Stimulus Package Research Articles

The Impact of COVID -19 to the Malaysian Social-Economic and Islamic Banks, and the Role of Maqasid Shariah

The COVID-19 outbreak is a global health issue that has hit countries around the globe. This pandemic has further been detrimental to the world’s socio-economies. The many restrictions implemented to curb the spread of the virus, such as the Movement Control Order (MCO), have resulted in socio-economic constraints that harm the commercial activities of individual businesses as well as corporate organisations. The MCO has also been alleged to negatively affect people’s mental health due to its impact on decreasing household income and exacerbating poverty. The banking sector is not immune to the pandemic’s effect, as reflected in its financial performance. As a result, the Malaysian government responded by announcing stimulus packages for businesses and retail sectors. At the same time, the financial institution through the Bank Negara Malaysia (BNM) remains committed to helping households and businesses. Thus, this paper aims to discuss the impact of COVID-19 on the performance of Islamic banking institutions from a socio-economic lens by comparing the first and second-quarter profits of the years 2019 and 2020. This study also looks into the roles of Maqasid Shariah and its application during the pandemic. Content analysis was applied as a tool for data collection from related websites, news and quarterly financial reports to analyse the performance of the banks. Analysis of the quarterly financial reports found that bank profit demonstrated a steep decline during the second quarter of the said period, constant with the middle of the MCO time frame. The study also found that the analysed banks reported non-financial performance reflected by Maqasid Shariah measures. This finding indicates that Islamic banks are responding to the need of society to ease the burden of adverse financial impacts on customers. Therefore, this research implicates that various parties have played their role and continue to do so in mitigating the consequences of COVID-19. This role emphasises the value of achieving Maqasid Shariah to maintain societal wellbeing and in helping the country implement sustainable growth plans. Accordingly, this study can function as a guide and serve as a lesson to all parties in reducing the effect of the current pandemic and any other shocks, including natural disasters and the financial and economic outcomes of the recession.

COVID-19 and GCC stock market performance: an analysis of the boon (financial stimulus package) and curse (oil price plunge) effects

PurposeThis study aims to investigate the reaction (in terms of returns and volatility) of Gulf Cooperation Council (GCC) country-wise stock markets (both conventional and Islamic) in response to the surge of COVID-19 cases, with special reference to the announcement of financial stimulus packages in each country and the recent global oil price plunge. Further, the study also examines the impact of COVID-19 cases on the stock market returns of each GCC country and the continuous dynamics of correlation between COVID-19 cases and GCC stock markets.Design/methodology/approachThis study uses an exponential generalized auto regressive conditional heteroskedasticity model and continuous wavelet coherence to estimate the stock market volatility and co-movement between COVID-19 cases and stock returns.FindingsEmpirical findings indicate an adverse reaction (negative returns and high volatility) during the period examined, with the stimulus package resulting in a positive transformation of returns in each country-level stock market as well as the regional stock index. Further, no evidence of an adverse effect of the oil price plunge is identified. All findings are identical between both conventional and Islamic stock indices.Originality/valueWhile ample research has been conducted on the impact and dynamics of the pandemic on stock markets, little has addressed the areas of financial stimulus packages and the oil price plunge. The findings of this study show that further research needs to be conducted to elucidate the ways in which effective financial stimulus packages can be formulated in the GCC region to mitigate the adverse effects of COVID-19 for economies without causing major financial deficits, as well as to find strategies to diversify economies away from the oil curse.

COVID-19, Green Deal and recovery plan permanently change emissions and prices in EU ETS Phase IV

The EU emissions trading system’s (ETS) invalidation rule implies that shocks and overlapping policies can change cumulative carbon emissions. This paper explains these mechanisms and simulates the effect of COVID-19, the European Green Deal, and the recovery stimulus package on cumulative EU ETS emissions and allowance prices. Our results indicate that the negative demand shock of the pandemic should have a limited effect on allowance prices and rather translates into lower cumulative carbon emissions. Aligning EU ETS with the 2030 reduction target of −55% might increase allowance prices to 45–94 €/ton CO2 today and reduce cumulative carbon emissions to 14.2–18.3 GtCO2 compared to 23.5–33.1 GtCO2 under a −40% 2030 reduction target. Our results crucially depend on when the waterbed will be sealed again, which is an endogenous market outcome, driven by the EU ETS design, shocks and overlapping climate policies such as the recovery plan.

Government dissemination of epidemic information as a policy instrument during COVID-19 pandemic: Evidence from Chinese cities

COVID-19 has given rise to a surge in the number of policy instruments used to deal with the pandemic at different levels of governments globally. While much attention has been placed on travel bans, lockdown, social distancing, and economic stimulus packages, government dissemination of epidemic information as a policy instrument has received less attention. Based on 14,637 news items collected from the portals of 79 municipal governments in China, this study aims to 1) conduct a content analysis of news items and construct three key attributes of governments' practices of epidemic information dissemination, namely, comprehensiveness, responsiveness, and the protection of privacy, and 2) study the patterns and determinants of the dissemination of epidemic information. Our results show that these cities vary substantially in how they disseminate statistical data and information on individual cases of COVID-19 infections within their localities, which are shaped by government performance in open data, severity of the pandemic, cities' administrative level, population, and health sector capacities. The findings generate theoretical and policy implications for government dissemination of epidemic information.

The Impact of Government Stimulus Packages Towards Business Survival During Covid-19 Among Small and Medium Enterprises in Sabah

he purpose of this study is to examine the impact of government fiscal stimulus packages amounting RM100 billion for SMEs during the first wave of covid-19 to provide greater assistance to SMEs in sustaining business operations and preserving jobs, as well as to support growth in current economic conditions. This paper analyses the business survival during Covid-19 by examining two determinants, namely government grants and financial assistance. Total number of 150 questionnaires distributed and 120 were returned. The respondents were selected from SMEs directory database and those who have been participated in SME@University program. The data were collected and analysed using Statistical Package for the Social Science (SPSS 26) and SmartPLS to analyse, and hypothesis testing. The study confirms that there are significant and positive impact between government stimulus packages towards business survival among SMEs in Sabah. The findings of this study have useful implication to help strengthen the government business survival approaches to support SMEs in Sabah during the pandemic outbreak. This paper, apart from its contribution to the entrepreneurship research, has useful implications for government in managing Covid-19 stimulus packages to SMEs in Sabah.

Coping with Corona Economic Crisis: The Islamic Economy and the Knowledge Economy

This research aims at identifying the economy and its strength in the face of natural disasters, showing how the economy of the countries of the world was affected by the corona pandemic, addressing the policies that have been applied to fade and restore its effects, displaying the efforts of financial institutions to confront it, and proposing direct and indirect solutions through the Islamic economy and the knowledge economy. The research will also show that the Corona crisis is not a pure evil or even a real economic deadly one, but rather the procedures, the wrong application of rules and the fragility of structures are the causes of the different crises. And, the research proposes to use the vital empowerment of technology and new economies such as sharing and behavioral economies and also to address them in study, action and application. Keywords : Pandemic, COVID-19; economic crises; Islamic economy; Islamic finance, sharing economy, stimulus packages. DOI: 10.7176/EJBM/14-6-03 Publication date: March 31 st 2022

COVID-19 and Job Loss: Implications for Peace and Security in Nigeria

Job insecurity and abrupt massive retrenchment of employees in virtually all sectors of Nigerian economy in the wake of coronavirus pandemic has plunged the nations into a breeding ground for youths crisis and overal insecurity of lives and properties. As these threaten the peace and security of the land leading to dwindling fortune of Nigerian economy, it therefore calls for concerns among peace and conflict management experts to prover lasting solution to these menaces. Hence, this paper is aimed at examining the effects of the novel COVID-19 pandemic on job losses as it affects the peace and security of Nigeria. Secondary method of data collection was used, in which reports, journals and internet based articles were reviewed and content analyzed. The paper reviewed both the natural origin theory and conspiracy theory of Coronavirus. Based on the literature reviewed, the paper revealed that the flare of the novel coronavirus in Nigeria has posed a serious threat to overal peace and security in the wake of lockdown and closure of businesses which by implication has forced numerous employees of about 42 per cent to loose their jobs in various sectors of Nigerian economy, and nearly 40 million Nigerians were projected to lose their jobs by the end of the year 2020-2021, arising from the fall in demand for and supply of goods and services, due to lockdowns, restriction of movement and social distancing measures among others were put in place to curb the spread of COVID-19. The paper also revealed that there was a ban on social and religious gatherings, social distancing, wearing of nose masks, lockdown and imposition of curfews, travel bans, stay at home policy among others, as measures to stop or reduce the spread of COVID -19 in Nigeria. To cushion the effects of coronavirus on the economy of Nigeria, government provided both monentary and fiscal palliative measures for the most vulnerables, though the stimulus packages were commendable but ineffective for lack of appropriate parameters for its implementation. Arising from the above, it was recommended that for peace to rein, employees should avoid putting all eggs in one basket, and for unforeseen contingency such as this novel pandemic, employees should have extra source of income by going into side businesses like blogging, rentals, online advertisement, investment in stocks with high returns, writing e-books, investment in real estate, small-scale poultry or fish farming among others. Keywords: COVID-19, Job Losses, Peace, Security, Nigeria DOI: 10.7176/RHSS/12-5-03 Publication date: March 31 st 2022

Has Germany’s temporary VAT rates cut as part of the COVID-19 fiscal stimulus boosted growth?

On 3 June 2020, the German government announced a EUR 130 billion fiscal stimulus package to stimulate market demand and jumpstart the economy in the wake of the COVID-19 pandemic lockdown in the spring of 2020. The most prominent measure of this package is an unconventional fiscal policy in the form of a temporary VAT rates cut for six months, from 1 July to 31 December 2020. Employing a dynamic stochastic general equilibrium (DSGE) framework, we study the efficiency of the VAT tax rates cut for ameliorating the consequences of the pandemic recession. The simulation of the calibrated DSGE model yields a tax policy-induced real GDP increase of about 0.3% points for 2020.

Market segmentation and spending multipliers

When workers are sluggish to change sectors and government demand is concentrated on few sectors, an increase in government spending has limited impact on production in other sectors and multipliers are higher. Compared to a one-sector model, a model calibrated to the 404 sectors of the U.S. economy raises multipliers by 0.5 when preferences feature no wealth effects on labor supply and by more if wealth effects are present. Relative price movements observed in response to spending shocks are consistent with the model’s mechanism. The model suggests that multipliers depend on the composition of stimulus packages.

IS THERE ANY DAY-OF-THE-WEEK EFFECT AMID THE COVID-19 PANIC IN THE MALAYSIAN STOCK MARKET?

Using daily data from January 2, 2020 to May 31, 2021, this study empirically examines the day-of-the-week effect in the Malaysian stock market during the coronavirus disease 2019 (COVID-19) outbreak. We also test the impact of the lockdown policy and market sentiment index on the stock market. We resort to ordinary least square regression with generalized autoregressive conditional heteroscedasticity specification. The finding shows that the day-of-the-week effect persisted during the COVID-19 outbreak. Monday’s returns on all selected indices were negative except for the access, certainty, efficiency market. The positive impact of the lockdown policy on Bursa Malaysia is identified after accounting for the day-of-the-week effect. This is due to the market expectation that the lockdown policy can stop the spread of COVID-19, which will lead to recovery. Further analysis uncovers that smaller capitalization stocks benefited more from the government lockdown policy announcements, which come with various stimulus packages that are more favorable to smaller companies. We also find that the United States market sentiment index negatively impacts all indices. This study unlocks and validates the contribution on calendar anomalies’ response during the COVID-19 period for Malaysia. The investment opportunity is available even during the pandemic era, leading to sustainable profit in the long term.

Policy Implications to Mitigate Economic Impact of Covid-19 and Enhance Healthcare Services during Pandemic in Saudi Arabia

In this recent time COVID-19 effect is becoming as a serious challenge for all human beings across the world. Saudi Arabia has secured 26th rank as health care service provider among all the nations globally. This study has included policy implications to improve health care services and economic activities in Saudi Arabia amid COVID-19 pandemic situation. Along with this, various effective initiatives taken by the government also has been mentioned in this study to identify its effectiveness. The effect of COVID-19 pandemic on the economic condition and the healthcare systems of Saudi Arabia is described briefly. Saudi government has invested USD 31.9 billion stimulus package to mitigate economic challenges amid the pandemic situation. Suitable investments are also made to incorporate digital tools in health care services. SAR 2 billion has been allocated to support 1000 small and medium health sectors, SAR 120 billion has been allocated to overcome financial crisis and SAR 9 billion is allocated to protect employment in private sector units.

COVID-19 pandemic and risk dynamics of financial markets in G7 countries

PurposeThe purpose of this study is twofold: to examine the effects of the COVID-19 pandemic on the risk dynamics of stock and bond markets in G7 countries; and to examine if the stock-bond risk dynamics can be linked to government measures to contain the pandemic.Design/methodology/approachTo examine the pandemic impact on the risk dynamics of the bond and stock markets, this study chooses G7 countries for their efficient financial market properties. This study uses standard generalized autoregressive conditional heteroskedasticity (GARCH) (1,1) and exponential GARCH (1,1) models to determine the most volatile and sensitive market, most persistent market during the crisis and the leverage effect between stock and bond markets. This study then uses a panel study to investigate whether this volatility in stock and bond markets is affected by the COVID-19 cases and various government responses (fiscal stimulus packages, monetary policy, emergency investment in health care and vaccine investment).FindingsThe findings of the study confirm that the bad news of the pandemic is causing higher volatility than good news for all seven stock markets. Canadian stock and bond markets are the most volatile, and Italian bond and stock markets are the most sensitive G7 countries. Japan has shown the highest persistence, and the stock market exhibits higher leverage than the bond market. Fiscal stimulus packages are helping to reduce bond market volatility, but none of these measures are effective in the stock market.Research limitations/implicationsThe pandemic is still spreading, and the rate at which it spreads wildly will always pose a limitation to any attempt to examine its full effect.Practical implicationsInvestigation of market volatility will help policymakers and market players formulate the best strategies to overcome and exit the crisis and plan post-pandemic solutions. It provides valuable insights for investors to rebalance their portfolios during highly volatile markets while preserving their risk appetite and investment objectives.Originality/valueThe paper provides evidence on the impact of the pandemic-induced crisis and the respective government responses on the volatility of competing capital markets (stock and bond) in countries that are considered most efficient in reflecting news.

Which States Support Which Ones? Predicting Federal Flow Through From the Feds to the States

While politicians in Washington, who have already authorized trillions of funds for businesses in the past 3 years, have been arguing over allocating funds for state and local governments, there have been a number of suggestions that stimulus packages potentially benefit certain states at the expense to others. The arguments primarily appear to come down to politics – “red,” Republican-led states versus “blue,” Democratically-led states. The insinuation is that that the “blue” states are more poorly run than the red states and that the better run “red” states should not be “bailing out” poorly run “blue” states. A linear regression model was developed that perfectly predicted both federal fund recipients and “red” or “blue” designations. Correlation and principal component analysis was run to determine the factors that were the best predictors. The truth appears to be as Governor Cuomo states, “blue” states are better run, better funded and are more productive than “red” states when measuring gross domestic product, income and net tax revenue per person. Educational funding was a major reason “blue” states were ahead of their “red” neighbors.

Fiscal stimulus packages to COVID-19: The role of informality.

In this paper, we use a novel cross‐country dataset to investigate the relationship between the prevalence of the shadow economy and fiscal policy responses to the economic crisis induced by the pandemic. The finding is that countries with a relatively larger shadow economy before the pandemic have adopted a smaller fiscal policy package. The results are robust to different econometric specifications, including an instrumental variable estimation. This reinforces the wider literature that countries (especially those with larger shadow economies) generally follow a procyclical policy as opposed to the optimal and countercyclical one.

Effects of COVID-19 on Global Financial Markets: Evidence from Qualitative Research for Developed and Developing Economies.

The research aims to prioritize the pandemic’s impact on the financial markets of developed and developing economies using a multi-criteria decision-making approach. The results revealed that COVID-19’s pandemic effects on financial markets differ between developed and developing nations. COVID-19 pandemic affects developed countries’ financial markets more through supply reduction, demand reduction, and economic instability. Regarding developing nations, confidence and expectations, changes in consumption patterns, and the bandwagon effect are the three most significant impacts of COVID-19 pandemic on financial markets. The best decisions to lower the effect of COVID-19 pandemic on developed nations’ financial markets are the declaration of the stimulus package and support of small-and-medium-sized enterprises. Contrastingly, in developing countries, support for vulnerable households and declaration of the stimulus package are the best decisions to combat COVID-19’s negative impact on their financial markets. As practical policy implications for lowering COVID-19’s negative impact on financial markets, the promotion of new financing instruments, reconstruction of the relationship between public and private sectors, and support of vulnerable households and enterprises are highly recommended.

Socio-Economic Effects of COVID-19 Pandemic on Health Status in Ekiti and Ondo States, Nigeria

Introduction: The coronavirus pandemic (COVID-19) has become a serious threat to human existence and at the same time causing a lot of traumatic socio-economic losses to people and nations globally. To this effect, studies have examined the impact of the pandemic in Nigeria, but not much has been said on the socio-economic effects of the pandemic on health status. This research work therefore, examines the socio-economic effects of COVD-19 pandemic on health status of people in Ekiti and Ondo States in Nigeria. Data from 663 respondents was obtained from the cross-section of adults age 18-65, using a self-structured open and close-ended questionnaire. Variables such as health status, occupation, income, education among others were used.
 Methods: Ordered Probit model was specified to investigate the effect of the pandemic on health status and the maximum likelihood estimation (MLE) was used as the estimation technique. Also, descriptive statistics was conducted to examine the demographic features of the respondents.
 Results and Findings: The results show that COVID-19 pandemic has both negative and positive socio-economic effects on health status among the majority of the participants. A decrease in school closure and job loss/ business closure makes respondents more likely to be in good health with 6.562% and 7.194% probabilities respectively. However, the probability that a respondent will be in a good health as a result of a positive change in income is 0.463%. This indicates that a positive change in income has a positive effect on health status, while school closure and job loss/business closure during COVID-19 have negative effects on health status. The study recommends that welfare benefits, financial incentives, stimulus package to both individuals and firms, while remote learning strategies are implemented to rebalance and boost people’s welfare in both states.

COVID‐19, trade and trade policy

COVID‐19, trade and trade policy

Cashew Apples in Ghana: Stakeholders' Knowledge, Perception, and Utilization.

Cashew (Anacardium occidentale), a crop projecting Ghana internationally beside cocoa, is usually cultivated for its nut, for both local and international markets. The cashew apple is underutilized in many African countries. This study is aimed at determining the knowledge, perception, and utilization of cashew apples in Ghana among stakeholders in the cashew value chain. Results from the study showed that the cashew industry consisted of farmers (89.1%), nut buyers (6.8%), extension officers (3.5%), and processors (0.6%) with uneven distribution of males (66.2%) and females (33.8%). Cashew apple utilization was low (<10%), though 84.37% had in-depth knowledge on the health benefits and value-added products made from the apples. Cashew apple is mainly utilized as fresh fruits or juice, with minor uses as an ingredient in food preparation, animal feed formulation, and production of mushroom, weedicide, ethanol, and manure. The cashew apple processors identified high cost of processing equipment, perishability of apples, lack of capital, market, technical know-how, and government support as challenges. Based on these findings, education of the stakeholders on value addition or processing of the apples at household and industrial levels and provision of stimulus packages to private processors are recommended to maximize cashew apple utilization in Ghana.

Machine Learning Models for Predicting Financially Vigilant Low-Income Households

The COVID-19 pandemic has adversely affected households&#x2019; lives in terms of social and economic factors across the world. The Malaysian government has devised a number of stimulus packages to combat the pandemic&#x2019;s effects. Stimulus packages would be insufficient to alleviate household financial burdens if they did not target those most affected by lockdowns. As a result, assessing household financial vigilance in the case of crisis like the COVID-19 pandemic is crucial. This study aimed to develop machine learning models for predicting and profiling financially vigilant households. The Special Survey on the Economic Effects of Covid-19 and Individual Round 1 provided secondary data for this study. As a research methodology, a cross-industry standard process for data mining is followed. Five machine learning algorithms were used to build predictive models. Among all, Gradient Boosted Tree was identified as the best predictive model based on F-score measure. The findings showed machine learning approach can provide a robust model to predict households&#x2019; financial vigilances, and this information might be used to build appropriate and effective economic stimulus packages in the future. Researchers, academics and policymakers in the field of household finance can use these recommendations to help them leverage machine learning.

Simulating the Impact of the Economic Sustainability Plan on the Performance of the Nigerian Economy in the Post COVID-19 Era

This study examines the impact of Economic Sustainability Plan (ESP) on the performance of the Nigerian economy as a national economic resilient policy in the post COVID-19 era within the framework of a macro-econometric model. The study is hinged on the Keynesian general theory of employment, income and interest. Annual time series data spanning from 1970 to 2019 for within sample forecast, and a six-year out-of-sample forecast spanning from 2020 to 2025 were used. The policy scenario of 21.3 percent increase in government expenditure under the ESP as a stimulus package was simulated and the findings showed that increase in government expenditure under the ESP in critical areas would bring about significant impact on the macroeconomic performance of the Nigerian economy, especially on employment, inflation, economic growth and balance of payment in the post COVID-19 era. Emergent from these findings, the study recommended among others that the government should mobilize resources to finance the ESP in order to stimulate the economy in the post COVID-19 era by ensuring prudential fiscal management of resources; and the Central Bank of Nigeria (CBN) should ensure that financial institutions saddled with the responsibility of disbursement of intervention funds reduce interest rate from 9 percent to 5 percent as reflected in the ESP.