Search

Copyright of Mexican Journal of Economics & Finance / Revista Mexicana de Economia y Finanzas is the property of Instituto Mexicano de Ejecutivos de Finanzas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Sustainable economic growth requires financial sector development. However, financial development is low in Ethiopia. Hence, the main objective of the study was to examine determinants of financial development in Ethiopia. Annual data from 1980 to 2019 was used and examined by ARDL estimation technique. Private sector credit and money supply as percentage of GDP were used as dependent variables. Independent variables include external debt, reserve requirement, real exchange rate, lending interest rate, inflation, political freedom index, trade openness and economic growth. Broad money supply model is positively affected by political freedom index, economic growth and trade openness both in the short run and long run. While it is negatively affected by interest rate and reserve requirement. However, real exchange rate has negative effect in the long run and insignificant effect in the short run. On the other hand, credit to private sector model is positively affected by inflation, and political freedom, economic growth and trade openness. While it is negatively affected by external debt, reserve requirement and lending interest rate. Error correction estimation result of credit to private sector model shows the adjustment coefficient is −0.263 and statistically significant at 5% level of significance, which means short run deviation from long run equilibrium is adjusted at a rate of 26.3%. The adjustment coefficient for broad money supply model is −0.254. The study recommends that the government needs to improve trade and the quality of factors of production, reduce reserve requirement, reducing interest rate on lending, political. [ABSTRACT FROM AUTHOR]

This article discusses models dealing with the effects of speculation on the forward foreign exchange rate. One of the most widely used models in this regard, the "Modern Theory of the Forward Foreign Exchange Rate," stresses the role of both interest arbitrage and speculation in the determination of the forward rate. The model's reduced form expresses the forward foreign exchange rate as a weighted average of the covered interest-parity exchange rate as well as the future spot rate expected to prevail at the maturity date of the forward contract. The author considers this specification unduly restrictive. Options facing speculators are much broader, as they do not need to buy or sell the relevant currency on the spot market on the date of delivery.

Presents several graphs and tables on financial markets in Canada from 1999 to 2005. Interest rates; Exchange rates; Money supply.

The article presents graphs and data on financial market of Canada. The article included graphs and data on the following topics: interest rates, exchange rates, stock markets, finance, corporate finances, and credit.

Presents financial market statistics in Canada compiled as of July 2004. Interest rates and foreign exchange rates; Stock exchange; Money supply and credit; Corporate finances; Net issues of securities.

Presents several graphs, charts and tables reflecting the financial markets in Canada. Interest and exchange rates; Stock exchange; Money supply and credit; Corporate finances; Operating profits by major industries; Net issues of securities; Security issues and retirements.

This article determines whether the data on equity returns, equity flows, and exchange rate returns are supportive of a portfolio rebalancing channel. The best data in international equity flows come from the U.S. Treasury and measure bilateral flows between the United States and a large number of foreign countries. A basic econometric problem with any system of simultaneously determined variables is the identification of primitive shocks. We search for the moving average representation of the data process which accords best with the conditional correlations obtained under the hypotheses of the portfolio rebalancing channel. Portfolio flow shocks appreciate the foreign-exchange rate and create foreign-equity-market excess returns. The empirical analysis here is closely related to recent theoretical work by Hau and Rey, which provide microfoundations to the portfolio balance theory. Similar features in a recent study by Gregorios Souriounis, who uses data in net equity and bond flows, equity returns, interest rates, and exchange rates to uncover dynamic links between capital flows and exchange-rate movements. Other empirical work by Kenneth Froot and Tarun Ramadorai uses proprietary data on daily institutional investor currency flows.

This paper analyses the short-run (or impact) and long-run (or steady-state) effects of a number of external disturbances on output, employment and the price level under a freely floating exchange rate regime. The four disturbances are: an increase in the relative price of an imported intermediate input, an increase in the world price of an imported consumption good, an increase in the world rate of interest, and an increase in the volume of world trade.
The model differs from existing open-economy macro-models in a number of ways. Both in the short run and in the long run the model respects the flow of funds and balance sheet identities or stock-flow constraints that characterize all properly specified sequential temporary (or momentary) general equilibrium,[1] open-economy models with money and other financial claims. The so-called "monetary" approach to the balance of payments represents the simple end of the wide spectrum occupied by this class of models.[2] The determination of the level of real economic activity and of the current account balance is consistent with the absorption approach.[3] The role of import and export price elasticities in the determination of the trade balance is clearly brought out.[4] In spirit the model has a close affinity to the ideas developed by Turnovsky (1977). [ABSTRACT FROM AUTHOR]

This paper describes a model linking transactions prices and trade credit. It demonstrates that prices of identical goods will differ, even in perfectly efficient markets for goods and capital, if credit terms differ. As a result, apparent arbitrage profits may disappear when prices are adjusted for the value of trade credit extended to finance goods. One major component is the length of time for which trade credit is extended. Within a single economy different explicit or implied credit maturities translate into different credit costs. In turn, these costs are reflected in price differences. A good example is the recent use of merchant discounts for cash payments as a disincentive against credit card payment. The amount of the discount is directly related to merchants' cost of funds. When prices are compared internationally, another element is added. Variations in the cost of credit extended in different currencies may reflect differences in interest rates and expected inflation. When compared at the current exchange rate the national prices of goods sold on credit should differ by the variation in the cost of providing that credit. The reflection of trade credit in the relationship between prices, exchange rates and interest rates has several interesting implications.

The primary objective of the paper is to establish that international portfolio capital flows are sensitive to changes in the international constellation of real interest rates. In calculating those real interest rates, the study emphasizes inflationary expectations operating through exchange rate expectations. The U.S. real rate enters every country's demand for foreign assets equation, consistent with the expectation that most foreign portfolio holdings are dominated by the U.S. liabilities and are correspondingly sensitive to changes in the U.S. real yields. The counterpart to this last observation is the significance of the U.S. real rate in the U.S. equation for liabilities to foreigners. All asset equations include the domestic rate as significant, indicating the sensitivity of domestic investors to the return on domestic assets. The adjustment speeds in the liability equations tend to be higher than those in the asset equations. This observation may reflect subtle difference in the substitution processes being modeled on the asset and liability sides.

Comments on the impact of inflation and devaluation on the selection of an international borrowing source. Reason for borrowing foreign currencies; Stability of borrowing cost and variability of exchange rates; Risk of higher actual expense of borrowing foreign currencies.

The article focuses on the book "Exchange Rates in European Monetary Integration," by Sinimaaria Ranki. The book presents an empirical and forward-looking analyses of exchange rates in European Monetary Integration. Investigates realignment expectations in the European Exchange Rate Mechanism (ERM) from 1987 to 1992. It analyzes the European Monetary System from 1980 to mid 1996 and quantifies the effects of internal and external factors on the domestic interest rates of ERM countries. The book examines stabilization aspects of monetary policy in the case of two large economies both issuing a major international currency.