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on Financial Development and Growth |
| By: | Rodrigo Cuenca De Armas (Department of Economics, Universitat Jaume I, Castellón, Spain); Maria Teresa Balaguer-Coll (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | This study explores the risk of financial development traps in European regions by analysing the performance of the financial sector in terms of productivity and its relationship with GDP per capita. Using data for 226 NUTS2 regions over the period 2000–2021, we construct two original indicators adapted from Diemer et al. (2022) to a sectoral framework, capturing respectively the cyclical and structural dimensions of decoupling between financial sector dynamics and regional economic performance. The analysis reveals that a non-negligible share of European regions show signs of entrapment, with considerable heterogeneity both between and within Eastern and Western Europe. Results also point to a reduction in the share of trapped regions between the crisis period (2008–2015) and the subsequent recovery phase (2016–2021), alongside a notable inversion in the relative exposure of Eastern and Western European regions. Our findings highlight the importance of assessing the functional orientation of the financial sector (rather than its mere size or depth) and suggest that institutional and sectoral factors play a critical role in shaping regional financial resilience beyond geographic location. |
| Keywords: | financial development, development traps, regional inequalities, productivity, employment, convergence |
| JEL: | R11 R58 O16 O18 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2026/06 |
| By: | Kul B. Luintel (Cardiff Business School, Cardiff University); Jose L. Torres (Department of Economics, University of Malaga) |
| Abstract: | We develop a general equilibrium framework in which a commercial banker constrained by capital adequacy requirements creates a special purpose vehicle (SPV) to hold securitized assets off its balance sheet. By separating the bank and SPV, the banker circumvents regulation, creating a gap between statutory and effective capital ratios. The model incorporates loan-to-value and collateral constraints with credit risk to examine interactions between financial and real sectors over the business cycle. Securitization is expansionary, increases off-balance-sheet lending under tighter regulation, amplifies credit risk, and raises welfare in the steady state. |
| Keywords: | Financial crisis; securitization; special purpose vehicles; DSGE models; credit risk |
| JEL: | E32 E44 G2 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2026/2 |
| By: | Priit Jeenas; Alberto Martin; Vladimir Asriyan |
| Abstract: | Financial crises are characterized by depressed asset prices, tight financial constraints, and misallocation of resources. Standard policy responses—such as asset purchases and low interest rates—are generally intended to alleviate these symptoms. This paper distinguishes between two types of crises that appear similar but differ fundamentally in their underlying mechanisms: fire-sale crises, where productive firms are forced to sell assets; and demand-freeze crises, where productive firms are unable to purchase assets. While both lead to similar observable outcomes, they have contrasting general equilibrium effects and may call for different policy interventions. Notably, conventional policies can be counterproductive in demand-freeze crises, as they may exacerbate financial constraints and further distort resource allocation. Empirical evidence on the pattern of capital reallocation among U.S. firms suggests that demand-freeze crises are, in fact, more common. |
| Keywords: | asset purchases, capital reallocation, cleansing effects, credit easing, demand freezes, financial crises, financial frictions, fire sales, monetary loosening |
| JEL: | E22 E44 E60 D53 G01 G18 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1567 |
| By: | Mahbuba Aktar (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan) |
| Abstract: | This paper studies how digital credit – specifically BigTech and fintech lending – relates to income inequality in 42 countries from 2013 to 2019. We develop a dynamic multi-equation panel framework based on isometric log-ratio transformations of income shares, which allows us to model shifts in the entire Lorenz curve while respecting the compositional constraints that standard approaches typically ignore. BigTech credit consistently reduces the top income share, and its inequality-reducing effect is most pronounced in developed economies, in countries with stronger institutions, and in financially open environments. Fintech credit exhibits the opposite pattern: it raises the top income share while lowering the bottom 50 percent’s share, with the magnitude of this effect similarly amplified by higher development, stronger institutional quality, and greater financial openness. |
| Keywords: | Digital credit, BigTech, fintech, income inequality |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:fds:dpaper:202605 |
| By: | João Bento; Miguel Matos Torres; Hicham Nachit |
| Abstract: | We are exploring the interplay between inequality and foreign direct investment (FDI) and green technology innovation, an area that remains underexplored in international business (IB) research. This study examines how green technology innovation moderates the relationship between FDI, proxied by the performance and operational outcomes of majority-owned U.S. foreign affiliates, and income inequality, measured by the Gini coefficient of equivalised disposable income from the Luxembourg Income Study (LIS) database. We employ OECD patent data on green innovations to construct a panel dataset of 28 high-income OECD countries from 2000 to 2020. Using fixed-effects panel regressions and quantile models with bootstrapped inference, the results indicate that FDI has a significant inequality-reducing effect, and green innovation moderates this relationship, reducing income inequality. Firm investment, profitability, efficiency, and innovation interact with green innovation to reduce inequality, highlighting the role of MNEs in fostering equitable outcomes. These findings contribute to a better understanding of IB activity by unpacking the interdependent dynamics between firm performance and national competitiveness, offering policy insights to promote FDI and green innovation and mitigate inequality. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:914 |
| By: | Yasser Sedqui (UAE - Abdelmalek Essaadi University [Tétouan] = Université Abdelmalek Essaadi [Tétouan]); Bouyarden Mohamed (UAE - Abdelmalek Essaadi University [Tétouan] = Université Abdelmalek Essaadi [Tétouan]); Bakala Halima (UAE - Abdelmalek Essaadi University [Tétouan] = Université Abdelmalek Essaadi [Tétouan]) |
| Abstract: | In a context marked by the intensification of global economic and human flows, the interaction between migration and foreign direct investment (FDI) has attracted growing attention in economic research. Morocco, as a key actor on the African continent, stands out for its dual dynamic: its central role in migration issues and the expansion of its foreign direct investments in Sub-Saharan Africa. The originality of this study lies in the analysis of the link between the migratory flows of Moroccans residing abroad (MREs) and Moroccan FDI directed toward 18 Sub-Saharan African countries over the period 2018–2023.The main research question is to determine the extent to which migratory networks contribute to stimulating Moroccan investment abroad, taking into account geographical distance and the level of economic development of partner countries. Methodologically, a panel data model was estimated using the random effects approach to identify the significant determinants of Moroccan FDI flows.Empirical results confirm the catalytic role of migration flows in facilitating investment, suggesting that the Moroccan diaspora acts as a vector of trust, market knowledge, and reduction of information asymmetries. Geographical distance and the host country's GDP also emerge as key explanatory variables.These findings highlight the strategic importance of Moroccan migrant networks as a lever for enhancing the attractiveness and security of investments in Sub-Saharan Africa, underscoring the need to further integrate the migratory dimension into foreign direct investment (FDI) internationalization policies and South–South economic cooperation strategies. |
| Abstract: | Résumé Dans un contexte marqué par l'intensification des flux économiques et humains à l'échelle mondiale, la question des interactions entre migration et investissement étranger direct (IED) suscite un intérêt croissant dans la littérature économique. Le Maroc, en tant qu'acteur majeur sur le continent africain, se distingue par sa double dynamique : d'une part, son rôle central dans les questions migratoires, et d'autre part, l'essor de ses investissements directs en Afrique subsaharienne. L'originalité de cette étude réside dans l'analyse du lien entre les flux migratoires des Marocains résidant à l'étranger (MRE) et les IED marocains à destination de 18 pays d'Afrique subsaharienne sur la période 2018-2023. La problématique principale consiste à déterminer dans quelle mesure les réseaux migratoires contribuent à stimuler les investissements marocains à l'étranger, en tenant compte de la distance géographique, du niveau de développement économique des pays partenaires et des liens institutionnels. Sur le plan méthodologique, nous avons adopté une approche économétrique en données de panel, estimée selon la méthode des effets aléatoires, afin d'identifier les déterminants significatifs des flux d'IED marocains. Les résultats empiriques confirment le rôle catalyseur des flux migratoires dans la facilitation des investissements, suggérant que la diaspora marocaine constitue un vecteur de confiance, de connaissance du marché et de réduction des asymétries d'information. La distance géographique et le PIB des pays d'accueil apparaissent également comme des variables explicatives majeures. Ces résultats mettent en évidence l'importance stratégique des réseaux migratoires marocains comme levier d'attractivité et de sécurisation des investissements en Afrique subsaharienne, soulignant la nécessité d'intégrer la dimension migratoire dans les politiques d'internationalisation des IDE et les stratégies de coopération économique Sud-Sud. Mots clés : Investissements directs étrangers, Marocains résidant à l'étranger, Réseaux migratoires, Afrique subsaharienne, Migration Sud-Sud Abstract In a context marked by the intensification of global economic and human flows, the interaction between migration and foreign direct investment (FDI) has attracted growing attention in economic research. Morocco, as a key actor on the African continent, stands out for its dual dynamic: its central role in migration issues and the expansion of its foreign direct investments in Sub-Saharan Africa. The originality of this study lies in the analysis of the link between the migratory flows of Moroccans residing abroad (MREs) and Moroccan FDI directed toward 18 Sub-Saharan African countries over the period 2018–2023. The main research question is to determine the extent to which migratory networks contribute to stimulating Moroccan investment abroad, taking into account geographical distance and the level of economic development of partner countries. Methodologically, a panel data model was estimated using the random effects approach to identify the significant determinants of Moroccan FDI flows. Empirical results confirm the catalytic role of migration flows in facilitating investment, suggesting that the Moroccan diaspora acts as a vector of trust, market knowledge, and reduction of information asymmetries. Geographical distance and the host country's GDP also emerge as key explanatory variables. These findings highlight the strategic importance of Moroccan migrant networks as a lever for enhancing the attractiveness and security of investments in Sub-Saharan Africa, underscoring the need to further integrate the migratory dimension into foreign direct investment (FDI) internationalization policies and South–South economic cooperation strategies. Keywords: Foreign Direct Investment – Moroccans Residing Abroad – South–South Migration – Migratory Networks – Sub-Saharan Africa |
| Keywords: | Foreign Direct Investment -Moroccans Residing Abroad -South-South Migration -Migratory Networks -Sub-Saharan Africa, Marocains résidant à l’étranger, Réseaux migratoires, Afrique subsaharienne, Migration Sud-Sud, Investissements directs étrangers |
| Date: | 2026–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05478864 |
| By: | Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | FDI in Central, East and Southeast Europe The new trade policies in the US have so far not brought much investment into the country by Olga Pindyuk Mostly gloomy outlook with a few bright spots by Olga Pindyuk and Doris Hanzl-Weiss Most countries in CESEE finished 2024 with foreign direct investment stocks (as a share of GDP) lower than in 2021, the year before the start of Russia’s full-scale invasion of Ukraine. Also more recently, CESEE countries have been struggling to maintain their attractiveness to foreign investors, with the number of greenfield projects announced in the region in January-September 2025 reaching its lowest level for six years. China has further strengthened its role as one of the main investors in CESEE, having significantly increased the capital pledged for greenfield projects this year. Kazakhstan has become the main destination for greenfield capital, accounting for 40% of capital pledged to the entire CESEE region, mostly owing to the influx of Chinese investment. Forecasts of main economic indicators for Central, East and Southeast Europe for 2025-2027 |
| Keywords: | greenfield FDI, import tariffs, FDI inflows, FDI stocks, greenfield FDI, German-Central European supply chain |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:wii:mpaper:mr:2025-11 |
| By: | Hindriks, Jean (Université catholique de Louvain, LIDAM/CORE, Belgium); Nishimura, Yukihiro |
| Abstract: | We develop a simple conceptual framework of asymmetric countries competing simultaneously for real investment and for profit shifting in the presence of tax haven. Our goal is to identify how this two-dimensional tax competition affects the performance of tax policy, including minimum tax rules. We define a developing country as one with either a narrower tax base or lower tax capacity. The developing country sets a lower tax rate, attracting FDI. We show that policies aimed at promoting FDI competition—such as reducing transaction costs, country risk, or market-entry barriers—do not necessarily benefit the developing country. There exists a critical threshold of real-investment competition beyond which intensified competition harms the developing country (and the developed country as well). We also identify a “tax capacity externality”: fighting profit shifting in the developed (high-tax) country always raises revenue in the developing country. Finally, we determine the level of the minimum tax that the developing country prefers. This preferred minimum tax increases with both the intensity of FDI competition and the developing country tax capacity. |
| Keywords: | Profit shifting ; FDI competition ; Tax competition ; Minimum tax |
| JEL: | C72 F23 F68 H25 H87 |
| Date: | 2025–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025022 |
| By: | Hindriks, Jean; Nishimura, Yukihiro |
| Abstract: | Technological advances and economic globalization have enabled multinational enterprises (MNEs) to avoid taxes by shifting both profits and real investment to low-tax jurisdictions. We develop a tax-competition model in which asymmetric countries compete for profit and investment in the presence of a tax haven. A key feature of the model is that tax haven can only attract profit but not investment. We show that the impact of the Global Minimum Tax (GMT) depends on the form of country asymmetry (unequal tax base or tax capacity), and on the intensity of competition for investment relative to competition for profit. A central result, shared across both types of country asymmetry, is that intensified competition for investment (via market integration or lower country risk), together with stricter profit-shifting regulations, leads the low-tax host country to prefer a higher minimum tax. |
| Keywords: | Profit shifting ; Tax competition ; Tax enforcement |
| JEL: | C72 F23 F68 H25 H87 |
| Date: | 2025–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025023 |
| By: | van Asselt, Joanna; Naing, Phyo Thandar |
| Abstract: | Remittances have emerged as an important source of income for households in post-coup Myanmar. This paper utilizes data from the seventh and fourth rounds of the Myanmar Household Welfare Survey (MHWS) to analyze remittance trends between January and June 2024 with trends from July to December 2022. These two rounds are compared because they both contain detailed questions on remittances. Between January and June 2024, 16 percent of households received remittances from at least one member who was residing overseas or in a different state or region. This comprises nine percent of households receiving remittances from migrants outside of Myanmar and eight percent of households receiving remittances from migrants within Myanmar. Around 12 percent of households received remittances from a single migrant and four percent of households received remittances from two or more members. In any three-month period between January-June 2024, more households in Kayin, Mon, and Tanintharyi received remittances than households in other states/regions. Among households that received remittances from within Myanmar, they received an average of MMK 173, 768 per month (about 49 USD). Households that received remittances from outside of Myanmar received around MMK 499, 386 per month (about 141 USD), significantly higher than the amount from migrants within Myanmar. Reliance on remittances among recipients has grown since 2021. Remittances made up 33 percent of household income between September 2021 and February 2022, compared to 45 percent of household income between January and June 2024. Finally, budget share of international remittances increased from 15 percent of household income between September 2021 and February 2024 to 26 percent between April and June 2024, underscoring the growing importance of remittances from abroad for household welfare in Myanmar. |
| Keywords: | remittances; households; social protection; Myanmar; Asia; South-eastern Asia |
| Date: | 2025–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:ifprwp:175804 |
| By: | Gómez, Laura; Joachín, Arturo; Támola, Alejandro; Fernández Díez, María Carmen |
| Abstract: | Informational credit rationing is a disequilibrium phenomenon in credit markets, in which price mechanisms fail to allocate credit efficiently due to informational frictions. It is commonly argued that innovative firms are particularly susceptible to credit rationing because innovation may exacerbate information asymmetries between firms and lenders. However, this argument often overlooks the improvements in internal information and management required to undertake such activities, which can influence the net change in information available to lenders. These improvements can enhance transparency and reduce agency problems, potentially offsetting the initial informational disadvantages. Using data from the World Bank Enterprise Surveys for medium and large formal firms and proxy indicators such as product differentiation and process improvement, this study estimates the average effect of innovation-related activities on access to credit. The results reveal statistically significant reductions in the probability of experiencing credit rationing, with marginal effects ranging from 11.8 to 19.7 percentage points. These findings are robust across model specifications and suggest that product differentiation, while initially increasing informational frictions, ultimately improves firms credit profiles. |
| Keywords: | credit rationing;credit markets;innovation;productdifferentiation;agency problems |
| JEL: | D82 L25 Q31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14533 |
| By: | Celine (Yue) Fei; Ulrich Hege; Xiao Jia |
| Abstract: | We study how IPO reforms transmit to venture capital (VC) markets using the introduction of China’s entrepreneurial boards, ChiNext and the registration-based STAR. We document that both boards attract younger, higher-growth firms with weaker fundamentals in levels, but post IPO growth persists for ChiNext firms while decelerating sharply for STAR firms. VC backing plays different roles across regimes: on ChiNext it aligns with valuation premia and long-run outperformance, whereas on STAR it mainly predicts higher first-day returns. To identify causal effects on VC allocation, we construct novel text-based regulatory exposure measures from listing documents using keyword matching and Sentence-BERT semantic similarity, and show that VC financing reallocates toward firms more aligned with “supported” activities. |
| Keywords: | IPO Reforms; IPO Listing Requirements; Venture Capital; Business Description; BERT; China |
| JEL: | G24 G28 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_736 |
| By: | Yu Ji; Cong Peng; Wei Tian; Yiqun Zhuang |
| Abstract: | The paper estimates the causal effect of short-term export credit insurance (ECI) on firm exports in a major developing economy. Using data from China's policy-oriented export credit insurer matched to customs and tax records, we exploit quasi-random variation in insurance availability generated by buyer-level credit ceilings and a first come, first served allocation rule. Combining propensity score matching with an instrumental variables strategy, we find that a 1% increase in insured export value raises total exports by about 0.225%. ECI also expands export scope, increasing the number of exported products and the likelihood of entering new destination markets, while leaving unit values largely unchanged. The effects are significantly stronger for smaller and private firms, exporters in financially constrained cities, and shipments to riskier destinations, and were amplified during the global financial crisis. Back-of-the-envelope calculations imply sizable social returns, suggesting that short-term ECI can be an effective trade finance instrument for promoting export-led growth in developing economies. |
| Keywords: | short-term export credit insurance, export, trade finance, trade policy |
| Date: | 2026–03–17 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2163 |
| By: | Borel Ahonon; Guillaume Roussellet |
| Abstract: | We propose a macro-finance model in which inflation, growth, and the policy rate are driven by unobservable long-run trends and transitory cycles that investors must infer from aggregate data. Their subjective estimates of these trends, and the uncertainty surrounding them, are priced into the Treasury yield curve in a tractable way through both interest rate expectations and bond risk premia. Empirical estimates reveal an upward smooth trend in the long-run real interest rate (r-star) until the 1980s, and large investor uncertainty with confidence bands on as wide as 3.4 percentage points, contrasting with the volatile rate implied by perfect information models. |
| Keywords: | Incomplete information; interest rate stars; Bayesian learning; treasury yields; investors; uncertainty |
| JEL: | C58 E43 E52 G12 |
| Date: | 2026–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:102914 |
| By: | Khalid Dembele (USSGB - Université des sciences sociales et de gestion de Bamako); Etienne Fakaba Sissoko (Université des sciences sociales et de gestion de Bamako - USSGB - Université des sciences sociales et de gestion de Bamako, CRAPES MALI - Centre de Recherche et d'Analyses Politiques, Economiques et Sociales du Mali, Faculté des Sciences économiques et de Gestion - USSGB - Université des sciences sociales et de gestion de Bamako) |
| Abstract: | This article analyzes the macroeconomic and institutional conditions under which fiscal discipline can become a driver of productive growth rather than a constraint of austerity. It introduces the concept of transformational discipline, defined as the cumulative interaction between credible fiscal rigor, effective public financing, and institutional transparency. This integrated approach is based on the assumption that fiscal sustainability is not limited to deficit control, but depends on the quality of public spending and the credibility of institutions. The research relies on a dynamic econometric model of the ARDL/ECM type and its panel extensions (PMG and CS-ARDL), applied to ten UEMOA and Sahel countries over the period 1990–2024. Three composite indices are constructed and validated: the Fiscal Discipline Index (IDF), the Productive Public Financing Index (IFP), and the Extended Fiscal Discipline Index (IDF+), which incorporates budget transparency. Reliability tests (PCA, KMO, Cronbach's alpha) confirm the statistical robustness of the indices. The results show that credible discipline has a significant positive impact on growth (+0.35 percentage points), that productive spending amplifies this effect (+0.38 points), and that transparency reinforces their interaction (+25%). The interaction IDF×IFP (+0.12) confirms the structural complementarity between fiscal rigor and efficiency. Prospective simulations suggest that an improvement of three points in the tax ratio, two points in productive investment, and 25% in transparency could increase regional growth by approximately 1.2 percentage points per year by 2030. The study concludes that transformational fiscal discipline, grounded in credibility, productivity, and governance, represents a sustainable path toward African economic sovereignty. |
| Abstract: | Cet article analyse les conditions macroéconomiques et institutionnelles dans lesquelles la discipline budgétaire peut devenir un levier de croissance productive plutôt qu'une contrainte d'austérité. Il introduit le concept de discipline transformationnelle, défini comme l'interaction cumulative entre la rigueur budgétaire crédible, l'efficacité du financement public et la transparence institutionnelle.Cette approche intégrée repose sur l'hypothèse que la soutenabilité budgétaire ne se réduit pas à la maîtrise des déficits, mais dépend de la qualité des dépenses publiques et de la crédibilité des institutions.La recherche s'appuie sur un modèle économétrique dynamique de type ARDL/ECM et ses extensions en panel (PMG et CS-ARDL), appliqué à dix pays de l'UEMOA et du Sahel sur la période 1990-2024. Trois indices composites ont été construits et validés : l'Indice de Discipline Fiscale (IDF), l'Indice de Financement Public Productif (IFP) et l'Indice de Discipline Fiscale élargi (IDF⁺) intégrant la transparence budgétaire.Les tests de fiabilité (ACP, KMO, α de Cronbach) confirment la robustesse statistique des indices.Les résultats montrent que la discipline crédible exerce un effet positif significatif sur la croissance (+0, 35 point), que la dépense productive amplifie cet effet (+0, 38 point) et que la transparence renforce leur interaction (+25 %).L'interaction IDF×IFP (+0, 12) valide la complémentarité structurelle entre rigueur et efficacité. Les simulations prospectives suggèrent qu'une amélioration de trois points de la pression fiscale, de deux points de l'investissement productif et de 25 % de la transparence pourrait accroître la croissance régionale d'environ 1, 2 point par an d'ici 2030.L'étude conclut que la discipline budgétaire transformationnelle, fondée sur la crédibilité, la productivité et la gouvernance, constitue une voie durable vers la souveraineté économique africaine. |
| Keywords: | H61 Fiscal discipline, H61, Productive public spending, Budget transparency, Governance, Sustainable growth, UEMOA, Sahel. Codes JEL : E62, H50, O43, O55, Croissance durable, Gouvernance, Transparence, Financement public productif, Discipline budgétaire, Discipline budgétaire Financement public productif Transparence Gouvernance Croissance durable UEMOA Sahel. Codes JEL : E62 H50 O43 O55 H61 Fiscal discipline Productive public spending Budget transparency Governance Sustainable growth UEMOA Sahel. Codes JEL : E62 H50 O43 O55 H61 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05378821 |
| By: | Burak Uras (Williams College); Tulio Bouzas (Tilburg University); ; |
| Abstract: | "Why do firms continue to rely on cash in economies where digital payments are widespread and electronic transaction costs are low? This paper shows that the an- swer lies in the interaction between payment technologies and tax enforcement. Us- ing randomized experimental evidence from Kenyan small and medium-sized firms, we establish that the adoption of electronic payments causally increases tax com- pliance by raising transaction traceability. Moreover, SME survey evidence shows that tax evasion is associated with cash discounts. Motivated by these findings, we develop a microfounded general equilibrium model in which heterogeneous firms choose prices, payment acceptance, and tax evasion jointly. Cash facilitates eva- sion but exposes buyers to transaction risk, while electronic payments are safer yet traceable by third parties. These trade-offs generate endogenous cash discounts, selective rejection of digital payments, and coexistence of payment instruments in equilibrium. The calibrated model shows that when electronic payments are non–interest-bearing, inflation increases cash usage and tax evasion, overturning the standard prediction that inflation reduces cash use. We characterize the op- timal policy mix and show that financial development, enforcement intensity, and inflation are tightly intertwined in maximizing government revenues and welfare." |
| Keywords: | E-Money, Pricing Heterogeneity, Tax Compliance, Macro Policy |
| JEL: | E44 G23 H26 |
| Date: | 2026–02–13 |
| URL: | https://d.repec.org/n?u=RePEc:wil:wileco:2026_102 |
| By: | Ibrahim Ag Elmoctar (UL - Université de Labé); Moussa Diakite (UL - Université de Labé) |
| Abstract: | Déclaration de divulgation :Les auteurs n'ont pas connaissance de quelconque financement qui pourrait affecter l'objectivité de cette étude. Ils assument l'entière responsabilité de tout éventuel plagiat, de l'usage de l'intelligence artificielle dans la rédaction, ainsi que des résultats présentés dans cet article. Conflit d'intérêts :Les auteurs ne signalent aucun conflit d'intérêts. |
| Keywords: | Economic growth, Instabilité monétaire Inflation Taux de change Croissance économique Guinée JEL Classification : E31, E52, F31, O55 Type du papier : Recherche empirique Monetary instability Inflation Exchange rate Economic growth Guinea JEL Classification : E31, Guinea JEL Classification : E31, O55 Paper type : Empirical Research, Exchange rate, O55 Type du papier : Recherche empirique Monetary instability, Guinée JEL Classification : E31, Croissance économique, Taux de change, Inflation, Instabilité monétaire |
| Date: | 2026–01–15 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05463917 |
| By: | Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Paul Lukuliko Philemon (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan) |
| Abstract: | We examine how a more hawkish policy stance – defined as an above- median long-run inflation semi-elasticity of the policy rate – affects economic growth in 37 inflation-targeting countries. To this end, we estimate time-varying, bias-corrected forward-looking Taylor rules for all inflation- targeting countries for which the data permit such estimation. Our results point to sizable growth effects, exceeding 0.5 percent annually, for countries with a more hawkish policy stance. This suggests that the growth benefits reported in the previous literature on inflation targeting are primarily driven by a small subset of countries that react more forcefully to inflation. |
| Keywords: | Economic growth, inflation targeting, monetary policy reaction function, hawkishness |
| JEL: | E52 E58 O40 O47 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:fds:dpaper:202601 |
| By: | Matthieu Chavaz; David Elliott; Win Monroe |
| Abstract: | We exploit the surprise announcement and subsequent amendment of a central bank funding scheme to test how public liquidity provision affects credit market outcomes. Contrary to the notion that public liquidity is primarily a substitute for private liquidity, banks that are more exposed to stress in private wholesale funding markets use less central bank funding. We rationalise this pattern by establishing an "equilibrium channel" of public liquidity. The mere availability of central bank funding reduces the cost of private wholesale funding. This stimulates lending by banks exposed to wholesale funding, regardless of whether they actually use the central bank funding. Using a surprise amendment to the design of the scheme, we show that the "strings attached" to central bank funding help to explain why it is an imperfect substitute for private funding. |
| Keywords: | central bank funding, mortgage lending, bank funding risk |
| JEL: | E52 E58 G21 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1336 |
| By: | Atinyo, Divine; Ababio, Kofi Agyarko; Danquah, Benjamin Adjei; Tweneboah, George |
| Abstract: | This study systematically reviewed empirical evidence on the role of mobile money in advancing financial inclusion and philanthropic impact across Africa and Asia. Based on 47 peer-reviewed studies published between 2010 and 2024, the review examined how mobile money technologies have influenced access to financial services and charitable behaviours. Using the PRISMA framework and the PICOS model, a structured search was conducted across major academic databases. Thematic synthesis revealed five core insights: mobile money enhances financial access for underserved populations; contributes to poverty reduction, gender inclusion, and rural empowerment; faces persistent challenges including infrastructural deficits, regulatory uncertainty, and digital illiteracy; holds emerging potential in philanthropic activities such as crowdfunding and disaster relief; and remains underexamined in the context of integrated financial-philanthropic strategies. Comparative analysis showed that mobile money systems in Africa tend to exhibit broader grassroots adoption and integration into informal economies, while those in Asia are more commonly shaped by centralised governance, formal institutional linkages, and stricter regulatory regimes. Despite regional variations, both contexts illustrate mobile money’s transformative potential. This review is one of the first to explore the intersection of financial inclusion and philanthropy within the mobile money landscape across two continents. By synthesising existing literature, it bridges a noticeable gap in digital finance research and offers practical insights for policymakers, development practitioners, and fintech innovators working toward more inclusive and socially responsive growth. |
| Date: | 2026–03–10 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:82kzx_v2 |
| By: | Mahbuba Aktar (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Florian Gerth (Asian Institute of Management, Philippines) |
| Abstract: | Financial frictions are a key determinant of monetary policy transmission. Using provincial Chinese data for 2011–2019, we examine this question through the lens of regional variation in traditional and digital financial inclusion. We combine high-frequency monetary policy shocks with state-dependent local projections, in- terpreting traditional inclusion as a proxy for liquidity constraints and digital inclusion as a proxy for search frictions. Regions with stronger liquidity constraints exhibit weaker output and price responses, in line with the predictions of New Keynesian models with heterogeneous agents. Lower search frictions instead tend to amplify transmission over medium horizons, though short-run effects are mixed. |
| Keywords: | monetary policy transmission; regional differences; financial frictions; financial inclusion; high-frequency identification |
| JEL: | E5 E4 C2 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:fds:dpaper:202604 |
| By: | Héctor Labat Moles |
| Abstract: | This article reviews the literature on “shadow banking”, recognizing the multiple meanings given to each of its component terms. Broadly, the expression refers to activities also performed by traditional banking (“banking”) but through different means (“shadow”). Examining the fifty most cited publications, this article identifies nine interpretations of the term “banking” and eleven of the term “shadow”, combined in twenty-one different ways, out of which three stand out: (i) maturity transformation with no public guarantee, (ii) non-bank maturity transformation and (iii) non-bank financial intermediation. Publications are often ambiguous and inconsistent in their interpretations due to challenges in analysing contemporaneous financial systems. |
| Keywords: | Shadow banking, non-banks, systemic risk, regulatory arbitrage, financial innovation. |
| JEL: | G01 G20 G23 G28 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp203 |
| By: | Goncharenko, Roman (Central Bank of Ireland); Lukmanova, Elizaveta (Central Bank of Ireland) |
| Abstract: | We examine how monetary policy transmits through non-bank lenders (NBLs) using comprehensive loan-level data covering the universe of all loans in an economy. A one-percentage-point (pp) increase in the policy rate leads NBLs to raise lending rates by 0.17 pp more than banks and to contract credit sharply on the extensive margin. We show that this amplification is driven by a liability wedge: banks’ price-insensitive deposit franchise stabilizes their funding costs, whereas NBLs rely on short-term wholesale debt that reprices immediately. This funding fragility exposes NBLs to rapid balance-sheet deterioration, resulting in higher pass-through and a stronger contraction in lending. This credit contraction spills over to the real economy, causing firms with high non-bank exposure to reduce assets, liabilities, employment, and profitability significantly more than bank-dependent firms. Consequently, we show that NBLs can act as stronger amplifiers of monetary policy than banks. |
| Keywords: | Non-bank lending, NBLs, Monetary Policy Transmission, Bank Lending Channel, Credit Channel, Pass-through. |
| JEL: | E51 E52 G21 G23 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:02/rt/26 |
| By: | Eric Budish; Adi Sunderam |
| Abstract: | Blockchain technology as embodied in cryptocurrencies like Bitcoin and Ethereum is comprised of both (a) a novel data structure and (b) a novel trust model. This paper analyzes the potential gains for traditional finance from an idealized version of the novel data structure on its own, with trust instead anchored in traditional sources such as rule of law, reputations, relationships, and collateral. Our framework has two parts. First, we analyze potential improvements for financial transactions that are already taking place. We identify three categories of improvement: (i) reducing real resource costs, (ii) improving balance sheet efficiency, and (iii) reducing intermediation rents. While the value of such improvements is hard to quantify precisely, we estimate that potential gains could be significant, especially the reduction in rents. Second, we analyze the potential for the technology to facilitate new transactions. We identify three channels: (i) making it more technologically difficult to cheat, (ii) making it easier to punish a cheating counterparty in a static sense, and (iii) making it easier to punish a cheating counterparty in a dynamic sense. Our key insight is that the potential gains are large if and only if there is a long tail of relatively low surplus, relatively infrequent transactions for which traditional forms of trust are insufficient. Last, we apply our framework to stablecoins. We conclude that if there are large gains from stablecoins for legal actors they are most likely to come from stablecoins putting pressure on intermediation rents or inefficient regulation, or from the programmability of stablecoins facilitating a large number of small transactions that otherwise would not have been trustworthy. |
| JEL: | D47 E42 E5 G1 G2 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34959 |
| By: | Hyun Song Shin |
| Abstract: | Money is a coordination device underpinned by strong network effects: the more others accept a form of money, the more I wish to adopt it too. The decentralisation agenda of public permissionless blockchains undercuts these network effects and leads to fragmentation of the monetary landscape. Validators who maintain the blockchain need to be rewarded to play their role with the necessary reward increasing in the degree of dependence on other validators' actions to sustain consensus. Since these rewards must ultimately be borne by users through congestion rents, capacity constraints are a feature, not a bug, especially for blockchains with more stringent standards for consensus. New blockchains with less stringent thresholds for consensus enter the market to serve users priced out of incumbent chains. The resulting fragmentation undercuts the very network effects that give money its social value. Stablecoins inherit this fragmentation from the blockchains on which they reside. The analysis has broader implications for the future of the monetary system. |
| Keywords: | blockchain, tokenomics, network effects, stablecoins, decentralised consensus, global games, monetary system, fragmentation |
| JEL: | D82 E42 G23 L14 O33 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1335 |
| By: | Mengzhong Ma; Te Bao; Yonggang Wen |
| Abstract: | We document the first systematic evidence of negative spillover effects in crypto asset returns across blockchains. Using on-chain data from Ethereum, Solana, Binance Smart Chain, Arbitrum, and Avalanche (2022-2025), we show that surges on one chain often coincide with declines on others, in contrast to the positive co-movements typical of equity markets. These spillovers intensify during attention shocks, proxied by chain activity and extreme return events, and persist after controlling for global equity returns, interest rates, and Bitcoin. Nonlinear factor models reveal that attention-driven capital reallocation, rather than common information, underlies these dynamics. Our findings introduce a new form of cross-market linkage, attention-induced substitution, that shapes risk transmission in crypto markets. The results carry implications for portfolio diversification, systemic risk measurement, and regulation of token launches that may trigger cross-chain capital flight. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.23762 |
| By: | Bindseil, Ulrich |
| Abstract: | In essence, the currently large stablecoins are electronic money issued by narrow balance sheet vehicles into a distributed ledger (or a "programmable platform"). Many believe that they will have significant success as a new form of money. Members of the current US administration expect that US stablecoins would circulate globally and support demand for treasuries and the international role of the USD. Related to the latter, recent industry initiatives plan to rely on US stablecoins as a settlement asset for cross-border payments ("stablecoin sandwich"). We discuss the comparative advantages of banks vs. non-banks as stablecoin issuers, as well as between MiCAR compliant and Genius Act compliant coins. We then review the implications of large global stablecoins on the financial system and discuss financial stability risks and remedies. We compare regulatory approaches across some jurisdictions and note that different directions have been taken, although most authorities seem to agree that stablecoins must not be remunerated. We discuss additional ideas how to address the risks associated with successful stablecoins, propose some basic regulatory principles and argue that prohibiting the remuneration of stablecoins does not necessarily foster financial stability. We suggest three options fulfilling the proposed regulatory principles. |
| Keywords: | money, stablecoin, blockchain, narrow banks, financial stability, run, disintermediation |
| JEL: | E40 E50 F33 G10 G20 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:338085 |
| By: | Marcos Cerón (Banco Central de Reserva del Perú); Marcelo Paliza (Banco Central de Reserva del Perú); Elmer Sánchez (Banco Central de Reserva del Perú) |
| Abstract: | This paper examines the determinants of Central Bank Digital Currency (CBDC) wallet usage and evaluates the impact of a retail CBDC pilot implemented by the Central Reserve Bank of Peru (BCRP) in regions with low levels of financial inclusion. As of August 2025, the pilot reached approximately 117 thousand active users and 60 thousand participating merchants, while the outstanding balance of CBDC in circulation amounted to about PEN 7.5 million. Focusing on districts with low levels of financial inclusion, the first part of the paper investigates the individual-level determinants of CBDC wallet usage. Survey-based evidence indicates that awareness of the central bank's involvement, satisfaction with the wallet, and the use of other digital wallets are strongly associated with active usage. In contrast, selfemployment is negatively correlated with wallet activity, likely reflecting the closed-loop design of the pilot. In the second part of the paper, we exploit a quasi-experimental setting created by differentiated advertising campaigns across treated and control districts to estimate the effects of the intervention. The results show that the campaign significantly increased merchant adoption. Instrumental-variable estimates further identify merchant participation as a key mechanism driving wallet usage. Overall, the findings highlight the features and policy levers that are critical for the adoption of a retail CBDC, including merchant network expansion, well-targeted advertising campaigns, clear communication about the central bank's involvement and financial incentives. |
| Keywords: | retail CBDC; digital payments; quasi-experimental design |
| JEL: | E42 E58 C26 |
| Date: | 2026–03–19 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp09-2026 |
| By: | Berg, Tobias; Lindner, Vincent; Rößler, Denise |
| Abstract: | After years of investigation, the digital euro project has entered the legislative stage. Geoeconomic developments, especially the full-scale invasion of Ukraine in 2022 and the following regime of sanctions against Russia, as well as the economist-nationalist policies of the second Trump administration, have reinforced arguments for EU monetary and infrastructure sovereignty. At the same time, however, the digital euro project is under pressure from private solutions, stablecoins and the European Wero initiative that claim to provide similar benefits as the digital euro. While these may develop into useful tools for payments, they fail to provide the same features, such as universal acceptance and legal certainty, competitive neutrality, and - crucially - EU sovereign control over settlement infrastructure. This Policy Letter calls upon EU policymakers to reject the false dichotomy between private solutions and a public infrastructure and to make swift progress on the legislation and implementation of the digital euro. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safepl:338129 |
| By: | König, Jörg; Meyer, Tim |
| Abstract: | Die Pläne zur Einführung eines digitalen Euros werden immer konkreter. Im Mai 2026 soll das Europäische Parlament über das Vorhaben abstimmen. Bis Ende des Jahres soll der europäische Gesetzgebungsprozess abgeschlossen sein. Der digitale Euro dürfte jedoch vor allem ein Prestigeprojekt europäischer Institutionen sein, dessen Nutzen nur schwer ersichtlich ist. Die Einführung des digitalen Euros hätte mit hoher Wahrscheinlichkeit Wettbewerbsverzerrungen und Risiken für das Finanzsystem zur Folge. Zudem könnte sie zu einer sukzessiven Verdrängung des Bargelds führen, die diskret von den unterschiedlichen interessierten Seiten vorangetrieben wird. Entgegen der Hoffnung seiner Befürworter dürfte der digitale Euro zudem kaum dazu in der Lage sein, technologischen Fortschritt zu befördern oder die Rolle des Euros als globale Reservewährung zu stärken. Deshalb bedarf es eines ergebnisoffenen Prozesses ohne Zeitdruck, an dessen Ende auch die Entscheidung stehen kann, den digitalen Euro nicht einzuführen. Vielmehr sollten andere Optionen in den Entscheidungsprozess einbezogen werden: Neben der Möglichkeit, der EZB die Bereitstellung der digitalen Infrastruktur anzuvertrauen, sollten private Initiativen Vorrang bei der Entwicklung digitaler Zahlungsdienstleistungen erhalten. Denn eines scheint offensichtlich: Europas Rückstände und Abhängigkeiten bei digitalen Zahlungssystemen lassen sich nicht durch eine mehr oder weniger staatliche Digitalwährung beheben, sondern erfordern Vertrauen in marktwirtschaftliche Prozesse und Offenheit gegenüber privaten Innovationen. |
| Keywords: | Bargeld, Digitalisierung, Europa, Finanzmärkte |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:smwpos:338087 |