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JRFM
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Trade, Economic and Financial Crisis
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Trade, Economic and Financial Crisis

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Risk".

Deadline for manuscript submissions: closed (31 December 2022) | Viewed by 13568

Special Issue Editor

Prof. Dr. Faridul Islam

E-Mail Website
Guest Editor
Department of Economics, Morgan State University, Baltimore, MD 21251, USA
Interests: energy; mathamatical modelling; energy finance; energy pricing; carbon pricing; time series analysis; forecasting
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

Experience with financial crises points to one thing—they are unpredictable, and poorly managed domestic macroeconomic policy and/or ill-advised external trade policy can trigger financial and economic turmoil and engulf the whole world. The possibility of a recurrence and the toll it takes demand intense academics scrutiny, and more importantly, it is important that those working in the area of international trade and finance take a look at the volatility in the financial market if it could be a source of a major economic downturn. The way economic/political forces are operating in recent times might lead us that way. While we note some positive trends in the markets—since 2016, there has appeared to be a strong market—a more careful look at the patterns observed in intra-day trade and several economic indicators might point to some unusual features. Regardless of conjecture, many believe that the matter is in need of intense scrutiny and analysis, perhaps through the lenses of finer econometric tools and models.

Economic historians still consider the Smoot–Hawley Act (1930), inter alia, as the root of the havoc that led to the Great Depression in the US, taking the whole world with it. Nobody is predicting a return to those ominous signs, but make no mistake, we may be in a phase where we almost fulfill the twin criteria noted above. So, is it plausible for the US to engage in a repeat of such follies? Should bad policy persist, which might trigger a far worse catastrophe in terms of both duration and intensity? The answer to whether or not it could happen can be explored through deep academic research, which can help to identify potential signals, if they exist. Many feel that, although the crisis of 2007–2008 has officially been declared to be over, the ghosts of the past seem to surround us, ready to strike if we fail to manage our house.

In light of this concern, the aim of this Special Issue is to collect wisdom from academics/policymakers across the world to capture their thoughts and publish them for dissemination to policymakers and professionals working in the field of international finance. This will make them aware of the cost of financial/economic crises. Although, several experts in the field of financial markets have been raising red flags for some time, academics have yet to come forward as they ought to lead any discussion. They are needed to analyze field data and offer insight into this matter of much import. Our aim can be restated as an attempt to identify early signs of economic boobytrap—if any—that might lie ahead. Hopefully, we will gather a set of serious academic papers from scholars of great expertise and demeanor. We are hopeful that we all can learn from such valuable insight, to guide policymakers and help them become prepared, which is sure to help us minimize the damaging effects of a crisis. Both theoretical and empirical papers are welcome.

Please consider submitting articles for publication to the journal JRFM, which is JEL coded and strictly follows a double-blind peer-review process to ensure quality. We are allowing a very broad latitude for authors to accommodate a diversity of papers from the discipline. Should you have questions, please feel free to address them to me.

Thank you!

Sincerely,

Dr. Faridul Islam
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

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Published Papers (4 papers)

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Research

13 pages, 1293 KiB  
Article
Analysis of Australia’s Fiscal Vulnerability to Crisis
by Gulasekaran Rajaguru, Safdar Ullah Khan and Habib-Ur Rahman
J. Risk Financial Manag. 2021, 14(7), 297; https://doi.org/10.3390/jrfm14070297 - 29 Jun 2021
Cited by 1 | Viewed by 2831
Abstract
Fiscal vulnerability, like a contagion, poses a threat to financial sector stability, which can lead towards sovereign default. This study aimed to assess fiscal vulnerability to crisis by investigating the Australian economy’s gross public debt, net public debt, and net financial liabilities. We [...] Read more.
Fiscal vulnerability, like a contagion, poses a threat to financial sector stability, which can lead towards sovereign default. This study aimed to assess fiscal vulnerability to crisis by investigating the Australian economy’s gross public debt, net public debt, and net financial liabilities. We used a threshold regression model and compared results with the baseline deficit–debt framework of analysis. The results of the base model suggested that the economy is fiscally sustainable, and that the primary surplus remains unaffected by increasing levels of public debt. In contrast, the threshold regression model indicated that the increasing level of debt has eroded primary surplus below the threshold level of 30.89% of public debt to GDP. These results need further investigation. Therefore, we modified our basic threshold model to capture budget deficit and surplus as a threshold in response to changes in public debt. The results from the sequential threshold regression model using the debt to GDP ratio and primary budget surplus identifying the periods of 1991, 1992, 2008, 2009, 2011 and 2019 as times of likely vulnerability to fiscal crisis. The overall results confirmed that the primary surplus remained sustainable over the estimated threshold level of public debt in all other sample periods and these findings persisted across alternative measures of public debt. Full article
(This article belongs to the Special Issue Trade, Economic and Financial Crisis)
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32 pages, 594 KiB  
Article
The Impact of the Introduction of Uniform European Collective Action Clauses on European Government Bonds as a Regulatory Result of the European Sovereign Debt Crisis
by Nicoletta Layher and Eyden Samunderu
J. Risk Financial Manag. 2021, 14(1), 1; https://doi.org/10.3390/jrfm14010001 - 22 Dec 2020
Viewed by 2619
Abstract
This paper conducts an empirical study on the inclusion of uniform European Collective Action Clauses (CACs) in sovereign bond contracts issued from member states of the European Union, introduced as a regulatory result of the European sovereign debt crisis. The study focuses on [...] Read more.
This paper conducts an empirical study on the inclusion of uniform European Collective Action Clauses (CACs) in sovereign bond contracts issued from member states of the European Union, introduced as a regulatory result of the European sovereign debt crisis. The study focuses on the reaction of sovereign bond yields from European Union member states with the inclusion of the new regulation in the European Union. A two-stage least squares regression analysis is adopted in order to determine the extent of impact effects of CACs on member states sovereign bond yields. Evidence is found that CACs in the European Union are priced on financial markets and that sovereign bond yields do respond to the inclusion of uniform CACs in the European Union. Full article
(This article belongs to the Special Issue Trade, Economic and Financial Crisis)
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24 pages, 477 KiB  
Article
Are the Current Account Imbalances on a Sustainable Path?
by Seema Narayan and Sivagowry Sriananthakumar
J. Risk Financial Manag. 2020, 13(9), 201; https://doi.org/10.3390/jrfm13090201 - 4 Sep 2020
Cited by 2 | Viewed by 3400
Abstract
This paper examines the current accounts of 16 developed and developing countries over the period 1970 to 2018. We test whether these nations satisfy their intertemporal solvency condition for external imbalances. The solvency condition in the strong form entails: (1) a cointegration, or [...] Read more.
This paper examines the current accounts of 16 developed and developing countries over the period 1970 to 2018. We test whether these nations satisfy their intertemporal solvency condition for external imbalances. The solvency condition in the strong form entails: (1) a cointegration, or a long run equilibrium, relationship between exports and imports of goods and services; and (2) an increase in imports leading to a proportional increase in exports. Our findings imply that the external imbalances are a cause of vulnerability for several nations. Bangladesh satisfies the abovementioned solvency condition—in other words, its current account is sustainable in the strong form. Australia, Ecuador, Honduras, Mexico, New Zealand, and Venezuela show weak forms of sustainability. For these six nations, the presence of a cointegration relationship between exports and imports coincides with less than proportional increases in exports with increases in imports. The current accounts of Chile and Paraguay are unsustainable—while their exports and imports are cointegrated, a growth in imports leads to a more than proportional increase in exports. For a few nations that failed the full sample (1970–2018) cointegration test, we developed sub-samples by anchoring the start date at 1970 and increasing the sample by every five years from 1999 to 2014. From the sub-samples, we find evidence of intermittent, but weak, cases of sustainability for Peru and South Africa. We show that Panama’s current account became unsustainable after 2009. China’s current account satisfied the strong form of sustainability between all sub-samples until 2014 and became unsustainable in the most recent four years (2015–2018). France, the Philippines, and the United States unequivocally failed the intertemporal solvency test in the full sample and sub-sample analyses. The cointegration tests allow for structural breaks in exports and imports. We find these breaks have strong economic significance. For instance, we find that for most countries the structural break in exports coincides with their worst economic recession. Full article
(This article belongs to the Special Issue Trade, Economic and Financial Crisis)
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16 pages, 302 KiB  
Article
Exchange Rate Risk and Uncertainty and Trade Flows: Asymmetric Evidence from Asia
by Mohsen Bahmani-Oskooee, Parveen Akhtar, Sana Ullah and Muhammad Tariq Majeed
J. Risk Financial Manag. 2020, 13(6), 128; https://doi.org/10.3390/jrfm13060128 - 15 Jun 2020
Cited by 20 | Viewed by 3808
Abstract
Very recently, the link between exchange rate volatility and trade flows has entered into a new direction in which researchers assess the possibility of asymmetric response of trade flows to a measure of exchange rate uncertainty. We add to this literature by estimating [...] Read more.
Very recently, the link between exchange rate volatility and trade flows has entered into a new direction in which researchers assess the possibility of asymmetric response of trade flows to a measure of exchange rate uncertainty. We add to this literature by estimating a linear and a nonlinear ARDL model to learn about the experiences of Asian countries, i.e., Pakistan, Japan, China, Korea, Singapore, Malaysia, the Philippines, and India. Like other studies in the literature, nonlinear models yielded relatively more significant results. In some cases, while the linear models showed no significant effects of exchange rate volatility on trade flows, the nonlinear models revealed significant effects. In some other cases, the opposite was true. Full article
(This article belongs to the Special Issue Trade, Economic and Financial Crisis)
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