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The Institute has published the latest in its series of thought leadership papers. Supporting SMEs was informed by the views of our 33,000 members and sets out the measures that [...]

In September, IAASA published its most recent Observations paper, Observations on Selected Financial Reporting Issues--Years Ending On or After 31 December 2021. While directed primarily at the comparatively small number [...]

The Institute has published its annual Next Financial Year position paper, with a focus on improving government policy for businesses on the island of Ireland without a need for additional [...]

This paper presents a highly granular database of nearly 500 capital flow management measures (CFMs) that cover 14 instruments and 49 countries at monthly frequency between 2008 and 2021. It sheds light on the incidence of CFMs along previously unexplored dimensions such as the nature of instruments used, and the asset class and direction of capital flows to which they were targeted. The paper also presents new indices of capital account policies to characterize the usage, stance and intensity of CFM policies. In comparison with existing indices of capital controls, we find that our data reveal significant intra-year changes in CFMs even when other indices exhibit stability over long periods. We find that a 'stock-taking' version of our data generates similar assessments about episodic versus long-standing controls as some other indices, suggesting that existing indices may be capturing low-frequency characteristics of capital account policies. Mahir Binici is a senior economist in the European Department of the IMF. Previously, he worked in the Strategy, Policy, and Review Department, where he focused on external policy issues, including those related to India. Prior to joining the IMF, he held positions as an economist at the Central Bank of Turkey and the European Central Bank. Mitali Das is an Advisor in the Fiscal Affairs Department of the IMF. Previously, she was Co-Chair of the IMF flagship publication, External Sector Report, led the analytical work on unemployment dynamics and labor shares for the World Economic Outlook, served on the IMF missions to China, Japan, and Nauru, and in the Office of the Chief Economist. Prior to the IMF, Ms. Das held academic appointments at Columbia University, Harvard University, Dartmouth College, and the University of California Davis. Evgenia Pugacheva is a research officer in the Research Department of the IMF, where she works on the World Economic Outlook report. Her research focuses on the macroeconomic implications of climate change, international trade, and the COVID-19 pandemic. Prior to joining the IMF, she worked at the World Bank on the World Development Report. JEL Classification F3 * F33 * F36, 1 Introduction Capital flow management measures (CFMs)--such as approval requirements, taxes on the acquisition of property, and outright prohibitions on cross-border transactions of financial assets--have been resurgent as crisis-management and [...]

In this paper, we offer a new framework to measure cross-border supply chain fragmentation and its impact on the global trade elasticity. Firstly, we introduce the supply chain fragmentation ratio that sums the volume of imports by all countries that participate in a particular supply chain. We find that supply chain fragmentation slowed down after 2010 for most goods, but not for services. We demonstrate the importance of using trade and production data at constant prices in measuring fragmentation trends. Secondly, we quantify the impact of fragmentation on the elasticity of trade to world GDP, extending the framework of Bems et al. (Am Econ Rev Pap Proc 101 (3):308-312, 2011). We account for trade effects from fragmentation within supply chains as well as asymmetric shocks to final demand. We find that the declining pace of fragmentation accounted for more than a third of the decline in the global trade elasticity after 2010. JEL Classification F14 * F15 * F62, 1 Introduction How can we track cross-border supply chain fragmentation and its impact on the global trade elasticity? The contribution of this paper is twofold. We first introduce the supply [...]

Can capital flow management measures (CFMs) reduce external vulnerability of the economy? This paper studies the effectiveness of a macroprudential stability levy introduced in Korea, which was intended to curb foreign currency (FX) debt as well as to lengthen its maturity structure in the banking sector. Using the detailed bank-level balance sheet data, this study finds that the levy had limited effects on curbing non-core FX debt, while it substantially lengthened its maturity structure driven mainly by foreign bank branches' interoffice account. The subsequent analysis employing the transaction-level loan rate data further suggests that it likely had unintended consequences favoring foreign bank branches that took advantage of regulatory arbitrage and therefore were able to take FX loan market share from domestic banks that could not avoid passing the levy onto their borrowers. Mathematics Subject Classification F31 * F38 * F42 * G15 * G21, 1 Introduction Capital flow management measures (CFMs) are highly contentious international macroeconomic policies. (1) Conceptually, the traditional view that capital should move freely across countries to maximize efficiency has been [...]

To understand the longer-term consequences of natural disasters for global value chains, this paper examines trade in the automobile and electronic sectors after the 2011 earthquake in Japan. Contrary to widespread expectations, we find that the shock did not lead to reshoring, nearshoring, or diversification across non-Japanese suppliers; and trade in intermediate products was disrupted less than trade in final goods. Imports did shift to new suppliers, especially where dependence on Japan was greater. But production relocated to developing countries rather than to other top exporters, and to larger countries. The results, showing relative inertia in intermediate goods and the dominance of economic fundamentals (cost and scale) in determining sourcing decisions, may help us understand supply chain adjustment after other natural disasters, like the COVID-19 pandemic. JEL Classification F14 * F23 * F63, 1 Introduction Natural disasters impact human lives both directly and through their long-lasting economic consequences. With climate change, the frequency of disasters is expected to increase, and their likelihood will [...]

Lockdowns imposed around the world to contain the spread of the COVID-19 virus and its variants had a differential impact on economic activity and jobs owing to differences in the ability to work remotely. This paper presents a new index of the feasibility to work from home to investigate which types of jobs are most at risk for 35 advanced and emerging market economies. Cross-country heterogeneity in the ability to work remotely reflects differential access to and use of technology, sectoral mix, and occupational selection. Workers least likely to work remotely tend to be young, without a college education, working for non-standard contracts, employed in smaller firms, and those at the bottom of the earnings distribution, suggesting that the pandemic has exacerbated inequality. Policies should account for demographic and distributional considerations both during the crisis and in its aftermath. JEL Classification D24 * J22 * J61 * O30 * R12 * R32, 1 Introduction Social distancing policies implemented to contain the COVID-19 pandemic affected a large share of workers across the world. Millions of workers lost employment and countless jobs remain at [...]

Tackling systemic hurdles to the long-term economic health of Ireland's SMEs will be a top priority for Barry Doyle, the new President of Chartered Accountants Ireland. As Investment Director with [...]

As the global push for sustainable finance intensifies, UK businesses may need to prepare for mandatory International Sustainability Standards Board (ISSB) reporting sooner than initially anticipated. Recent developments in the [...]

Manual processing in Accounts Payable lacks the data required to effectively track and analyse key metrics in KPIs. In fact, according to the Institute of Finance & Management, only 9% [...]

The Basel III regulation explicitly prescribes the use of Hodrick-Prescott filters to estimate credit cycles and calibrate countercyclical capital buffers. However, the filter has been found to suffer from large ex-post revisions, raising concerns on its fitness for policy use. To investigate this problem, we study credit cycles in a panel of 26 countries between 1971 and 2018. We reach two conclusions. The bad news is that the limitations of the one-side HP filter are serious and pervasive. The good news is that they can be easily mitigated. The filtering errors are persistent and hence predictable. This can be exploited to construct real-time estimates of the cycle that are less subject to ex-post revisions, forecast financial crises more reliably, and stimulate the build-up of bank capital before a crisis. JEL Classification E32 * G01 * G21 * G28, 1 Introduction Recessions following financial crises are twice as costly as normal business cycles downturns (Jorda et al. 2011; Schularick and Taylor 2012). The procyclical behavior of the financial sector [...]

We re-examine the historically common finding that ex post depreciation and the forward premium are negatively correlated, usually termed the forward premium puzzle. When covered interest differentials are zero, this finding is equivalent to the rejection of the joint hypothesis of uncovered interest parity (UIP) and full information rational expectations. We term this result the Fama puzzle (1984), given the difficulty in identifying a time-varying risk premium that could rationalize this result. In our analysis, the rejection occurs for eight exchange rates against the US dollar, but does not survive into the period during and in the decade after the financial crisis. Strikingly, in contrast to earlier findings, the Fama coefficient--the coefficient on the interest differential--then becomes large and positive; this is what we term the New Fama Puzzle. Using survey based measures of exchange rate expectations, we find much more consistant evidence in favor of UIP. Hence, the explanation for the switch in the Fama coefficient in the wake of the global financial crisis is mostly a change in how expectations errors and interest differentials co-move. JEL Classification F31 F41, 1 Introduction The commonplace finding that ex post changes in exchange rates do not offset interest differentials so as to equalize expected returns constitutes one of the durable puzzles in [...]

We derive a novel measure of household income stabilization and analyze how reforms of tax-benefit systems in the period 2007-2014 have affected the workings of automatic stabilizers in the EU-27. Our results reveal that the heterogeneity in automatic stabilizers across EU countries has become slightly smaller over the period under consideration. With a few exceptions, automatic stabilizers could operate freely in the early phase of the financial and economic crisis, but were constrained in several EU countries by subsequent fiscal consolidation measures. A comparison of our estimates of automatic stabilizers inherent in tax-benefit systems with macro measures such as changes in cyclically adjusted budget balances reveals that micro-based estimates provide more precise information about the degree of household income stabilization. Keywords Automatic stabilizers * Fiscal consolidation * Euro-area debt crisis JEL Classification E63 * E62 * H31 * H12, 1 Introduction The Great Recession and the resulting sovereign debt crisis in Europe have caused many countries to take fiscal consolidation measures. Tax increases and spending cuts aimed at reducing [...]

We take stock of the costs of government interventions in the financial sector over the period 2007-2017 and track the assets still under government control. We build a new bank-level dataset on interventions and holding divestitures covering 1114 financial institutions in 37 countries. At end-2017, few countries had fully divested their financial sector holdings. On average, public holdings were divested faster in more capitalized, profitable, and liquid banks. They remained higher in countries where private investment and credit growth grew slower, financial access, depth, efficiency, and competition were worse, and financial stability improved less. Keywords Financial crisis * Government interventions * Bank resolution, JEL Classification E50 * E60 * G20 1 Introduction Substantial government interventions in financial institutions were a hallmark of the response to the Global Financial Crisis (GFC). In many countries, [...]

This study argues that the ability to mitigate risks associated with international trade is particularly important at times of heightened uncertainty, such as the economic crisis caused by the Covid-19 pandemic. Risk mitigation can be achieved through letters of credit (LCs), trade finance instruments providing guarantees to trading partners. As their use varies across products, exports of some products are more resilient than others during times of increased uncertainty. This situation reverses in times of financial crises when distressed banks may limit the supply of LCs. Our analysis using data on US and EU-15 exports during the Covid crisis and the Global Financial Crisis provides empirical support for these hypotheses. Keywords International trade ? Trade finance * Letter of credit * Risk ? Global financial crisis * Covid-19, JEL Classification G01 F14 F23 1 Introduction Trading goods across international borders is more risky than trading within national borders. The trading partners are located in different countries that may [...]

The European Securities and Markets Authority (ESMA) is the Europe-wide body responsible for safeguarding the stability of the EU's financial system. ESMA achieves this through the protection of investors and [...]

Using a sample covering 50 advanced and emerging economies over 1990-2017, it is found that large current account deficits are followed by systematic negative surprises in economic growth. This regularity is verified both in the case of advanced economies and emerging economies. In addition, large current account deficits are reversed significantly faster than what forecasters anticipate and are followed by low asset returns and drops in sentiment. The findings are robust to changes in the specification and do not seem to be explained by efficient learning dynamics. This evidence indicates that analysts are unable to incorporate the negative information transmitted by large current account deficits and has implications for the understanding of past economic events and for the design of macro-prudential policies. JEL Classification E3 * F4 * E7 * 04, 1 Introduction Large current account deficits have drawn the attention of analysts in a recurrent manner. (1) These analyses have evaluated vulnerabilities that could be manifested by current account deficits. [...]

Just before the Queen's Speech was delivered, rumours had been circulating that the long-awaited audit and corporate governance reforms had been unceremoniously dropped. Thankfully, it seems that the call from [...]

The UK government is plotting a series of initiatives to enable the domestic endorsement and adoption of new international sustainability standards, according to Debbie Crawshawe, accounting expert at the Department [...]

With the mandatory compliance of (https://www.accountancyage.com/making-tax-digital/) MTD for VAT rules just weeks away for businesses with a taxable, annual turnover below 85,000, business owners in the UK and their accountants [...]

One of the key advantages of moving a company pension scheme into a Master Trust arrangement is the near automatic upgrade in governance. Few, if any, small schemes can afford [...]

FSSAI has been embracing the use of technology in a big way to facilitate ease of doing business on their IT platforms, said FSSAI CEO Arun Singhal, CEO, FSSAI said [...]

The war in Ukraine and supply-chain challenges have led to inflation in the costs of fuel, materials and components. This means that businesses in Northern Ireland now need to review [...]

Q I feel I need to constantly prove myself, meaning work very long hours. spend hours drafting reports, checking other people's work and preparing for meetings. I've been aware of [...]