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This paper examines current and suggested iterations of the climate finance architecture and potential risks in capital generation and delivery. Which is achieved via the construction of a literature review which aims to capture the main actors involved in the climate finance architecture. This is then contrasted to a post-keynesian and development economics synthesized framework focusing on liquidity preference, asymmetrical relationships and Minskyan financial instability. Utilizing data on current accounts, private capital flow instability and reserve asset accumulation we are able to show the explanatory power of our synthesized framework in explaining global capital imbalances and its impact on global financial flows and the impact on middle and low income countries. Using the insights gathered from our synthesized framework we then contrast it to the literature review, examining it for observable limitations in capital generation and delivery. In doing so a couple of things are noted, there are significant points of contention relating to capital generation and delivery in the climate finance architecture, potentially resulting in volatile asset prices and a negative impact on effective climate finance. Simultaneously it’s observed that climate finance is not catalytical for financial instability but a growing dependency and intertwining with conventional private financial flows may result in bouts of greater financial instability of climate finance assets. Lastly the paper affirms that there is a need to further examine the role and function of blended finance mechanisms.

This is the peer reviewed version of the following article: Horii, R. & Ono, Y. (2021) Financial crisis and slow recovery with Bayesian learning agents. International Journal of Economic Theory, 1– 29, which has been published in final form at https://doi.org/10.1111/ijet.12322. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited., In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and postcrisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view.

We argue that even in the case that banks are able to maintain the interest rate at a level that they want (the most “radical” version of the theory of endogenous money), liquidity preference continues to constitute a key element when determining the real equilibrium of the economy. In a framework of endogenous money, the Keynesian theory of liquidity preference still constitutes a theory that determines level of income. Financial markets matter, and the Kaldorian idea that liquidity preference “ceases to be of any importance” can only be defended under a set of very restrictive assumptions., En este artículo argumentamos que incluso en el caso de que los bancos puedan mantener la tasa de interés al nivel que deseen (la versión más “radical” de la teoría de dinero endógeno), la preferencia por liquidez sigue constituyendo un elemento clave en la determinación del equilibrio real de la economía. En un marco de dinero endógeno, la teoría keynesiana de preferencia por la liquidez es aún una teoría para la determinación del nivel de ingreso. Los mercados financieros importan, y la idea kaldoriana sobre la relevancia de la preferencia por la liquidez solo puede defenderse con un conjunto de supuestos muy restrictivos., Neste artigo argumentamos que inclusive em caso de que os bancos possam manter a taxa de juros ao nível esperado (a versão mais “radical” da teoria de dinheiro endógeno), a preferência por liquidez continua constituindo um elemento chave na determinação do equilíbrio real da economia. Em um marco de dinheiro endógeno, a teoria keynesiana de preferência pela liquidez é ainda uma teoria para a determinação do nível de ingresso. Os mercados financeiros importam, a ideia kaldoriana sobre a relevância da preferência pela liquidez só pode defender-se com um conjunto de supostos muito restritivos.

One of the pillars of the research programme of heterodox Post-Keynesian economics is the endogenous creation of money supply, according to which the amount of money in circulation automatically accommodates to the needs reported by economic agents. Ensuring an adequate supply of funds is the role of commercial banks that create credit money ex nihilo, while monetary authorities are responsible for providing commercial banks with money reserves that guarantee the continuity of lending, and thus the process of the production and exchange in the economy. While the Post-Keynesians agree on the endogenous nature of money supply, not all of them perceive the role and operation of the central bank aimed at meeting the demand for reserves reported by commercial banks in the same way. As a result, four Post-Keynesian interpretations of this issue emerged: horizontalism, structuralism, an interpretation from the monetary circuit perspective and from the liquidity preference circuit. The purpose of this article is to present these approaches and to indicate the differences between them and the mainstream economics, as well as among themselves. The impact of such heterogeneity of views on the coherence of Post-Keynesianism and the ability of the school to create an alternative to neoclassical orthodoxy is also emphasised., Jednym z filarów programu badawczego heterodoksyjnego postkeynesizmu jest endogeniczna kreacja podaży pieniądza. Zgodnie z nią ilość pieniądza w obiegu samoistnie dostosowuje się do potrzeb zgłaszanych przez podmioty gospodarcze. Zapewnienie odpowiedniej podaży środków finansowych jest rolą banków komercyjnych, które kreują pieniądz kredytowy ex nihilo. Natomiast zadaniem władz monetarnych jest dostarczanie bankom komercyjnym rezerw pieniężnych gwarantujących ciągłość akcji kredytowej, a tym samym procesu produkcji i wymiany w gospodarce. Podczas gdy postkeynesiści zgadzają się co do endogenicznego charakteru podaży pieniądza, to nie wszyscy w ten sam sposób postrzegają rolę i działania banku centralnego w kierunku zaspokajania popytu na rezerwy zgłaszanego przez banki komercyjne. W rezultacie ukształtowały się cztery postkeynesowskie interpretacje tej kwestii: akomodacyjne, strukturalistyczne, z perspektywy teorii obiegu pieniężnego oraz z perspektywy preferencji płynności. Celem artykułu jest przybliżenie tych ujęć oraz wskazanie, w czym są one odmienne od stanowiska głównego nurtu ekonomii oraz w jakim stopniu różnią się między sobą. Podkreślono również wpływ takiej heterogeniczności poglądów na spójność postkeynesizmu i możliwość stworzenia przez tę szkołę alternatywy dla neoklasycznej ortodoksji.

This study investigates if the currency may have an endogenous role in the economic dynamics of the region studied, according to post-Keynesian precepts of regional development, or whether its importance is derived from exogenous actions. Methodologically, we use the concept of preference for bank liquidity to verify the reliable standard of the local economy and the shift-share method to generate sectorial information in the region. A summary of the results shows high levels of liquidity preference, indicating the unwillingness of the banking system in fostering regional development. The drain on resources toward the central regions seems to confirm the present analysis., O presente estudo investiga se a moeda pode exercer um papel endógeno na dinâmica econômica da região estudada, segundo os preceitos pós-keynesiano de desenvolvimento regional, ou se a sua importância é derivada de ações exógenas. Metodologicamente, utiliza-se o conceito de preferência pela liquidez bancária para verificar o padrão de confiança da economia local e o método shift-share para gerar informação setorial na região. A síntese dos resultados mostra altos índices de preferência pela liquidez, indicando a não disposição do sistema bancário em fomentar o desenvolvimento regional. A fuga de recursos em direção às regiões centrais parece se confirmar na presente análise.

In the exercise of the activities of financial broker, the banks apply the funds raised in financial assets, that can be more or less liquid, with consequent impact on profitability, causing, according to the Theory of Liquidity Preference, a trade-off between liquidity and profitability. From this perspective, the aim of this article is to help understand the behavior of banks in Brazil about the choices and the creating assets portfolios, through empirical investigation using dynamic estimation with the GMM-SYS estimator, using a panel data with 104 banks that worked in Brazil between 2000 and 2011. The results of this study contribute to the better understanding of behaviors and associated elements to assets allocation choices of financial institutions in Brazil, since identify, in addition to the persistence of asset positions of banks, the relationship between private juridical personality and foreign nationality banks with the highest degree of preference for liquidity, as well as evidence of more conservative behavior in the creation of assets portfolios by part of smaller and less capitalized institutions. The macroeconomics variables, GDP and Interest, were also influential on the configuration of the applications of banks in Brazil., No exercício de suas atividades de intermediador financeiro, os bancos aplicam os recursos captados em ativos financeiros de maior ou menor liquidez, com consequente impacto na rentabilidade, gerando, segundo a Teoria da Preferência pela Liquidez, um trade-off entre liquidez e rentabilidade. Sob essa perspectiva o objetivo desse artigo é melhor compreender o comportamento dos bancos no Brasil quanto às escolhas e formação dos portfólios ativos, mediante investigação empírica através de estimação dinâmica com o estimador GMM-SYS em dados organizados em painel com 104 bancos que atuaram no Brasil entre 2000 e 2011. Os resultados encontrados no presente estudo contribuem para a melhor compreensão acerca de comportamentos e elementos associados às escolhas de alocação de ativos das instituições financeiras no Brasil, à medida que se identifica, além da persistência das posições ativas dos bancos, as relações entre a personalidade jurídica privada e nacionalidade estrangeira dos bancos com o maior grau de preferência por liquidez, bem como as evidências de comportamento mais conservador na formação dos portfólios ativos por parte das menores instituições e daquelas menos capitalizadas. As variáveis macroeconômicas, PIB e Juros, também se mostraram influentes sobre a configuração das aplicações dos bancos no Brasil. Palavras-chave: Bancos. Preferência pela liquidez. Painel dinâmico.

In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and postcrisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view., This is the peer reviewed version of the following article: Horii, R. & Ono, Y. (2021) Financial crisis and slow recovery with Bayesian learning agents. International Journal of Economic Theory, 1– 29, which has been published in final form at https://doi.org/10.1111/ijet.12322. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

This is the peer reviewed version of the following article: Horii, R. & Ono, Y. (2021) Financial crisis and slow recovery with Bayesian learning agents. International Journal of Economic Theory, 1– 29, which has been published in final form at https://doi.org/10.1111/ijet.12322. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited., In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and postcrisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view.

In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and post-crisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view.

In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and post-crisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view.