Directions of improvement of multinational banks’ credit activity regulations in terms of debt-type economy

Research background: Amidst deepening economic internationalization and financial globalization, multinational banks remain the most important financial intermediaries in the international debt capital market. By ensuring the cross-border movement and redistribution of credit resources, multinational banks’ credit activities lead to the accumulation of external indebtedness in the host countries. Purpose of the article: The purpose of the article is to substantiate scientific and practical recommendations for improving multinational banks’ credit activities regulations in order to minimize their negative impact on the level of external indebtedness and the formation of the debt-type economy in the host countries. Methods: Methods of abstraction, systematization and generalization, as well as system approach have been used in our research. Findings & Value added: A hierarchical system of multinational banks’ credit activity regulation, which includes institutional-subjective (the level of multinational banks themselves), macro-regional (the level of the home country and host countries), mega- and meta-regional, and global levels have been proposed. Scientific and practical approaches to regulating multinational banks’ credit activities, which are based on the introduction of special regulatory measures by the countries with debt-type economies (transformation of external financing sources, revision of forms of credit cooperation with multinational banks, intensification of inclusion in the processes of securitization of credit relations, introduction of a system of macroprudential regulation instruments, increasing the level of international liquidity), have been developed.

External Debt in Bosnia and Herzegovina – An Empirical Analysis

Over the last few decades, many countries in the world have been struggling with high indebtedness. This has been especially emphasized in periods of crisis, and this was not an exception during the last global economic crisis in 2009. The advent of the crisis has further increased the need for borrowing. Increasing indebtedness after the crisis was also characteristic of BiH economy, the country in our research focus, which had an increase of public external debt by over 100% over the last two decades.The paper focuses on the external indebtedness of Bosnia and Herzegovina (BiH) over the period 2004-2017. The empirical part relies on dynamic modelling - Vector Autoregression Model, which is used to explore total external indebtedness. The empirical investigation implies that foreign-trade exchange deficits have had the greatest impact on rising indebtedness in BiH, while movements in EURIBOR interest rates have little influence in explaining this variability. The empirical investigation implies that macroeconomic policy in BiH, if it wants to keep the external debt under control over the longer time horizon, does need to focus on deficits in its foreign exchange more. One of inevitable priorities is to work on supporting production based of export from this economy.

Macroeconomic determinants of external indebtedness of Ethiopia: ARDL approach to co-integration

Although Ethiopia is one of the Heavily Indebted Poor Countries (HIPC), there is a lack of empirical studies about the determinants of its external indebtedness. This paper aims to fill this gap by examining the macroeconomic determinants of the external indebtedness of Ethiopia between 1981 and 2016, using the two- and three-gap models as a theoretical framework and an autoregressive distributed lag bound testing approach. The result shows that in the long run, the savings-investment gap, trade deficit, fiscal deficit, and debt service have a positive and significant impact on external indebtedness. However, the growth rate of gross domestic product, trade openness, and inflation negatively and significantly affect the external indebtedness of the country. These results coincide with the predictions of the two- and three-gap models of the theoretical framework. The study argues that appropriate macroeconomic, social, and supply-side policies are essential to reducing the external indebtedness of Ethiopia.

Determinants of External Indebtedness in Heavily Indebted Poor Countries: What Macroeconomic and Socio-Economic Factors Matter?

This study specifically examined whether macroeconomic and socio-economic factors such as corruption, foreign aid, government expenditure, external reserve, population growth, economic growth, and unemployment rate matter in increasing or reducing the level of external indebtedness in heavily indebted poor countries (HIPCs). Both static panel data and panel fully modified ordinary least squares (OLS) estimation techniques were employed. Using panel data set of all the 39 HIPCs covering period of 1996 to 2018, we found out that the factors that matter in increasing their external indebtedness are high rate of corruption that leads to mismanagement of public funds, high dependency on foreign aids, increase in government expenditure, population growth, and unemployment rate. However, external reserve and gross domestic product (GDP) has a reducing effect on their external indebtedness. In terms of causal relationship, only corruption, population growth, and GDP have a causal relationship with external debt, while other variables exhibited a zero causal relationship with external debt. JEL Classifications: F34, E6, E24

Sostenibilidad de la deuda o la vida en el centro

ResumenEl problema del endeudamiento externo recurrente de los países dependientes resurge períodicamente con una nueva crisis. En el caso de la Argentina, el problema ha sido analizado desde los años ochenta a partir del concepto de sustentabilidad de la deuda. En la actualidad, el mismo recupera un lugar central en la discusión.Sin embargo, los aportes recientes desde la economía política feminista y la ecología proveen nuevas claves para construir una revisión del problema en otras dimensiones. En particular, ponen en el centro del asunto la cuestión de la sostenibilidad de la vida como eje articulador de cualquier solución a la cuestión de la deuda externa.En este trabajo buscaremos presentar una discusión que recupere algunos de los hitos del debate en la Argentina e incorpore estas nuevas perspectivas. Sin resolver de manera definitiva el problema en cuestión, pretendemos abrir algunas reflexiones que merecen ser puestas sobre la mesa.---O problema do endividamento externo recorrente dos países dependentes está periodicamente a ressurgir com uma nova crise. No caso da Argentina, o problema tem sido analisado desde os anos 80 a partir do conceito de sustentabilidade da dívida. Atualmente, ele recupera um lugar central na discussão.No entanto, as recentes contribuições da economia política feminista e da ecologia fornecem novas chaves para construir uma revisão do problema em outras dimensões. Em particular, colocam no centro da questão a questão da sustentabilidade da vida como eixo articulador de qualquer solução para a questão da dívida externa.Neste documento procuraremos apresentar uma discussão que recupere alguns dos marcos do debate na Argentina e incorpore estas novas perspectivas. Sem resolver definitivamente o problema em questão, pretendemos abrir algumas reflexões que merecem ser colocadas em cima da mesa.---The problem of recurrent external indebtedness of dependent countries is periodically re-emerging with a new crisis. In the case of Argentina, the problem has been analyzed since the 1980s from the concept of debt sustainability. At present, it recovers a central place in the discussion.However, recent contributions from feminist political economy and ecology provide new keys to build a review of the problem in other dimensions. In particular, they put in the center of the matter the question of life sustainability as the articulating axis of any solution to the foreign debt issue.In this paper we will seek to present a discussion that recovers some of the milestones of the debate in Argentina and incorporates these new perspectives. Without resolving the problem in question definitively, we intend to open some reflections that deserve to be put on the table.