The impact of financial repression on manufacturing upgrade based on fractional Fourier transform and probability

This paper proposes a method combining fractional Fourier transform (FRFT) and a high peak-to-average power ratio suppression algorithm. Calculations show that as the order of the FRFT decreases, the peak-to-average power ratio of the signal gradually decreases; combined with the suppression algorithm can further reduce the peak-to-average power ratio of the system and solve the problem of the suppression algorithm affecting system performance. At the same time, this paper uses the 2012 World Bank survey data of Chinese manufacturing enterprises to study the influence of financial repression on the selection of financing channels of manufacturing enterprises. The research results show that financial repression has a significant impact on the choice of financing channels for manufacturing enterprises, which greatly increases the proportion of informal financial financing in the operating capital of enterprises and reduces the proportion of formal financial financing. Financial repression has led to an increase in the cost of formal financial financing, making enterprises choose informal financial channels for financing. Among them, large enterprises tend to choose commercial credit in informal finance, while small and medium-sized enterprises choose private credit It is possible to choose two financing channels, which reflects the ‘scale discrimination’ characteristics of financial repression.

Financial Repression and Inequality towards Economic Growth during the Pandemic in Indonesia

Background – During the pandemic, the global economy was greatly affected, including Indonesia. Currently, Indonesian government expenditure is focused on overcoming the impact of the pandemic by implementing policies in various sectors that have a major impact on vulnerable communities. This causes widespread poverty, which is indicated by the occurrence of income inequality due to government policies through financial repression that possibly affects economic growth. Purpose – This study aims, first, to analyze the financial repression policies carried out by the Indonesian government during the pandemic (2019-2021 period) on Indonesia's economic growth as a developing country. The second objective is that the impact of financial repression carried out as a government policy will be studied more deeply on income inequality because most of the Indonesian population works in the informal sector. The third objective is to further analyze the relationship and impact of the two macroeconomic factors (financial repression and income inequality) simultaneously in the midst of a pandemic that affects economic growth in Indonesia. Design/methodology/approach – This study uses a quantitative and descriptive exploratory approach with secondary data. Data analysis used simultaneous equations with 2 Stage Least Square. Findings – The results of this study prove that income inequality and financial repression have no significant effect on the level of economic growth in Indonesia. However, in the opposite relationship, if the rate of economic growth is associated with the death rate of the population, which represents the condition of the COVID-19 pandemic, it shows a significant negative effect on the rate of economic growth and income inequality, as well as financial repression. Research limitations – This study is limited by the data period during the pandemic (late 2019 to July 2021) and the availability of data from the Badan Pusat Statistik (Central Bureau of Statistics) and the World Bank. Originality/value – The measurement of financial repression by the money supply and others, as a component of equation 1, and measurement of inequality using the Gini ratio or other poverty index as a component of equation 2. Both equations are linked to Indonesia's economic growth rate.

Analysis of Policy Financial Assets Model under the Concept of Rural Revitalization in Xinjiang

In recent years, with the rapid development of rural finance in Xinjiang, the problem of resource allocation and support has become increasingly prominent, which restricts the development of rural economy in Xinjiang. Based on this, this paper combs the policy financial asset model under the concept of Rural Revitalization in Xinjiang, and defines the concept of rural financial deepening. This paper analyzes the current situation of rural financial deepening in Xinjiang, and theoretically explains the reasons of rural financial repression in Xinjiang. This paper constructs a comprehensive evaluation index system of financial deepening and carries out empirical analysis. The results show that the total financial investment in Xinjiang has played an important role in promoting the deepening of rural finance, and the effect is very obvious. However, in the process of rural financial deepening in Xinjiang, the two dimensions of financial structure and financial efficiency did not play their due role, but became obstacles to its deepening.

Financial Deregulation

A wave of liberalization swept the end of the twentieth century. From the 1970s and 1980s onwards, most developed countries have passed various measures to liberalize and ‘modernize’ the financial markets. Each country had its agenda, but most of them have experienced, to a different extent, a change in regulatory regime. This change, often labelled deregulation and associated with the advent of neoliberalism, was sharply contrasting with the previous era, the Bretton Woods system, which has sometimes been portrayed as an era of ‘financial repression’. On the other hand, a quick glance at financial regulation today, at the amount of paper it produces, at its complexity, at the number of people involved, and at the resources invested in it, is enough to say that, somehow, there is more regulation today than ever before. In the new system, financial regulation has taken unprecedented importance. As more archival material is becoming available, a better understanding of the fundamental changes in the regulatory environment towards the end of the twentieth century is now possible. What kind of change exactly was deregulation? Did competition between financial regulators lead to a ‘race to the bottom’ in regulation? Is deregulation responsible for the recurring financial crises which seem to have characterized the international financial system since the 1980s? The movement towards a more liberal regulatory regime was neither linear nor simple. This book—a collection of chapters studying deregulation in various countries and contexts—examines the national and international pathways of deregulation by providing an in-depth analysis of a short but crucial period in a few major countries.

EU Bank Regulation after the Great Financial Crisis

The chapter outlines the main features of the post-crisis regulatory regime for banks in the European Union. It traces the evolution of the approach taken by EU legislators which transformed the deregulation which prevailed prior to the Great Financial Crisis (GFC) into a regulatory regime which though far from financial repression known in the 1970s, is oriented towards functionally prioritizing financial stability and banks’ functions in the broader economy. This is achieved through co-responsibilization of the banking sector for public objectives, explicit regulation of structure and operations as well as far-reaching powers granted to new oversight authorities. The chapter explains the features of such a new bespoke regulatory regime for EU cross-border banking drawing on the new framework for bank crisis prevention and management, that is EU resolution law.

DETERMINANTS OF A COUNTRY’S GNP TO GDP POSITION: A REVISIT

In memoriam Professor Eu Chye TAN The Singapore Economic Review express sincere gratitude for the work done by Professor Tan serving on its Editorial Board from 2017–2020. The aim of this paper is to identify the factors that could contribute to an increase in a country’s GNP relative to its GDP. This represents a sequel to [Tan, EC, CF Tang and RD Palaniandi (2019). What could cause a country’s GNP to be greater than its GDP? Singapore Economic Review, doi:10.1142/S0217590819500073.] on what could cause a country’s GNP to exceed its GDP. Annual data of a panel of 52 countries from 1992 through 2016 are mobilized for the purpose, with the sample period split into five-year average intervals. The possible determinants of the relative position include the savings-investment gap, international reserves, state of technology, demography, unemployment, export-orientation, income inequality, size of the primary commodities sector, financial repression, tax incidence and the ease of doing business. Based upon the application of the system GMM technique to winsorized data and filtered data from Cook’s Distance Outlier Test, the savings-investment gap could enhance the GNP–GDP percentage of a country. The percentage could be lowered by export orientation, uneven income distribution and the size of the working age population.

The ZIRP trap – The institutionalization of negative real interest rates

This paper analyzes the consequences of the monetary policies enact-ed by Western central banks from 2008 on and the possibilities to end these policies. Zero interest rate policies (ZIRP) actually impaired the recovery that was underway by subsidizing a distorted structure of production. The over­ indebtedness of Western economies was artificially propped up thus delaying recovery. We also show how ZIRP fosters moral hazard, the development of new bubbles and breeds unintended consequences that destabilize the finan­ cial system. ZIRP adversely influences entrepreneurship and culture by discour­ aging hard work and prudent investment. In today´s central bank world, ZIRP implies the institutionalization of negative real interest rates. It harms traditional entrepreneurial virtues, complicates long-term planning, politicizes society and erodes the foundations of capitalism. Exiting ZIRP is politically costly. We analyze the exit options that remain for policy makers, including financial repression, high inflation, default, capital levies, bail-ins and currency reforms, and evaluate them from a free-market perspective. Keywords: ZIRP, unconventional monetary policy, overindebtedness, exit op­ tions, negative real interest rates. JEL Classification: E14, E31, E32, E52 Resumen: Este artículo analiza las consecuencias de las políticas monetarias de los bancos centrales a partir de 2008 y la posibilidad de salir de estas políticas extraordinarias. ZIRP impidió la recuperación subvencionando una estructura productiva distorsionada. El sobreendeudamento de las economías occidentales se mantuvo y alargo artificialmente retrasando la recuperación. Mostramos también que ZIRP causa riesgo moral, el desarrollo de nuevas bur-bujas y consecuencias no intencionadas que desestabilizan el sistema financie-ro. ZIRP afecta negativamente a la función empresarial y a la cultura. Desincen-tiva el trabajo y la inversión prudente. En el mundo actual de bancos centrales, ZIRP implica la institucionalización de tipos de interés reales negativos. Daña las virtudes empresariales tradicionales, complica la planificación a largo pla-zo, politiza la sociedad y mina las bases del capitalismo. La salida de ZIRP es políticamente costosa. Analizamos las opciones de salida que les quedan a los políticos incluyendo la represión financiera, una inflación elevada, el incumplimiento en los pagos, los impuestos sobre el capital, bail-ins y reformas monetarias que son evaluadas desde una perspectiva liberal. Palabras clave: política de tipo de interés cero (ZIRP), política monetaria no convencional, sobreendeudamiento, opciones de salida, tipos de interés reales negativos. Clasificación JEL: E14, E31, E32, E52.

Do competition and efficiency lead to bank stability? Evidence from Bangladesh

Financial deregulation after financial repression during 1980s and 1990s has stimulated a fierce competition among banks across the world. In pace with this, banking industry of Bangladesh is also experiencing an intense competition, since it is composed of a large number of banks. Considering this upsurge, our study aims to explore the impact of competition and efficiency on financial stability of Bangladeshi banks over 2009–2017. For exploring this nexus, we calculate Boone indicator and Z-score, construct banking efficiency index by principal component analysis, using bank-level data to measure competition, stability and efficiency, respectively, and analyze the impact of efficiency on financial stability at different levels of competition. We address the endogeneity of the estimation by employing two-step system GMM and different robustness checks. The findings of our study suggest a nonlinear competition–stability relationship, and though efficiency contributes to stability, the impact is moderated in the presence of competition. Our findings are robust to alternative measures of competition, stability and control variables, which could be useful for policy makers to formulate strategies and policies to maintain financial stability.

The Effects of Ownership Structure on Borrowing Rate: The Case of Listed Iranian Companies

The Iranian banking system engages in financial repression, and there are legal restrictions on interest rate. However, micro-evidence shows that the interest rates paid by Iranian firms in this condition are different across firms. This article aims to investigate the roots of the difference in borrowing rates by exploring the effects of the borrowers’ ownership structure and bank–firm relationship features. Using data collected from companies listed in the Tehran Stock Exchange (TSE) for the period 2007–2016, empirical models are estimated through applying the dynamic panel data regression method. According to the estimation results, the presence of an institutional stockholder, and particularly banks, among a firm’s shareholders can generally reduce its borrowing rate. Moreover, the results show that the financing rate is significantly lower in the firms with more than 20 per cent of their shares owned by the government. In addition, the findings suggest that borrowers of unhealthy banks, in terms of non-performing loans (NPL), bear a higher finance rate.