scholarly journals DOES ECONOMIC POLICY UNCERTAINTY REDUCE FINANCIAL INCLUSION?

2021 ◽  
Vol 17 (No.1) ◽  
pp. 53-80
Author(s):  
Peterson K Ozili
Keyword(s):  
Economic Policy ◽  
Financial Services ◽  
Credit Cards ◽  
Financial Inclusion ◽  
Policy Uncertainty ◽  
Economic Policy Uncertainty ◽  
Electronic Payments ◽  
Nonperforming Loans ◽  
Negative Effect ◽  
High Level

This study investigates whether the level of economic policy uncertainty (EPU) would reduce the level of financial inclusion. It was predicted that a high level of EPU could have a negative effect on the level of financial inclusion. It was argued that a high level of EPU would discourage financial institutions from providing basic financial services to low end customers and unbanked adults, and this would lead to a decrease in the level of financial inclusion. Using a sample of 22 countries, the study found that the level of EPU did not have a significant impact on financial inclusion. None of the nine indicators of financial inclusion were found to have a significant direct relationship with EPU. However, there was some evidence that the combined effect of a high level of EPU and high nonperforming loans could reduce financial inclusion, particularly through bank branch contraction and a reduction in the use of electronic payments. Furthermore, the use of formal accounts and credit cards would increase in times of high credit supply and when there was a high level of EPU.

scholarly journals Economic policy uncertainty and overinvestment: evidence from Korea

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Wenwen Jiang ◽  
Hwa-Sung Kim
Keyword(s):  
Economic Policy ◽  
Cash Flow ◽  
Negative Relationship ◽  
Free Cash Flow ◽  
Policy Uncertainty ◽  
Economic Policy Uncertainty ◽  
Korean Family ◽  
Significant Difference ◽  
Negative Effect ◽  
High Level

The authors show that there is a negative relationship between economic policy uncertainty (EPU) and firm overinvestment using Korean data from 2007 to 2016. Since Jensen (1986) shows that a firm's free cash flow is an important factor of overinvestment, the authors examine how free cash flow influences the sensitivity of overinvestment to EPU. The authors find that a high level of free cash flow attenuates the negative effect of EPU on overinvestment. The authors find that there is no significant difference in the effect of EPU on overinvestment between Chaebol (Korean family-run conglomerates) and non-Chaebol firms, which is consistent with the literature that the features of Chaebol are weakening.

The effect of economic policy uncertainty on US tourism net exports

2021 ◽  
pp. 135481662110253
Author(s):  
Abebe Hailemariam ◽  
Kris Ivanovski
Keyword(s):  
Economic Policy ◽  
Policy Uncertainty ◽  
Structural Vector Autoregression ◽  
Economic Policy Uncertainty ◽  
Vector Autoregression Model ◽  
Long Run ◽  
Negative Effect ◽  
Positive Shock ◽  
Net Export ◽  
Positive Effect

This article models the endogenously interrelated relationship between global economic policy uncertainty (EPU), world industrial production (WIP), and the demand for US tourism net export (TNX) expenditures. To do so, we apply an identified structural vector autoregression model over monthly data spanning from January 1999 to October 2020. Our findings reveal that a positive shock in WIP has a significant positive effect on demand for TNXs. In contrast, unanticipated increases in price and EPU have a statistically significant negative effect on TNXs. Our results show that, in the long run, a one standard deviation shock in global EPU explains about 26.05% of the variations in tourism net service exports.

scholarly journals Whether Digital Financial Inclusion Can Improve Capital Misallocation or Not: A Study Based on the Moderating Effect of Economic Policy Uncertainty

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Guohua He ◽  
Lu Shen
Keyword(s):  
Economic Policy ◽  
Rural Areas ◽  
Spillover Effect ◽  
Financial Inclusion ◽  
Policy Uncertainty ◽  
Economic Policies ◽  
Real Economy ◽  
Economic Policy Uncertainty ◽  
The Impact ◽  
Positive Effect

This paper discusses the impact of digital financial inclusion on regional capital’s turn from the fictitious to the substantial economy. The continuous decline of the capital efficiency of the real economy is an important reason for the misallocation of financial capital, such as the financialization of real enterprises. Development of the digital financial inclusion helps to relieve small and micro businesses from financing constraints, encourage civilian consumption, and improve services concerning issues of agriculture, rural areas, and farmers. Yet, its financial features also indicate potential systematic risks, manifested as the capital’s departure from its intended purpose of serving the substantial economy, given some beneficiaries’ investment in the fictitious economy. Based on the provincial panel data between 2011 and 2019, this paper constructs an index describing capital’s diversion from the fictitious to the substantial economy. This paper then analyzes the impact of digital financial inclusion on such a diversion of the regional capital, investigating the regulatory effects caused by the uncertainty in economic policies. Empirical study reveals that digital financial inclusion has an evident positive effect on regional capital’s diversion from the fictitious to the substantial economy but without any spatial spillover effect. Among the three subdimensions of digital financial inclusion-scope of coverage, depth of usage, and level of digitalization, the scope of coverage has the strongest positive effect, and digitization level, the weakest. The positive correlation between digital financial inclusion and capital diversion from the fictitious to the substantial economy is under negative regulation due to economic policy uncertainty. In other words, increasing uncertainty in the economic policy would weaken digital financial inclusion’s support of the substantial economy.

Economic policy uncertainty, consumer confidence in major economies and outbound tourism to African countries

2021 ◽  
pp. 135481662098538
Author(s):  
Hassan F Gholipour ◽  
Robin Nunkoo ◽  
Behzad Foroughi ◽  
Hassan Kalantari Daronkola
Keyword(s):  
Economic Policy ◽  
Generalized Method Of Moments ◽  
Positive Change ◽  
Consumer Confidence ◽  
Policy Uncertainty ◽  
African Countries ◽  
Economic Policy Uncertainty ◽  
Negative Effect ◽  
The Impact ◽  
Tourism Flows

Uncertainty, which is the only certain thing about the future, influences economic agents, their behaviours and economic activity. Debates and concerns about policy uncertainty have intensified following events such as the financial crisis, Brexit and more recently, the Covid-19 pandemic. The purpose of this study is to investigate the impact of changes in economic policy uncertainty and consumer confidence in a set of major economies on tourism flows to African countries. Using data over the period of 2005–2019 and applying panel difference generalized method of moments method, our results show that a positive change in consumer confidence in Canada, China, France, Japan, Russia and the United Kingdom (UK) has favorable impact on tourism departures from these countries to 25 African countries. We also find that a positive change in uncertainty in Canada, Russia, Spain and the UK has negative effect on tourist departures from these countries to African countries. The implications of the results for tourism development in African countries are discussed.

Party determinants of FDI: Evidence from governing party fractionalization in government

2021 ◽  
pp. 135406882110119
Author(s):  
Jiangang Jiang ◽  
Jianhong Zhang ◽  
Hongjian Cao
Keyword(s):  
Economic Policy ◽  
Real Option ◽  
Central Government ◽  
Policy Uncertainty ◽  
Government Ownership ◽  
Host Countries ◽  
Economic Policy Uncertainty ◽  
Real Option Theory ◽  
High Level ◽  
Positive Effect

Based on real option theory and transaction cost theory, we hypothesize that a high level of governing party fractionalization in the host country’s government fosters FDI because high governing party fractionalization is associated with low economic policy uncertainty. By using the data of governing party fractionalization in 135 host countries and greenfield FDI projects from China from 2003 to 2015, the findings of the study confirm the positive effect of governing party fractionalization on FDI. Moreover, the results of our studies confirm that the positive effect of governing party fractionalization on FDI is weakened for investing firms with experience in host countries and with central government ownership, for FDI projects conducted in natural resource industries, and in host countries with high GDP growth and low capital abundance. We further confirm that economic policy uncertainty is a mechanism through which governing party fractionalization influences FDI.

scholarly journals Customer Concentration, Economic Policy Uncertainty and Enterprise Sustainable Innovation

2020 ◽  
Vol 12 (4) ◽  
pp. 1392 ◽  
Author(s):  
Tingyong Zhong ◽  
Yimeng Zuo ◽  
Fangcheng Sun ◽  
Jeoung Yul Lee
Keyword(s):  
Economic Policy ◽  
Research And Development ◽  
Listed Companies ◽  
Customer Relationship ◽  
Driving Mechanism ◽  
Policy Uncertainty ◽  
Economic Policy Uncertainty ◽  
High Level ◽  
The Relationship ◽  
Different Levels

Few studies have addressed how customer concentration affects the decision of a firm’s research and development (R&D) strategies and then innovation outcome. Using a sample of China’s listed companies for the period from 2009 to 2017, this study investigates the relationship between customer concentration and enterprise sustainable innovations, as well as how such the relationship changes with economic policy uncertainty. The findings imply that there is a significant inverted-U-shaped relationship between customer concentration and enterprise sustainable innovations. Under a high level of economic policy uncertainty, the advantage of the customer relationship is maximized. In this context, raising customer concentration significantly promotes enterprise sustainable innovations. Customer concentration affects innovations differently as the equity properties, and locations of enterprises vary under different levels of economic policy uncertainty. Thus, the interval of customer concentration conducive to enterprise innovations differs. The results are robust to econometric techniques that control for endogeneity. Overall, our findings suggest that enterprises build and adjust the customer relationship and improve the driving mechanism for sustainable innovations.

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