Technological and Economic Development of Economy

Will peer-to-peer online lending affect the effectiveness of monetary policy?

2025-01-22T10:01:47+02:00

Online lending is a product of digital transformation, which has had a profound impact on the traditional money market. This paper discusses the impact of peer-to-peer (P2P) online lending on the effectiveness of monetary policy. Through the bootstrap sub-sample rolling-window Granger causality tests show that P2P has both positive and negative impacts on the money supply (M2). The positive impact of P2P on M2 indicates that online loans increase the amount of money supply. The negative impact of P2P on M2 shows that it may cut the money supply, thus weakening the monetary policy effectiveness. The general equilibrium model is inconsistent with these results, which underlines a positive effect from P2P to M2. In turn, the negative impact points out that the adjustment of monetary policy will hinder the development of P2P. The negative impact of M2 on P2P indicates that through the regulation of money supply, the online lending market can be correctly guided to prevent financial market from getting out of control. Through the supervision of online lending industry, we can accurately grasp the development of the internet financial industry and reduce its impact on monetary policy.

First published online 3 September 2024

Factors hindering and boosting SDG7 implementation in EU countries

2025-01-22T10:01:47+02:00

One of the sustainable development goals (SDG7) is to ensure access to clean and affordable energy, which is related to most other SDGs and plays a crucial role in economic development and human well-being. The aim of the article is to identify factors that enhance and delay one of the most crucial goals of sustainable development, SDG7. The study’s originality lies in the spatiotemporal approach to analysing the impact of selected factors on the development of green energy and increasing its availability. Three groups of potential SDG7 determining factors have been identified: ecological, social and economic. The proposed approach and the use of sensitivity analysis to variables weighting and ranking constructions of EU countries is an innovative aspect of the work and fills the gap in research on SDG7. The study showed that Denmark and Sweden occupy leading positions in the rankings based on the extent of SDG7 implementation. In contrast, Bulgaria, Cyprus and Lithuania occupied one of the last positions. The results of panel-data model estimations showed that in each estimated model, the same “indispensable variables” significantly affect the implementation of SDG7. Among these variables, only the unemployment rate significantly negatively impacted the SDG7 execution.

First published online 15 November 2024

Debt or equity? Financial impacts of R&D support across firm demographics

2025-01-22T10:01:47+02:00

This study utilizes data from Korea’s Research and Development (R&D) grant program to examine the impact of receiving an R&D grant on a firm’s ability to obtain external financing, taking into account the heterogeneous effects based on firm size and characteristics. By employing the propensity score matching method, we establish the causal effect of R&D support on financing and discover that R&D grants have differential effects on debt and equity financing. Our findings indicate that larger firms are more likely to acquire subsequent debt financing, whereas small firms that receive R&D grants exhibit an increased likelihood of securing equity financing, particularly among young firms. Furthermore, we identify a certification effect of R&D grants, implying that such grants may serve as indicators of the potential success of small, young firms in the market. Collectively, this study illuminates the role of R&D grants in firms’ financing decisions, providing valuable insights for policymakers and firms seeking to secure external financing.

First published online 12 December 2024

Promoting economic recovery: the silver lining of digital transformation and corporate innovation

2025-01-22T10:01:47+02:00

With the unstable international environment, the global economy has experienced a slowcession. Previous research on digital innovation in firms has often neglected the impact of macroeconomic cycles. This paper examines the moderating effect of the economic slowcession in the digital transformation and corporate innovation nexus, by using the China’s A-share listed companies’data during 2001 and 2021. The empirical results find that the positive impact of digitization on innovation is countercyclical. During recession, the positive impact of digital transformation on innovation is even greater compared to economic prosperity. Grouped regression results indicate that State-owned listed companies, Non-high tech companies, Large-scale companies, and Eastern companies are more affected by the positive moderating effect of the recession. This indicates that getting out of recession requires more aggressive support of these companies, which promotes innovation and economic recovery. This study provides a useful reference for countries in recession and provides an important complement to traditional economic cycle theory and innovation cycle theory.

First published online 15 November 2024

Can green bonds hedge against geopolitical risk? A cross-market connectedness analysis with portfolio implications

2025-01-22T10:01:48+02:00

This study investigates whether green bonds (GBs) can hedge against geopolitical risk (GPR). This study extends the booming literature on GPR and GBs, develops a modified connectedness network model to measure the connectedness between GPR and GBs, confirms the hedging property of GBs against GPR, and becomes the first to discuss alternative hedging properties of GBs against GPR. We find evidence of market-, time-, and quantile-varying linkage between GPR and GB markets based on the time-varying Granger causality test and quantile extended joint spillover index model. We confirm via a regression model that only the GB markets in China and Japan can hedge against GPR. At the same time, GB in China remains a weak hedging and safety-haven asset simultaneously. The results remain robust for alternative proxy variables, data frequency, and model specification. Finally, the MVP approach provides superior performance while maintaining weak hedging and safety-haven properties against GPR. This study has considerable portfolio-related implications: (1) it offers an efficient hedge (i.e., GB) against GPR, (2) the heterogeneous performance of regional GB markets reminds investors to be cautious when selecting GBs assets, and (3) it encourages reasonable investment allocations on GBs to achieve a balance between profit and risk.

First published online 24 September 2024

Evaluating impacts of ICT development on wages of workers

2025-01-22T10:01:48+02:00

At the provincial level, there is a research gap in discussing the causality and internal mechanism between ICT development and wages of workers. The study utilizes the province-level balanced panel data over the period 2006–2021 in China, clarifies the impact and internal mechanism of ICT development on wages of workers, and uses the DID method to identify the causality between the two. This study found that there is a positive correlation between ICT development and workers’ wages, and skill level is a mediate transmission channel. Moreover, ICT development has a positive impact on workers’ wages in the central and western regions. Besides, compared to low-wage workers, high-wage workers gain more information dividends. The findings of this study have reference significance for policymakers. First, for the central and western provinces in China, it is necessary to actively develop the ICT industry, cultivate high-tech enterprises, and improve local ICT development levels. Second, we should improve the skill level of workers and enhance their competitive advantage in employment. Third, each province should continue to expand the enrollment scale of higher education institutions, and improve the quality of labor force.

First published online 09 September 2024

The effects of fınancıal pressure polıcıes on economıc growth: The case of OECD countries

2025-01-22T10:01:48+02:00

In this study, the effects on economic growth of financial pressure policies applied in OECD countries are examined. For this purpose, the “financial pressure index (FPI)” was calculated by using 10- year data for 2010–2020 from 37 OECD countries and “growth rates” were obtained. The FPI was calculated using (i) loans extended to the pri¬vate sector, (ii) loans extended to the central government, (iii) interest payments and (iv) inflation rate data. In calculating FPI, first of all, the data was standardized. Following the standardization process, the data was weighted using Principal Component Analysis (PCA) to calculate the FPI. After weighting the data, each standardized value was aggregated by multiplying it by its own weighted value, and the final FPI was ultimately calculated. Economic growth rates were calculated as a percentage of GDP. Finally, the analysis was carried out by comparing the calculated FPI with the economic growth rates. According to the results of the analysis, the coefficient of FPI was statistically significant (p < 0.05). In this context, every 1-point increase in FPI reduced GDP by 0.178 points.

First published online 17 September 2024

An analysis of the Indian Economy during the three COVID-19 pandemic waves

2025-01-22T10:01:48+02:00

The objective of the study was to examine the effects of the COVID-19 pandemic on India’s economy. The analysis focused on several economic metrics, including stock market prices, the rupee’s value in relation to the US dollar, economic activity, the unemployment rate, and the rate of inflation. Contrary to popular belief, the results demonstrate that during the first wave (25 March 2020 to 16 September 2020), the increasing number of cases had a beneficial influence on economic activity and a negative impact on the unemployment rate. The second wave, which lasted from 15 March 2021 to 17 July 2021, was considerably stronger and demonstrated how confirmed instances had a significant detrimental impact on inflation rates and stock values. Contrary to expectations, the third wave (December 28, 2021, to January 30, 2022) was found to be less intense. Overall, the report shows how the pandemic affected India’s economy during each of the three waves and notes that there have been encouraging signs of recovery during the return to normalcy phase. The government, scholars, policymakers, and economists will find this study useful in understanding how the COVID-19 Pandemic affected the Indian economy and in coming up with ideas for future risk mitigation measures.

First published online 26 August 2024

Influence from highways on regional economic growth – based on the trade potential in China

2025-01-22T10:01:48+02:00

The question of whether the construction of the highway network is economical and can produce positive economic benefits has been a hot topic of discussion in recent years. Previous scholars have explored the impact from multiple perspectives. Our paper draws the “trade potential” model proposed by Armstrong, based on the universal gravity model and the principle of space interaction, which is different from the traffic accessibility, market potential, and market access used in most of the literature. We argue that it is more appropriate to consider both the size impact and the time distance or trade cost impact of the two cities. The paper constructs a conceptual framework and theoretical model for the impact of highways on regional economic growth, measures the “minimum transit time” of highways between prefecture-level cities in China, and calculates the trade potential of prefecture-level cities. Through corresponding empirical model testing, we have obtained some meaningful conclusions.

First published online 17 September 2024

TFP shocks and endogenous innovation ability in manufacturing industry: from the perspective of structural stickiness

2025-01-22T10:01:49+02:00

This paper identifies the systemic shocks of total factor productivity (TFP) at the macro level and industry level, and then evaluates the structural stickiness of TFP shocks by using information entropy and industry correlation degree through counterfactual structural simulation based on China’s manufacturing companies. We find that: in the face of TFP systemic shocks, the industries with less structural stickiness include computer communication and other electronic equipment manufacturing, special equipment manufacturing and general equipment manufacturing, indicating that these industries have a strong internal innovation power. The TFP distribution of electrical machinery and equipment manufacturing industry and ferrous metal smelting and rolling industry showed structural differentiation, and the lower tail enterprises are not sensitive to TFP shocks. The industries with strong structural stickiness are non-ferrous metal processing industry and non-metallic mineral products industry, etc., which have weak internal innovation power and need exogenous innovation incentives. In addition, there is a significant positive correlation between industry correlation and information entropy, which emphasizes the radiation effect role of industries with high industry correlation degree. The research provides a new method to evaluate the innovation ability of the industry and a basis for the differentiation of innovation incentive policies in the industry.

First published online 15 November 2024

How does FinTech development drive corporate innovation? Fresh evidence from the perspective of financial supply

2025-01-22T10:01:49+02:00

By constructing a city-level financial-technology (FinTech) development dataset, this study examines the impact of FinTech on corporate-innovation behavior from a financial-supply perspective. The results reveal that FinTech promotes corporate innovation by reducing corporate-financing constraints and financing costs, alleviating information asymmetry, and expanding financing channels. This promotion effect is more pronounced for private, small, and young firms, firms with fewer fixed assets, and those located in low-regulation intensity areas. Moreover, credit-based FinTech companies have a greater impact on business innovation. In addition, bank deregulation and increased bank competition crowd out the financial supply of FinTech for innovation financing. Knowledge of these impacts can help corporate managers, governments, and financial regulators to formulate more effective development strategies to promote corporate innovation.

First published online 15 November 2024

On the impact of the COVID-19 pandemic on the household’s consumption and labor supply: theory and application

2025-01-22T10:01:49+02:00

The COVID-19 pandemic and the corresponding regulation measures carried out to curb it have had a strong negative impact on the whole economy, and household consumption has been seriously affected. A large part of the drop in consumption is due to the reduction of household income, which is mainly caused by the labor supply loss during the pandemic. To present the mechanism of the impact of the pandemic on consumption, this study constructs a novel theoretical model. Two hypotheses about the pandemic’s impact on labor supply are proposed and empirically tested. Subsequently, a comparative static analysis is carried out to determine the numerical mechanism of the pandemic’s impact on household consumption. In addition, the model is also empirically tested and further modified for application, enabling the studies of both a realistic simulation and a policy simulation. This study finds that the labor supply of households has been affected during the pandemic, and there is a mediating effect channel through the regulation stringency. The epidemic severity and regulation policies have a negative impact on household consumption, in turn, will raise the saving rate of households. The income effect of the two on consumption accounts for 32% and 44% of the total effect respectively.

First published online 05 September 2024