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The Theory Applications of Finance and Macroeconomics

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A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: closed (30 January 2021) | Viewed by 77561

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Dr. Helmi Hamdi

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Centre d'Études et de Recherche en Gestion (CERGAM), Institut d'Administration des Entreprises (IAE), Université d'Aix-Marseille AMU, Marseille, France
Interests: economics of banking and finance; energy economics; emerging market economies; macro-econometrics; financial stability; fintech and payment systems
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Dear Colleagues,

Recently, the world economy has witnessed some turbulences and instability that have raised concerns and added threats to the global economy. For example, climate change, trade war, regional political tension, Brexit and, the very recent Coronavirus epidemic that have hit several countries across all continents at an astonishing rate are among some of the factors that have increased uncertainty. We have also noticed the surge of technological innovations and their implications in the banking and financial sectors. Today, we talk about blockchain, fintech, insurtech, regtech, and big tech, which have changed the business model of banks, financial institutions, and also the management model of firms and public administration. To get better insight into all these trends, economists have used the finance and macroeconomic theory to analyze the micro- and macroeconomic consequences of all these events and to study their impacts on economic and financial sector stability as well as economic development and growth. In this Special Issue, Economies is inviting researchers and academicians to submit their work to a Special Issue dedicated to “The Theory Applications of Finance and Macroeconomics”. Some of the topics that contributions to the issue might address include trade tension, climate change, blockchain and cryptocurrencies, financial liberalization, macroeconomic issue, principles of international finance, and open economy macroeconomics.

Dr. Helmi Hamdi
Guest Editor

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Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Economies is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1800 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

Economic instability
Macroeconomic theory
Theory of Finance
Fintech, blockchain and cryptocurrencies
Environmental degradation
Trade tensions
International finance
Open macroeconomics

Published Papers (11 papers)

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Research

14 pages, 1364 KiB

Open AccessArticle

Applying Quantum Mechanics for Extreme Value Prediction of VaR and ES in the ASEAN Stock Exchange

by Chukiat Chaiboonsri and Satawat Wannapan

Economies 2021, 9(1), 13; https://doi.org/10.3390/economies9010013 - 03 Feb 2021

Cited by 5 | Viewed by 2603

Abstract

The advantage of quantum mechanics to shift up the ability to econometrically understand extreme tail losses in financial data has become more desirable, especially in cases of Value at Risk (VaR) and Expected Shortfall (ES) predictions. Behind the non-novel quantum mechanism, it does interestingly connect with the distributional signals of humans’ brainstorms. The highlighted purpose of this article is to devise a quantum-wave distribution methodically to analyze better risks and returns for stock markets in The Association of Southeast Asian Nations (ASEAN) countries, including Thailand (SET), Singapore (STI), Malaysia (FTSE), Philippines (PSEI), and Indonesia (PCI). Data samples were observed as quarterly trends between 1994 and 2019. Bayesian statistics and simulations were applied to present estimations’ outputs. Empirically, quantum distributions are remarkable for providing “real distributions”, which computationally conform to Bayesian inferences and crucially contribute to the higher level of extreme data analyses in financial economics. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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12 pages, 298 KiB

Open AccessArticle

Debt-Growth Nexus in the MENA Region: Evidence from a Panel Threshold Analysis

by Mohammed Daher Alshammary, Zulkefly Abdul Karim, Norlin Khalid and Riayati Ahmad

Economies 2020, 8(4), 102; https://doi.org/10.3390/economies8040102 - 20 Nov 2020

Cited by 15 | Viewed by 3416

Abstract

This study examines whether a debt-to-GDP threshold exists in the public debt and economic growth relationship for 20 Middle East and North Africa (MENA) countries from 1990 to 2016 using the threshold estimation technique. The empirical results reveal that there is a threshold effect in the public debt and economic growth relationship. The MENA region’s debt-to-GDP threshold value as a developing region is lower than the debt threshold computed by earlier studies for developing countries. We found that the effect of public debt on economic growth is significant and positive only below the threshold value of debt-to-GDP. More precisely, debt has a promoting influence on economic growth when the debt is less than 58% of the GDP. This finding indicates that the relationship between public debt and economic growth is contingent on the debt-to-GDP ratio. Importantly, policymakers need to be more prudent when establishing a policy regarding debt issues. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

12 pages, 423 KiB

Open AccessArticle

Financial Inclusion and Firms Growth in Manufacturing Sector: A Threshold Regression Analysis in Selected Asean Countries

by Rosmah Nizam, Zulkefly Abdul Karim, Tamat Sarmidi and Aisyah Abdul Rahman

Economies 2020, 8(4), 80; https://doi.org/10.3390/economies8040080 - 06 Oct 2020

Cited by 9 | Viewed by 3509

Abstract

This paper examines the effect of financial inclusion on the firm growth of the manufacturing sector (513 firms) in selected ASEAN countries (Malaysia, Philippines, and Vietnam) using a cross-section threshold estimation technique. The levels of financial inclusion across firms were measured based on the distribution of financial services (access to credit). The main findings revealed that there is a non-monotonic effect of financial inclusion on the firm’s growth. These findings show that the impact of financial inclusion on firm growth in the manufacturing sector is significantly positive below a threshold point, and turns to significantly negative after a certain threshold point has been reached. These new findings suggest that manufacturing firm owners and banking institutions should deepen their financial inclusion efforts, and limit the distribution of credit access within the optimum value or threshold level in promoting the growth of the firm. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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18 pages, 948 KiB

Open AccessArticle

Poverty Alleviation and Microfinance for the Economy of Pakistan: A Case Study of Khushhali Bank in Sargodha

by Stylianou Tasos, Muhammad Ijaz Amjad, Masood Sarwar Awan and Muhammad Waqas

Economies 2020, 8(3), 63; https://doi.org/10.3390/economies8030063 - 10 Aug 2020

Cited by 10 | Viewed by 11669

Abstract

Poverty is a universal reality, and no one can deny the omnipresence of it all over the world. It is considered as the most harmful economic and social problem of human beings since their creation. It affects individuals as well as society as a whole in a very destructive way, and it is considered that poverty is the mother of all human rights violations. Perhaps no one would argue against the notion that microfinance can be a very useful apparatus in human, social, economic, political and national development. Microfinance has been established to fill the gap of a missing credit market for the poor. Among all other anti-poverty strategies, it has become one of the most important and successful tools for poverty elimination throughout the world. In this study, we investigate the impact of microfinance on poverty alleviation for the economy of Pakistan. The literacy is very poor for the area of Pakistan, so our research will help policy makers in making the right decisions in order to help the people that are living below the poverty line. Primary data of 300 households from Khushhali Microfinance Bank Limited were collected. The findings reveal that microfinance imparts a vital role in poverty eradication where the poverty level has decreased from 42.67% in comparison household (CHH) to 29.33% in the program household (PHH). Finally, it unveils the fact that there is a negative association between the provision of microfinance and poverty level of the household. The availability of micro financing facilities to the poor has declined the poverty rate from 42.67 percent to 29.33 percent. The Logistic Regression model implies that poverty has a negative association with the duration of microfinance, education and existence of a market in the locality, whereas it is positively related to family size and gender of the respondent. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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15 pages, 669 KiB

Open AccessArticle

Trade Balance Effects on Economic Growth: Evidence from European Union Countries

by Deimante Blavasciunaite, Lina Garsviene and Kristina Matuzeviciute

Economies 2020, 8(3), 54; https://doi.org/10.3390/economies8030054 - 01 Jul 2020

Cited by 20 | Viewed by 19731

Abstract

A growing number of recent research analyse the trade balance impact on economic growth. However, ambiguous results of studies imply the need for the research as the deteriorating trade balance hinders economic growth. This research aims to investigate the impact of the trade balance on economic growth as well as to evaluate it during the periods of trade deficit. Our estimations are based on the European Union (EU) 28 countries panel data over the period of 1998–2018, using the OLS method of multivariate regression analysis with fixed effects and focusing on two strategies: (i) including all trade balance periods, and (ii) adding deficit dummy variable seeking to evaluate whether during deficit periods we can find different and significant effect on economic growth. Evaluating all trade balance periods, the obtained results indicate the negative and lagging impact of the trade balance on economic growth, and no significant differences of the impact were identified during the deficit periods. The deterioration of trade balance reduces average economic growth and from linear relationship evaluation, we can state that it does not matter whether it starts from trade deficit or surplus result. The results obtained may also obscure the possibility of a non-linear effect, which would suggest a stronger negative impact on economic growth when the trade balance deteriorates in the presence of a large trade deficit. When discussing directions for further research it would make sense to consider other factors, such as the size of the deficit and its permanence. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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14 pages, 574 KiB

Open AccessArticle

Research on Property Income Inequality Effect of Fiscal Finance

by Xiaozhun Peng and Hongyou Lu

Economies 2020, 8(2), 50; https://doi.org/10.3390/economies8020050 - 17 Jun 2020

Cited by 2 | Viewed by 3132

Abstract

“Creating conditions for more people to have property income” has become a national policy after the 17th National Congress of the Communist Party of China. Based on the micro survey data from Chinese Family Panel Studies (CFPS) in 2010, 2012, 2014, 2016 and the macro panel data at the provincial level, a logarithmic linear equation was built to estimate the impact of micro and macro factors on property income. Furthermore, the contribution of fiscal expenditure and financial development on property income equality can be recognized using the regression-based inequality decomposition method. This research revealed that fiscal expenditure improves residents’ property income and slightly reduces the inequality of property income distribution. With respect to financial development, it improves residents’ property income but aggravates the inequality of property income distribution. However, there is a significant difference between the different regions. In eastern and central regions, inequality of property income distribution greatly benefits from fiscal expenditure, while in northwest regions, fiscal expenditure makes property income inequality even worse. Therefore, the focus of financial sustainable development is to reduce property income inequality through the establishment of an effective government and the improvement of the rule of laws. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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23 pages, 2396 KiB

Open AccessArticle

Model Selection Procedures in Bounds Test of Cointegration: Theoretical Comparison and Empirical Evidence

by Waqar Badshah and Mehmet Bulut

Economies 2020, 8(2), 49; https://doi.org/10.3390/economies8020049 - 08 Jun 2020

Cited by 7 | Viewed by 3561

Abstract

Only unstructured single-path model selection techniques, i.e., Information Criteria, are used by Bounds test of cointegration for model selection. The aim of this paper was twofold; one was to evaluate the performance of these five routinely used information criteria {Akaike Information Criterion (AIC), Akaike Information Criterion Corrected (AICC), Schwarz/Bayesian Information Criterion (SIC/BIC), Schwarz/Bayesian Information Criterion Corrected (SICC/BICC), and Hannan and Quinn Information Criterion (HQC)} and three structured approaches (Forward Selection, Backward Elimination, and Stepwise) by assessing their size and power properties at different sample sizes based on Monte Carlo simulations, and second was the assessment of the same based on real economic data. The second aim was achieved by the evaluation of the long-run relationship between three pairs of macroeconomic variables, i.e., Energy Consumption and GDP, Oil Price and GDP, and Broad Money and GDP for BRICS (Brazil, Russia, India, China and South Africa) countries using Bounds cointegration test. It was found that information criteria and structured procedures have the same powers for a sample size of 50 or greater. However, BICC and Stepwise are better at small sample sizes. In the light of simulation and real data results, a modified Bounds test with Stepwise model selection procedure may be used as it is strongly theoretically supported and avoids noise in the model selection process. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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30 pages, 3308 KiB

Open AccessArticle

The Impacts of China–Africa Economic Relation on Factor Productivity of African Countries

by Miao Miao, Jiang Yushi and Dinkneh Gebre Borojo

Economies 2020, 8(2), 47; https://doi.org/10.3390/economies8020047 - 04 Jun 2020

Cited by 9 | Viewed by 11009

Abstract

This study attempts to empirically examine the impacts of the China–Africa economic relationship on factor productivity. The two-step system Generalized method of moments (GMM) estimator is applied to analyze the impacts of the Africa–China economic relationship on factor productivity of 44 African countries controlling Africa–China trade, Chinese foreign direct investment (FDI), and aid allocation to African countries for the periods 2003–2017. The estimation strategy controls endogeneity concerns. Another novelty of this study is calculating total factor productivity (TFP) using the regression approach and driving capital stock data. Additionally, the institutional quality index of countries is derived using principal component analysis. The findings of this study refer that the impact of the China–Africa economic relationship on the TFP of African countries is conditional to the domestic institutional quality of African countries. The results imply that the productivity embodied by the Africa–China economic relationship should be backed by the domestic adaptive capacity to use the benefit of China–Africa economic relations to excel factor productivity. Hence, the capability of African countries to benefit from the China–Africa economic relationship to enhance factor productivity should improve the institutional quality. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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20 pages, 1393 KiB

Open AccessArticle

Empirical Measurement of Competition in the Thai Banking Industry

by Jirawan Prayoonrattana, Thanarak Laosuthi and Bundit Chaivichayachat

Economies 2020, 8(2), 44; https://doi.org/10.3390/economies8020044 - 02 Jun 2020

Cited by 7 | Viewed by 5968

Abstract

The degree of competition in the banking industry can be observed and measured by two approaches, structural and nonstructural. Based on these two approaches, there are various indicators, which are different factors and methods. This paper aims to provide calculations, determine a good indicator, and assess the competitive environment of the Thai banking industry. Specifically, there are four indicators—concentration ratio, Herfindahl–Hirschman Index, Lerner Index, and Panzar–Rosse H statistic—which are widely used to examine the efficiency and effectiveness of policies in the banking industry. The findings indicate that the Lerner Index, calculated by stochastic frontier analysis, is the most reliable indicator of the banking competition environment in Thailand. It has a range of 0.36 to 0.60 and an average value of 0.40. Furthermore, during the period of study, the degree of Thai banking competition had a tendency to increase over time, which reflects an increase in allocative efficiency of resources in the banking industry. This is in accordance with the Financial Sector Master Plan of the country. However, this result probably leads to instability of the financial system. Therefore, policy-makers should carefully regulate competition policy by considering the systematic risk of the banking system at the same time. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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20 pages, 2425 KiB

Open AccessArticle

Determining the Financial Inclusion Output of Banking Sector of Pakistan—Supply-Side Analysis

by Fareeha Adil and Abdul Jalil

Economies 2020, 8(2), 42; https://doi.org/10.3390/economies8020042 - 28 May 2020

Cited by 9 | Viewed by 6074

Abstract

Financial inclusion is the process of including the people who lack formal financial services. The concept of financial inclusion emerged globally in the times of millennium and is defined as the availability and usage of formal financial services. It essentially facilitates economic growth; the financially included individuals can invest in business, education, and entrepreneurship, which can pave way to poverty alleviation and economic development. In the context of Pakistan, a developing economy of South Asia, the financial landscape presents a grim picture of financial inclusion where only 16 percent of the population is financially included. Despite the current focus of policies and regulations devoted to enhancing access to finance in Pakistan from the supply side, the current state of financial inclusion is limited. Therefore, this study investigates the financial inclusion process for Pakistan from the supply side. We analyze the supply-side dimension of access by employing econometric technique of autoregressive distributive lag (ARDL) and using time series data of banking sector of Pakistan. Our empirical findings suggest that the greater the size, geographic outreach, and demographic outreach of the banks, the greater the contribution to the financial inclusion. Additionally, improvement in soft consumer loans and increase in small-sized advances reinforces the financial inclusion process. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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17 pages, 333 KiB

Open AccessArticle

The Growth of Private Sector and Financial Development in Saudi Arabia

by Mohammad Imdadul Haque

Economies 2020, 8(2), 39; https://doi.org/10.3390/economies8020039 - 12 May 2020

Cited by 9 | Viewed by 5774

Abstract

In an attempt to diversify itself away from the dominance of oil on its economy, Saudi Arabia needs to emphasize on the growth of its private sector. Currently, the private sector’s contribution to economic growth is meager as the oil sector dominates the economy. This study attempts to assess the role of financial development towards the growth of the private sector. Assessing this relationship is important, as it is quite probable that the dominant oil sector attracts the financial resources, affecting the private sector adversely. Johansen’s method of cointegration is applied on the data for the period 1985–2018. The private sector’s gross domestic product has a negative relation with the supply of money, positive relation with bank credit to private sector, and no significant relationship with share market capitalization, as shown by the results of the study. In addition, the private sector’s growth has a positive and significant relationship with government expenditure, investment, and trade openness. Hence, the study recommends further strengthening of financial sector services. Besides the current trend on government expenditure, investment and trade openness should continue to enable the private sector to contribute significantly to the economic growth of the country. A previous study on the private sector’s growth and financial variables is exclusively missing, and makes this study unique. Full article

(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)

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