Macroeconomic and Institutional Drivers of Current Account in Developing Asian Countries

This study empirically investigates the impact of macroeconomic and institutional variables on the current account balances of nine selected developing Asian countries over the period of 1984-2018. The Fixed Effect (FE) technique that helps to identify the major variables that can affect the dependent variable i.e., current account has been used to analyze data. The results indicate that trade openness; domestic relative income and real effective exchange rate are the variables which are significant and positively associated with the current account balances of developing Asian countries. However, when the institutional variables are included i.e. law &order and bureaucratic quality have turned out to have the significant effect on current account as well. The dummy variable is also introduced to compare the ASEAN region with South Asian region. The results suggest that it has positive and significant effect on the current account balances of ASEAN.

The Effects of Global Value Chain Participation on Current Account Balances in African Economies: Does it Matter Being a Landlocked Country?: An Empirical Review

The general objective of this paper is to evaluate the effects of Global Value Chain Participation (GVCP) on Current Account Balance (CAB) in African countries. The specific objectives are to (1) identify the type of GVCP that contributes more significantly and positively to African countries’ current account balance and (2) find out whether being landlocked affects a country’s participation in global value chain in Africa. This paper uses panel data from three secondary sources: (1) UNCTAD-EORA database (2018) for forward and backward participation indicators, (2) WDI (2018) for current account balance, FDI, population and trade openness and (3) PWT 9.1 for exchange rates. In a linear panel specification, this research applies the Feasible Generalized Least Square (FGLS) econometric techniques and results highlight firstly that forward GVCP contributes more significantly and positively to CAB in Africa with a coefficient ranging between 1.64 and 2.43 in various regressions. Secondly, the effect of GVCP on CAB is reduced in landlocked African countries as revealed in its negative and significant coefficient of -2.33 as the variables are interacted. This paper recommends that, African countries should embark on forward participation and improve connectivity infrastructure to facilitate the participation of landlocked African economies in global interactions.

REALITY AND PROSPECTS OF INTERNET BANKING AS A DIRECTION OF DIGITALIZATION IN UKRAINE

The article covers the state of the digitalization process in Ukraine, the advantages of its implementation in the information and telecommunications spheres. The experience of foreign countries in digitalization is briefly analyzed. Some features of the functioning of the best Internet banks of the state are revealed: PrivatBank, UkrSibbank, FUIB. There is a clear trend of banks moving from branches to the Internet, when users are gradually, but persistently, accustomed to all currency transactions through special applications in smartphones. It is noted that the minimum set of any successful digital bank should be the following functions: card limit management, control of current account balances, deposit, payment of utilities, transfer of funds to accounts in other banks. It is indicated that already at this stage of digital transformation the Ministry of Finance has created a "Catalog of the best Internet banking in Ukraine", in which any Internet user in Ukraine has the opportunity to compare and choose Internet banking according to their requirements and preferences. The main advantages, threats and key problems of digitalization of the banking sector in Ukraine are listed.

Considerations on Fractional Reserve Banking and Free-Banking

In this article, our goal is to examine a controversy very dear to Austrian economists: that of the legitimacy of the fractional reserve banking system, defined as a system in which the bankers keep in their vaults a quantity of money (narrowly defined) lower than the quantity of cash deposits granted to their clients. In the Austrian vision, the monetary supply, broadly defined (Mises, 1971), consists of money properly said, plus monetary substitutes (bank notes, cash deposits), plus credit-money, this one corresponding to any future right to a monetary sum (time deposits, promissory notes, pre-fixed derivatives). In a narrow sense, money supply consists in money properly said (fiat-money or commodity money). We must, however, clarify some aspects of the money supply. Monetary substitutes have their origin in the monetary certificates. Monetary certificates, in their turn, are tools utilized to confer information about the medium of exchange. For instance, precious metal coins mintage confers information about the metal’s purity and about the weight of the coin; bank notes and current account balances confer information about the amount, overseer and proprietor of the deposited money. So, money certificates can change the agents’ valuations concerning the particular good in question, even being able of independent valuation. Monetary certificates can be physically connected to the medium of exchange or separated from it. In the case of physically connected monetary certificates, we have what we normally call monetary substitutes. Monetary substitutes can, due to their nature, work as property titles to the very medium of exchange. Contemporaneously, monetary substitutes usually can be identified with cash deposits (current account balances) and paper checks, provided that the use of bank notes is increasingly rare. Having made those clarifications concerning monetary substitutes, we will, following Mises (1971, p. 135), call fiduciary media the quantity of monetary substitutes that exceeds the quantity of money properly said. However, before proceeding with our Investigation about the consequences of the legalization of the production of fake monetary substitutes (fiduciary media), we must explain what would be a fake monetary substitute and the nature of this counterfeiting. We must, therefore, start our argumentation establishing some differences about the nature of loan and deposit contracts [x].

The Role of Macroeconomic Stability in Current Account Balances

The role of macroeconomic stability in current account balances has not been studied with a calculated index in the literature until now. It is aimed to find out the role of macroeconomic stability in current account balances for the first time in the study. The analysis is completed for the period between 1980 and 2016 for 97 countries. The macroeconomic stability is represented by an index which is created with inflation rate, growth rate, unemployment rate and fiscal balance data of all the countries. It is found out that the macroeconomic stability is one of the important determinants of current account balances like institutional quality and financial development. It has a negative and statistically significant relationships with current account balances for four different country groups which are developing countries, all countries except industrial, all countries except industrial and African countries, and all countries. Results show that the macroeconomic stability is especially important for the developing countries rather than high income countries.

How Does Profit Shifting Affect the Balance of Payments?

Profit shifting by multinational enterprises—through manipulation of transfer prices of related-party trade, intragroup lending, or the location of intangibles—affects international flows, raising the question of its impact on the current account and external balances. This paper approaches this question theoretically and empirically. In theory, profit shifting distorts the components of the current account and bilateral current account balances but leaves a country’s aggregate net balance unaffected. There is, however, a real effect on current account balances, because taxes are paid to different jurisdictions. Moreover—in practice—the measured current account could change, because not all transactions are equally easy to track. Our panel empirical results broadly confirm that the current account balance tends to be, on average, unaffected by profit shifting, but taking heterogeneity into account we find that both the real tax effect and mismeasurement strengthen income balances—and thus the current account—in investment hubs.