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This study explores the potential determinants of financial stress in the panel of emerging middle-income countries from 2000 to 2016. A variety of driving factors of financial stress classified into domestic, global, and institutional factors besides international linkages and regional dummies are taken. The study uses Principal Component Analysis to develop composite indices for the quality of institutions and financial stress. The authors apply various static and dynamic panel data techniques for robustness analysis. Findings underline the role of institutional quality in mitigating financial stress in these countries. Also, the authors conclude that deterioration in country characteristics and external factors stimulate financial stress in the selected countries. The study calls for strengthening the institutional setup that helps reduce political uncertainty, hence financial stress. It further suggests coordination in fiscal policy and mitigating recessionary trends to manage financial stress. It would have been insightful to evaluate the key drivers of financial stress in future through refined measures of political risk. [ABSTRACT FROM AUTHOR]

This article covers the relationship of one of the most uncertainty‐generating events in the recent history of Spain: the Catalan secessionist crisis, and the equity market. The research analyses the differences between Catalan companies and the rest of the country and it is focused on the determinants of the variability of returns after the illegal independence referendum. Determinants such as firm country risk concentration, measured as the level of internationalization or the growth opportunities, and others like size or financial constraints. An additional event study examines the impact of the flight of companies from the region. The general approach used in this article is the event study methodology. The experiment is divided in two parts (geographical and firm level). The market model is used to describe the returns, abnormal returns are obtained in one step using dummy variables and all equations are estimated together through a seemingly unrelated regressions framework. Then cross‐sectional regressions are employed to explain the abnormal returns' variance. Changes in sample, variables and volatility are also implemented. It demonstrates that larger and more internationalized firms were less exposed to this event, unlike those with higher growth opportunities and higher financial constraints. Lastly, the flight of companies served to mitigate the adverse effect. This research highlights investors' fear of drastic political changes and points out characteristics that make some securities a refuge in a unique case, as an attempt of unilateral independence. [ABSTRACT FROM AUTHOR]

We investigate whether fintech development expedites financial inclusion and affects the stability of the financial sector in BRICS economies. We first seek to identify the linkage between Fintech development and financial inclusion in the BRICS economies. We then explore if Fintech poses any threat to financial stability by studying the impact of Fintech on three main factors of financial stability; Country risk, Liquidity, and Price volatility to see any possible threat to financial stability. We apply the robust Global Vector Autoregressive (GVAR) model with Bayesian framework to analyze a monthly dataset ranging from 2015 to 2022. By applying a positive shock to Fintech over financial inclusion and financial stability, we reveal a positive dynamic relationship between fintech development and financial inclusion, with fintech exhibiting a long-term influence on financial inclusion in some BRICS countries than others. However, we found no significant evidence that fintech presents any threat to financial stability; at least not in the short term. We offer several policy implications and future research directions. • This study analyses monthly data of five BRICS economies. • The GVAR model is applied to investigate the impact of fintech on financial inclusion and financial stability. • Fintech significantly promotes financial inclusion in BRICS economies. • Fintech does not threaten financial stability in the BRICS markets. [ABSTRACT FROM AUTHOR]

Sustainable financial development plays a vital role in new institutional economics and transaction cost economics. This asserts the important role of interest and exchange rates and political stability as determinants of an economy's institutional quality. The current study aimed to investigate the effects of the real interest rate, the exchange rate and political stability on foreign direct investment (FDI) inflows in G7 and Gulf Cooperation Council (GCC) countries from 2005 to 2019. The panel fully modified least square and panel dynamic least square estimators used in this study revealed a significant positive long-run relationship between the real interest rate and FDI inflows in the G7 and GCC countries. In addition, there was a significant negative long-run relationship between the exchange rate and FDI inflows in the G7 countries; this relationship was insignificant in the GCC countries. There was also a significant negative long-run relationship between political stability and FDI inflows in the GCC countries; this relationship was insignificant in the G7 countries. The panel least square method confirmed the results of the previous two estimators for the real interest rate and FDI inflows in the G7 countries. Based on these findings, to increase FDI inflows, efforts should be made to lower the lending interest rate and enhance capital formation and trade. Furthermore, market forces should be allowed to determine the real interest rate, and monetary policy should focus on developing a systematic exchange rate to promote political stability and the sustainability of foreign investment in developed and developing countries. [ABSTRACT FROM AUTHOR]

The determinants of FDI inflows have been a subject of unremitting debate in the economic literature over the years. However, the role of country risk has received inadequate attention, especially in the context of the Visegrád countries, which comprise the Czech Republic, Hungary, Poland and Slovakia. Hence, this study examined whether country risk matters for FDI inflows into the Visegrád Four for the period 1991–2020. This study accounted for cross-sectional dependency, structural breaks and heterogeneous slopes in the panel of the four countries by employing the dynamic common correlated effect estimator. Additionally, country-wise fully modified least-squares regression was conducted for each country to test the robustness of the estimates. The empirical results revealed that country risk matters for the FDI inflows into the Visegrád countries, as it has a negative effect on the FDI inflows. Furthermore, both the overall panel and country-wise regressions established that economic and political risks are essential determinants of the FDI inflows, as both have a negative relationship with the FDI inflows. However, financial risk had weak and mixed impacts on the FDI inflows in the overall panel and country-wise regressions, respectively. These research outcomes highlight the need for appropriate macroeconomic and government authorities in the Visegrád economies to enhance the market capabilities of their economies by improving and upholding the social, institutional, corporate and macroeconomic structures, and as a way of achieving better country risk attributes. [ABSTRACT FROM AUTHOR]

Using a portfolio theory framework, we introduce the concept of "political beta" to model firm-level export diversification in response to global political risk. Our model predicts that firms are less responsive to changes in political relations with lower beta countries—those that contribute less to the firm's total political risk. We document patterns consistent with our model using disaggregated Russian firm-by-destination-country data during 2001–2011: Trade is positively correlated with political relations, though the effect is far weaker for trading partners whose political relations with Russia are relatively uncorrelated with those of other partners in a firm's export portfolio. [ABSTRACT FROM AUTHOR]

Azerbaijan is known for its rich oil and natural gas resources and transit location in the Caspian basin. This article explores current political risks for the energy Multinational Corporations (MNC's) in Azerbaijan. In order to identify a political risk, a literature review is conducted, highlighting four categories proposed by Fitzpatrick as the main framework to understand the conditions giving rise to them. The findings focus on oil price fluctuations, COVID-19 pandemic, war with Armenia, climate change and environmental issues, digitalisation and technology and possible developments in Iran as the new political risks for the energy MNC's in Azerbaijan enforcing foreign investors to reconsider their risk analysis in this country. [ABSTRACT FROM AUTHOR]

The present paper is inspired by the notions of "financial risk" and "financial uncertainties" and transfers their basic reasoning to social science analysis; that is, it develops a theoretical analysis in order to explain social and political change. We know that the degree of social and political change depends on the set of established institutions in a society. Societies can face two extremes: volatility, e.g., rapid changes that lead to instability, which increases the risk of a system or regime collapsing, or rigidity, which does not permit necessary adaptation and change and thus may again increase the risk of the regime collapsing. Thus, an optimal (or ideal) point of change is between the two extremes, permitting change that is neither too sudden and fast nor too slow and inflexible. To illustrate this, we analyze two cases from ancient Greece: Sparta, as a society and state with too many institutional checks and balances that led to rigidity and collapse, and Athens, which in the 5th century BCE had an institutional setting with very limited checks and balances, which again led to near collapse until the late 5th century BCE, when new institutions that were related to some efficient checks and balances were introduced that enabled the state to survive in a world of changing circumstances and balances of power. [ABSTRACT FROM AUTHOR]

Motivation: The COVID-19 pandemic caused a major crisis in global economy. The year 2020 will be remembered in the history of global economy as the year of a massive supply and demand shock, and, consequently, a slump in economic growth in most countries. The effects of the pandemic will be felt to varying degrees by the majority of the world’s economic entities. One such effect is the radical decrease in global foreign direct investment (FDI). It is hard to assess now how heavily the pandemic will influence the long-term FDI trends. The perception of the pandemic risk is, however, likely to heighten. This article deals with foreign direct investment risks, and more specifically, with the pandemic risk seen as one of natural risks in COVID-19-related contexts. Aim: The article aims to identify how the enterprises with Polish capital in Kazakhstan perceive the pandemic risk in comparison with other FDI risks. The authors of this paper were co-investigators on a scientific research project concerning FDI in Kazakhstan as exemplified by the investment intensity of Polish enterprises. The project was carried out from 2019 to 2021, i.e., when the pandemic started and during its course. The research concept was, however, created before there were any signs of the pandemic. Therefore, the research questions regarding FDI risk in Kazakhstan were not to any extent inspired by this occurrence. Nevertheless, the question about the pandemic risk was included in the research tool. Thus, the perception of this risk became the subject of research. The findings of partial research that are presented in this article are original in nature, because the assessments constituting their basis were formulated at a time when Kazakhstan, like other countries around the world, struggled with the pandemic and when its effects were unknown. Results: According to the enterprises with Polish capital in Kazakhstan, the main areas of risk entailed in their operation in this country were, most importantly, the risks of the investment country and global risks. Local currency exchange risk ranked 1st; as many as 70% of respondents said that this risk perception was high. This was followed by global economic events (e.g. depression), performance risks (e.g. product price, transfer risks, the price of capital) and government policy risks (e.g. tax reforms, monetary reforms, price controls, trade restrictions, nationalisation, government regulation, barriers to earnings repatriation). The 5th most distinctly perceived risk by the studied enterprises was global social events risks, including the pandemic risk. 40% of the surveyed entities defined this risk perception as high, and 30% each as medium and small. The fact that the pandemic risk ranked 5th among other FDI risk components in Kazakhstan indicates its great significance to the enterprises operating there at an early stage of the COVID-19 pandemic, i.e., when the level of uncertainty caused by the pandemic in terms of both its economic and its social effects was very high. [ABSTRACT FROM AUTHOR]

Remittances associated with the migrant workforce represent a significant part of the total remittance flows that are transmitted by migrant workers, usually to their families or friends. The volume and frequency of remittance flows is determined by several factors, such as: the number of migrant workers; salaries; economic activity in the country of origin / recipients; exchange rate; political risk; facilities for the transmission of funds; marital status; the level of education of migrants; if the migrant is accompanied by a wife / children; the length of time he migrated; family income level; the rate index calculated between the country of origin and the country of destination. Research on the use of remittances shows that most is used for food, clothing and health services, construction or rehabilitation of housing, land acquisition or other durable goods and only to a small extent "productive investments" (with multiplier effect of creating new jobs). The productive use of remittances represents "any activity that has the potential to generate additional income or to guarantee future expenses". These financial flows as well as labor migration have been severely affected by the COVID-19 pandemic. This paper makes an analysis of the evolution of remittances during this period. [ABSTRACT FROM AUTHOR]

This study examines the impact of political risk on the likelihood of takeover completion and on deal duration. Using a sample of US deals between 2002 and 2019, we find a negative and significant relationship between the takeover completion likelihood and the bidder’s political risk. Our findings also suggest that firms take more time to complete deals when the bidders face higher political risk. As firm-level political risk breeds uncertainty, bidders faced with higher political risk are more likely to cancel bids before closing and delay deal completion. Political shocks can expose acquirers to default risk and make it costly for bidders to raise external funds to undertake mergers and acquisitions (M & As). Our results are robust, after controlling for potential endogeneity concerns. This study examines the impact of political risk on the likelihood of takeover completion and on deal duration. Using a sample of US deals between 2002 and 2019, we find a negative and significant relationship between the takeover completion likelihood and the bidder’s political risk. Our findings also suggest that firms take more time to complete deals when the bidders face higher political risk. As firm-level political risk breeds uncertainty, bidders faced with higher political risk are more likely to cancel bids before closing and delay deal completion. Political shocks can expose acquirers to default risk and make it costly for bidders to raise external funds to undertake mergers and acquisitions (M & As). Our results are robust, after controlling for potential endogeneity concerns. [ABSTRACT FROM AUTHOR]

We investigate whether firm-level political risk affects corporate cash holdings. Taking a sample of 5424 US firms with 129,750 firm-quarter observations from 2002Q1 to 2021Q3, we find that cash holdings is higher for firms with greater exposure to firm-level political risk. The positive relationship between firm political risk and cash holdings is consistent for financial constraint and non-constraint firms, high and low growth firms, pro-cyclical and counter-cyclical and competitive industries. Further, our findings are consistent to alternative measures of firm-level political risk and cash holdings. In addition, our findings remain robust with different endogeneity tests: a natural experiment, an instrumental variable approach, and a propensity score matching. Overall, we present novel evidence on the determinants of corporate cash holdings. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to examine how capital investment projects are appraised in Lebanon; whether the risk is incorporated into this process by Lebanese firms and the impact of political risk on the capital budgeting process. Design/methodology/approach: This paper uses a questionnaire survey to investigate the capital budgeting practices of companies located in Lebanon, which is a country characterised by a high level of political risk. Findings: Lebanese companies tend to use more than one method of investment appraisal and, increasingly, they are using sophisticated discounted cashflow techniques alongside the payback period. The most widely used methods to evaluate risk include scenario and sensitivity analysis. Finally, political risk plays an important role in the capital budgeting processes of Lebanese companies. Originality/value: The paper reports on whether the methods of capital investment appraisal used throughout advanced Western economies are used in the context of an emerging economy. In addition, Lebanon is an ideal research site to study capital budgeting as the conflicts in the country of the past 50 years have required sizeable new expenditure on capital projects; the country is characterised by high levels of political risk which may lead corporate managers to use different approaches to investment appraisal and it provides an opportunity to study capital budgeting decisions by private, unlisted firms. [ABSTRACT FROM AUTHOR]

The paper deals with the analysis of the banking system of Ukraine. It is shown that for Ukraine the frequency and depth of crisis phenomena in the banking sector are exacerbated by the raw material orientation of the economy, underdeveloped domestic market and the circulation of foreign currency (dollarization of the economy). It should be noted that in the pre-crisis during 2006-2007, excessive mortgage lending created a "bubble" in the real estate market, which, comparing its devastating effects, corresponded to this phenomenon in the real estate market in the United States. Although the crisis of 2008- 2009 demonstrated the vulnerability of the Ukrainian banking system to numerous economic and political upheavals, no significant changes in banking supervision took place to minimize systemic risks. Restoration of the banking system of Ukraine in 2015-2016 is generally in line with post-crisis trends to streamline the banking system and increase its efficiency in the world. At the same time, the weakness of the institutional environment makes it impossible to use both administrative tools and state development banks to increase productive lending in Ukraine. On the other hand, commercial banks will use refinancing loans instead of private-sector savings to lend. In this case, the probability of the need for financial support from banks increases, which will lead to a significant increase in public debt. Moreover, a system of vector autoregression models has been developed to research the impact of crisis periods on the performance of commercial banks in Ukraine. The simulation results (mainly the analysis of impulse response functions) allow concluding that interbank lending in post-crisis conditions recovers relatively rapidly (with a lag of two years). Lending to non-financial corporations and non-residents showed a decline and recovery only within four years after the crisis. Lending to the general government sector is growing every year, but at the same time loans to other resident sectors are declining. In addition, during the year after the crisis, the volume of deposits in the banking system is demonstrating a decrease. Other variables do not show any response to the crisis. [ABSTRACT FROM AUTHOR]

This manuscript examines the influence of macroeconomic and bank‐specific factors on credit quality in Palestine over the last decade. For this purpose, empirical tests are conducted using panel dataset of the fixed and random effects estimates form the period of 2007 to 2018. The results of fixed effects show ample evidence of significant impact from interest, profitability and credit supply to credit default when financial crisis in included in the panel data analysis. As result, interest and credit supply positively impact non‐performing loans (NPLs) with statistical significance, while profitability has significant negative affiliation with NPLs. It also found that Palestinian commercial banks are able to cushion their NPLs during and after the global crisis. The novelty of this research provides a good knowledge in credit quality and risk control. Therefore, it can help in understanding the underlying causes of credit risk in this country and empower the commercial banks to sustain their competitive environment. Hence, it could be of considerable use to the monetary authorities to control credit default and protect Palestinian banks from financial distress. [ABSTRACT FROM AUTHOR]

Dividend policy decision is a puzzling phenomenon in finance literature. This study intends to examine the considerable factors of dividend policy among the non-financial listed companies in Pakistan. The research study intends to explore the influence of firm and country level determinants on the dividend in Pakistan. To achieve the objective, this study collected 134 Pakistani non-financial firms' data from 2000 to 2017 using POLS and FE approach. The results found that profitability and corporate tax have influencing and positive effect, while size of the firm and investment opportunities shows significantly adverse influence on dividend policy at firm level factors. Under country level factors, inflation, stock market development, and debt market development have negative impact, however political risk has positive influence on dividend policy. This study is beneficial for the board of directors and management of organizations to establish adequate dividend policy for the organization. It will also be useful for stakeholders of the organization regarding investment decision. [ABSTRACT FROM AUTHOR]

This study has been prepared in order to research the forms of application of the Service Export Insurance product on the basis of countries in the world, to determine who prefers this product and in which situations it is applied. Another aim of the study is to research how it can be applied to economic activities in the most efficient way in our country's own dynamics. Service exports in Turkey were included in the coverage of receivables insurance by Turk Eximbank in 2021. The purpose of this insurance is to protect the forward receivables formed by exporting services against commercial and political risks in order to encourage and develop service exports. In the study, the applications of export credit institutions operating in the global market were researched with the literature review method, and based on these examples, suggestions were made by Turk Eximbank about improvements in existing applications and new applications that are not currently available. In consequence of review of the studies in the field of export, it has been seen that there are studies in different fields, but academic studies on service insurance in exports are very limited, and therefore, it is aimed to bring a study to the literature with this study. (This study was produced from a doctoral thesis.). [ABSTRACT FROM AUTHOR]

Over the past decade, there has been an extremely rapid increase in bilaterally financed infrastructure projects globally, as part of China's Belt and Road Initiative (BRI). The BRI is a broad initiative involving many Chinese state-owned enterprises to develop transport and other infrastructure across the developing world, with bilateral financing from either the China Development Bank (CDB) or the China Export–Import Bank (CEXIM). More recently, many large BRI projects have undergone renegotiations with borrower nations or caused financial distress. This provides a useful opportunity to evaluate the BRI through the lens of the obsolescing bargain model. The obsolescing bargain has historically been used to describe the relationship between multinational corporations (MNCs) and the developing countries they invest in. For large capital investments paid off over a long operating period, such as infrastructure projects, the obsolescing bargain describes a shift in leverage from MNCs to the host nation once the capital investment is complete, often leading to renegotiation or even expropriation. This study examines the BRI through the lens of the obsolescing bargain to evaluate the practices of China's state-owned enterprises (SOEs) and policy banks in mitigating political risk. [ABSTRACT FROM AUTHOR]

This paper analyses whether banks with a greater commitment to climate change issues, proxied by the climate change score from the Carbon Disclosure Project (CDP), experience an impact on their credit risk and whether this relationship is moderated by the environmental performance of the country where the bank is located. For these purposes, a panel data analysis is carried out on a large sample of international listed banks over the period 2011–2019. Our findings suggest that the commitment to climate issues lowers the risk level of bank loans when banks have a medium‐high level of attention to these issues. The country location of the bank does play a key role: In countries with better environmental performance, credit risk reduction takes place at lower levels of climate change commitment. This study provides important implications for the actions that bank managers, regulators and practitioners can enact. [ABSTRACT FROM AUTHOR]

The relevance of the topic consists in the fact that due to limited start-up capital, high risk and uncertainty about profitability, lack of experience and, consequently, a positive credit history, venture capital is recognized as the main source of financing the development of many companies in the early stages. The purpose of the paper is to prove the hypothesis of the determining influence of fiscal factors of stimulation of research and development and a set of stable economic and political preconditions for expanding the presence of venture capital in the country. Based on the data of twenty European countries for 2007—2018 (240 observation points), a regression dependence of the amount of invested venture capital on tax preferences in research and development, research and development costs and country risk were constructed. The assessment of the parameters of the created regression model made it possible to prove that it can be used for forecasting volumes of investment of venture capital at the change of the factors of fiscal policy and reduction of macroeconomic risks. The directions of activation of venture financing for the countries are formed: for the development of high technologies and the implementation of innovative ideas, the state should apply tax benefits and preferences for research activities of small and medium enterprises; expansion is necessary for state support for innovation through the consolidation of state and local budgets on research programs, the creation of research and production clusters, technology incubators, support for individuals in their innovation initiatives; the high risk of the country not only leads to a decrease in the inflow of foreign venture capital: domestic investors will withdraw their venture capital and direct it to countries where the political and economic situation is more stable, which further deepens the economic shocks of the national economy and leads to political ones. The implementation of these measures will promote the development of high-tech enterprises, job creation in the country by overcoming the problem of limited financial resources through investment of venture capital. [ABSTRACT FROM AUTHOR]

This research focuses on the analysis of political risk in the context of offshoring decisions. The study uses the Repertory Grid Technique, which entails a series of semi-structured interviews exploring key political risk experiences across offshoring engagements. The research extends the spectrum of political risk analysis in the context of offshoring engagements, and explores the varied impact of political risk across business activity types. The research identifies five key political risks affecting offshoring engagements and highlights the moderating effect of specific offshoring activity types Business Process Outsourcing, Information Technology Outsourcing or Knowledge Process Outsourcing on political risk implications. The research explores the conditioning effect of activity specific exposure to political risk and enhances the explanatory ability of the Transaction Cost Economics constructs, offering a novel operationalisation of the political risk component of external uncertainty. From a practical perspective, the research highlights the need for developing managerial tools to improve monitoring and identification of risks. The key practical contribution is the development of differentiated political risk typologies that can capture the nuances of external risks in offshoring, allowing for more accurate risk assessment of offshoring decisions. [ABSTRACT FROM AUTHOR]