<abstract><title style='display:none'>Abstract</title>Since the last global financial crisis supervisory mechanisms and regulations have become more stringent which have significantly improved resilience of banks therefore positively affecting financial stability. Apart from traditional financial institutions which have been supervised according to strict regulations and standards technological development in financial services commonly called FinTech have introduced new trends providing fast peer to peer lending which directly matches lenders and borrowers thus putting more pressure to policymakers and supervisors.This paper presents potential implications of FinTech developments to financial stability, while explaining FinTech influence to market structure as well as benefits and risks of technologically driven financial innovations to financial stability.The paper stresses out an importance of international cooperation of regulators in order to preserve financial stability in the recent world of technological changes and innovations. FinTech has changed consumers’ expectations and preferences while increasing the number of users expecting fast and easily accessible services available on mobile phones and other electronic devices. The paper shows that new technology provides the space for expanding financial services but it also poses additional risks to financial system in terms of microfinancial and macrofinancial risks.</abstract>

Fintech and Financial Stability Potential Influence of FinTech on Financial Stability, Risks and Benefits

<abstract><title style='display:none'>Abstract</title>This paper analyses the effects of two alternative monetary strategies (exchange rate targeting and inflation targeting) on economic growth and employment. On the panel of 18 countries for the period from 1996 to 2013, I tested the hypothesis that countries in exchange rate targeting have a higher rate of GDP growth and lower inflation rate. In order to test the impact of exchange rate policy on economic growth and prices, I applied dynamic panel two stepwise method of least squares (2SLS method) and they were evaluated by two independent regression equation. In order to allow the comparison of results related to exchange rate targeting, the effects of the introduction of inflation targeting in the unemployment rate were also estimated using the panel method two stepwise least squares (2SLS method). Results of empirical studies show that countries with inflation targeting have a lower rate of economic growth and higher unemployment.</abstract>

Exchange Rate Targeting Versus Inflation Targeting: Empirical Analysis of the Impact on Employment and Economic Growth

<abstract><title style='display:none'>Abstract</title>This study investigates the relationship between cashless payments and economic growth in selected OECD countries. Using annual data from 2007 to 2016, our results indicate that: Firstly, cashless payment stimulates economic growth in OECD countries. Specifically, the growth-enhancing effect is found in debit card payment while credit card, e-money and cheque payment have no impact on economic growth; Secondly, the positive relationship between economic growth and debit card payment is robust after controlling for the effect of endogeneity, omitted variable bias and outliers. Based on the findings, this study offers some imperative policy recommendations.</abstract>

Cashless Payments and Economic Growth: Evidence from Selected OECD Countries

<abstract><title style='display:none'>Abstract</title>In the period before the crisis, Montenegro experienced a rapid credit growth, which coincided with the privatization of several banks and was followed by the entry of foreign banking groups, amplifying the banks’ lending process and increasing competition in this sector. This paper focuses on identification and estimation of determinants of credit growth in Montenegro, exploring both demand and supply side factors, and particularly paying attention to supply factors. Our findings confirm that positive economic developments and an increase in banks’ deposit potential lead to higher credit growth. Furthermore, our findings emphasize that the banking system soundness is decisive for promoting further bank’s lending activities. We provide evidence that the weakening of banks’ balance sheets, in terms of high non-performing loans and low solvency ratio, has a negative effect on credit supply.In addition, this paper provides a nuanced analysis of the determinants of credit growth by allowing these to be different before and after the global financial crisis. The post-crisis model finds that credit supply indicators gained in importance in explaining credit growth, while the model in pre-crisis period provides evidence that both demand and supply indicators matter in explaining credit growth.</abstract>

Determinants of Credit Growth: The Case of Montenegro

<abstract><title style='display:none'>Abstract</title> This article discusses the principles of quality management and benefits of their implementation in central banks. It is based on new principles of quality management, in particular to: customer focus, leadership, engagement of people, process approach, improvement, evidence-based decision making, and, relationship management. With a view to continuously improving their performance and achieving sustained success, central banks have a realistic opportunity to use these principles in an efficient and effective manner whereby the top management certainly holds the most responsibility. Quality management principles are analysed herein both in their original form and in terms of their implementation in the financial system and its most prominent entity - central bank. The article also incorporates new standard-related terms such as `context` and `risk-based thinking` that significantly strengthen quality management principles and contribute to a more effective and efficient achievement of sustainable success.</abstract>

Quality Management Principles and Benefits of their Implementation in Central Banks

<abstract><title style='display:none'>Abstract</title>More and more individuals are becoming overindebted and facing difficulties in managing personal finance. On the other hand, financial products are becoming more and more complex, with numerous concealed risks. The level of financial literacy of youth and children is unsatisfactory both in the region and globally. Such a situation could lead to personal problems (financial distress), aggravated financial stability, with reverse adverse implications on economic growth. Many international studies have also confirmed these hypotheses.The aim of this paper is to point to the importance of financial education of youth and children, as well as to give some guidance on how to develop a national programme for increasing financial literacy. The paper develops a five-step programme with the main topics covering the drafting of a national strategy for developing financial literacy of youth and children and its implementation.</abstract>

Central Bank of Montenegro and Faculty of Economics, Belgrade

Financial Education of Children and Youth

<abstract>
<title style='display:none'>Abstract</title>
Leaning against the wind of credit booms is a monetary policy that is tighter than what is consistent with standard inflation targeting. This way the central bank tries to address excessive household debt. While the merits of such policy have been analysed, I argue that there are two dimensions that have been overlooked but are crucial: (i) ability of borrowers to freely adjust outstanding debt (refinancing) and (ii) dominant mortgage type in the economy (fixed or adjustable rate). I answer the research question using a standard macroeconomic model extended for the presence of borrowers who consume all their disposable income (hand-to-mouth) net of payments on long-term mortgage. I find that the optimal simple policy rule significantly depends on the ability to adjust debt and on mortgage type. Policy prescriptions based on models not accounting for these realistic features may lead to wrong monetary decisions.
</abstract>

Non-Ricardian Borrowers and Mortgage Type: Implications for Monetary Policy Leaning against the Wind

<abstract>
<title style='display:none'>Abstract</title>
Climate change is one of the biggest risks to the global financial system and to the economies of perhaps every nation upon this planet. Central banks could play a prominent role in protecting us from this economic upheaval. This paper develops an objective Green Central Bank Index. The index is constructed by identifying nine distinct policy tools which central banks can deploy to further their countries’ climate resilience. Central banks can be graded against each of these areas using publicly available information, and the grades combined into an index using appropriate weights. We can therefore measure the intensity with which individual central banks engage with the green agenda and compare to their peers. We apply our Green CB Index to thirteen of the largest and most developed economies in the world. We identify three distinct groups of countries: leaders in climate change who actively use the central banks power and influence to encourage their economies to become sustainable; a second set of countries who either publicly announce their policies to reduce financial risks from climate change but are yet to deploy their full arsenal in support of climate, or the reverse – keeping a low public profile but nonetheless discretely using the position of the central bank to further climate goals; and a final group of countries who are yet to prioritise climate issues. The Index highlights the differing policy challenges facing these three separate central bank groups.
</abstract>

The Green Central Bank Index

<abstract>
<title style='display:none'>Abstract</title>
Macroprudential policy mainly aims to enhance financial stability and reduce the possibility of costly financial crises. However, to achieve this, macroprudential policy decisions may have some unintended side effects on economic growth. The paper provides an empirical framework for investigating potential side effects of macroprudential policy tools in developing countries. The results show that macroprudential policy decisions may lead to a decline in economic growth in developing countries, but the depth and efficiency of the financial sector may interact with macroprudential policy decisions to support economic environment stability. In the Arab region, the results differ compared to other developing countries, as the macroprudential policy interventions have a positive impact on economic growth, especially for the macroprudential tools that aim to enhance the resilience of the banking sector, while there is no effect of the cyclical macroprudential tools on economic growth.
</abstract>

The Side Effects of Macroprudential Policies on Economic Performance in the Arab Region

<abstract>
<title style='display:none'>Abstract</title>
Ensuring liquidity is critical for the functioning of banks. This study investigates the functional form of bank profitability and liquid asset holdings. We test for an inverted Kuznets curve-shaped quadratic polynomial relationship using generalized least square regression on an unbalanced quarterly dataset of Islamic and conventional banks of South Asia from 2016 to 2021. The study finds that profitability and liquid asset holdings have a concave nonlinear relationship suggesting a profit-maximizing level of liquidity. However, Islamic banks are less nonlinear than conventional banks, suggesting that their profitability is less responsive to changes in liquid asset holdings and needs more liquid assets to maximize profitability. Additionally, we find that the optimal level of liquidity to maximize profitability fell during Covid-19 as the relationship became more nonlinear. The study provides evidence of unique liquid management requirements for different types of banks based on how bank profitability response differs across different types of banks. The development of a one-fit-all liquidity management framework as in the case of the Basel III liquidity risk framework may not be appropriate. From a policy standpoint, the Basel III liquidity risk framework needs to be tailored especially in the context of Islamic banks.
</abstract>

Liquid Asset Holdings and Banking Profitability: Evidence from South Asia

<abstract>
<title style='display:none'>Abstract</title>
The article examines the problem of increasing social responsibility of the financial sector on the example of systemically important banks that operate in the modern information and network economy under conditions of uncertainty. A comparative analysis of dimensions of social responsibility of banks in different countries of the world was carried out. Based on the obtained results, the importance of social responsibility of banking structures for a wide range of stakeholders and thus for stable and successful operation of banks in the economics of information and uncertainty was confirmed. The general purpose of the study is to develop, test and suggest a comprehensive methodology for monitoring and assessing the level of social responsibility of the financial sector on the example of Ukrainian banks in conditions of uncertainty and recognizing gaps between the actual level and the desired, maximally high state of social responsibility. In our research, we considered social responsibility as a key direction towards achieving and harmonizing the strategic goals of financial institutions. The article focuses on the development of practical measures to monitor public opinions and assess the level of social responsibility of financial institutions. The research offers the following directions: 1) A comparative analysis of data for systemically important banks in Ukraine and other world countries regarding social responsibility; 2) determination of factors that influence the activity of the banking sector; 3) determination of question-indicators applied to the level of social responsibility of banks; 4) analysis of public opinion on the level of social responsibility of banks; 5) analysis of gaps in assessments of the level of social responsibility on the example of systemically important banks of Ukraine. The study involved the methods of statistical research and expert evaluations that made it possible to suggest a methodology for determining the level of social responsibility of financial institutions on the example of systemically important banks. Higher expectations from social responsibility of banks on the part of society were also revealed. The suggested methodology involves analyzing gaps between assessments by stakeholders and the desired level of social responsibility of banks in evaluating the level of compliance with social responsibility. A comparison of the average score of the public assessment with the highest level of social responsibility of banks is visualized. The directions for improving the social responsibility policy are outlined on the example of systemically important banks in Ukraine on the basis of a comparative analysis and taking into account various experiences around the world.
</abstract>

Social Responsibility of the Financial Sector in the Information and Network Economy: The Example of Systemically Important Banks in Ukraine and Comparison With Banks in Other Countries of the World

<abstract>
<title style='display:none'>Abstract</title>
Transparency in the work of central banks has become one of the key features of monetary policy. Because of this, many economists have diverted to finding the most suitable way to measure it. Although a unique method of measurement has yet to be achieved, there are various studies in the literature that deal with the calculation of the transparency index of central banks. Most studies have focused on measuring transparency of the largest central banks, while countries of the Western Balkans have been neglected. In the literature, there are no studies related to the analysis and measurement of transparency of the central banks in the Western Balkan countries. Starting from the index calculated by Eiffinger &amp; Geraats, this paper aims to calculate the transparency index for five central banks: the Central Bank of Montenegro, the Croatian National Bank, the Central Bank of Bosnia and Herzegovina, the National Bank of the Republic of North Macedonia, and the Bank of Albania.
</abstract>

Analysis of the Transparency Index of the Central Banks of the Western Balkan Countries

<abstract><title style='display:none'>Abstract</title> This paper aims to analyse macroeconomic and institutional empirical determinants of growth of NPL ratios. Research is focused on selected CEEC and SEE countries in the period 2006- 2013. For our analysis we use static panel model approach with the logarithm of share of NPLs to total loans as a dependent variable. As independent variables we used a combination of country-specific macroeconomic and financial indicators which are commonly used in reference literature, as well as relevant institutional variables. Our results show that there is a negative relationship between increases in GDP and rise of the NPL ratio. Along with GDP, foreign currency loans ratio and level of exchange rate are positively related with the increase of NPL ratio. This confirms the expectation that countries where domestic currency is not the main medium of credit placements will have larger problems with the level of NPLs, which is even more pronounced in periods of domestic currency depreciation. In the presented models, the inflation rate is reported as statistically insignificant for sample countries. In the group of institutional variables, only financial market level of development is reported as statistically significant in relation to the level of NPL - with a more developed financial market the level of NPLs should be lower.</abstract>

Macroeconomic and Institutional Determinants of Non-performing Loans

<abstract><title style='display:none'>Abstract</title>In recent years we have witnessed a growing trend in cashless transactions as well as products and services sold exclusively in this way. Also, after the onset of the global financial crisis, private crypto currencies appeared that have raised some concerns. All of these changes beg the question of whether modern societies are moving towards a cashless society. This also raises a number of other dilemmas such as whether cashless societies have negative implications, whether they have what should be the response of economic policymakers, who would be potential winners and losers, and the like.The paper analyses the arguments both in favour and against cashless society, the future of crypto currencies, as well as potential responses of economic policymakers to the emergence of a cashless society. The paper concludes with the observation that it is not reasonable to expect the transition to a cashless society in the near future but the next step in the evolution of money might be the appearance of central bank digital currencies, at least in some countries.</abstract>

Cashless Society – The Future of Money or a Utopia?

<abstract><title style='display:none'>Abstract</title>This paper aims to survey the existing literature, both theoretical and empirical, on the relationship between monetary policy and economic growth. While there has been a wide range of studies on the existing relationship between monetary policy and economic growth, the nexus between the two remains inconclusive. This paper takes a comprehensive view of the theoretical evolution of the relationship and the respective recent empirical findings. Overall, this paper shows that the majority of findings support the relevancy of monetary policy in supporting economic growth, mainly in financially developed economies with fairly independent central banks. The relationship tends to be weaker in developing economies with structural weaknesses and underdeveloped financial markets that are weakly integrated into global markets. This paper concludes that monetary policy matters for growth both in the short-run and long-run despite the prevailing ambiguous relationship. The paper recommends intensive financial development measure for developing countries as well as structural reforms to address to supply side deficiencies.</abstract>

Monetary Policy and Economic Growth: A Review of International Literature

<abstract><title style='display:none'>Abstract</title>This paper aims to evaluate the macroeconomic and bank-specific determinants of non-performing loans (NPL) in the Nepalese banking system using both static and dynamic panel estimation approaches. The study considers 30 Nepalese commercial banks over the period 2003-2015 and uses 7 bank-specific and 5 macroeconomic variables to assess the impact of banking management and economic indicators on NPL. The findings show that NPLs have significant positive relationship with the export to import ratio, inefficiency, and assets size and a negative relationship with the GDP growth rate, capital adequacy, and inflation rate. The results of the empirical study indicate low economic growth as the primary cause of high NPLs in Nepal and suggest that efficient management and effective financial policies are required for a stable financial system and economy. This is the first complete study in the Nepalese banking system and also the first study that has evaluated the effects of remittance, public debts and interest spreads on NPL. The findings of this study will be helpful in designing the macroprudential and fiscal policies in Nepal.</abstract>

Macroeconomic and Bank-Specific Determinants of Non-Performing Loans: Evidence from Nepalese Banking System

<abstract><title style='display:none'>Abstract</title>The first central banks were founded in the XVII century and monetary policy has been evolving ever since. Knowledge on monetary economy has improved significantly over the last couple of decades and a consensus has been reached in a number of areas. As a result, hyperinflations have been extremely rare over the past decades.The global financial crisis challenged traditional monetary policy that was based on the approach involving one instrument (reference interest rate) and one goal (price stability). It is obvious that we need a new approach to monetary policy and I believe that changes will happen gradually in the future.This paper consists of two parts. The first part covers the traditional monetary policy and deals with issues where consensus has been reached, as well as with issues on monetary policy objectives, transparency, and macroprudential policy.The second part addresses the issues that pose a challenge for monetary policy and for which there is no complete consensus. This part elaborates on the dilemma involving rules versus discretions, a new approach to banking supervision, monetary policy during a crisis, the role of econometric models, and the need for international coordination of monetary policy.</abstract>

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