nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒03‒23
twelve papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Do Banks Price Environmental Risk? Evidence from a Quasi Natural Experiment in the People’s Republic of China By Huang, Bihong; Punzi, Maria Teresa; Wu, Yu
  2. The Centenary of Poland's Independence. A Note on Infrastructure Convergence By Laurent Guihéry; Michal Taracha
  3. The Long-lasting Effects of Living under Communism on Attitudes towards Financial Markets By Christine Laudenbach; Ulrike Malmendier; Alexandra Niessen-Ruenzi
  4. The Gender Gap in Peer-to-Peer Lending: Evidence from the People’s Republic of China By Chen, Xiao; Huang, Bihong; Ye, Dezhu
  5. An Input-Output sectorial analysis of North Macedonia By Giovanni Mandras; Andrea Conte; Simone Salotti
  6. Sector connectedness in the Chinese stock markets By Ying-Ying Shen; Zhi-Qiang Jiang; Jun-Chao Ma; Gang-Jin Wang; Wei-Xing Zhou
  7. Development of High-Speed Rail in the People’s Republic of China By Haixiao, Pan; Ya, Gao
  8. Land reform and child health in the Kyrgyz Republic: By Kosec, Katrina; Shemyakina, Olga N.
  9. Household Savings in Central Eastern and Southeastern Europe : How Do Poorer Households Save? By Beckmann,Elisabeth
  10. Kazakhstan Financial Markets and the Development of SDR Denominated Financial Products By Dominique de Rambures
  11. Polish GDP Forecast Errors: A Tale of Ineffectiveness By Rybacki, Jakub
  12. Fiscal Incidence in Ukraine : A Commitment to Equity Analysis By Bornukova,Kateryna; Leshchenko,Nataliia; Matytsin,Mikhail

  1. By: Huang, Bihong (Asian Development Bank Institute); Punzi, Maria Teresa (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute)
    Abstract: This paper maps the risk arising from the transition to a low-emission economy and studies its transmission channels within the financial system. The environmental dynamic stochastic general equilibrium (E-DSGE) model shows that tightening environmental regulations deteriorates firms' balance sheets as it internalizes the pollution costs, which consequentially accelerates the risks that the financial system faces. This empirical study, which employs the Clean Air Action that the Chinese government launched in 2013 as a quasi-experiment, supports the theoretical implications. The analysis of a unique dataset containing 1.3 million loans shows that the default rates of high-polluting firms rose by around 50% along their environmental policy exposure. At the same time, the loan spread charged to such firms increased by 5.5% thereafter.
    Keywords: environmental DSGE Model; Clean Air Action; lending spread; default rate
    JEL: E32 E50 H23 Q43
    Date: 2019–07–05
  2. By: Laurent Guihéry (UCP - Université de Cergy Pontoise - Université Paris-Seine); Michal Taracha
    Abstract: Poland plays an important role in the European Union. After many years of occupation until regaining the independence in 1918, in its long history, Poland is now a bridge between Western Europe and the Commonwealth of Independent States and Ukraine. The country is largely benefiting from this situation: Poland is the first beneficiary of the EU Cohesion Policy funds, well ahead of Italy and Spain (Appendix 1). New roads are being built, railway tracks are being renovated, city centers and other degraded districts are being revitalized. Polish countryside and the main cities are flourishing. In the field of transport infrastructure, the paper shows that the regional policy of the European Union has reduced the original inequalities in the rail and road infrastructure development inherited from the Partitions of Poland between Prussia, Austria and Russia. With regard to the railway infrastructure, we notice that track closures is also significant in this convergence. The paper also indicates a problem with the accessibility of medium-sized towns that lost their status of a voivodeship capital in 1999. One of the functional problems of these cities, apart from the demographic and financial problems, is their poor road and rail accessibility. The paper is then expressing some critics on the model of polarization-diffusion model in the European regional development policy, especially for Eastern Poland which is not so much benefiting from the regional policy of the EU. In conclusion, convergence towards the EU average still occurs in Poland.
    Keywords: N14,N13,H76,R58,Mots-clés Pologne,Infrastructures,Convergence,Politique régionale,Union Européenne Keywords Poland,Infrastructure,Regional policy,European Union Classification JEL : R4
    Date: 2019–08–27
  3. By: Christine Laudenbach; Ulrike Malmendier; Alexandra Niessen-Ruenzi
    Abstract: We analyze the long-term effects of living under communism and its anticapitalist doctrine on households’ financial investment decisions and attitudes towards financial markets. Utilizing comprehensive German brokerage data and bank data, we show that, decades after Reunification, East Germans still invest significantly less in the stock market than West Germans. Consistent with communist friends-and-foes propaganda, East Germans are more likely to hold stocks of companies from communist countries (China, Russia, Vietnam) and of state-owned companies, and are unlikely to invest in American companies and the financial industry. Effects are stronger for individuals exposed to positive “emotional tagging,” e.g., those living in celebrated showcase cities. Effects reverse for individuals with negative experiences, e.g., environmental pollution, religious oppression, or lack of (Western) TV entertainment. Election years trigger further divergence of East and West Germans. We provide evidence of negative welfare consequences due to less diversified portfolios, higher-fee products, and lower risk-adjusted returns.
    JEL: D03 D14 D83 D84 E21 G11
    Date: 2020–03
  4. By: Chen, Xiao (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Ye, Dezhu (Asian Development Bank Institute)
    Abstract: We document and analyze the gender gap in the online credit market. Using data from Renrendai, a leading peer-to-peer lending platform in the People’s Republic of China (PRC), we show that lending to female borrowers is associated with better loan performance, including a lower probability of default, a higher expected profit, and a lower expected loss than for their male peers. However, despite the higher creditworthiness, we don’t find any measurable gender impact on funding success rate, meaning that female borrowers have to compensate lenders by providing higher profitability to achieve a similar funding probability to their male peers. This evidence indicates the existence of a gender gap that discriminates against female borrowers. Further analysis implies that this gender gap is independent of the amount of information disclosed by borrowers.
    Keywords: P2P lending; gender gap; loan performance
    JEL: G20 G21 J16
    Date: 2019–07–10
  5. By: Giovanni Mandras (European Commission - JRC); Andrea Conte (European Commission - JRC); Simone Salotti (European Commission - JRC)
    Abstract: The European Commission's Joint Research Centre (JRC) is supporting an Innovation Agenda for the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo*, Montenegro, North Macedonia and Serbia). Smart Specialisation is the European Union (EU) place-based policy aiming at more thematic concentration in research and innovation (R&I) investments via the evidence-based identification of the strengths and potential of a given economy. Access to data and economic analysis are key to a better identification of both current and future socio-economic policy challenges. The EU Instrument for Pre-accession Assistance (IPA) supports reforms in the enlargement countries with financial and technical help. Out of the almost €4000 million of EU financial support to Western Balkans over the programming period 2014-2022, €664 are destined to North Macedonia. Economic modelling simulations using national Input-Output data for North Macedonia show the potential benefits related to investments in the country. The analysis uses a detailed sectorial disaggregation.
    Keywords: rhomolo, region, growth, smart specialisation, western balkans
    JEL: C67 C82 E61
    Date: 2020–02
  6. By: Ying-Ying Shen (ECUST); Zhi-Qiang Jiang (ECUST); Jun-Chao Ma (ECUST); Gang-Jin Wang (HNU); Wei-Xing Zhou (ECUST)
    Abstract: Uncovering the risk transmitting path within economic sectors in China is crucial for understanding the stability of the Chinese economic system, especially under the current situation of the China-US trade conflicts. In this paper, we try to uncover the risk spreading channels by means of volatility spillovers within the Chinese sectors using stock market data. By applying the generalized variance decomposition framework based on the VAR model and the rolling window approach, a set of connectedness matrices is obtained to reveal the overall and dynamic spillovers within sectors. It is found that 17 sectors (mechanical equipment, electrical equipment, utilities, and so on) are risk transmitters and 11 sectors (national defence, bank, non-bank finance, and so on) are risk takers during the whole period. During the periods with the extreme risk events (the global financial crisis, the Chinese interbank liquidity crisis, the Chinese stock market plunge, and the China-US trade war), we observe that the connectedness measures significantly increase and the financial sectors play a buffer role in stabilizing the economic system. The robust tests suggest that our results are not sensitive to the changes of model parameters. Our results not only uncover the spillover effects within the Chinese sectors, but also highlight the deep understanding of the risk contagion patterns in the Chinese stock markets.
    Date: 2020–02
  7. By: Haixiao, Pan (Asian Development Bank Institute); Ya, Gao (Asian Development Bank Institute)
    Abstract: High-speed rail (HSR) construction is continuing at a rapid pace in the People’s Republic of China (PRC) to improve rail’s competitiveness in the passenger market and facilitate inter-city accessibility. To take advantage of spillover effects, bring economic cohesion at the local level, and recover the local matching investment in infrastructure, all cities have planned new towns around HSR stations. Speeding up HSR construction has required the development of many standardized technologies and processes. Plans for HSR stations usually situate them in suburbs, far from city centers, to reduce the cost of property right of way relating to the removal of housing or industry as well as to lower the complexities in negotiations. However, city centers remain the main starting and destination terminals for most HSR passengers, especially businessmen who use HSR frequently. Besides, large railway stations in suburbs, providing a comfortable waiting space for passengers, have prolongate the travel time for HSR users. A reliable and high-quality public transit service, connecting an HSR station and the city center at the launch of HSR operations, is essential to curb the increase in car/taxi use. Studies have also suggested that, instead of building one big HSR station in the suburb of a metropolis, constructing multiple stations in the vicinity of city centers will greatly reduce the access/egress time, thereby enhancing travel efficiency.
    Keywords: high-speed rail; multimodal intercity transport; People’s Republic of China
    JEL: L92 R11 R40 R58
    Date: 2019–05–24
  8. By: Kosec, Katrina; Shemyakina, Olga N.
    Abstract: Does the establishment of private property rights to land improve child health and nutrition outcomes? We exploit a natural experiment in the Kyrgyz Republic following the collapse of socialism, whereby the government rapidly liquidated state and collective farms containing 75 percent of agricultural land and distributed it to individuals, providing 99-year transferrable use rights. We use household surveys collected before, during, and after the privatization reform and spatial variation in its timing to identify its health and nutrition impacts. We find that young children aged 0-5 exposed to land privatization for longer periods of time accumulated significantly greater gains in height and weight, both critical measures of long-term health and nutrition. Health improvements appear to be driven by increases in consumption of home-produced food—suggesting that increased private control over household production may translate into increased consumption and thus health dividends for young children.
    Keywords: KYRGYZSTAN, CENTRAL ASIA, ASIA, land reform, agrarian reform, land, health, children, child health, nutrition, child nutrition, land ownership, private ownership, human capital, I10 Health: General, J10 Demographic Economics: General, O10 Economic Development: General,
    Date: 2019
  9. By: Beckmann,Elisabeth
    Abstract: Based on a survey of households in 10 Central Eastern European and Western Balkan countries, this paper presents new and unique evidence on which households have savings and how they save. The paper shows that the percentage of savers is low, and savings are frequently informal. Formal savings are dominated by bank savings, and participation in contractual and capital market savings is very low in comparison to high-income countries. Poor households are significantly less likely to have any savings; income also has an effect, albeit smaller, on the choice of formal versus informal savings. With a high density of bank branches in Central Eastern European and Western Balkan countries lack of physical access to banks does not explain the lack of formal savings. Lack of trust in banks reduces the probability of formal savings, especially bank savings.
    Keywords: Educational Sciences,Capital Markets and Capital Flows,Capital Flows,Non Bank Financial Institutions,Mutual Funds,Financial Literacy,Insurance&Risk Mitigation,Social Funds and Pensions
    Date: 2019–02–19
  10. By: Dominique de Rambures (Université Paris 1 Panthéon-Sorbonne)
    Abstract: Kazakhstan is located at the crossroads of Russia, China and India spheres of influence. On top of the Almaty financial center, the economic capital of the country, the government is considering starting up a new financial center in Astana (AIFC or Astana International Financial Center), the new capital city (2008) located in the northern part of the country. The creation and development of a Stock Exchange is a long-term venture that requires vision, continuity and innovation. The development of SDR markets, starting with SDR Eurobond issues, is a way to diversify the range of financial products, initiate a worldwide SDR market and attract international investors.
    Keywords: Kazakhstan, financial markets, SDR, financial products, Astana, Stock Exchange
    Date: 2019–01
  11. By: Rybacki, Jakub
    Abstract: The aim of this paper is to evaluate gross domestic product (GDP) forecast errors of Polish professional forecasters based on the individual data from the Rzeczpospolita daily newspaper. This dataset contains predictions on forecasting competitions during the years 2013–2019 in Poland. Our analysis shows a lack of statistical effectiveness of these predictions. First, there is a systemic negative bias, which is especially strong during the years of conservative PiS government rule. Second, the forecasters failed to correctly predict the effects of major changes in fiscal policy. Third, there is evidence of strategic behaviors; for example, the forecasters tended to revise their prognosis too frequently and too excessively. We also document herding behavior, i.e., an alignment of the most extreme forecasts towards market consensus with time, and an overly strong reliance on forecasts from NBP inflation projections in cases of estimates for longer horizons.
    Keywords: GDP forecasting
    JEL: E32 E37
    Date: 2020–01–28
  12. By: Bornukova,Kateryna; Leshchenko,Nataliia; Matytsin,Mikhail
    Abstract: The paper employs the Commitment to Equity framework to present a first attempt at a comprehensive fiscal incidence analysis for Ukraine, encompassing the revenue and expenditures components of the fiscal system, including direct and indirect taxes, as well as direct, indirect, and in-kind transfers. The fiscal system in Ukraine has high redistribution effects, decreasing the Gini inequality index by 21 percentage points, and the official measure of poverty incidence by 27.6 percentage points (considering all fiscal interventions including in-kind transfers). As in many other countries in the region, pensions are the main contributor to the redistribution effect of fiscal policy. However, Ukraine stands out due to the relatively high equalizing effect of direct transfers. Fiscal policy in Ukraine is pro-poor, with the lowest income decile benefiting the most. Overall, 60 percent of the population of Ukraine are net recipients from the fiscal system, the main categories of recipients being households with two or more children, single-parent households, and retirees.
    Keywords: Inequality,Social Protections&Assistance,Educational Sciences,Health Care Services Industry,Public Finance Decentralization and Poverty Reduction,Public Sector Economics,Macro-Fiscal Policy,Economic Adjustment and Lending
    Date: 2019–03–05

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