The Singapore Economic Review

This study explored the spillover effect of the banking sector on the systemic risk of the insurance sector. We selected 27 listed insurers from China, South Korea, Japan and Singapore, and built a double-CoVaR model based on monthly data for 2012–2021. We explored the impact mechanism by decomposing the spillover effect and conducted regression analysis to determine factors influencing net spillover. First, the banking sector has positive spillover on insurance systemic risk. Second, the banking sector affects insurance systemic risk mainly through direct risk spillover. Third, the size, asset similarity and leverage of insurers significantly impact net spillover. This paper contributes to the previous literature and regulation by providing a methodology for predicting risk spillovers using a new model and an up-to-date data.

Frequent natural disasters have had an important impact on social development and human behavior. Based on quasi-natural experiments in the flooding area of Yellow River, this study investigates the impact of the historical Yellow River flooding on the risk-taking of modern enterprises by using Regression Discontinuity design. Our study finds that those enterprises located in the flooding area of Yellow River have significantly lower risk-taking capability than those not located in the flooding area of Yellow River. Our claim remains unchanged when we use a series of robustness checks and rule out some competing explanations. This negative influence can be attributed to three mechanisms, namely trust, religious belief and uncertainty avoidance. And the negative effects are subject to heterogeneity stemming from variations in an enterprise’s ownership structure and scale. More importantly, the negative impact of the Yellow River flooding on the risk-taking of enterprises can be alleviated in areas with a higher level of formal institution.

There is a plethora of empirical evidence available which postulates that the central banks across the world respond asymmetrically to inflation. The response of monetary authorities toward inflation changes, when it reaches a threshold level. After estimating the nonlinear Taylor rule for 51 countries over the period of 1983–2015, including 28 advanced economies and 23 emerging and developing economies, we come to the conclusion that the quality of political institutions has a significant impact on the threshold level of the inflation rate. In contrast to the countries with weak institutional quality, countries with high institutional quality have a very low level of inflation rate where monetary authorities change their behavior. Our finding further reveals that the countries with low corruption, stable governments, efficient bureaucracy and good socio-economic conditions have a very low level of inflation rate. Central banks respond aggressively in these countries when inflation exceeds a threshold level inflation rate. The socio-economic condition index has a greater impact on the inflation threshold level as compared to other sub-indexes of institutional quality. The findings imply that the improvement in institutional quality enables the central banks to keep inflation at a low level.

This study investigates trade shock transmission between selected African countries, the BRIC and the rest of the global economy with a view to understanding the likely disposition of African economies towards multilateralism in the years to come. The study extends the network approach of [. Measuring financial asset return and volatility spillovers, with application to global equity markets. The Economic Journal,  119(534), 158–171, https://doi.org/10.1111/j.1468-0297.2008.02208.x] by constructing generalized trade linkage measures at various degrees of aggregation using generalized forecast error variance decompositions of an underlying global vector autoregressive model. The results indicate that the trade linkage between Africa and the rest of the global economy is substantial, with the total trade linkage index having an average value of 87%. We find that China, USA, UK, Japan, EU and Canada dominate Africa’s trade and therefore have the potential to spread trade shocks to it. The results further indicate that apart from the BRIC, other regional trading blocs such as Asia, the Americas, and Europe play influential roles in Africa’s trade. Overall, the findings show that African economies are predominantly net receivers of trade shocks originating from the aforementioned dominant sources. We conclude that these patterns of cross-country trade shock spillovers, coupled with the ongoing challenges of legitimacy facing the World Trade Organisation, would likely influence Africa’s move from multilateralism to multi-polarism in the years to come.

This study investigates dynamic interconnectedness, spillover transmissions and risk contagion through the lens of intraday and overnight returns to ascertain whether intraday and overnight trading information (returns) have idiosyncratic effects on risk behavior of financial markets. The study employs the generalized VAR-based spillover measure, graph theory and Bayesian causality network (BN) models. Our results reveal that spillover propagation from the US market is mainly through the intraday return series to Asian markets, whereas the overnight series is mainly a recipient of spillovers. Furthermore, in terms of risk contagion, the result identifies the most systemically central financial markets (SCFMs) as Singapore, Hong Kong, Korea and Taiwan. In particular, the findings demonstrate that while Singapore maintains the role as the most systemically central markets in large part, other markets occasionally took the leading role as most central markets. Overall, the findings provide important practical implications for market regulators and investors to monitor the channels of trading information and the performance of SCFMs for better risk management and strategic investment decisions.

The aim of this paper is to explore the relationship between intelligence and economic and financial crimes. For this purpose, we use a cross-sectional sample of 182 countries for the time span of 2012–2017. Our research provides empirical evidence on the existence of a significant impact of intelligence upon economic and financial crimes. When we analyze the entire sample, we find that intelligent people are more prone to comply with the law and thus increase the efficiency of implementing government policies to reduce economic and financial crimes. However, when we conduct our analysis among the two subgroups of high- and low-income countries, different results are obtained. For high-income countries, we obtain evidence of a positive coefficient for the impact of intelligence on economic and financial crimes, meaning that increased intellectual capacities of people from these countries, including high professional knowledge and skills, are used to break the traditional technology in order to get illegal benefits. Our results conducted for the low-income countries' subsample do not support intelligence as being a determining factor for economic and financial crimes; in these countries, other determinants are more important for engaging in such activities. Our study may have important implications for the policymakers who must acknowledge that various policies in the field of economic and financial crimes need to be differentially adopted depending on the level of development of each country, which offers different ways of involvement in such crimes, related to the level of people's intelligence.

This study uses world input–output (IO) data from 1995 to 2014 to investigate the influence of economic ties on employment in the United States and China. We conclude that the job spillover in China mainly increase the number of jobs employed by the manufacturing industry and the service industry in US, especially the employment of medium- and high-skilled labors accounting for more than 90%. In the meantime, the job spillover effect in the US to China is increasing constantly, especially to the employment of low- and medium-skilled labors in manufacturing and service industries, which tend to be further enhanced. However, the main factors of employment changes on both sides that are from the changes of industrial structure, rather than the impact of foreign products. The most important thing is that the production between China and the United States doesn’t reduce the number of each other’s employment, but optimizes the employment structure of each other, forming a “win–win” situation.

This study aims to investigate how various forms of social control, namely selective incentive and behavioral conformity, collectively rationalize participation in collective action, through indirect network connections. To address it, we use a public game model and analyze the equilibrium conditions of the emergence of collective action on centralized, star-shaped networks and on decentralized, loop-shaped networks. The results show that social control is effective in motivating contribution towards a public good; however, the effect is highly dependent on the ratio of the benefits derived from selective incentive versus behavioral conformity as well as on the structure of social networks. Moreover, we find that indirect network connections can be an important route through which social control can improve the emergence of collective action. These findings have important implications for collective action theory and for intervention in collective actions.

This paper investigates how financial discrimination influences skilled-unskilled wage inequality in China. In the basic model, we find that a reduction of financial discrimination will reduce skilled-unskilled wage inequality. In the extended model, we find that skilled-unskilled wage inequality will be narrowed down if and only if the substitution elasticity of unskilled labor and the intermediate product in the private sector is larger than that of the skilled labor and capital in the public sector. When considering the reality of China, we predict that a reduction of financial discrimination leads to the decline of wage inequality.

A differentiated product is commoditized over time. We investigate the impacts of product commoditization and a change in bargaining power between upstream and downstream firms on the choice between vertical separation and integration. We demonstrate first that vertical separation by the upstream firm dominates vertical integration if and only if the upstream firm’s bargaining power is below a certain threshold. Second, the upstream firm’s gain from vertical separation decreases with its own bargaining power and the degree of product commoditization. Third, however, product commoditization marginally diminishes the loss in the gain from vertical separation due to a higher bargaining power of the upstream firm.

With the development of the carbon market, extensive attention has been paid to the relationship between the carbon market and the stock market. In this paper, we employ the event study method and fixed-effects model to investigate the effect of carbon market policy adjustments (CMPAs) on the share prices of covered firms. The main findings are as follows: First, CMPA can trigger abnormal fluctuations in the share prices of covered firms, which is reinforced by a series of sensitivity tests. Second, heterogeneity checks suggest that this kind of positive effect is more significant for non-state-owned firms, firms on China’s Main Board (MB) and firms in active carbon pilots. Besides, there are two potential influence channels between carbon market policy and share price of covered firms, including affecting carbon prices (CPs) and releasing important signals. Our findings indicate that there is a joint effect between the carbon market and the stock market. Therefore, policymakers should fully consider the impact of CMPAs on covered firms’ share prices when formulating new carbon market policies.

Based on the demand-pull and cost-push theory, this study examines the relationship between foreign direct investment (FDI) and inflation nexus by using time series technique of Autoregressive Distributed Lags (ARDL). Asymmetry assumption was investigated by employing relatively advanced Nonlinear Autoregressive Distributed Lag (NARDL) method. Annual data from 1973 to 2017 has been collected from the World Bank database and DataStream. The results revealed that Bangladesh’s FDI inflow has a significant impact on the inflation rate, which augurs well for the economy. In addition, we also discover an asymmetric relationship in the long run and symmetric relationship in the short run. Several policy recommendations of these findings are provided.

In this paper, we use quantile-based analysis and nonlinear conditional autoregressive value-at-risk (CAViaR) model to investigate how cryptocurrency price and policy uncertainty indexes affect exchange traded funds (ETFs) investing in equity securities of companies operating in various disruptive innovation sectors and related to digital assets and blockchain technology. Results of the quantile-on-quantile (QQ) estimates and quantile regression reveal that cryptocurrency price and policy uncertainty generally have a negative impact on the globally traded ETFs suggesting that the changes in cryptocurrency uncertainty lead to destabilizing effects in the ETF market. Moreover, we find that the impact of cryptocurrency uncertainty is asymmetric depending on each quantile of ETF returns even though each ETF is influenced in the same way by each uncertainty index, indicating that cryptocurrency price uncertainty and cryptocurrency policy uncertainty have common effects on the ETF market. A linear quantile causality analysis indicated that there is evidence of a significant causality running from the considered uncertainty indexes to the ETF returns, revealing that cryptocurrency price and policy uncertainty have a significant information value in explaining expected ETF returns. On the other hand, we find that linear quantile models outperform nonlinear CAViaR models in quantiles that are only moderate.

This study examines the relationship between monetary policy (MP), bank competition and risk-taking behavior for 69 commercial banks in India between 2005 and 2022. To the best of our knowledge, ours is the first study to examine the combined and differential effects of MP and bank competition on the risk-taking behavior of Indian banks. Furthermore, we extend our analysis by re-examining this relationship after the COVID-19 crisis. Based on the panel quantile regression model, our main findings suggest that increased concentration in the Indian banking system weakens the risk-taking channel of MP. Furthermore, the COVID-19 crisis has significantly impacted the relationship between MP, bank competition and bank risk. Finally, we also find that the effect of MP and bank competition on banks’ risk-taking behavior differs between high- and low-risk banks. Our findings are robust to alternative measures of bank risk and MP.

International travel is one of the fastest-expanding links, connecting countries worldwide and bringing them closer together. Since 1990, many Southeast Asian countries have opened their doors to international integration and have become attractive destinations for international tourists by promoting tourism development, typically Singapore, Thailand and Malaysia. The study of brands and competitiveness for tourism destinations in Vietnam is essential. However, there is no research done yet to study the brands and competitiveness of destinations in Mekong Delta. This research aims to define factors affecting the brand and competitiveness of a tourism destination; its foundation is a synthesis of qualitative and quantitative research methods and it focuses on a case study in the Mekong Delta. Group conversations with specialists were held to conduct qualitative research. Research directly interviewed 650 tourists in Mekong Delta tourist areas and was used to conduct quantitative research. The research will show which specific factors affect the brand and destination competitiveness in the Mekong Delta that other researchers have not shown. The research results show that: (i) brand of a destination is affected by eight factors (tourism infrastructure, natural environment, destination adaptation, culinary culture, safety and security in tourism, hospitality, service costs and local folk music); (ii) competitiveness of a destination is affected by nine factors (tourism infrastructure, natural environment, destination adaptation, culinary culture, safety and security in tourism, human service costs, local folk music and brand). From the results, this research suggests some managerial implications for expanding brands and strengthening the destination competitiveness in the Mekong Delta.