This study investigates the nonlinear relationship between financial development (FD) and air pollution - conceptualised as the Finance-Environment Kuznets Curve (FEKC) - across 36 Asian economies (1996-2022). Using panel data, we examine multiple FD dimensions, including domestic credit, private bank credit, liquid liabilities, and stock market capitalisation, with PM2.5 as a proxy for pollution. Results confirm an inverted U-shaped FEKC for most indicators, indicating that early financial deepening worsens pollution, but later reduces it beyond identified thresholds. Institutional quality both directly lowers pollution and moderates the FD-environment nexus, weakening early adverse effects and accelerating later environmental gains, highlighting the importance of governance in green financial development.
This study examines how financial technology (fintech) affects international trade using a structural gravity model with data from 128 countries (2014-2022). Estimated via Poisson Pseudo-Maximum Likelihood (PPML) with comprehensive fixed effects, results show that a one-unit increase in fintech development boosts international manufacturing trade by 328.9% and agricultural trade by 30.6% relative to domestic trade. Robustness checks confirm findings across alternative measures. These results underscore digital financial inclusion's critical role in reducing cross-border trade barriers, suggesting that fintech-promoting policies can significantly enhance global trade competitiveness, particularly in manufacturing and high-tech sectors.
We study two-player contests over a continuum of battlefields under probabilistically enforced resource caps. Players independently draw allocations from chosen distributions; the higher allocation wins each battlefield and both bear costs. Extending the generalized equality of payoffs principle (Hwang, Koh, and Lu, 2023, "Constrained Contests With a Continuum Of Battles." Games and Economic Behavior 142: 992-1011) to step function constraints, we characterize equilibrium strategies. Imperfect enforcement incentivizes over-allocation beyond the cap, even when enforcement probability is high. Under asymmetric caps, players may exceed even the higher cap. Our framework recovers canonical equilibria under perfect enforcement as special cases.
This study examines the effects of affirmative action bans on underrepresented minority (URM) students in U.S. higher education. Using state-level variation and a difference-in-differences approach, it estimates the impacts on enrollment, degree completion, and STEM participation. The results show that these bans reduced Black enrollment and bachelor's degree attainment at four-year institutions, with the largest declines occurring at highly selective institutions. Black representation in STEM fields decreased at highly selective institutions but increased at moderately selective ones. These findings are consistent with the mismatch hypothesis and suggest that institutional selectivity plays an important role in shaping access, persistence, and academic trajectories.
Previous studies of the relation between capital controls and banking crises have found mixed results. We suggest that this is at least in part because at the time data was not available to distinguish between controls on inflows and outflows. We find that controls on outflows are related to more banking crises while there is no statistically significant relationship with controls on inflows. This is consistent with the view that such inflow controls need to be used carefully and that in such cases they may be useful and in others they may be harmful.
This study uses the quantile ARDL methodology to examine the dynamic link between confirmed COVID-19 cases and deaths in the U.S. after vaccination, with a particular emphasis on exploring heterogeneity across various percentiles. The findings indicate that the confirmed case fatality rate decreased after vaccination, and the relationship between confirmed cases and deaths varies across different percentiles.
We investigate investors' spending responses to daily stock market returns using daily card transaction data in Seoul, South Korea. We document robust evidence of positive associations between daily card spending at karaoke lounges, pubs, and bars and stock market returns. We provide suggestive evidence that our findings are more consistent with the mental accounting framework. Our nonparametric analysis documents evidence of investors' loss aversion. We document little evidence of a gambling motive among investors. This study provides new evidence on investors' behavioural spending responses to stock market fluctuations.
This study assesses the impact of a variety of different NTMs on GVC length and explores heterogeneity in these effects depending on countries and sectors with an extensive dataset covering 12 sectors across 171 countries from 2012 to 2022. Our results indicate that all kinds of NTMs tend to reduce the length of GVCs. This outcome appears to be driven primarily by developing countries and the manufacturing sector. This suggests that regulatory changes accumulate along interlinked country-sector relationships and ultimately disrupt the fragmentation and complexity of production networks.
This study investigates the dynamics of Korean short-term interest rates by applying both univariate diffusion and jump diffusion models to daily overnight call rate data. Continuous diffusion models often fail to capture the sudden, discontinuous movements observed in financial data, a limitation addressed here by extending the Vasicek, CIR, CKLS, and flexible GD-GV models with a jump component. The models are estimated using maximum likelihood estimation (MLE) based on accurate, non-discretised approximate transition probability density functions (ATPDFs). Our findings provide compelling evidence for the presence and significance of jumps in the Korean overnight call rate. Jump diffusion models consistently yield substantially higher log-likelihood values, demonstrating a superior fit compared to their pure diffusion counterparts. The estimated jump intensities reveal frequent discontinuous movements, with jump volatilities contributing significantly to the overall interest rate variance. Crucially, the detected jumps are directly linked to non-linear policy interventions and systemic shocks, such as the 1997 Asian Financial Crisis, the Daewoo collapse, and subsequent BOK big step rate hikes. This study underscores the critical role of the surprise element in accurately modelling Korean short-term interest rate dynamics, offering valuable insights for financial analysis and risk management.
This study evaluates the impact of South Korea's small and medium enterprise (SME) support policies on firm survival and performance under economic crisis conditions by leveraging the exogenous shock of the COVID-19 pandemic. Using administrative data from the SMEs Integrated Management System (SIMS), we analyze the effectiveness of various SME support programs, including technology, human resources, export, domestic sales, startup, and management support. To address endogeneity, we exploit the natural experiment created by COVID-19; to mitigate selection bias, we restrict the sample to firms that received financial support in 2019 and examine how the timing of support (across 2019 quarters) affects outcomes. If firms receiving support closer to the pandemic show greater improvements, this suggests a policy effect rather than selection bias. Our results indicate that technology and domestic sales support are significantly associated with higher employment, revenue, and firm survival. We also examine complementarity and substitutability among support policies, finding significant interactions for certain combinations.
Complex trade patterns characterise the present simulations of the constant cost model with three and five regions and products aggregated from the World Input-Output Database. The regions start with America, Asia and Europe trading Resources, Manufactures and Services. The sum of per capita Cobb-Douglas utility with global consumption shares is maximised for each region subject to balanced trade and global material balance. Simulations of autarky and each region trading with the rest of the world lead into full model. The global trade equilibria are characterised by export diversification, import competition and endogenous nontraded goods.
We assess the effects of global supply chain disruptions on the Korean economy, with a particular focus on core inflation, and compare them to the impact of other supply-side shocks. Empirical results from a structural vector autoregressive model estimated using a Bayesian approach with narrative sign restrictions indicate that global supply chain shocks have a highly persistent impact on inflation, whereas the effects of other supply-side shocks tend to be more transitory. Furthermore, we decompose the effect of supply chain disruptions by region, specifically distinguishing between China and the rest of the world, and uncover significant heterogeneity in their effects, which is not captured by the globally integrated index. This finding implies that policy responses to supply chain shocks may need to be tailored according to the geographic origin of the disruption.
This study examines the global macroeconomic effects of oil shocks arising from different types of uncertainty. Extending Kilian (2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market." American Economic Review 99:1053-1069. https://doi.org/10.1257/aer.99.3.1053), we incorporate financial uncertainty (VIX) and geopolitical risk (GPR) in addition to traditional oil supply and demand shocks, and reinterpret the residual oil-specific demand shock as a speculative shock, following Cross, Nguyen, and Tran (2022. "The Role of Precautionary and Speculative Demand in the Global Market for Crude Oil." Journal of Applied Econometrics 37:882-895. https://doi.org/10.1002/jae.v37.5). The shocks are subsequently embedded in a Global VAR (GVAR) framework to evaluate their international transmission. The results reveal considerable heterogeneity: financial and geopolitical uncertainty shocks are generally associated with weaker real GDP, particularly in advanced economies, while their effects on inflation are muted or region-specific. Speculative shocks produce more varied outcomes, with modest output declines and mild cost-push pressures in advanced economies, but neutral or slightly expansionary responses with limited price effects in some emerging markets. In contrast, demand-driven oil price increases are typically procyclical, while adverse supply shocks are linked to output losses and stronger inflationary pressures, underscoring the asymmetry in transmission channels.
This study investigates the effect of inflation on financial inclusion across 61 countries. Using the median quantile regression and two-stage least squares regression methods, the findings reveal that inflation has a positive effect on financial inclusion in European countries and a negative and insignificant effect on African, Asian and the Americas countries. The moderation analysis shows that bank stability does not weaken the adverse effect of inflation on financial inclusion in African countries, but a high bank loan-to-deposit ratio weakens the adverse effect of inflation on financial inclusion and accelerates financial inclusion in a high inflation environment in African countries.
Resiliency denotes how quickly stock prices recover from non-information shocks and revert to fundamentals. This study examines the role of resiliency in explaining the expected returns in the Korean stock market by decomposing prices into permanent and transitory components and applying spectral analysis. We show that low resiliency generates a significant illiquidity premium, robust to firm size, alternative liquidity measures, and across normal, crisis, high-, and low-volatility periods. Additionally, the effect of resiliency becomes insignificant when short sales are restricted, suggesting the significance of short sales availability in determining resiliency premiums.
This study investigates how multiple directorships, often referred to as 'busy' boards, influence firms' information environment and stock price crash risk. We find that multiple directorships are positively associated with crash risk, and this effect is primarily driven by busy outside directors rather than busy inside directors. Further analysis shows that the negative monitoring effects of busy outside directors are mitigated when local communities and corporate governance practices emphasise a long-term perspective. We also document that firms with busy outside directors disclose their environmental practices less frequently and in less detail, which further increases crash risk.
This study reports a randomized controlled trial testing whether behavioral nudges can encourage Millennials and Generation X to save or plan for retirement. The nudges included framing pensions as investments, using rules of thumb, labeling saving amounts, and emphasizing the future. The future-focused nudge most effectively increased the proportion of respondents willing to encourage peers to save beyond mandatory occupational pensions. No significant generational differences were found overall, but younger respondents-though less inclined than Generation X to view additional saving as necessary-responded positively to future- or investment-oriented nudges, narrowing the generational gap.
The study examines the inefficiencies arising from delivery overcrowding at the beginning of the year, driven by parental preferences related to Korea's school-entry cut-off policy. Utilizing a quasi-experimental design focussing on a specific patient cohort, we assess the influence of hospital overcrowding on the provision of medical services and subsequent health outcomes considering heterogeneous patient and physician characteristics. Despite the inability of mothers delivering spontaneously to manipulate delivery dates, scheduled births substantially increase early in the year due to Korea's school-age policy. Consequently, patients receiving treatment during this period experience reduced medical interventions, lower fetal monitoring rates, and decreased likelihood of undergoing certain procedures. Notably, deliveries in early January are associated with lower costs, reflecting an 8.7% reduction compared to the average expense for spontaneous deliveries.
The study found that political turnover accelerated the SOA, supporting our proposed 'power vacuum hypothesis'. This positive correlation was particularly evident in regions with high levels of political intervention, heavy tax burdens, and widespread corruption, as well as in firms with limited political connections, minimal reliance on political resources, and reduced political contributions. Additionally, outgoing officials with longer tenures and newly appointed officials with offsite experience amplified this effect. Notably, mayoral turnover had a greater impact on the SOA than secretary turnover. Lastly, bank loans were crucial for adjusting capital structures when they deviated below target levels.
