Attenuating international financial shocks: the role of capital controls

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chokri Zehri
Keyword(s):  
Exchange Rate ◽  
Empirical Work ◽  
Capital Controls ◽  
Capital Inflows ◽  
Monetary Shocks ◽  
Financial Shocks ◽  
Empirical Examination ◽  
Content Type ◽  
Exchange Rate Shocks

PurposeBy reinforcing monetary policy independence, reducing international financing pressures and avoiding high-risk takings, capital controls strengthen the stability of the financial system and then reduce the volatility of capital inflows. The objective of this study was to conduct an empirical examination of this hypothesis. This topic has received strong support in the theoretical literature; however, empirical work has been quite limited, with few empirical studies that provide direct empirical support to this hypothesis.Design/methodology/approachThis study analyzed quarterly data of 32 emerging economies over the period between 2000 and 2015 and proposes two methods to identify capital control actions. Using panel analysis, Autoregressive Distributed Lag and local projections approaches.FindingsThis study found that tighter capital controls may diminish monetary and exchange rate shocks and reduce capital inflows volatility. Furthermore, capital controls respond counter-cyclically to monetary shocks. Under capital controls, countries with floating exchange rate regimes have more potential to buffer monetary shocks. We also found that capital controls on inflows are more effective for reducing the volatility of capital inflows compared to capital controls on outflows.Originality/valueThis study contributes to the question of the effectiveness of capital controls in attenuating the effects of international shocks and reducing the volatility of capital flows. Previous studies have mostly focused on the role of macroprudential regulation; however, there is a lack of systematic effects of capital controls on monetary and exchange rate policies. To our knowledge, this is the first preliminary study to suggest that capital controls may buffer monetary and exchange rate shocks and reduce the volatility of capital inflows. This study investigates the novel notion that capital controls allow for a notable counter-cyclical response of monetary and exchange rate policies to international financial shocks.

Effectiveness of capital controls in dampening international shocks

2021 ◽  
Vol 9 (4) ◽  
pp. 521-551
Author(s):  
Chokri Zehri
Keyword(s):  
Exchange Rate ◽  
Capital Flows ◽  
Capital Controls ◽  
Capital Inflows ◽  
Monetary Shocks ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Floating Exchange Rate ◽  
Exchange Rate Shocks ◽  
International Shocks

This study is a contribution to the ongoing debate on whether capital controls are effective in buffering international shocks and reducing capital flows volatility. The author demonstrates that capital controls can considerably mitigate the effects of monetary and exchange rate shocks and reduce the volatility of capital inflows to emerging markets. This study analyses quarterly data of 28 emerging economies over the period between 2000 and 2015 and proposes two methods to identify capital controls actions. Using panel analysis, autoregressive distributed lag, and local projections approaches, this study finds that tighter capital controls may diminish monetary and exchange rate shocks and reduce capital inflows volatility. Furthermore, capital controls respond anti-cyclically to monetary shocks. Under capital controls, countries with floating exchange rate regimes have more potential to buffer monetary shocks. The author also finds that capital controls on inflows are more effective for reducing the volatility of capital flows compared to capital controls on outflows.

Restrictive Policy to Curb Capital Flows Volatility

2021 ◽  
pp. 2150010
Author(s):  
Chokri Zehri
Keyword(s):  
Exchange Rate ◽  
Emerging Economies ◽  
Capital Flows ◽  
Capital Controls ◽  
Dynamic Panel Data ◽  
Exchange Rate Shocks ◽  
Local Projections ◽  
Empirical Approaches ◽  
Restrictive Policy

We examine the role of the restrictive policy, through capital controls, in reducing the capital flows volatility. The study highlights the effects of these controls to dampen international financial shocks. Using quarterly data of 28 emerging economies over the period between 1999 and 2019, three empirical approaches are applied, dynamic panel data, ARDL, and local projections models. Four indexes of capital controls have contributed to the finding that a tighter level of capital controls reduces the sensitivity of capital flows to monetary and exchange rate shocks. These findings on the benefits of capital controls are particularly asymmetric according to the differences between controls on inflows and outflows, and the differences between floating and pegged exchange rate regimes.

Information content of order flows in the FX market: importance of nonfundamental factors

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yacine Hammami ◽  
Sabrine Kharrat
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Information Content ◽  
Explanatory Power ◽  
Empirical Work ◽  
Order Flow ◽  
Content Type ◽  
Exchange Rate Dynamics ◽  
Fx Market

PurposeThe purpose of the paper is to show that order flows determine exchange rate dynamics because they carry information about nonfundamental factors besides macroeconomic fundamentals.Design/methodology/approachTo understand the role of nonfundamental factors in driving order flows, this study uses two approaches. Initially, Evans and Rime (2016) VAR framework is followed to study the incremental information transmitted by order flow compared to macroeconomic variables. Then, the study uses the settings in which Rime et al. (2010) conduct their empirical work, which gives the researcher more latitude in specifying the identity of the factors that drive order flows.FindingsThe findings evidence that order flows explain the dynamics of the TND/USD exchange rate. The results highlight that order flows convey information about technical strategies, the currency systematic factors and political risk. This study also documents the presence of a Ramadan effect in exchange rates and order flows.Originality/valueThis study makes four contributions to the literature. First, it complements the literature on the FX microstructure of emerging markets. The study investigates the information content carried by order flows, while the previous literature has focused solely on examining the explanatory power of order flows to explain exchange rates in emerging countries. The second contribution is that the study demonstrates formally that order flows determine exchange rates because they transmit information about nonfundamental factors. Third, this study is the first to examine whether order flows convey information about technical analysis. Four, the study relates order flow to nontraditional factors that are relevant to the Tunisian FX market.

Mergers in Indian public sector banks: can human resource practices ensure effective implementation of change?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richa Singh ◽  
Geetika Goel ◽  
Piyali Ghosh ◽  
Saitab Sinha
Keyword(s):  
Public Sector ◽  
Human Resource ◽  
Resistance To Change ◽  
Change Implementation ◽  
Empirical Examination ◽  
Content Type ◽  
Public Sector Banks ◽  
Hr Practices ◽  
Effective Change

PurposeThis study examines the link of effective change implementation (CIE) with select human resource (HR) practices and employees' resistance to change (RTC) amidst ongoing mergers in Indian public sector banks (PSBs). It also intends to highlight the role of RTC as a mediator in this mechanism.Design/methodology/approachThe authors used a structured questionnaire administered through a survey of employees of select PSBs that have undergone mergers. The hypothesized relationships were tested on 220 responses with structural equation modelling.FindingsTraining and communication of change as HR practices were found to have significant effects in implementing change. RTC fully mediated the relationship of training and CIE, and partially mediated the association of communication and CIE. Communication had a stronger influence on RTC than training. This finding upholds the importance of communication but also implies that training can reinforce effective communication of change and may not affect the implementation if not directed towards handling resistance.Practical implicationsThe significance of communication as a finding supports the theory of planned behaviour. The authors’ results also align with the social exchange theory and can be extended to the job demands-resources model. PSBs may plan for phase-wise training initiatives starting from the announcement till the end of a merger. PSBs also need to effectively communicate all relevant HR issues to employees, thus being transparent and fair. Both online and offline modes of communication can be explored. Overall, the senior management has to imbibe the handholding of employees in the short term and a sense of empathy in the longer term.Originality/valueResearch on HR in Indian banking mergers seems to take a back seat vis-à-vis strategic issues and financial performance. There also is a limited empirical examination of the role of HR practices in effective change implementation. This paper addresses both these issues by proposing a conceptual model and empirically validating it amidst the merger of PSBs. The authors also highlight how training and communication are effective in handling resistance to change.

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suriani Suriani ◽  
M. Shabri Abd. Majid ◽  
Raja Masbar ◽  
Nazaruddin A. Wahid ◽  
Abdul Ghafar Ismail
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Asset Price ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

Complexities of learning organizations – addressing key methodological and content issues

2018 ◽  
Vol 25 (6) ◽  
pp. 443-454
Author(s):  
Nataša Rupčić
Keyword(s):  
Higher Education ◽  
Learning Environment ◽  
Learning Organizations ◽  
Middle Managers ◽  
Empirical Work ◽  
Project Work ◽  
Related Factors ◽  
Content Type ◽  
Learning Challenges

Purpose The purpose of this paper is to highlight challenges regarding methodological approach in studying learning organizations as well as the following content related issues: knowledge harvesting in project work, role of middle managers in creating energized learning environment, structuring individual activities to promote learning, impact of context-related factors (spaces of performance) and content-related factors (storytelling) on learning in higher education and diverging assessments of learning organizations with regard to hierarchy and organizational size. Design/methodology/approach Conclusions and models presented in the paper have been designed based on the systems perspective, critical thinking and critical review of previous contributions. Findings Findings refer to suggestions regarding further empirical work based on solid normative contributions in the field of learning organizations in general and its specific topics such as learning in project work, organizational design, role of middle managers, learning organization perceptions and learning challenges in higher education. Research limitations/implications Conclusions and models provided in the paper need further empirical testing and validation. Practical implications Implications for practitioners have been identified in terms of recommendations regarding possible methodological approaches in further studies of learning organizations, as well as regarding the following areas: knowledge creation cycle, structuring of individual activities to promote learning, role of middle managers in creating energized learning environment, learning challenges in higher education and divergent assessments of learning organizations regarding organizational hierarchy and size. Originality/value Contributions from previous authors have been systemically and critically reviewed, adapted models have been provided and suggestions for practitioners in this regard have been offered.

scholarly journals Exchange rate pass-through to inflation in Egypt: a structural VAR approach

2018 ◽  
Vol 3 (2) ◽  
pp. 2-19 ◽  
Author(s):  
Omneia Helmy ◽  
Mona Fayed ◽  
Kholoud Hussien
Keyword(s):  
Exchange Rate ◽  
Price Index ◽  
Structural Var ◽  
Empirical Literature ◽  
Content Type ◽  
The Exchange Rate ◽  
Exchange Rate Shocks ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
The Impact

Purpose The theoretical and empirical literature stipulated that exchange rate shocks do influence the domestic price of imports. Hence, this paper aims to investigate the underlying relationship between the exchange rate and prices known as the exchange rate pass-through. Design/methodology/approach The paper uses a structural vector auto-regression (SVAR) model, drawing on Bernanke (1986) and Sims (1986), to empirically examine and analyze the pass-through of exchange rate fluctuations to domestic prices in Egypt. Findings The empirical results of the monthly data between 2003 and 2015 revealed that the exchange rate pass-through in Egypt is fairly substantial but incomplete and slow in the three price indices [IMP, producer price index and consumer price index (CPI)]. However, the impact is more prominent for consumer prices than for any other price index. This finding could be attributed to the fact that the CPI in Egypt is composed of a relatively large number of subsidized commodities and goods with administered prices as well as the authorities’ behavior in manipulating prices (i.e. export ban). This is expected to weaken the transmission of exchange rate shocks. Practical implications The result has interesting implications for Egypt’s ability to attain an effective inflation targeting regime. Originality/value The study contributes to the literature by assessing the effect of changes in the exchange rate (the Egyptian £ vis-à-vis the US$) on prices using an updated time series from 2003 to 2015. It addresses the limitations of the study of Nafie et al. (2004), which found no strong relationship between the exchange rate and inflation rate in the Egyptian context. One of these limitations was using the CPI, as the only price index.

Dynamics of capital controls: panel evidence from Asia

2020 ◽  
Vol 47 (2) ◽  
pp. 242-263
Author(s):  
Biplab Kumar Guru ◽  
Inder Sekhar Yadav
Keyword(s):  
Capital Flows ◽  
Capital Controls ◽  
Substitution Effect ◽  
Capital Flight ◽  
Empirical Examination ◽  
Content Type ◽  
Asian Economies ◽  
Asset Classes ◽  
The Impact ◽  
Gross Capital Flows

PurposeThis study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different asset classes such as debt, FDI, equity, and derivatives.Design/methodology/approachSeveral dynamic panel SYS-GMM models are employed on two sets of unique data on cross-border capital flows and capital control index along with control variables at aggregated and disaggregated level by different asset classes during 1995–2015 for a sample of 31 Asian economies.FindingsEconometric findings suggest that higher capital controls effectively reduce gross capital flows. The reduction in gross capital flows is largely found to be on account of effectiveness of controls on equity flows. However, the impact of controls on overall debt and derivative flows is found to be insignificant. Further, it was found that an increase in direct capital controls disaggregated by inflow and outflow categories significantly reduced the inflow of debt and equity + FDI flows and outflow of equity + FDI and derivative flows. Finally, the study did not find any substitution effect (due to indirect controls) and net effect on capital flows.Practical implicationsResults of such empirical examination may enable governments in respective countries to pursue prudent and rational capital controls as a shield against capital flight and shock transmission.Social implicationsPreventing capital flight through effective controls has macroeconomic benefits such as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the society.Originality/valueThe primary contribution of the study is the analysis of effectiveness of capital controls disaggregated by different asset categories such as debt, equity, FDI, and derivatives using two unique recent data sets for a large sample of Asian economies.

Are stable cryptocurrencies exempted from impossible trinity?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dimitrios Koutsoupakis
Keyword(s):  
Exchange Rate ◽  
Peer Review ◽  
Price Variation ◽  
Content Type ◽  
The Us ◽  
Us Dollar ◽  
Asset Classes ◽  
Complete Catalogue ◽  
Empirical Framework

PurposeWhile monetary autonomy is self-explanatory for cryptocurrencies such as Bitcoin with predetermined supply path, it is of great interest to probe into the monetary structures of Stablecoins. In these supply contracts and expands and capital restrictions apply due to the existence of reserves as the exchange rate arrangement adheres to a price rule.Design/methodology/approachEver since the launch of Bitcoin and its offspring, examination of cryptocurrencies' trading activity from the empirical finance viewpoint has received much attention and continues to do so. The particular monetary arrangements found in Stable cryptocurrencies (colloquially referred to as Stablecoins), however, have not been properly (1) classified and (2) studied within an empirical international finance and banking context. This paper provides an empirical framework analogous to Impossible Trinity for exploring monetary arrangements across Stablecoins wherein reserves are held as price stability is targeted.FindingsThe study findings of existence of the degree of achievement along the three dimensions of the Impossible Trinity hypothesis, namely monetary independence, exchange rate stability and financial openness for a representative sample able to cover all varieties of Stablecoins, provide fresh empirical insights and arguments to this growing literature with respect to the success of their embedded exchange rate stabilization mechanisms. While the hypothesis can be supported for all cryptocurrencies in question, the trade-off combination among exchange rate stability, capital openness and monetary independence varies with the categorical types of Stablecoins.Research limitations/implicationsIf Stable cryptocurrencies, therefore, claim the role of global monetary assets freed from sovereign limits and national boundaries, it is critical to explore whether they adhere to traditional monetary frameworks. It goes without saying that in this work the author does not use a complete catalogue of all the available Stablecoins, rather a complete catalogue of all the possible asset classes of Stablecoins. While there is a significant difficulty in finding Algorithmic Stablecoins and, so far, there is plethora of Stable Token initiatives, a broader sample to further examine these under this paper's empirical framework is suggested. Enrichment of the robustness analysis by constructing additional proxies, possibly building time series for the proposed cmo1 subindex and using additional estimation methods is encouraged.Practical implicationsStablecoins have been developed aiming to address the issue of excessive price variation in cryptocurrencies such as Bitcoin. Holders of Stablecoins enjoy the combined advantages of using a blockchain-based digital infrastructure in fulfilling the functions of store of value and media of exchange and of using a traditional currency, which merely plays the role of the unit of account (and in some circumstances the trusted reserve to which is convertible to). Understanding the varieties of Stablecoins and quantifying the components for success of their price stabilization may result in designing better Stablecoins.Social implicationsBlockchain and cryptocurrencies have introduced new challenges to money and banking. Cryptocurrencies, which independently float such as Bitcoin, have gained the interest so far due to price variation that allows for gains. But these should be by far not considered to be a substitute to traditional means of payment. Lately, Stablecoins have increasingly gained attention for that USD Tether/Bitcoin pair (a Stablecoin pegged to the US dollar at parity) has outrun the US dollar/Bitcoin pair as the most traded pair in digital exchanges marking the strong position and high demand for Stablecoins.Originality/valueThis approach uncovers the varieties of Stablecoins with respect to their monetary constraints compared to the rest of the cryptocurrencies, which independently float. In this paper, the author provides a conceptual framework for the analysis of the exchange rate mechanisms conditional on Stablecoin asset classes accompanied with an empirical study from the monetary viewpoint. This is the first work in this attempt. The empirical framework employed is analogous to the traditional theory of international monetary economics referred to as Impossible Trinityz.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/JES-06-2020-0279

How can teachers’ entrepreneurial competences be developed? A collaborative learning perspective

2015 ◽  
Vol 57 (5) ◽  
pp. 492-511 ◽  
Author(s):  
Katariina Peltonen
Keyword(s):  
Collaborative Learning ◽  
Interpretative Phenomenological Analysis ◽  
School Context ◽  
Empirical Work ◽  
Training Programme ◽  
Content Type ◽  
Self Confidence ◽  
Collegial Support ◽  
Training Programmes

Purpose – The purpose of this paper is to explore the role of collaborative learning in the development of teachers’ entrepreneurial competences in the school context at primary, secondary and vocational levels of education. Design/methodology/approach – The research is based on an interpretative and collaborative learning approach to teachers’ entrepreneurial competence development. The empirical work relies on teachers’ written learning reflections collected during the chosen training programme and applies an Interpretative Phenomenological Analysis (IPA) method to analyze the data. Findings – The findings demonstrate that collaborative learning can help teachers to adopt a more entrepreneurial teaching approach. The findings highlight that social interaction and collegial support are important “drivers” for building self-confidence, further showing that conceptual and pedagogical renewal leads to an in-depth understanding of the work role and its meaning in society. Research limitations/implications – The study is of an explorative nature and bound to a specific contextual setting in Finland. Therefore further empirical research is needed to affirm the study’s suggestions on the effects of other collaborative learning interactions. Practical implications – The research findings provide new insights for teacher trainers and policy makers on how to enhance entrepreneurial teaching competences. The study concludes with new directions for designing and managing teacher training programmes. Originality/value – The paper enhances the understanding of teachers’ entrepreneurial competences, the role of collaborative peer learning in this process and thus bridges the gap between teacher research and entrepreneurial competence literature.

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