Assessment and influencing factors analysis of economic system vulnerability of the Belt and Road Initiative countries

Economic vulnerability is an important indicator to measure regional coordination, health and stability. Despite the importance of vulnerabilities, this is the first study that presents 26 indicators selected from the dimensions of the domestic economic system, external economic system and financial system in the Belt and Road Initiative (BRI) countries. A quantitative analysis is conducted to analyze the characteristics of spatial heterogeneity of vulnerability of the economic subsystems and the comprehensive economic system of the BRI countries and the main influencing factors of the comprehensive economic system vulnerability (CESV) are identified based on obstacle degree model. The results show that the CESV of the East Asia, South Asia and ASEAN countries are lower than that of the Middle Eastern Europe, Central Asia and West Asia countries. The CESV of the BRI countries are generally in the middle level and the average vulnerability index of highly vulnerable countries is twice as much as that of lowly vulnerable countries. In addition, in terms of the vulnerability of the three subsystems, the spatial distribution of vulnerability of the domestic economic system (DESV) and financial system (FSV) is basically consistent with the spatial distribution pattern of CESV, both of which are low in East Asia and South Asia and high in West Asia and Central Asia. While, the vulnerability of external economic system (EESV) shows a different spatial pattern, with vulnerability of West Asia, Central Asia and ASEAN higher than that of East Asia and South Asia. The main obstacle factors influencing the CESV of BRI countries include GDP growth rate, saving ratio, ratio of bank capital to assets, service industry level, industrialization level and loan rate. Therefore, the key way to maintain the stability and mitigate the vulnerability of the economic system of BRI countries is to focus on the macroeconomic development and operation, stimulate the economy and market vitality, promote the development of industries, especially the service and secondary industries, and optimize the economic structure, banking system and financial system.

Effective Practices of Macroprudential Stress Testing as a Tool of Increasing the Stability of Russian Financial System in the Context of Macroeconomic Shocks

The article examines the evolution of the prudential approach to banking regulation, examines the practical contribution of the Basel Committee on Banking Supervision to the development and implementation of internationally unified practices and procedures for stress testing and supervision. The authors share the point of view that the existing methods and practices of stress testing still need improvements and methodological improvements, since they regularly allow the practical implementation of adverse scenarios leading to financial shocks and global crises. As a significant disadvantage of many actively used stress testing models, it is noted that they are often focused on complex, highly bureaucratic procedures for the preparation and analysis of financial statements, the main purpose of which is to assess the probabilities and sizes of losses and identify scenarios for the development of the situation for each specific bank, and no risks for the financial system as a whole. The authors come to the conclusion that it is advisable to prioritize the use of alternative stress testing models in crisis and post-crisis conditions, the forecasts within which are based on the actual values of financial market indicators, macroeconomic variables, and other open data. Special attention is paid to the stylized CLASS model, based on simple econometric models, as well as stress testing the current market value of V-lab. Based on the results of the study, the authors come to a number of conclusions that the role of the macroeconomic component in the procedures, methods, and algorithms for macroprudential stress testing used in Russia should increase, the degree of involvement and the sphere of responsibility for its results of key institutional units of the public administration system should expand, and macroprudential stress testing itself should not be limited to supervisory stress testing in everyday practice.

Taming Hyperchaos with Exact Spectral Derivative Discretization Finite Difference Discretization of a Conformable Fractional Derivative Financial System with Market Confidence and Ethics Risk

Four discrete models, using the exact spectral derivative discretization finite difference (ESDDFD) method, are proposed for a chaotic five-dimensional, conformable fractional derivative financial system incorporating ethics and market confidence. Since the system considered was recently studied using the conformable Euler finite difference (CEFD) method and found to be hyperchaotic, and the CEFD method was recently shown to be valid only at fractional index , the source of the hyperchaos is in question. Through numerical experiments, illustration is presented that the hyperchaos previously detected is, in part, an artifact of the CEFD method, as it is absent from the ESDDFD models.

Threshold Effect of Financial System on High-Quality Economic Development

The relationship between financial system and economic development is not a simple linear relationship. In some cases, the development of finance may not improve the economic development level. This paper studies the influence of the financial system on the high-quality economic development, constructs the comprehensive index of the financial system by the factor analysis method, and calculates the green total factor productivity as the index of high-quality economic development by the CRS multiplier model. Empirically, this paper takes the panel data of 30 provinces, municipalities, and autonomous regions in China from 2005 to 2018 as samples, constructs the panel threshold model, and applies the financial system, economic development level, infrastructure, and industrial structure as threshold variables to study the nonlinear relationship between the financial system and high-quality economic development. The results demonstrate that the impact of the financial system on the high-quality economy presents an inverted U-shaped relationship when the financial system and industrial structure are the threshold variables, indicating that there is an optimal interval, that is, when the financial system threshold is between 0.1355 and 0.1377 and the industrial structure threshold is between 0.1364 and 0.1408, the financial system plays a greater role in the allocation of funds and has the most obvious positive impact on high-quality economic development. Meanwhile, the impact of the financial system on the high-quality shows a marginal decreasing trend when the economic development level and infrastructure are the threshold variables; when the economic development threshold is less than 0.1409 and the basic setting threshold is less than 0.1167, the financial system has the greatest effect on promoting high-quality economic development. Based on the research results, targeted policy suggestions are put forward.

A Study of the Spatial Effects of Financial Support and Economic Growth under Optimal Control of Nonlinear Generalized Complex Systems

This paper provides an in-depth analysis and study of the spatial effects of financial support and economic growth with the help of nonlinear generalized complex systems. Taking the industrial sector as the research object and combining the relevant contents of neoclassical investment theory, information economics, and institutional economics, this paper clearly defines and argues that the main feature of current financial policy is financial constraint rather than financial inhibition based on an in-depth understanding of the theoretical connotation and policy rationality of financial constraint and, as a premise, further analyzes the financial constraint policy causing excessive investment and capital mismatch in the corporate sector. It further analyzes the mechanism of the role of financial constraint policies in causing overinvestment and capital mismatch in the corporate sector and conducts empirical tests from three research perspectives of measuring investment efficiency, output efficiency of investment, allocation efficiency of industry capital, and investment behavior of microenterprises, and finally puts forward relevant policy recommendations in conjunction with the evaluation of the efficiency of financial constraint policies. This paper selects three dimensions of the financial system, namely, financial structure, financial efficiency, and financial scale, and studies the adaptability between these three dimensions and the development of the real economy, respectively, and then uses different empirical methods to analyze the dynamic adaptability effects between the development of the real economy and these three dimensions of the financial system and finally explores the way of adaptability between the financial system and the development of the real economy. This paper provides a medium and micro theoretical basis and new empirical evidence for understanding the importance of financial system reform on economic growth and also opens up a space for exploring the exit path of financial constraints and using interest rate marketization as a general grip to reasonably guide financial resources to achieve economic transformation and upgrading and sustainable and healthy development through supporting high-quality investment, using more interprovincial level data in the analysis, so it is more comprehensive and detailed than previous scholars’ studies. The examination is more comprehensive and detailed than previous scholars’ studies.

Determinants of Financial Capability: A Situational Analysis for Namibia

It is imperative that if the poor in society benefit from the massive developments in the financial sector, then such a sector must be genuinely inclusive. It should meet the needs of all citizens with the potential to use such financial services productively. This paper scopes financial inclusivity as a process ensuring ease of access, availability, and usage of financial services by all members of society. To reduce socio-economic inequality, the poor in developing countries, like everyone else, need access to a wide range of financial services that are convenient, flexible, and reasonably priced. Therefore, financial inclusivity is sought to be significant towards the global development agenda as a tool for increasing the poor’s access to financial services, often cited as a mechanism that can help reduce poverty and lower income inequality. For many years, microfinance has been heralded as a mechanism for enhancing financial inclusion. It provides an avenue through which the marginalized and the poor can access and benefit from the formal financial system. Moreover, financial inclusivity is substantially evident in the rural areas among the poor, who have no collateral or credit history for participating in the legal financial system. As a result, financial inclusion is receiving increased attention as an essential tool for reducing aspects of socio-economic inequality characterized by the isolation of individuals and communities from formal financial services, like affordable and accessible credit.

Inevitable Failure of Inconvertible Paper Money

Since the invention of paper money, it has been understood that it is difficult for its creators to resist issuing so much that it loses value. Long experience led to the single uniquely effective means of resisting this fraud: this is for the issuer to guarantee to convert their paper money, on demand, into some defined asset, such as gold, on fixed terms. With the end of the US dollar's guaranteed convertibility into gold, its value became dependent on decisions by leaders of the US government and financial system, unhindered by the need to keep it stable. Predictably, this led to unprecedented inflation of the supply of dollars, leading to ever-rising prices and continuing decline in the acceptability of dollars and US geopolitical leadership.

Paradigm Change in Financing Sources

Paradigm changes also change the sources of corporate finance. The goal of this chapter is to demonstrate how the sociological changes that will be created by technological developments transform the sources of finance within the framework of “sustainability” and “financial inclusion.” At this point, the basic elements of the financial system in the transition from traditional financing to alternative financing and to platform-based financing, albeit a new one, are examined. For this purpose, first of all, traditional financing sources and alternative financing sources are briefly mentioned, and then platform-ecosystem-based financing sources, which are the main subject of the study, are shed light on. The sources of financing provided through FinTechs are examined within the framework of digital finance-digital inclusion and online finance models (especially crowdfunding). The changes that the COVID-19 process may create in financial resources and the digital technologies it may bring are also assessed.