The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies

Ashraf, Badar Nadeem; Qian, Ningyu; Shen, Yinjie

doi:10.1016/j.ememar.2021.100793

Cited by 30 publications

(27 citation statements)

References 60 publications

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“…e integration of global economies due to cross-border trade and investment ows has increased tremendously over the past three decades. While this phenomenon has had positive repercussions on global stock market development and nancial stability [1][2][3][4], it has also increased considerably the correlations among global equity markets. Corollary to this, the diversi cation bene ts that were apparent among markets have diminished signi cantly [5].…”

Section: Introductionmentioning

confidence: 99%

Quantifying Information Flows among Developed and Emerging Equity Markets

Boateng

Owusu

Adam

et al. 2022

Mathematical Problems in Engineering

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We rely on daily changes in implied volatility indices for the US stock market (VIX), developed markets excluding the US (VXEFA), stock markets in Brazil (VXEWZ), Russia (RVI), India (NIFVIX), China (VXFXI), and the overall emerging market volatility index (VXEEM) to examine the degree of information flows among the markets in the coronavirus pandemic. The study also employs the complete ensemble empirical mode decomposition with adaptive noise (CEEMDAN) to decompose the data into intrinsic mode functions (IMFs). Subsequently, we cluster the IMFs based on their level of frequencies into short-, medium-, and long-term horizons. The analysis draws on the concept of Rényi transfer entropy (RTE) to enable an assessment of linear as well as non-linear and tail-dependence in the markets. The study reports significant information flows from BRIC volatility indices to the overall emerging market volatility index in the short-and medium-terms and vice versa. We also document a mixture of bi-directional and uni-directional flow of high risk information and low risk information emanating from emerging equity markets and from the developed markets. We find that the transmission of high risk information is largely dominated by the developed markets (VIX and VXEFA). In the midst of high degree of contagion, our findings reveal that investors can find minimal benefits by shielding against adverse shocks from the developed markets with a combination of stocks from India and other equities in the emerging markets in the short-term, within 1–15 days. For as low as 1–5 days, the empirical evidence indicates that a portfolio consisting of stocks from Russia and Brazil also offer immunity to shocks from the VXEFA. Our study makes an important empirical contribution to the study of market integration and contagion among emerging markets and developed markets in crisis periods.

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Section: Introductionmentioning

confidence: 99%

Quantifying Information Flows among Developed and Emerging Equity Markets

Boateng

Owusu

Adam

et al. 2022

Mathematical Problems in Engineering

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“…Most of the above studies test openness theory either at the macro level using private credit to GDP as the proxy variable of financial development (Muhammad et al, 2016;Herwartz and Walle, 2014;Baltagi et al, 2009), and micro-level using only conventional bank data (Ashraf et al, 2021;Rahman et al, 2020;Ashraf, 2018). We argue that Islamic banks are not involved in interest-based transactions and are inherently reluctant to exhibit excessive risk-taking behavior.…”

Section: Related Literaturementioning

confidence: 91%

“…Still, banks expose themselves to risk for higher profitability by extending higher loan credit. Recently, Rahman et al (2020) and Hossain et al (2020) assess the impact of trade openness on bank risk-taking behavior and find that it reduces bank risk-taking while Ashraf et al (2021) report that both openness variable reduces the loan spread in emerging economies.…”

Section: Related Literaturementioning

confidence: 99%

Trade, financial openness and dual banking economies: Evidence from GCC Region

Khan

Hassan

Paltrinieri

et al. 2021

Journal of Multinational Financial Management

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“…Mai Le et al (2021) explained that macroeconomic variables, such as high interest rates, high inflation rates, and high exchange rate fluctuations cause companies to experience financial difficulties that can reduce their financial performance, thus impacting the decline in company performance. The influence of macroeconomic conditions on bank financial performance, aligning macroeconomic variables consisting of Industrial Production Index, Inflation, Interest Rates, Exchange Rates, Jakarta Composite Index, and world crude oil prices are in the same contribution to macroeconomic conditions (Ashraf et al, 2021).…”

Section: Effect Of Macroeconomic Variables On Macroeconomic Conditionsmentioning

confidence: 99%

Strategy Development of Macroeconomics on Performance Financial Banking

Salindeho¹

2023

JEFMS

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Banking has a major contribution to the success of the country's economy, because of its role as part of the financial system which acts as an intermediary to facilitate economic activity. This research aims to analyze the influence of internal macroeconomic factors that can formulate strategies for developing banking financial performance, and how much influence these factors have on banking financial performance. The research design used is explanatory research. The object of research namely; Conventional banks and Islamic banks in Bitung City, North Sulawesi, Indonesia, were selected by purposive sampling. The research was carried out from August to October 2022. The data used in this study are secondary data obtained from; financial reports of selected banks. Inflation, Interest Rates, Composite Stock Price Index, Exchange Rates, and Gross Domestic Gross (GDP), Capital Adequacy Ratio (CAR), and Return on Assets (ROA). Inflation, Exchange Rate, Capital Adequacy Ratio (CAR), and Return on Assets (ROA). The enormity of the influence of the variables of macroeconomic conditions on banking financial performance is76.9%, while the remaining 23.1% is the influence of other variables outside this research.

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The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies

Cited by 30 publications

References 60 publications

Quantifying Information Flows among Developed and Emerging Equity Markets

Quantifying Information Flows among Developed and Emerging Equity Markets

Trade, financial openness and dual banking economies: Evidence from GCC Region

Strategy Development of Macroeconomics on Performance Financial Banking

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