Search

Copyright of Journal of Economic Cooperation & Development is the property of Statistical Economic & Social Research & Training Centre for Islamic Countries 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.)

In the aftermath of first world war, offshore finance has garnered the attraction of various quarters. As of 2010, at least USD 21–32 Trillion of unreported private financial wealth, nearly 18% of the aggregate global wealth, was cantered in tax havens. Financial risk management to prevent offshore financial crisis has become an international concern and widely discussed. We examine the dynamic interrelationship between cognitive ability, risk preference and offshore financial development for a global sample of 44 countries for the period 2001–2017 by using simultaneous equation models. The findings reveal that risk preference, as an informal institute, exerts imperceptible influence on offshore financial development. Moreover, as the cognitive ability affects offshore financial development by way of risk preference, there does exist 'Smart Managers Effect' and 'Smart Investors Effect' determined by the cognitive ability in Offshore Financial Centres. Moreover, our results vindicate the role of 'Invisible Hand' of the market during the tension between markets and governments. The study offers a convincing explanation of the impacting path to risk preference, dominated by cognitive ability, on offshore financial development in offshore financial centres from the perspective of the Institutional Economics. [ABSTRACT FROM AUTHOR]

We measure the impact of competition and institutional quality on stability for dual banking economies. Our sample comprises 492 banks (109 Islamic and 383 conventional banks) from 17 countries with dual‐banking systems. The sample period is from 2005 to 2020. The estimations are performed using Two Step System Generalized Method of Moments approach. Our findings reveal heterogeneous effect of competition on stability. We found the evidence of competition‐stability paradigm in case of full sample as well as for Islamic banks. There is no effect of competition on the stability of conventional banks. Furthermore, there is no evidence of size effect in the competition‐stability results. The impact of legal institution is insignificant. We also observe that better quality of political and the economic institutions increases the bank stability. We attribute these findings to the conjecture that better political and/or legal institutions improve bank stability by reducing information asymmetry and adverse selection. Finally, we find the evidence that political, legal and economic dimensions of institutions have differential effect on competition‐stability relationship. The findings are robust to alternative definitions of competition, stability and different methodological approaches. [ABSTRACT FROM AUTHOR]

In view of increasing importance of emerging market currencies in the global foreign exchange markets and the growing concerns regarding the vulnerability of these currencies to global crises, we assess the connectedness of 16 emerging currencies by employing asymmetric domains of time and frequency spanning March 2011 to January 2022. We first notice bidirectional interconnectedness (both positive and negative) among three clusters of sampled exchange rates. The currency contagions follow divergent directions during crisis periods. During US debt selling crisis, there is a short-run negative contagion pointing to the appreciation of currencies. Following the Chinese financial market crisis, emerging market currencies demonstrated devaluation. There is long-run positive contagion (devaluation) in response to European Debt Crisis, Russian Ruble Crisis, Brazilian economic crisis, and Argentinian monetary crisis. The sampled exchange rates demonstrate negative long-run connectedness (appreciation) after COVID-19. The major transmitters to total connectedness are South Africa, Poland, and Mexico and major receivers include Thailand, the Philippines, Malaysia, India, Indonesia, and Egypt. In the long run, China is emerging as a significant transmitter. Our study draws significant policy and practical implications for regulators, investors, and financial market participants. [ABSTRACT FROM AUTHOR]