scholarly journals Research on the threshold of symbiosis between finance and real economy – empirical test based on banking panel threshold model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Conglai Fan ◽  
Xinlei Cai ◽  
Jian Lin
Keyword(s):  
Banking Industry ◽  
Threshold Model ◽  
The United States ◽  
Profit Sharing ◽  
Chinese Government ◽  
Real Economy ◽  
Bank Profitability ◽  
Promotion Effect ◽  
Content Type ◽  
The Real

PurposeStarting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany.Design/methodology/approachBased on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy.FindingsFinance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion.Originality/valueThe promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy.

Dynamic interactions between stock markets and the real economy

2016 ◽  
Vol 11 (4) ◽  
pp. 715-746 ◽  
Author(s):  
Nikiforos T. Laopodis ◽  
Andreas Papastamou
Keyword(s):  
Economic Development ◽  
Stock Market ◽  
Methodological Approach ◽  
Financial System ◽  
Cointegration Analysis ◽  
Policy Implications ◽  
Real Economy ◽  
Dynamic Interactions ◽  
Content Type ◽  
The Real

Purpose The purpose of this paper is to re-examine the relationship between a country’s aggregate stock market and general economic development for 14 emerging economies for the period from 1995 to 2014. Design/methodology/approach The methodological approach of the paper is multifold. First, the authors use cointegration analysis to determine the simple dynamics among the variables. Second, the authors utilize vector autoregression analysis to study the dynamics among the variables for the 14 countries. Third, the authors employ panel analysis to determine common variations among the variables and across countries. Findings When examining the linkage between the stock market and economic development, proxied by gross domestic product growth or with gross fixed capital formation growth, the authors did not find a meaningful relationship between them. However, when the authors included additional control variables strong, dynamic interactions between the two magnitudes surfaced. Specifically, it was found that the stock market is positively and robustly correlated with contemporaneous and future real economic development and, thus, it directly contributed to a country’s economic development either through the production of goods and services or the accumulation of real capital. Thus, it can be inferred that the stock market alone is not capable of boosting economic development in these countries unless being part of a comprehensive financial system (which includes banks) as well as investment in real capital. Research limitations/implications The policy implications are clear. Government authorities must recognize that the stock market alone is not a driver of economic development and that a sound, efficient financial system (which includes banks) must be present in order to contribute and foster economic development. Originality/value The study is original in the sense that it examines various financial and economic variables to determine the degree of (or dynamic interactions among) the stock market and the real economy for each and all emerging markets in the sample.

Real effects of real estate: evidence from unemployment rates

2020 ◽  
Vol 37 (4) ◽  
pp. 605-623
Author(s):  
Can Dogan ◽  
John Can Topuz
Keyword(s):  
Real Estate ◽  
Housing Prices ◽  
Real Economy ◽  
Residential Real Estate ◽  
Content Type ◽  
Unemployment Rates ◽  
The Real ◽  
Real Estate Price ◽  
Real Effects ◽  
Real Estate Prices

Purpose This paper aims to investigate the relationship between residential real estate prices and unemployment rates at the Metropolitan Statistical Area (MSA) level. Design/methodology/approach This paper uses a long time-series of MSA-level quarterly data from 1990 to 2018. It uses an instrumental variable approach to estimate the effects of residential real estate prices on unemployment rates using the geography-based land constraints measure of Saiz (2010) as the instrument. Findings The results show that changes in residential real estate prices do not have a causal effect on unemployment rates in the same quarter. However, it takes 9-12 months for an increase (decrease) in real estate prices to decrease (increase) unemployment rates. This effect is significant during both pre- and post-financial crisis periods and robust to control for the economic characteristics of MSAs. Research limitations/implications This paper contributes to the emerging literature that studies the real effects of real estate. Particularly, the methodology and the findings can be used to investigate causal relationships between housing prices and small business development or economic growth. The findings are also of interest to policymakers and practitioners as they illustrate how and when real estate price shocks propagate to the real economy through unemployment rates. Practical implications This study’s findings have important implications for academics, policymakers and investors as they provide evidence of a snowball effect associated with shocks to real estate prices: increasing (decreasing) unemployment rates following a decrease (increase) in real estate prices exacerbates the real estate price movements and their economic consequences. Originality/value This paper analyzes a significantly longer period, from 1990 to 2018, than the existing literature. Additionally, it uses the MSA-level land unavailability measure of Saiz (2010) as an instrument to explore the effects of residential real estate prices on unemployment rates and when those effects are observed in the real economy.

Examining financial needs of banking customers for product development in Islamic banking in Indonesia

2019 ◽  
Vol 12 (5) ◽  
pp. 712-726 ◽  
Author(s):  
Aimatul Yumna
Keyword(s):  
Product Development ◽  
Primary Data ◽  
Islamic Banking ◽  
Life Cycle Approach ◽  
Real Economy ◽  
Structured Interviews ◽  
Content Type ◽  
The Real ◽  
Financial Products ◽  
Qualitative Approaches

Purpose This study aims at product development in Syariah banking, using the theory of Pyramid of Maslahah. Product development are important aspects of Islamic banking to realize Maqasid Al Shariah and to better serve the real economy. Design/methodology/approach To understand the needs of the customers, this study uses qualitative approaches and collects primary data from semi-structured interviews of 25 banking customers in Indonesia. Findings The study found that the group of respondents who have similar characteristics in age, marital status and number of kids tend to have similar financial needs. Some of the needs that have not been fulfilled by Sharia banking are the needs for investment in banking products, the needs for pension plan products and the needs for travelling-related financial products. Practical implications This study proposed that Islamic banking should provide financial products that cater to three needs of the society, including the needs for necessities/essentials (daruriyat), the needs of complementary requirements (hajiyyat) and the needs for beautifications or embellishments (tahsiniyat), to be able to better serve the real economy. Originality/value Financial needs and the life cycle approach can be used for product development in banking industry. However, this approach has not been widely used for consideration in the development of Sharia banking products in Indonesia. This study provides some novelty in Islamic banking customer behavior, especially in understanding financial needs based on the theory of Pyramid of Maslahah.

scholarly journals Crowdfunding REITs: a new asset class for the real estate industry?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lucia Gibilaro ◽  
Gianluca Mattarocci
Keyword(s):  
Real Estate ◽  
The United States ◽  
Individual Investors ◽  
Diversification Strategy ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Real Estate Investments ◽  
Asset Class

PurposeThe paper aims to study the performance of crowdfunding REITs with respect to traditional REITs in order to evaluate the differences in the risk–return profile and their usefulness for a diversification strategy within the indirect real estate investments.Design/methodology/approachThe paper considers the crowdfunding REITs introduced after the JOBS act in the United States and evaluates their performance and risk during the time period 2016–2018. Performance achieved by crowdfunding REITs is compared with other types of REITs in order to evaluate their usefulness for constructing an optimal portfolio strategy based on a standard mean variance approach.FindingsResults show that the performance of crowdfunding REITs is more stable over time with respect to other REITs and the lack of correlation with traditional REITs may be exploited for constructing a more efficient diversified portfolio of indirect real estate investments.Practical implicationsCrowdfunding REITs have different performance with respect to standard REITs and, especially individual investors, may benefit from including this new investment opportunity in their portfolio.Originality/valueThe paper is the first study on the performance of the crowdfunding REITs that is evaluating their usefulness for a diversification strategy within the real estate sector.

Global growth and market prospects may improve in 2016

2016 ◽  
Keyword(s):  
Commodity Prices ◽  
Equity Markets ◽  
Commodity Price ◽  
The United States ◽  
Real Economy ◽  
Content Type ◽  
Positive Effects ◽  
New Energy ◽  
Growth Prospects ◽  
Global Growth

Subject Correlation between oil prices, equity markets and global growth. Significance Weak global growth and volatile equity markets in early 2016 illustrate how the real economy and distressed investors are struggling with rapid changes in such key parameters as the new energy and commodity price regime. This is because the 'losers' have to react quickly, plunging economies into recession before the 'gainers' generate any positive effects. These asymmetries, along with disappointing data, are spooking stock markets into a broad-based sell-off. After a nearly 10% fall in global equities between end-December and mid-February wiped as much as 6-7 trillion dollars off wealth, markets have rallied, especially in the United States, where key indices have recouped losses to trade at levels last seen at end-2015. Impacts A recovery in global growth prospects could emerge by mid-2016, stabilising commodity prices and underpinning gains in equity markets. Distressed sales of assets should abate and have less influence on markets. Easing fears over China will help markets rebound after the panic attack in early 2016. The consumer benefits of low energy and food costs have disappointed, but there could be higher spending throughout 2016.

Brazil impeachment battle will do short-term damage

2015 ◽  
Keyword(s):  
Financial Markets ◽  
First Year ◽  
Real Economy ◽  
Short Term ◽  
Content Type ◽  
The Real ◽  
The Government ◽  
Legal Grounds ◽  
Deep Recession ◽  
Foregone Conclusion

Significance This comes near the end of a tremendously challenging first year of Rousseff's second term, marked by collapsing popularity, mass protests and deep recession. However, impeachment is far from a foregone conclusion. The legal grounds are unclear and the government seems more likely than not to have enough congressional support to stave off the process. Indeed, the timing could increase the odds that Rousseff will complete her term. Impacts Financial markets will be especially volatile in the coming months. At best, a recovery in the real economy will not start before late 2016 or even 2017. Nevertheless, impeachment turbulence could gradually lead to more stable politics.

Chad’s Deby will tighten grip amid rising challenges

2018 ◽  
Keyword(s):  
United States ◽  
Family Members ◽  
The United States ◽  
Legislative Elections ◽  
Content Type ◽  
The Real ◽  
The Government ◽  
The Imf

Subject Political outlook for Chad. Significance In November, the government will likely miss a self-imposed deadline for holding long-delayed legislative elections. The real challenges to President Idriss Deby’s authority, however, may come from the country’s professional classes rather than the ballot box. Impacts Despite domestic turmoil, counterterrorism cooperation will likely keep Chad in the good graces of France and the United States. As budgetary difficulties persist, Chad will become increasingly beholden to international creditors and the IMF. Over the longer term, some of Deby’s associates and family members may grow restless as they wait for their turn in power.

scholarly journals The role of the economic crisis on the competitiveness of the agri-food sector in the main Mediterranean countries

2014 ◽  
Vol 60 (No. 2) ◽  
pp. 49-64 ◽  
Author(s):  
M. Crescimanno ◽  
A. Galati ◽  
T. Bal
Keyword(s):  
Economic Crisis ◽  
The United States ◽  
World Market ◽  
Real Economy ◽  
The Real ◽  
The Public ◽  
Mediterranean Countries ◽  
The World ◽  
World Economic

The world economic crisis that, since 2008 has also struck the real economy, cannot be attributed only to the United States bubble which in 2007 involved the mortgage credit market, but it is the result of a series of factors among which the imbalance of the financial market, of the public accounts of the main economies and the real sector. Also agriculture, which has always been considered an anti-cyclic sector, has seen a strong slowdown with a plunge in the trade flows. This paper analyses the changes which happened to the competitive position in the world market of some Mediterranean countries and of France, Italy, Spain and Turkey in particular trying, moreover, to understand the vulnerability of the countries belonging to the EU concerning their integration into an economic and monetary union. The results show how much the crisis has involved all the countries bringing, on the whole, a reduction of the competitive potential in the international market which has been less strong in Turkey, the country characterized by a low per capita income and a low public debt. It can be seen, in particular, how the sectors with a strongest commercial specialization have showed a better resistance to the pressure of the recessive trend.  

Investor sentiment, market competition and trade credit supply

2019 ◽  
Vol 9 (2) ◽  
pp. 284-306
Author(s):  
Hongbin Huang ◽  
Ran Li ◽  
Ya Bai
Keyword(s):  
Trade Credit ◽  
Market Competition ◽  
Investor Sentiment ◽  
Real Economy ◽  
Content Type ◽  
The Real ◽  
Credit Supply ◽  
Virtual Economy ◽  
The Difference ◽  
The Impact

Purpose The purpose of this paper is to study the influence of investor sentiment on the supply of trade credit, and further explores the difference of the effect of investor sentiment on the supply of trade credit in the environment of strong market competition and weak market competition. Design/methodology/approach The authors use panel estimation techniques to examine the impact of investor sentiment in the Chinese securities market on the supply of corporate trade credit. Findings This paper finds that investor sentiment has positive impact on trade credit through three channels of motivation, willingness and ability. At the same time, this paper finds that investor sentiment has stronger impact on enterprises in strong market competition than enterprises in weak market competition. Research limitations/implications This paper expands the research on the influence of virtual economy on the real economy, analyzes the difference of the influence of investor sentiment on the supply of trade credit under different market competition conditions. Practical implications The paper perfects the mechanism of trade credit decision-making at this stage, and provides more evidence for the virtual economy to act on the real economy. Social implications This paper provides a theoretical basis for the government functional departments to use the investor sentiment to play a positive role in trade credit to improve the market competition and guide the development of China’s capital market in the direction of rationalization and health. Originality/value In combination with market competition environment and industry characteristics, this paper investigates external irrational factors and studies how investor sentiment affects trade credit supply.

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