Variable Interest Rate Research Articles

Credit Risk Influence on Insurance Performance During Credit Restructuring Policy

This study analyzes the relationship between banking credit risk and general insurance performance during the banking credit restructuring policy period in Indonesia from March 2020 to March 2024. Credit, Nonperforming loans (NPL), and credit interest rates variables are used as proxies for banking risk. General insurance performance is proxied by credit premium, credit claim, and profit before tax. Through multiple regression analysis using Ordinary Least Squares (OLS), this study shows that there is a significant effect of banking risk on general insurance performance. The relationship between banking and insurance can be a complementary or substitution relationship, depending on how important risk transfer and capital allocation. The result provides useful insights to achieve co-evolution of banking and insurance in maintaining financial system stability. Keywords: banking credit risk; credit restructuring policy; general insurance performance

A System Dynamics Approach to Concession Period Optimization in Public-Private Partnerships (PPPs)

The success of public-private partnerships (PPPs) often depends on the duration of a project’s concession period. Although experts have invested considerable efforts into optimizing these periods, few have examined the complex, interactive effects of project-specific risks and bankability criteria on concession durations. To overcome this gap, this study develops a System Dynamics (SD) model that allows decision-makers to estimate the optimal concession period terms based on causal interactions between a project’s main risks and bankability. The model is applied using data from recent PPPs in Italy. The results show variable interest rates, inflation, operational expenditures (OPEX), and debt repayment mechanisms all uniquely impact the concession period.

Home Financing Analysis Taking Inflation and Variable Interest Rates into Account With Ordinary Annuities

This study aims to determine the effect of variable interest rates and inflation on the credit system, namely Home Ownership Credit (KPR) using the ordinary annuity approach. This KPR can be influenced by several factors, especially the variable interest rate and inflation factors that affect the total monthly installments that must be paid by customers. In this study, the ordinary annuity approach is used to determine the KPR installment payments by taking into account fluctuations in variable interest rates and inflation. By looking at interest rate and inflation data from year to year. The results of this study indicate that inflation affects people's purchasing power while interest rates affect the amount of installment fees that must be paid. It is hoped that this study can help customers to understand the risks that can occur regarding KPR facilities in economic dynamics.

CAUSES OF THE GLOBAL FINANCIAL CRISIS: POTENTIAL IMPACTS ON THE WORLD AND TURKISH ECONOMY

The global-scale crisis that quickly affected the entire world, originating in the United States, resulted in a dramatic increase in housing prices due to the widespread issuance of home (mortgage) loans to the public without much consideration for repayment capacity, fueled by the surge in demand. Subsequently, problems arose uncontrollably, especially for individuals with low incomes using variable interest rate mortgage loans, as the Federal Reserve (FED) also increased interest rates. The difficulties stemmed from the inability of these individuals to repay the loans, particularly those with variable interest rates, leading to what can be called "subprime mortgages." The securitization of these troubled loans and their grounding in derivative financial instruments, coupled with numerous banks transferring these contracts to each other, resulted in troubled stocks and derivative contracts experiencing significant global crisis due to excessive value losses. As the banking sector forms the cornerstone of financial markets and economies worldwide, the crisis that began in the banking sector rapidly and negatively impacted not only global banks but also developing and even developed country economies through a domino effect. This study aims to analyze the effects of the global crisis on the world countries and Turkey, along with the causes and consequences, based on the U.S. mortgage market.

Financial management skills as enabling factor in project performance of small business in the construction industry in Gauteng Province: theoretical and practical implications

The study significantly enhances the current literature by highlighting the importance of financial management skills in the success of MSMEs, especially in the context of small construction firms functioning under unstable and uncertain economic conditions. It offers insights on how effective financial management can alleviate the negative impacts of economic uncertainty, including variable interest rates and regulatory modifications, which were intensified by the COVID-19 pandemic. This study concentrates on BCO Construction in Johannesburg, examining the distinct financial issues encountered by small construction firms and the potential solutions through improved financial management strategies. The research delineates numerous vital financial management competencies needed for project accomplishment. This encompasses the capacity to manage liquidity efficiently, sustain profitability, and utilize financial instruments such as Net Present Value (NPV) and Earned Value (EV) management. It emphasizes the significance of abilities in managing financial leverage, which can facilitate the attainment of project objectives within budgetary and temporal limitations. The findings indicate that the absence of trained financial personnel, ineffective payment systems, and liquidity issues are substantial obstacles for BCO Construction. Consequently, it is advisable to tackle these difficulties through specialized financial literacy and management training to enhance overall project performance. The study employs a quantitative methodology, including standardized questionnaires administered to eighty (80) participants to gather data regarding the problems and competencies required for financial management in building projects. The analysis conducted with SPSS version 29 indicates that enhancing communication channels, integrating strategic financial planning, and implementing thorough training programs are essential for aligning financial objectives with overarching corporate goals. This alignment is essential for optimizing resource allocation, guaranteeing financial stability, and improving competitiveness in the construction sector.

PENGARUH UANG ELEKTRONIK, SUKU BUNGA, DAN INFLASI TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA TAHUN 2015.I – 2023.IV

This study aims to test and analyze the effect of electronic money, interest rates, and inflation on economic growth in Indonesia in 2015.I-2023.IV. The type of research used is explanatory research. The research data source is secondary time series data in quarterly form, namely the first quarter of 2015 to the fourth quarter of 2023. The analysis model used is multiple linear regression analysis. Based on the results of partial hypothesis testing, it is concluded that the electronic money variable, and interest rates have no significant effect, while the inflation variable has a significant effect on economic growth. Simultaneously, the variables of electronic money, interest rates, and inflation simultaneously have a significant effect on economic growth. The acceleration of digital transactions should be accompanied by the availability of adequate infrastructure and simplify business regulations and increase market confidence so as to encourage economic growth.

Oil sector revenue, macroeconomic variables and economic growth in Nigeria

The challenges in oil sector revenue are so enormous that can overwhelm macroeconomic variables thereby reducing their potentials of contributing to the gross domestic product and reduce the rate of unemployment. The inability to create value is the major problem which oil sector revenue are faced with in today’s dynamic economic environment. This study investigated the influence of the oil sector revenue and macroeconomic variables on gross domestic product, Nigeria. The Dynamic Capability View Theory was used to underpin the study. The study employed a time series through secondary data. Unit root test and Multiple Regression were utilised for data analysis. The findings revealed that oil sector revenue contributed negatively to growth and development process of Nigeria which is not as expected, because unit increase in oil sector revenue has negative effect on economic growth to the tune of 6%. The macroeconomic variables interest rate show negative interest on GDP as expected but government expenditure too shows negative effect on GDP as against expectation. Thus, it was recommended that government should develop alternative source of income because too much reliance on oil to the neglect of other source of revenue is harmful to the economy. Other sector of the economy can as well be functional properly through diversification of resources.

DRIVING FORCES OF HOUSING PRICES IN TÜRKİYE: A NONLINEAR ARDL ANALYSIS

The study aims to examine the effects of the industrial production index, consumer price index, consumer confidence index, real effective exchange rate, and loan interest rate variables on the housing price index. Monthly data between 2010:01-2024:05 is used in the study and the NARDL method is used. When the long-term coefficients are examined; it is seen that positive shocks in the industrial production index have a positive effect on the housing price index and negative shocks have a negative effect on the housing price index. It is seen that positive changes in the consumer price index have a positive effect on the housing price index and negative changes have a negative effect. Increases in the consumer confidence index have a positive effect on the housing price index. An increase in the real effective exchange rate causes a decrease in the housing price index in the long term. Finally, both positive and negative changes in housing loan interest rates increase the housing price index.

VECM MODEL IN MEASURING THE IMPACT OF MONETARY POLICY INTERVENTION ON ECONOMIC GROWTH IN INDONESIA FROM 2009 TO 2022

This research was conducted to determine the short-term and long-term effects of inflation, exchange rates, interest rates, and the money supply on economic growth in Indonesia from 2009 to 2022 using the Vector Error Correction Model (VECM) method. The VECM method is used to analyze the interaction between these variables over different time horizons, offering valuable insights into their respective roles in influencing economic growth. The results show that in the short run, the exchange rate variable does not have a significant effect on the economic growth, while in the long run the interest rate variable has a positive impact on the economy with a negative coefficient value. The short run variable interest rates do not have significant effects on the growth of the economy, but in the longer run interest rates have an important effect on growth. In conclusion, the effect of exchange rates on the Indonesian economy is still a controversial research topic. The findings enhance the current literature on macroeconomic policy and provide a foundation for policymakers to design more effective economic strategies, especially in addressing the challenges posed by inflation and exchange rate volatility in both the short and long terms.

Returns, interest rate variations and changes in foreign exchange rates in Asia

The aim of the paper was to resolve the contradictory findings on exchange rate variability and stock returns on the basis of comparative evidence from Asian markets with interest rate variation serving as a moderator of the observed effect. The study applied the quantile and Bayesian Vector Autoregression technique from 2000 to 2023. The findings suggest that currency rate volatility and interest rate risk are two market risk variables that have a large and negligible direct influence on stock return, particularly over the long term. The results demonstrated a significant positive relationship between variations in exchange rates and return on assets, the latter being established at the medium to higher quantile of exchange rates. Return on assets reacts favourably to shocks related to interest rates and exchange rates. This may suggest that stock markets with substantial international operations are robust enough to withstand the volatility and risk brought on by currency rate swings. The results indicate that interest rate variations, which are favourable to the market, have a positive effect on returns. It implies that banks are motivated to extend credit to more people. When these factors move in same direction, there is a low sentiment in the market, a low risk and positive investor behaviour. Additional quantification of the magnitude and direction of volatility spillovers between exchange rates and stock returns show how these linkages are dynamic and vary depending on nations, time periods and market. The interdependence of exchange rate changes and stock returns within the larger financial ecosystem is highlighted by the volatility spillover that influences economic policy decisions, risk management techniques and investment strategies. The study concluded that during the analysed periods in Asia, the market risk variables taken into account in this model are important and substantial predictors of return on assets

FORECASTING CONSUMER PRICE INDEX USING MACROECONOMIC VARIABLES: A COMPARATIVE ANALYSIS OF MACHINE LEARNING AND DEEP LEARNING APPROACHES

The Turkish economy has faced many economic difficulties throughout it's history. At this point, predicting inflation accurately is very important for policy makers, businesses, investors and consumers. This study aims to estimate the Turkish Consumer Price Index. Producer price index, M1 money supply, gold price, dollar price, natural gas price and interest rate variables were used to estimate the CPI for Turkey. The variables used in the research were obtained through EVDS, the Central Bank's Electronic Data Management System. Monthly data from January 2003 to August 2023 was used in the study. The obtained data were estimated using DDPG, XGBoost, SVR, KNN and CNN-BiLSTM methods. Model performances were compared using RMSE, MSE, MAE, MAPE and R2 statistical coefficients. When model performances were evaluated, the best CPI prediction for Turkey was obtained by the SVR method.

Stochastic optimization of a hybrid photovoltaic/fuel cell/parking lot system incorporating cloud model

Stochastic optimization of a hybrid photovoltaic/fuel cell/parking lot system incorporating cloud model

Chlamydia infection with vaccination asymptotic for qualitative and chaotic analysis using the generalized fractal fractional operator

In this work, we solve a system of fractional differential equations utilizing a Mittag-Leffler type kernel through a fractal fractional operator with two fractal and fractional orders. A six-chamber model with a single source of chlamydia is studied using the concept of fractal fractional derivatives with nonsingular and nonlocal fading memory. The fractal fractional model of the Chlamydia system can be solved by using the characteristics of a non-decreasing and compact mapping. A suggested model with the Lipschitz criteria and linear growth is studied both qualitatively and quantitatively, taking into account boundedness, uniqueness, and positive solutions at equilibrium points with Leray-Schauder results under time scale concepts. We examined the framework of local and global stability and insight into Lyapunov function properties for the infectious disease model. Chaos Control will employ the regulate for linear responses approach to stabilize the system following its equilibrium points. This will take into consideration a fractional order framework with a managed design, where solutions are bounded in the feasible domain and have a greater impact at the lower minimum infectious rate. To illustrate the implications of fractional and fractal dimensions with varying interest rate values through simulations with Newton’s polynomial method under the Mittag-Lefller kernel. Additionally, a comparative analysis of results is also derived by employing power and exponential decay kernels at various fractional orders.

Determinants of Foreign Investment in Indonesia Post-Pandemic

Research Originality: The Covid-19 pandemic brought out the phenomenon of a rapid increase in investment after it has ended in Indonesia. This study gives a significant contribution in analyze the impact of pandemic on foreign direct investment.Research Objectives: The aim of this research is to predict whether there is a relationship of interest rates, inflation, labor force, GDP, and exchange rate with investment.Research Methods: This research is also to examine the asymmetric relationship among variables using the NARDL (Nonlinear Autoregressive Distributed Lag) method to identify the long-run effects of these variables on the investment after the Covid-19 pandemic in Indonesia. It uses the secondary data from 1980-2022.Empirical Results: The results of research show that there is a long-run asymmetric effect of the variables of interest rates, GDP, and exchange rates on the foreign direct investment. It means that changes in these variable factors do not only affect the size of investment, but also the speed of its increase after the pandemic. Meanwhile, there is no asymmetric effect of the variables of labor force and inflation on the investment.Implications: This research provides a picture and new insights related to the foreign direct investment dynamics in Indonesia after the Covid-19 pandemic. This study implies that require a different policy approach in an effort to increase the investment in Indonesia.JEL Classification: F21, O40

Monetary Policy and The Financial Performance of Listed Consumer Goods Firms in Nigeria

This study assesses the impact of monetary policy on the financial performance of the listed consumer goods firms in Nigeria. The study uses the purposive sampling technique and elimination method to determine the considered listed consumer goods firms in Nigeria from 2012 to 2023 and analyzed the impact of monetary policy variables of interest rates and inflation rate on the financial performance of these firms, measured by earnings per share as the indicator. Regression analysis was used to analyze the data. The results specifically show that changes in interest rate have a positive significant influence on the financial performance of listed consumer goods firms while changes in inflation rate have no significant influence on the financial performance of listed consumer goods firms. The study recommends the implementation of interest rate policies by the monetary authority that will balance stability and economic growth knowing the positive impact on the financial performance of the consumer goods firms.

Analysis Of Stock Price Determinants In Islamic Banks In Indonesia

This study aims to determine and analyze stock prices by looking at the direct and indirect effects between inflation, interest rates, exchange rates, ROA and stock prices in Islamic Banks in Indonesia. This study uses panel data regression with variables of inflation, interest rates, exchange rates, ROA, and stock prices with data analysis using SPSS 22 software. The period of this study is 2020-2022. The results of this study indicate that inflation, interest rates, and exchange rates are significant to ROA. Inflation and ROA are directly significant to stock prices. Meanwhile, interest rates and exchange rates directly have no effect on stock prices. For the indirect relationship between inflation, interest rates, and exchange rates affect stock prices through ROA.

Optimal sizing of islanded microgrid using pelican optimization algorithm for Kutubdia Island of Bangladesh

Optimal sizing of islanded microgrid using pelican optimization algorithm for Kutubdia Island of Bangladesh

PENGARUH INFLASI DAN TINGKAT SUKU BUNGA TERHADAP PEMBIAYAAN PADA BANK SYARIAH DI KOTA BANJARMASIN

Purpose: This study aims to determine the effect of inflation and interest rates on financing at Islamic banks in Banjarmasin city. Design/methodology/approach: This research uses quantitative methods. The data used is secondary data and time series. Data sourced from the pages of Bank Indonesia, the Financial Services Authority (OJK), the Central Statistics Agency (BPS) and data from Islamic Commercial Banks which are the objects of this study in the period 2014 to 2023. Findings: Based on the results of statistical data processing, the results of this study indicate that the value of Sig. Inflation variable (X1), amounting to 0.993> 0.05 and the tcount value of 0.009 < 2.571. Sig value. Interest Rate Variable (X2) is 0.066> 0.05 and the tcount value is -2.571 < 2.571. The results of this study indicate that simultaneously the inflation and interest rate variables affect financing at Islamic banks in Banjarmasin City. This can be proven by the value of Fcount 2.825 > Ftable 4.45. Research implications: Based on the research results, it is known that although inflation and interest rates have no effect on financing in Islamic banks, the government must remain effective in controlling macroeconomic activities to maintain the stability of inflation and interest rates, so that economic stability can be guaranteed.

Islamic Banks Stability in Indonesia: Assesing the Role of Islamicity Performance Amidst the Pandemic Challenges

Research Originality: Islamicity performance reflects adherence to Sharia principles, which are fundamental to Islamic banking operations. Research that emphasizes the contribution of Islamicity performance to the stability of Islamic bank requires additional studies.Research Objectives: This research examines the influence of banks’ internal factors, Islamicity performance, and macroeconomic factors on the Islamic bank stability amidst the pandemic challenges using financial intermediation theory.Research Methods:A random effects test was performed on a balanced panel data covering the period of 2017.1-2023.3 on 10 Islamic banks continuously publishing quarterly financial reports.Empirical Results: Credit risk and eficiency affect stability. Higher expenses enhance stability during pandemic. Reserves for uncollectible debt reduce stability. Islamicity performance in profit-sharing financing may reduce stability. Economic growth and inflation negatively affect stability pre-pandemic. Interest rate and dummy variables have positive effects.Implications: These findings imply the significance of preemptive risk management, cost-effective operations, prudent reserves allocation, and regulatory compliance to enhance stability in Islamic bank across varying economic circumstances.JEL Classification: E4, G21, B22How to Cite:Amaroh, S., Masykuroh, E., Husnurrosyidah., & Ali, M., (2024). Islamic Banks Stability in Indonesia: Assesing the Role of Islamicity Performance Amidst the Pandemic Challenges. Etikonomi, 23(2), 317 – 332. https://doi.org/10.15408/etk.v23i2.37269.

Enhancing valuation of variable annuities in Lévy models with stochastic interest rate

This paper extends the valuation and optimal surrender framework for variable annuities with guaranteed minimum benefits in a Lévy equity market environment by incorporating a stochastic interest rate described by the Hull-White model. This approach frames a more dynamic and realistic financial setting compared to previous literature. We exploit a robust valuation mechanism employing a hybrid numerical method that merges tree methods for interest rate modeling with finite difference techniques for the underlying asset price. This method is particularly effective for addressing the complexities of variable annuities, where periodic fees and mortality risks are significant factors. Our findings reveal the influence of stochastic interest rates on the strategic decision-making process concerning the surrender of these financial instruments. Through comprehensive numerical experiments, and by comparing our results with those obtained through the Longstaff-Schwartz Monte Carlo method, we illustrate how our refined model can guide insurers in designing contracts that equitably balance the interests of both parties. This is particularly relevant in discouraging premature surrenders while adapting to the realistic fluctuations of financial markets. Lastly, a comparative statics analysis with varying interest rate parameters underscores the impact of interest rates on the cost of the optimal surrender strategy, emphasizing the importance of accurately modeling stochastic interest rates.