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Volume 11 (2022): Issue 3 (September 2022)

Volume 11 (2022): Issue 2 (May 2022)

Volume 11 (2022): Issue 1 (January 2022)

Volume 10 (2021): Issue 3 (September 2021)

Volume 10 (2021): Issue 2 (May 2021)

Volume 10 (2021): Issue 1 (January 2021)

Volume 9 (2020): Issue 3 (September 2020)

Volume 9 (2020): Issue 2 (May 2020)

Volume 9 (2020): Issue s1 (July 2020)

Volume 9 (2020): Issue 1 (January 2020)

Volume 8 (2019): Issue 3 (September 2019)

Volume 8 (2019): Issue 2 (May 2019)

Volume 8 (2019): Issue 1 (January 2019)

Volume 7 (2018): Issue 3 (September 2018)

Volume 7 (2018): Issue 2 (May 2018)

Volume 7 (2018): Issue 1 (January 2018)

Volume 6 (2017): Issue 3 (September 2017)

Volume 6 (2017): Issue 2 (May 2017)

Volume 6 (2017): Issue 1 (January 2017)

Volume 5 (2016): Issue 3 (September 2016)

Volume 5 (2016): Issue 2 (May 2016)

Volume 5 (2016): Issue 1 (January 2016)

Volume 4 (2015): Issue 3 (September 2015)

Volume 4 (2015): Issue 2 (May 2015)

Volume 4 (2015): Issue 1 (January 2015)

Volume 3 (2014): Issue 3 (September 2014)

Volume 3 (2014): Issue 2 (May 2014)

Volume 3 (2014): Issue 1 (January 2014)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

Volume 6 (2017): Issue 3 (September 2017)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

8 Articles
access type Open Access

Eurozone Debt Monetization and Helicopter Money Drops: How Viable can this be?

Published Online: 23 Sep 2017
Page range: 5 - 15

Abstract

Abstract

After the outburst of the recent financial crisis, the subsequent unconventional monetary acting that seemed to be a veritable revolution tends to become a norm. This paper makes an effort to employ the modern monetary theory framework to address the nowadays recession in the Eurozone through the prism of debt perpetuation and the more drastic helicopter money drops. Dynamics of debt monetization and issues of its sustainability are examined in connection to its free liquidity injections capacity. The aim of this paper is to try to cast some light on the potential of overt money financing in the Eurozone (EZ) and its consequences on the ECB’s credibility and the maintenance of its efficacy.

Keywords

  • Unconventional monetary policy
  • Helicopter money
  • Debt monetization
  • Eurozone
access type Open Access

Money and the Quality of Life

Published Online: 23 Sep 2017
Page range: 17 - 34

Abstract

Abstract

This paper deals with the influence of money on the quality of life, in the light of the major importance it has on all aspects of our lives. Bearing in mind that money is an everyday, inseperable and unavoidable companion, with all its advantages and power, as well as its numerous challenges, risks and temptations, it inevitably affects all segments of the quality of life. The relation between money and quality of life, therefore, can be viewed not only theoretically, but also at a practical level. In the times we live in, which have been labelled the digital age, with ever increasing change, the key questions which arise are whether and to what extent do people really manage their money, and to what extent does money manage people and their lives, do people own money or does money own people? Although it sounds paradoxical, money causes people financial worries, whether they have it or whether they do not and so can significantly influence their quality of life. Standard macro-economic indicators, traditionally used as measures of the well-being of society, do not always give a real and complete picture of the quality of life, as this encompasses the way of life, as well as the standard of living. The quality of life includes the whole spectrum of factors, not only economic, but also many others which lead to satisfaction, both material and spiritual. These can include financial and material living conditions, employment, health, education, leisure time and social activities, economic and physical safety, human rights and freedoms, protection of the environment and overall life satisfaction. This paper analyses the direct and indirect connections between effective and efficient money management and the aforementioned factors which are decisive in forming the quality of life.

Keywords

  • Money
  • Quality
  • Quality of Life
  • Indicators of Quality of Life
  • Quality of Life and financial worries
access type Open Access

Central Bank Independence - the Case of the National Bank of Republic of Macedonia

Published Online: 23 Sep 2017
Page range: 35 - 65

Abstract

Abstract

This paper explores the level of independence of the National bank of the Republic of Macedonia by primarily focusing on the legal provisions that pertain to the key aspects for achieving and maintaining price stability. It provides a historical perspective of the evolution of the independence since the first years of transition. The assessment of the independence of the NBRM is based on the index of Cukierman, Webb, and Neyapti (1992), as one of the most commonly used indices, and the index of Jacome and Vazquez (2005), which incorporates some specific aspects relevant for transition economies. Both indices indicate that the legal independence of the NBRM has increased over the years and that the current legal framework provides a high level of independence. Yet, it should be emphasized that there is a room for further strengthening, in particular in the areas of policy formulation and the process of appointment of the non-executive members of the council of the NBRM. As the indices are based on the legal provisions, they can serve only as an indication of the actual independence of the central bank.

Keywords

  • central bank independence
  • monetary policy
  • indices
  • Macedonia
access type Open Access

Does Concentration Matter for Bank Stability? Evidence from the Albanian Banking Sector

Published Online: 23 Sep 2017
Page range: 67 - 94

Abstract

Abstract

Motivated by the debate on the concentration-stability nexus, this paper studies the impact of bank concentration on the likelihood of a country suffering systemic bank fragility. For this reason, we followed a new approach using on-site bank balance sheet information to construct our proxy that represents each bank stability condition and uses a variety of internal and external factors to estimate a balance panel dynamic two-step General Method of Moments (GMM) approach for the period 2008 - 2015. First, results provide supportive evidence consistent with the concentration-fragility view. Second, macroeconomic variables seem to have a significant effect on bank stability, which is not found for the sovereignty primary risk. By contrast, the bank-specific variables have also a significant effect on bank stability conditions. Finally, non-systemic banks are found to be more sensitive to macroeconomic condition and market concentration, while the better capitalised banks are less sensitive to fragility at the expense of lower operation efficiency.

Keywords

  • Bank Fragility
  • Primary Sovereignty Risk
  • Panel Data
  • Dynamic GMM
access type Open Access

Institutional Design, Macroeconomic Policy Coordination and Implications for the Financial Sector in the UK

Published Online: 23 Sep 2017
Page range: 95 - 126

Abstract

Abstract

This study has analysed the implications of institutional design of macroeconomic policy making institutions for the macroeconomic policy interaction and financial sector in the United Kingdom. Employing a Vector Error Correction (VEC) model and using monthly data from January 1985 to August 2008 we found that the changes in institutional arrangement and design of policy making authorities appeared to be a major contributing factor in dynamics of association between policy coordination/combination and financial sector. It was also found that the independence of the Bank of England (BoE) and withdrawal from the Exchange Rate Mechanism led to the increase in macroeconomic policy maker’s ability to coordinate and restore financial stability. The results imply that although institutional autonomy in the form of instrument independence (monetary policy decisions) could bring financial stability, there is a strong necessity for coordination, even in Post-MPC (Monetary Policy Committee) and the BoE independence.

Keywords

  • Macroeconomic Policy Interaction
  • Institutional Design
  • Financial Markets
  • Policy Coordination
  • Central Bank Independence
access type Open Access

Revival of Legacy of Tooke and Gibson: Further Evidence and Implications for Monetary Policy

Published Online: 23 Sep 2017
Page range: 127 - 142

Abstract

Abstract

Traditional economics assumes that interest rate effects inflation by changing the aggregate demand (Barth and Ramay, 2002). On the other hand, many economists in recent years have explored the cost side effects of monetary transmission and found very strong evidences in favour of cost channel. One of such studies is that by Rehman (2015) which explores the relationship between interest rate and inflation for a large data set comprising various measures of interest rate and inflation from countries around the globe. Rehman (2015) computes the correlation between two variables and he finds that the correlation between two variables is either positive or insignificant. Rehman argues that the finding is quite robust and does not change with a change in measure of interest rate and/or inflation. If the correlation between interest rate and inflation is positive then using interest rate to control inflation would be counterproductive. Thus it will endorse the warning of Wright Patman, a US congressman and Chairman of Joint Economic Committee who argues that “senseless of trying to fight inflation by raising interest rate, throwing the gasoline on fire to put out the flames would be as logical”. Findings of Rehman (2015) are based on correlation coefficients. The correlation without having control variables could only provide a clue and could be subject to serious missing variable bias. However, Rehman (2015) argues that thousands of similar clues from the entire globe collectively become very strong evidence. However, given the importance of the topic, it is necessary to do a more careful analysis and summarize the relationship between two variables which is not subject to missing variable bias. Therefore, this paper applies more sophisticated econometric techniques including Granger Causality and Static Long Run Solution to find the impact of interest rate and inflation.

Keywords

  • Cost Channel
  • Gibson Paradox
  • Tooke Banking School Theory
  • Monetary Transmission Mechanism
  • Monetary Policy Effectiveness
access type Open Access

Empirical Assessment on Financial Regulations and Banking Sector Performance

Published Online: 23 Sep 2017
Page range: 143 - 155

Abstract

Abstract

This study examines financial regulation and banking sector performance in Nigeria. Specifically, the study determines the impact of reforms on banking sector performance and also assesses the nexus between capital adequacy and banking sector performance. Time series data for the period 1993 to 2014 was used. As an analytical tool, the study uses unit root test to determine the stationary state of the variables. We also employed the Johansson co-integration and error correction model (ECM) statistical techniques to establish both short-run and long-run dynamic relationships between the endogenous and exogenous variables. The empirical findings indicate that financial regulation significantly impacts the banking sector performance while financial regulation has both short-run and long-run dynamic relationships with the banking sector performance in Nigeria. It was found that the four-period lag of capital adequacy negatively affects banking sector performance and is not statistically significant. The paper suggests that the Central Bank of Nigeria (CBN) should continually make public the impacts that the various financial regulations and reforms have on the performance of Nigerian banks. Majority of the policies on financial regulation by the apex bank (CBN) need to be long-run which can enable confidence of stakeholders, shareholders and the general public in the Nigerian banking industry when critically evaluated.

Keywords

  • Financial regulations
  • capital adequacy
  • bank size
  • monetary policy rate
  • reform
  • performance
access type Open Access

Predicting Systemic Banking Crises Using Early Warning Models: The Case of Montenegro

Published Online: 23 Sep 2017
Page range: 157 - 182

Abstract

Abstract

Very high costs of systemic banking crises emphasize the importance of early warning models for these crises. In order to create an early warning model for systemic banking crises a combined approach is implemented. The first approach applied in this paper is signal approach, however, with some modifications as compared with its standard application in the literature. On the basis of individual indicators two composite indices are created. Unlike other papers in this field, the author has chosen a 24-month period before the beginning of the crisis as a signal horizon, while the signal horizon in the literature is usually considered to be a period of 12 months before and 12 months after the crisis onset. The second approach represents logit model whereas the independent variables are actually the indicators with the best performances obtained within the signal approach. In order to check the robustness of indicators, the Bayesian model averaging technique is used. The indicator that represents the credit growth rate, besides being a part of the composite index, is statistically significant in all estimated specifications of the logit model, including the technique of Bayesian model averaging. Additionally, trends in the international market have a significant influence on the domestic banking system and its stability, and hence also on the probability of occurrence of a systemic banking crisis.

Keywords

  • early warning models
  • systemic banking crises
  • Montenegrin banking system
  • signal approach
  • composite index
  • logit model
  • Bayesian model averaging
  • synthesis of signal and logit approach
  • credit expansion
  • economic cycle
8 Articles
access type Open Access

Eurozone Debt Monetization and Helicopter Money Drops: How Viable can this be?

Published Online: 23 Sep 2017
Page range: 5 - 15

Abstract

Abstract

After the outburst of the recent financial crisis, the subsequent unconventional monetary acting that seemed to be a veritable revolution tends to become a norm. This paper makes an effort to employ the modern monetary theory framework to address the nowadays recession in the Eurozone through the prism of debt perpetuation and the more drastic helicopter money drops. Dynamics of debt monetization and issues of its sustainability are examined in connection to its free liquidity injections capacity. The aim of this paper is to try to cast some light on the potential of overt money financing in the Eurozone (EZ) and its consequences on the ECB’s credibility and the maintenance of its efficacy.

Keywords

  • Unconventional monetary policy
  • Helicopter money
  • Debt monetization
  • Eurozone
access type Open Access

Money and the Quality of Life

Published Online: 23 Sep 2017
Page range: 17 - 34

Abstract

Abstract

This paper deals with the influence of money on the quality of life, in the light of the major importance it has on all aspects of our lives. Bearing in mind that money is an everyday, inseperable and unavoidable companion, with all its advantages and power, as well as its numerous challenges, risks and temptations, it inevitably affects all segments of the quality of life. The relation between money and quality of life, therefore, can be viewed not only theoretically, but also at a practical level. In the times we live in, which have been labelled the digital age, with ever increasing change, the key questions which arise are whether and to what extent do people really manage their money, and to what extent does money manage people and their lives, do people own money or does money own people? Although it sounds paradoxical, money causes people financial worries, whether they have it or whether they do not and so can significantly influence their quality of life. Standard macro-economic indicators, traditionally used as measures of the well-being of society, do not always give a real and complete picture of the quality of life, as this encompasses the way of life, as well as the standard of living. The quality of life includes the whole spectrum of factors, not only economic, but also many others which lead to satisfaction, both material and spiritual. These can include financial and material living conditions, employment, health, education, leisure time and social activities, economic and physical safety, human rights and freedoms, protection of the environment and overall life satisfaction. This paper analyses the direct and indirect connections between effective and efficient money management and the aforementioned factors which are decisive in forming the quality of life.

Keywords

  • Money
  • Quality
  • Quality of Life
  • Indicators of Quality of Life
  • Quality of Life and financial worries
access type Open Access

Central Bank Independence - the Case of the National Bank of Republic of Macedonia

Published Online: 23 Sep 2017
Page range: 35 - 65

Abstract

Abstract

This paper explores the level of independence of the National bank of the Republic of Macedonia by primarily focusing on the legal provisions that pertain to the key aspects for achieving and maintaining price stability. It provides a historical perspective of the evolution of the independence since the first years of transition. The assessment of the independence of the NBRM is based on the index of Cukierman, Webb, and Neyapti (1992), as one of the most commonly used indices, and the index of Jacome and Vazquez (2005), which incorporates some specific aspects relevant for transition economies. Both indices indicate that the legal independence of the NBRM has increased over the years and that the current legal framework provides a high level of independence. Yet, it should be emphasized that there is a room for further strengthening, in particular in the areas of policy formulation and the process of appointment of the non-executive members of the council of the NBRM. As the indices are based on the legal provisions, they can serve only as an indication of the actual independence of the central bank.

Keywords

  • central bank independence
  • monetary policy
  • indices
  • Macedonia
access type Open Access

Does Concentration Matter for Bank Stability? Evidence from the Albanian Banking Sector

Published Online: 23 Sep 2017
Page range: 67 - 94

Abstract

Abstract

Motivated by the debate on the concentration-stability nexus, this paper studies the impact of bank concentration on the likelihood of a country suffering systemic bank fragility. For this reason, we followed a new approach using on-site bank balance sheet information to construct our proxy that represents each bank stability condition and uses a variety of internal and external factors to estimate a balance panel dynamic two-step General Method of Moments (GMM) approach for the period 2008 - 2015. First, results provide supportive evidence consistent with the concentration-fragility view. Second, macroeconomic variables seem to have a significant effect on bank stability, which is not found for the sovereignty primary risk. By contrast, the bank-specific variables have also a significant effect on bank stability conditions. Finally, non-systemic banks are found to be more sensitive to macroeconomic condition and market concentration, while the better capitalised banks are less sensitive to fragility at the expense of lower operation efficiency.

Keywords

  • Bank Fragility
  • Primary Sovereignty Risk
  • Panel Data
  • Dynamic GMM
access type Open Access

Institutional Design, Macroeconomic Policy Coordination and Implications for the Financial Sector in the UK

Published Online: 23 Sep 2017
Page range: 95 - 126

Abstract

Abstract

This study has analysed the implications of institutional design of macroeconomic policy making institutions for the macroeconomic policy interaction and financial sector in the United Kingdom. Employing a Vector Error Correction (VEC) model and using monthly data from January 1985 to August 2008 we found that the changes in institutional arrangement and design of policy making authorities appeared to be a major contributing factor in dynamics of association between policy coordination/combination and financial sector. It was also found that the independence of the Bank of England (BoE) and withdrawal from the Exchange Rate Mechanism led to the increase in macroeconomic policy maker’s ability to coordinate and restore financial stability. The results imply that although institutional autonomy in the form of instrument independence (monetary policy decisions) could bring financial stability, there is a strong necessity for coordination, even in Post-MPC (Monetary Policy Committee) and the BoE independence.

Keywords

  • Macroeconomic Policy Interaction
  • Institutional Design
  • Financial Markets
  • Policy Coordination
  • Central Bank Independence
access type Open Access

Revival of Legacy of Tooke and Gibson: Further Evidence and Implications for Monetary Policy

Published Online: 23 Sep 2017
Page range: 127 - 142

Abstract

Abstract

Traditional economics assumes that interest rate effects inflation by changing the aggregate demand (Barth and Ramay, 2002). On the other hand, many economists in recent years have explored the cost side effects of monetary transmission and found very strong evidences in favour of cost channel. One of such studies is that by Rehman (2015) which explores the relationship between interest rate and inflation for a large data set comprising various measures of interest rate and inflation from countries around the globe. Rehman (2015) computes the correlation between two variables and he finds that the correlation between two variables is either positive or insignificant. Rehman argues that the finding is quite robust and does not change with a change in measure of interest rate and/or inflation. If the correlation between interest rate and inflation is positive then using interest rate to control inflation would be counterproductive. Thus it will endorse the warning of Wright Patman, a US congressman and Chairman of Joint Economic Committee who argues that “senseless of trying to fight inflation by raising interest rate, throwing the gasoline on fire to put out the flames would be as logical”. Findings of Rehman (2015) are based on correlation coefficients. The correlation without having control variables could only provide a clue and could be subject to serious missing variable bias. However, Rehman (2015) argues that thousands of similar clues from the entire globe collectively become very strong evidence. However, given the importance of the topic, it is necessary to do a more careful analysis and summarize the relationship between two variables which is not subject to missing variable bias. Therefore, this paper applies more sophisticated econometric techniques including Granger Causality and Static Long Run Solution to find the impact of interest rate and inflation.

Keywords

  • Cost Channel
  • Gibson Paradox
  • Tooke Banking School Theory
  • Monetary Transmission Mechanism
  • Monetary Policy Effectiveness
access type Open Access

Empirical Assessment on Financial Regulations and Banking Sector Performance

Published Online: 23 Sep 2017
Page range: 143 - 155

Abstract

Abstract

This study examines financial regulation and banking sector performance in Nigeria. Specifically, the study determines the impact of reforms on banking sector performance and also assesses the nexus between capital adequacy and banking sector performance. Time series data for the period 1993 to 2014 was used. As an analytical tool, the study uses unit root test to determine the stationary state of the variables. We also employed the Johansson co-integration and error correction model (ECM) statistical techniques to establish both short-run and long-run dynamic relationships between the endogenous and exogenous variables. The empirical findings indicate that financial regulation significantly impacts the banking sector performance while financial regulation has both short-run and long-run dynamic relationships with the banking sector performance in Nigeria. It was found that the four-period lag of capital adequacy negatively affects banking sector performance and is not statistically significant. The paper suggests that the Central Bank of Nigeria (CBN) should continually make public the impacts that the various financial regulations and reforms have on the performance of Nigerian banks. Majority of the policies on financial regulation by the apex bank (CBN) need to be long-run which can enable confidence of stakeholders, shareholders and the general public in the Nigerian banking industry when critically evaluated.

Keywords

  • Financial regulations
  • capital adequacy
  • bank size
  • monetary policy rate
  • reform
  • performance
access type Open Access

Predicting Systemic Banking Crises Using Early Warning Models: The Case of Montenegro

Published Online: 23 Sep 2017
Page range: 157 - 182

Abstract

Abstract

Very high costs of systemic banking crises emphasize the importance of early warning models for these crises. In order to create an early warning model for systemic banking crises a combined approach is implemented. The first approach applied in this paper is signal approach, however, with some modifications as compared with its standard application in the literature. On the basis of individual indicators two composite indices are created. Unlike other papers in this field, the author has chosen a 24-month period before the beginning of the crisis as a signal horizon, while the signal horizon in the literature is usually considered to be a period of 12 months before and 12 months after the crisis onset. The second approach represents logit model whereas the independent variables are actually the indicators with the best performances obtained within the signal approach. In order to check the robustness of indicators, the Bayesian model averaging technique is used. The indicator that represents the credit growth rate, besides being a part of the composite index, is statistically significant in all estimated specifications of the logit model, including the technique of Bayesian model averaging. Additionally, trends in the international market have a significant influence on the domestic banking system and its stability, and hence also on the probability of occurrence of a systemic banking crisis.

Keywords

  • early warning models
  • systemic banking crises
  • Montenegrin banking system
  • signal approach
  • composite index
  • logit model
  • Bayesian model averaging
  • synthesis of signal and logit approach
  • credit expansion
  • economic cycle

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