Purpose This study aims to examine how economic policy uncertainty (EPU) affects firms’ capital allocation efficiency (CAE) and whether national governance (NGI) reduces uncertainty-driven investment inefficiencies. Design/methodology/approach This study uses unbalanced panel data of non-financial firms listed on the Bombay Stock Exchange 500 index over the period 2016–2024. CAE is measured as the inverse of investment inefficiency, estimated through investment inefficiency residuals. Panel data quantile regression (PDQR) is used to capture the heterogeneous effects of EPU, and NGI is included as a moderating factor. The PDQR models control for firm-level characteristics, as well as year and sector fixed effects. The results remain robust under system generalized method of moments estimation, addressing potential endogeneity concerns. Findings EPU significantly improves firms, with stronger effects observed at the higher quantiles (Q50 and Q75). NGI significantly moderates the relationship between EPU and CAE, although it does not have a direct effect on CAE. The findings indicate that the impact of EPU on firms’ CAE varies with the quality of national governance. Practical implications The findings highlight that EPU exerts a disciplining effect on CAE, particularly for moderately and highly inefficient firms. While NGI does not reduce inefficiency directly, a stronger institutional framework plays a moderating role by influencing how firms respond to uncertainty. These results suggest that policy should focus on strengthening governance to enhance firms’ adaptive capacity during uncertainty periods. Originality/value This study provides novel distributional evidence by using PDQR to capture heterogeneity across firms. Furthermore, the study contributes by including NGI as a moderating factor in an emerging market context. This study highlights the role of institutional quality in influencing firm responses to uncertainty.
Purpose This paper aims to assess the degree to which flexibilization of the exchange rate regime can be an optimal option for achieving monetary policy autonomy. This could only be attained by putting the revelations of Mundell’s trinity under econometric examination in the context of emerging countries. Design/methodology/approach The methodology unfolds in three complementary stages. First, the authors assess the degree of monetary policy autonomy in each country by estimating the dynamic correlation between domestic interest rates and the US federal funds rate using the DCC-GARCH models. This provides a time-varying measure of the sensitivity of domestic interest rates to external monetary shocks. In the second stage, ANOVA and Bartlett’s tests are used to determine whether monetary policy autonomy differs significantly across exchange rate regimes. Finally, in the third stage, the authors estimate a random-effects panel model incorporating the three pillars of the Mundell trilemma (monetary policy autonomy, exchange rate regime and capital account openness) to provide a comprehensive empirical assessment of their interactions within emerging economies. Findings This study provides empirical evidence that no country is immune to the “Soft Power” exerted by US interest rates on the monetary conditions of peripheral countries. However, flexible exchange rate regimes provide relative autonomy for monetary policy by reducing the impact of capital account openness on the sensitivity of domestic interest rates in emerging countries. Originality/value While monetary policy autonomy has been the subject of extensive research, its measurement still relies largely on indirect or institutional indicators whose ability to accurately reflect the degree of autonomy actually exercised remains a matter of debate. The originality of this study therefore lies in a two-step approach: first, constructing an empirical measure of the actual degree of monetary policy autonomy rather than relying on a preexisting indicator; and second, analyzing the determinants of this autonomy within the framework of Mundell’s “impossible trinity.” This approach addresses a methodological gap in the literature by placing the measurement of monetary policy autonomy itself at the center of the empirical analysis.
Purpose This study aims to examine whether the allocation of central-bank reserves between the European Central Bank (ECB) deposit facility and current accounts influences monetary-policy transmission independently of the aggregate quantity of liquidity. The study addresses an empirical puzzle: abundant-reserve frameworks are expected to provide tight control of overnight rates, yet small but persistent deviations between market and administered rates remain. The dependent variable is the transmission gap, measured as the absolute deviation between the euro short-term rate (€STR) and the ECB deposit facility rate. Reserve allocation is measured by both the share of reserve liquidity parked in the deposit facility and the levels of parked and circulating balances. Design/methodology/approach The study uses monthly euro-area data. The main estimations use a modern transmission sample beginning with the introduction of €STR, while a complementary historical liquidity sample supports longer-run analyses of liquidity regimes, thresholds and structural stability. The empirical framework combines heteroskedasticity- and autocorrelation-consistent baseline regressions with interaction, dynamic, threshold, quantile, structural-break and rolling-window specifications, together with multi-collinearity diagnostics and alternative dependent-variable checks. Findings Reserve allocation does not have a uniform average association with monetary-policy transmission. The unconditional association between the parking ratio and the transmission gap is statistically indistinguishable from zero. However, the association becomes economically and statistically stronger during periods of elevated financial stress, under the reformed ECB operating framework and when reserve absorption is extreme; it is also concentrated in the upper tail of the transmission-gap distribution. The absolute level of parked liquidity carries more information about transmission effectiveness than the parking ratio alone. Structural-break and rolling-window evidence further indicates that the relationship between reserve allocation and policy transmission changes with the ECB’s operating environment. Originality/value The study identifies a state-dependent allocation channel of monetary policy through which the distribution of reserves, rather than reserve quantity alone, is associated with policy-rate transmission in an abundant-reserve framework. By linking reserve-allocation behaviour to money-market pass-through, it connects the literatures on monetary-policy implementation, floor-system operating frameworks, reserve management and central-bank liquidity design. The findings inform reserve-remuneration policy, liquidity-management practice and the design of abundant-reserve operating frameworks in the euro area and other advanced economies. They also indicate that reserve-allocation measures are best used as complementary, state-contingent monitoring indicators rather than as policy targets.
Purpose This study aims to investigate how the oil reserve-to-production (r/p) ratio impacts foreign direct investment (FDI) inflows in Africa’s leading oil-producing economies and how financial development moderates this relationship. Design/methodology/approach The study estimated panel data of the 10-leading oil-producing Africa countries between 2000 and 2022, using pool mean group estimation technique. Findings The study shows that the abundance of oil has a long-run adverse impact on FDI inflows into African oil-producing countries, and that this effect is more pronounced in Sub-Saharan Africa than in North Africa. Furthermore, the importance of a well-developed financial sector for foreign investors is evident only in Sub-Saharan Africa; however, its interaction with oil r/p plays a significant role in mitigating the adverse impact of oil wealth on FDI inflows, particularly in North African countries. Originality/value To the best of the authors’ knowledge, no study has ever considered the oil r/p as a proxy for oil, as it can serve as a valuable measure of oil wealth or availability that can influence FDI inflows. Moreover, most studies on the linkages between oil and FDI flows in Africa focus on comparisons between oil-rich and non-oil-rich countries, with limited comparison among oil-abundant countries or regions themselves, leaving the unique opportunities and challenges of these economies underexplored. Hence, this study focuses on the top 10 African oil-producing economies, by comparing North Africa and Sub-Saharan Africa. In addition, this study innovatively introduced financial development as a moderating variable to provide insight into the dynamic interaction between oil, and FDI inflows in Africa.
Purpose This study aims to examine whether reported CoreTech in bank annual reports provides a standalone resilience signal or contains conditional information about deposit-growth pressure during periods of stress. Design/methodology/approach Using an unbalanced panel of 25 publicly listed Vietnamese commercial banks from 2013 to 2025, the study constructs an auditable annual-report index of reported internal technology implementation. The index separates implementation evidence from digital ambition, customer-facing channels and generic disclosure. Regressions with bank and year fixed effects examine how lagged reported CoreTech relates to deposit-growth pressure across stress periods. Findings Banks with stronger lagged reported CoreTech experienced weaker deposit growth during the COVID stress window. This represents a relative deposit-growth shortfall rather than deposit outflows or realized liquidity distress. No statistically detectable association is found during 2022–2023 or for nonperforming-loan outcomes. Practical implications Supervisors, managers and analysts should interpret reported CoreTech alongside deposit growth, the current account and savings account ratio, loan-to-deposit ratios, liquidity buffers and bank business models. Originality/value The study provides an auditable disclosure-based measure of reported internal technology implementation and shows that its information content varies across stress environments.
