. The study recommended adopting a comprehensive macroprudential regulatory framework that integrated various tools to address systemic risk. It suggested enhancing theoretical models to understand the dynamic effects of these tools and their combined impact. Practical recommendations included building strong regulatory institutions, improving data collection, and enhancing international cooperation and information sharing. Policy recommendations emphasized clear and transparent frameworks, regular policy reviews, and considering potential unintended consequences. Engaging with stakeholders to address concerns and ensure balanced regulation was also advised to support sustainable economic growth while maintaining financial stability.

Regulatory compliance and efficiency in financial technologies: Challenges and innovations

This study explores the integration of Regulatory Technology (RegTech) within dynamic regulatory frameworks tailored to the financial services industry, addressing the critical challenge of aligning fast-paced technological innovations with more traditionally static regulatory environments. The core purpose of this research is to develop adaptable regulatory frameworks that support the implementation of advanced technological tools, ensuring compliance while enhancing the efficiency of regulatory supervision. Utilizing a blend of qualitative and quantitative research methods, this paper analyzes the effectiveness of proposed frameworks through real-world application within financial institutions. Results indicate that integrating RegTech solutions streamlines compliance processes, significantly reduces operational costs, and improves real-time risk management. Interpretations of these findings suggest that adaptive regulatory frameworks facilitate a more proactive regulatory approach capable of supporting continuous technological advancements without compromising the integrity or stability of financial systems. The conclusion drawn from this study advocates for a systematic reevaluation of current regulatory practices, emphasizing the need for regulations that are as dynamic and innovative as the technologies they aim to govern. This approach promises to safeguard against emerging risks and foster an environment conducive to technological advancement within the financial sector.

Analysis of Modern Challenges and Prospects: The Role of Education, Technology and Ideas in Shaping Society, Based on the Experience of the Ancient Roman Way of Life. Selfishness as a Way of Forming a Stable Financial System

Analysis of Modern Challenges and Prospects: The Role of Education, Technology and Ideas in Shaping Society, Based on the Experience of the Ancient Roman Way of Life. Selfishness as a Way of Forming a Stable Financial System

Financial stability and financial inclusion: a non-linear nexus

PurposeThe purposes of the paper are as follows: (1) Analysing the effect of financial inclusion on financial stability. (2) Examining whether financial inclusion non-linearily impacts financial stability. (3) Analysing whether the effect of financial inclusion varies across quantiles of financial stability. (4) Investigating whether dimensions of financial inclusion affect financial stability differently. (5) Examining whether the effect of financial inclusion on financial stability depends on competitiveness of the banking industry.Design/methodology/approachUsing panel data for 19 African countries for the period 2006–2022, we first developed multidimensional index of financial inclusion using two-stage indexing approach. Then employing panel semiparametric regression, we analyse the non-linear nexus between financial stability and financial inclusion. We further employ panel quantile regression to investigate the differential effect of financial inclusion at different quantiles of financial stability. We also employed two-stage least squires, and alternative measurement of financial stability as robustness checks.FindingsEmploying panel semiparametric regression, we demonstrate that the financial inclusion-stability nexus exhibits non-linearity: below (above) threshold level financial inclusion promotes (reduces) financial stability. Employing panel quantile regression, we find that the effect of financial inclusion increases at higher quantiles of financial stability. We further demonstrate that the effect of financial inclusion on financial stability is pronounced in a more competitive bank industry. The findings are robust to two-stage least squares estimation, and alternative measurement of financial stability. The results suggest that keeping a balance between achieving stable and inclusive financial system, and ensuring a competitive banking industry are essential to achieve bank soundness while promoting financial inclusion.Originality/valueThe study incrementally contributes to the literature related to the financial inclusion – stability nexus in four-fold. First, unlike studies that relied on some indicators of financial inclusion, we employed the effect of multidimensional financial inclusion on financial stability and further examined whether or not the effect varies across financial inclusion dimensions. Second, unlike studies that assumed a linear nexus between financial inclusion and stability, employing panel semiparametric regression, we investigated for non-linear relationship between the two. Employing a novel panel quantile estimation approach, we further scrutinised whether the effect of financial inclusion varies across quantiles of financial stability. Third, to our knowledge, our study is the first to examine the effect of multidimensional financial inclusion on bank soundness in Africa.HighlightsWe find a non-linear nexus between financial inclusion and financial stability.Financial inclusion below (above) threshold enhances (reduces) financial stability.The effect of financial inclusion is pronounced at higher quantiles of financial stability.The effect of financial inclusion on financial stability depends on bank competition.The results hold across different dimensions of financial inclusion.

Cryptocurrency: A new player or a new crisis in financial markets? —— Evolutionary analysis of association and risk spillover based on network science

In recent years, cryptocurrency has attracted widespread research attention. Against the backdrop of financial globalization, the high volatility of cryptocurrency prices may pose a threat to the stability of the entire financial system. To explore the potential association and transmission of financial risks between cryptocurrency and traditional financial assets, this paper constructs a complex network using the Granger causality method and the DY spillover method. Based on data from 24 categories of assets or index returns from different markets, networks of association and risk spillover between cryptocurrency market and traditional financial markets are established under different time periods, the study covers the period from January 2015 to November 2023. Analyzing the mutual influence between cryptocurrency and traditional financial markets from the perspective of complex networks, and evaluating the market positioning, risk characteristics, and investment potential of cryptocurrency. Research findings indicate that cryptocurrency possesses not only monetary characteristics but also functions as an investment tool, significantly impacting the stability of traditional financial markets. Furthermore, different types of cryptocurrencies vary in market functions, risk characteristics, and investment potentials. Future research could further explore the nonlinear and dynamic associations between cryptocurrency and traditional financial markets, as well as the micro mechanisms and behavioral factors within cryptocurrency markets.

BANKING SUPERVISION THROUGH SUPTECH

Victor Ababii E-mail: ababii.victor@gmail.com PhD student, Academy of Economic Studies of Moldova Head of Division, Reporting and Statistics Department, National Bank of Moldova Chișinău, Republic of Moldova https://orcid.org/0009-0008-9573-0204 Abstract: The banking system requires continuous development to enhance stability and integrity of the financial sector by implementing the latest technological tools. Maintaining a sustainable financial system, resilient to the shocks generated by the digital age and able to adapt and prevent emerging cyber risks remains a priority for supervisory institutions, in response to financial supervision and risk management framework through leveraging state-of-the-art technology for better governance and control. SupTech's primary objective is to promote inclusion in the financial sector by focusing on governance management and digital financing. It`s goal is to support the development of an inclusive financial system built on a robust digital infrastructure that enhances efficiency, transparency, and resilience. As technological innovations advance, financial services have to evolve, requiring financial institutions to adapt their surveillance technologies (SupTech) to safeguard citizen interests. Establishing both normative and technical SupTech frameworks helps supervisory authorities to eliminate gaps in internal processes, streamline workflows, fortify risk management, protect consumers, and maintain financial system stability amid ongoing market changes. Implementing a SupTech framework involves several stages: diagnosing the institution's current state, defining the purpose, vision, and objectives of SupTech, identifying key drivers and adaptive capabilities, evaluating necessary actions, and detailing steps for successful implementation. A thorough diagnosis of the supervisory institution involves IT solutions that facilitate continuous bank monitoring and offsite supervision. This diagnostic analysis includes: (1) Data products – identifying the position and trends to reach the level of AI-augment business intelligence tools; (2) Analytics – aiming to implement analytics tools perspectives; (3) Access controls - with the position on the agency - wide access; (4) Storage – oriented towards the use target of big data tools; (5) Validation and processing – aiming at the use of advanced data processing; (6) Collection – using the latest AI-based collection trends or alternative data sources. Configuring the SupTech framework involves transforming vulnerabilities into opportunities. For example, automating data flows can address deficiencies in manual data handling, risk assessment, and report generation. Implementing a data warehouse can solve challenges related to data consolidation, multiple analysis tools, system integration complexity, and data correlation. SupTech aims to provide supervisory authorities with reliable, high-quality data, aligning with best practices in governance and data management. This ensures consistency in the supervisory process and resilience to technological advancements. Digitizing surveillance processes is crucial for operational efficiency, with advanced analytics and business intelligence solutions enhancing surveillance information and decision-making. Keywords: SupTech, Fintech, Regtech, risks, data model. JEL classification: G21

Determinan stabilitas perbankan di Indonesia: Pendekatan makro dan mikro prudensial

Banks have a very important role in the economy. Not only as financial intermediaries. They have also played a big role in the effectiveness of monetary policy. Therefore, bank stability is very important. This research aims to determine the influence of micro-prudential variables represented by CAR, NPL, and LDR variables, as well as the influence of macro-prudential variables represented by the Rupiah exchange rate variable against USD, inflation, interest rates, and IHSG, on bank stability in Indonesia, both in the short and long term. Using the vector error correction model (VECM) analysis technique, this research provides results that microprudential variables and macroprudential variables are both proven to have an influence on banking stability in Indonesia. Micro-prudential indicators such as CAR and LDR have been proven to have a positive effect on banking stability. Meanwhile, NPLs have a negative effect on banking stability. Likewise for macro-prudential indicators: the exchange rate and inflation have a negative effect on financial system stability. Meanwhile, interest rates and IHSG have a positive effect on banking stability. The impact of surprises or shocks that occur in micro-prudential and macro-prudential variables on banking stability is permanent. The implication of the findings in this research is that Bank Indonesia and the Financial Services Authority have a very large role in achieving banking stability in Indonesia.

Development of the Country’s Sustainable Cyberspace Strategy to Ensure the Country’s National Security

This article is devoted to the assessment of the country’s sustainable cyberspace strategy by comparing the cyber security strategies of those countries that are economically developed and use advanced information and communication technologies. Based on the components of the National Cyber Security Index, a calculation was made for 10 countries, which made it possible to monitor the effectiveness of their cyber strategies and identify their shortcomings. The calculation is made for the years 2018 and 2021. During this period, no significant critical changes form abnormal indicators, but it is possible to reflect a particular trend. Application of the PROMETHEE method (I and II) and the formation of net flows, determination of importance and comparison of alternatives allowed to carry out an in-depth analysis of various aspects of cyber security, such as protection measures, response to cyber threats and general resistance to cyber-attacks. It is determined that Belgium and Lithuania are the most resistant to threats from cyber-attacks and in the fight against money laundering among the countries considered, as they are rapidly developing and implementing new measures. Their indicators increased by 0.1 values in 2021 compared to 2018. According to the calculations, Great Britain is the most conservative in implementing certain strategies, and its indicators remained at the level of 0-0.2 according to various criteria for the years studied. Most countries improve their indicators by a total of 0.2 values, which reflects their development. Ukraine tends to decrease some indicators by 0.1 value; some are at the same level. The regulatory framework’s introduction rate in the cyber security field increases. It shows that Ukraine has many rapidly changing risks, but is trying to achieve flexibility in responding to them. The research findings identify each country’s cybersecurity strengths and weaknesses, as well as potential risks and vulnerabilities. Thanks to this analysis, recommendations are made for developing and implementing effective cyber security strategies, both at the national and international levels. The study contributes to the understanding of the complexity of modern cyber threats. It emphasizes the need for continuous improvement and adaptation of protection measures to ensure the stability and security of financial and information systems in a global digital environment.

THE IMPACT OF PORTFOLIO DIVERSIFICATION ON THE PROFITABILITY OF LICENSED COMMERCIAL BANKS IN SRI LANKA

Licensed commercial banks are essential for ensuring the stability of any country's financial system. According to the 2022 annual report of the Central Bank of Sri Lanka (CBSL), licensed commercial banks collectively held fifty-five percent of total assets. Portfolio diversification stands as a fundamental strategy for mitigating risk and enhancing returns in the banking sector. Thus, this study aims to investigate the relationship between portfolio diversification and profitability within the realm of licensed commercial banks operating in Sri Lanka. The researcher set out to achieve two research objectives by examining the correlation between the diversification index and profitability. Return on Asset and Return on Equity were used as measurement criterion of profitability. The dependent variable, portfolio diversification, was measured using a diversification index derived from the Herfindahl-Hirschman Index (HHI). A sample of ten listed banks was selected out of twenty-four licensed commercial banks. Secondary data were collected from the annual reports of ten listed commercial banks for the period of 2012 – 2022. A fixed effect model was selected among panel data regression models after conducting the F test, LM test, and Hausman test. The study's findings indicate that the diversification index has an insignificant negative impact on ROA and a significant negative impact on ROE. The equity ratio of banks has a negative, insignificant impact on both ROA and ROE. Bank size has a significant and negative impact on both ROA and ROE. Therefore, the findings of the study demonstrate that diversification negatively impacts both ROA and ROE. The findings from this study hold significant implications for both banking institutions and policymakers in Sri Lanka. Understanding the relationship between portfolio diversification and profitability can inform strategic decision-making within banks, guiding them towards more effective risk management practices and resource allocation strategies. In essence, this study contributes to the existing literature by offering empirical evidence and theoretical insights into the impact of portfolio diversification on the profitability of licensed commercial banks in Sri Lanka.

THE ROLE OF BOARD STRUCTURES IN INCREASING BANK ACCOUNTABILITY: GLOBAL EXPERIENCE

The governance of banking institutions plays a critical role in the stability and integrity of financial systems globally. The structure of the board of directors significantly influences how banks manage risks, comply with regulations, and align operations with the interests of shareholders and other stakeholders. Understanding how board structures differ across regulatory and cultural landscapes is crucial for enhancing bank accountability and performance. This article aims to critically evaluate how various board structures impact the accountability of banking institutions across different global contexts. The goal is to identify effective governance practices that can be adapted to improve bank accountability worldwide. Employing a comparative case study methodology, this research analyzes board structures in banking institutions across continents including North America, Europe, Asia-Pacific, the Middle East, Africa, and Latin America. Data from primary sources like interviews and secondary sources such as regulatory documents and academic articles are synthesized to assess the impact of board configurations on governance and accountability. The analysis reveals that effective board structures often include a high proportion of independent directors, robust audit and risk committees, and a commitment to diversity, which correlate with enhanced accountability and financial performance. However, variations exist due to cultural, economic, and regulatory differences that influence board effectiveness across regions. The findings suggest that while there is a global trend towards standardizing governance practices, local adaptations remain essential. The study recommends that banks and regulators focus on enhancing board independence, diversifying board composition, and strengthening risk oversight to improve governance frameworks. Future governance models should incorporate a dynamic approach to adapt to technological advancements, economic shifts, and societal expectations, ensuring that banking institutions can effectively meet emerging challenges and opportunities.

The impact of digital finance and financial inclusion on banking stability: International evidence

Research background: Achieving a jointly stable and inclusive financial system represents an important pillar of the call for action among Sustainable Development Goals. Considerable attention from previous research has been given to traditional financial inclusion (FI) and its implications on financial stability and overall development, but the findings are mixed. Furthermore, there is limited evidence related to the implications of digital financial inclusion on banking system stability. Therefore, the present study tends to address two main research questions, as follows: Can traditional financial inclusion protect banking stability? Can digital finance inclusion become a new driving force to promote banking stability? Purpose of the article: The paper aims to assess the influence of both traditional and digital financial inclusiveness on banking stability, using quantile regression, across a panel of 81 countries. We also examine the potential transmission channels through which financial inclusiveness influences banking stability. Methods: We construct three different financial inclusion indices, which capture the degree of access and usage of financial services, based on a three-stage Principal Component Analysis. Next, based on quantile analysis, we test the role of these financial inclusion indices in shaping banking stability. Findings & value added: We provide international evidence on the non-linear relationship between traditional and digital FI and banking stability, respectively. Our empirical findings suggest that FI indices are negatively related to banking stability until a certain threshold, after which, increases in financial inclusiveness have a positive effect on banking stability. The magnitude of the impact is more sizeable for low-range quantiles, meaning that the effect of digital inclusiveness is more pronounced in countries with excessive risk-taking tendencies. We find support for operational efficiency transmission channels and uncover new evidence on the association between digital FI and banking stability.

FINANCIAL INCLUSION: DOES IT PLAY AN IMPORTANT ROLE IN A COUNTRY? REVIEW OF THE LITERATURE

Financial Inclusion (FI) is a key pillar of financial development and inclusive growth in a country. It plays an immense role and is showing an evolving nature around the world. Most research now investigates this concept mainly due to its supportive nature for a country’s development perspectives. Many countries make investments and pay considerable attention to initiating FI agendas and national FI strategies to improve the level of FI in their countries. Economic empowerment through formal financial sector activities, poverty reduction, lowering income inequality, enhancing savings and investments, and improving productivity are some of the contributory factors of FI. Reviewing nearly 50 past literature, this article attempts to develop new literature regarding the importance of FI for a country. Furthermore, the study examines FI definitions and barriers to FI. The findings of the literature reveal that FI directly supports the achievement of a country's growth objectives. The main contributory factors of FI are employment creation, reducing income inequality and poverty, smoothing the financial sector while maintaining financial system stability, and working with technological developments towards financial activities. However, there are several important bottlenecks such as lack of income, difficult access points due to long distance, barriers to digital finance and payments, and lack of financial knowledge. Affordable financial sector products and services for everyone tend to improve the level of FI. The outcome of the research provides valuable insight for policymakers and responsible authorities to take proactive actions to reach the FI targets by eliminating barriers to FI. In this regard, higher participation of the population towards the formal financial sector in a country is an important element, and actions should be arranged for the gradual transformation of people to achieve this target. The findings of this study further provide avenues for future studies and policy-level decisions, highlighting the fact that FI is an important concept for creating a financially inclusive country.

Financial Technology for the Sustainable Development

The Sustainable Development Goals (SDGs) are the critical goals for every country in the world. A stable global financial system is needed these days to satisfy its duty to boost private capital mobilization to achieve sustainable development and steady economic growth. However, several obstacles limiting such financial mobilization have been identified by scholars, practitioners, and standard setters. In recent times digital transformation and advancement, specifically in the finance sector, include a wide range of technological developments, and applications such as blockchain, the Internet of things, big data, and artificial intelligence are promised to enhance performance in the financial sector. The potential of digital applications in the finance sector to resolve critical obstacles in financing for inclusive and sustainable growth becomes evident. Financial inclusion is indisputably one of the most significant processes towards achieving the Sustainable Development Goals and FinTech is one of the best methods for these goals to be accomplished. The Fintech industry in India is rapidly expanding and the purpose of this paper is to discuss issues such as fintech drivers, shortcomings of traditional financial services, and the role of technological advancement. The paper also addresses issues relating to fintech investment and disturbance. Financial technology faces challenges such as investment management, customer management, and regulation. The paper examines the evolution of fintech in the banking sector over time. But as we are aware a country like India lacks proper infrastructure and management and the objectives of banking can’t not be attained easily. All the issues and challenges faced by the government and financial institutions have been discussed in this paper along with the important and different strategies adopted by them. The study is based on secondary data and a literature review. India has surpassed the global fintech adoption rate to promote financial transactions with the help of technology. Demonetisation and implementation of the GST (goods and services tax) have also played a major role in the adoption of financial technologies among the masses. Also, the announcement made by the government in 2017 to decrease the amount of paper currency in circulation has elevated its awareness. Blockchain is another financial technology that is being used in the industry. Out of the total “fintech” technologies, blockchain was developed for finance which is directly connected to financial institutions. The main aim of Blockchain in financial services is decentralization where we do not trust a third party to execute transactions. It includes services such as transferring funds between banks and companies. While trading in capital markets, innovative electronic trading platforms facilitate online trade and real-time transfers. Trading networks allow investors to observe the trading behavior of their peers and expert traders and to follow their investment strategies on currency exchange and capital markets. These platforms require either very little or no knowledge about financial markets. An automated financial advisor provides financial advice or online investment management with moderate minimal human intervention.

ტრიფინის პარადოქსი ოცდამეერთე საუკუნეში

This article presents a fresh perspective on the Triffin Paradox, a concept introduced by economist Robert Triffin in the mid-20th century that continues to have a significant impact on global financial systems and policies. Despite the passage of time and the evolution of the economy, the fundamental principles of the Triffin Paradox remain relevant in today's financial discussions. The paper provides a thorough analysis of the ongoing relevance of the Triffin Paradox in the modern global economy. It draws upon historical context, theoretical frameworks, and empirical evidence to shed light on how the paradox continues to manifest itself in the current financial landscape. Specifically, it explores how the dominance of the U.S. dollar as the world's primary reserve currency perpetuates structural imbalances and systemic vulnerabilities, echoing the concerns raised by Triffin. Moreover, the paper delves into the implications of the Triffin Paradox for various stakeholders, including policymakers and central banks. It examines the challenges posed by the pursuit of domestic monetary policy objectives in an interconnected world, where the stability of the global financial system relies heavily on the stability of the reserve currency issuer. Additionally, the paper explores potential strategies for mitigating the risks associated with the Triffin Paradox and fostering a more sustainable international monetary order. By integrating insights from economics, finance, and international relations, this paper contributes to a deeper understanding of the Triffin Paradox and its enduring significance in shaping contemporary financial dynamics. It emphasizes the need for policymakers and stakeholders to address the inherent structural tensions in the global monetary system, with the goal of promoting financial stability, economic resilience, and inclusive prosperity worldwide.

The Influence of Equity Incentive on Corporate Debt Default Risk

As researchers show more interest in debt default risk, work on influencing factors of this risk is put a particular emphasis. Because risk preference of management and corporate financial condition cannot be explained by their traits perfectly, this paper has argued association between equity and debt default risk. Selecting 323 listed enterprises as sample, the study uses descriptive analysis and multiple linear regression analysis to determine the relationship of these two indicators. According to the analysis results, large proportion of equity incentives to the total share capital has passive impact on financial condition. It brings heavy credit burden to companies while large proportion of managerial ownership can decrease debt default risk and promote the stability of financial system. This paper strengthens the idea that there is reasonable and significant association between equity incentive and debt default risk. It also proves that different measuring factors of equity incentive have different directions effects on corporate debt default risk.