Economics and Business Review

Editorial introduction

Michał Pilc — 2024-03-28

Editorial

Some implications of behavioral finance for international monetary analysis

Thomas D. Willet — 2024-03-14

This paper discusses some of the important insights from behavioral finance for international monetary and financial analysis. A broad approach to behavioral finance is advocated which includes analysis of the effects of uncertainty, perverse incentives, and complexity economics as well as the cognitive biases focused on in the initial contributions to behavioral finance. It offers reasons why capital mobility is often not perfect and expectations are sometimes not rational. Correctly interpreted it is not a wholesale attack on efficient market theory but rather argues that markets can behave differently at different times, being efficient sometimes and subject to destabilize or insufficiently stabilizing speculation at others and focuses on the conditions that make different types of behavior more likely. It helps provide insights into issues such as currency crisis, the effects of official intervention in foreign exchange markets, the international monetary trilemma, capital flow surges and reversals, the discipline effects of fixed exchange rates and international financial markets and why uncovered interest rate parity often does not hold.

Google Search intensity and stock returns in frontier markets: Evidence from the Vietnamese market

Dang Thi Viet Duc — 2024-03-13

The study investigates investor attention's impact on stock trading by modeling the relationship between Google search intensity and stock return with stocks listed in frontier markets in Vietnam from October 2016 to October 2021. The study has three findings. First, the study confirms the price pressure hypothesis and attention theory that Google search intensity positively affects stock returns. Second, this study indicates that the impact of Google search intensity on stock price is short. The positive effect is within the week of searching and reverses the following week, although the reverse force is not strong. Third, the relationship is more robust post than pre-COVID-19, suggesting that after a shock, more new individual investors enter the market, the impact of GSVI on stock return is stronger.

The asset-backing risk of stablecoin trading: the case of Tether

Javier Jorcano Fernández — 2024-03-29

This article aims to analyse the asset-backing risk of stablecoins, focusing on international accounting standards, classification criteria, and auditing standards and using Tether as a case study. It examines Tether’s issuance, backing, controls, ratios, and regulations to assess risk transmission and mitigation. The results suggest a need for unified and strengthened accounting and auditing standards to enhance user confidence. Liquidity, solvency, and debt ratios were applied to Tether's balance sheets; while Tether has made efforts to increase its transparency, and although it possesses highly liquid assets, challenges remain regarding its liquidity, solvency, and debt. An independent auditors' valuation is crucial for investor confidence, demonstrating that more specific regulations are required for stablecoins. Future research should explore other stablecoins to comprehensively understand the accounting and auditing challenges in the field.

Determinants of consumer adoption of biometric technologies in mobile financial applications

Anna Iwona Piotrowska — 2024-03-29

This study aims to identify what determines the use of biometric technologies in the financial applications of banks and FinTechs. The analysis uses data from a survey of 1,000 adult Polish residents. The estimated logit model indicates that the probability of using biometric solutions decreases with age and increases with the level of education and technological sophistication relating to personal innovativeness, experience with biometric technology, and the use of digital technology in both financial and non-financial areas. The work identifies the COVID-19 pandemic as a factor accelerating the adoption of biometric solutions and fostering awareness of the threat of digital technologies invading respondents’ privacy. The study demonstrates the positive impact of trust that phone manufacturers ensure the security of stored funds and data processing on the acceptance of biometric solutions in financial services. This relationship underpins the recommendation to financial institutions in the field of promoting biometric technologies.

Central bank communication in unconventional times: Some evidence from a textual analysis of the National Bank of Poland communication during the COVID-crisis

Lada Voloshchenko-Holda — 2024-03-29

The article analyses the communication of the National Bank of Poland (NBP) one year after the announcement of the crisis response package adopted after the outbreak of the COVID pandemic. It presents the perspective of a central bank that first entered unconventional monetary ground during the COVID-crisis. The analysis aims to answer the question of what message about monetary policy objectives may have been conveyed in communication with regard to possible interpretations of the response actions by economic agents. Misinterpretations of policy actions at the time, fuelled by the increased attention to inflation, could later contribute to higher inflation persistence. The article presents findings based on the innovative use of MAXQDA Pro 2022 solutions for textual analysis of central bank’s communication. It points to three inconsistencies in the NBP’s communication that could potentially lead to misinterpretation of the NBP’s policy actions in response to the crisis and thus affect the formation of expectations.

Corporate governance and risk management: An evaluation of board responsibilities in western and Islamic banks

Bchr Alatassi — 2024-03-29

This research aims to explore the role of the board in cor-porate governance (CG) and risk management within the context of Islamic banking. Given the global reach of fi-nancial institutions, it is important to compare and evalu-ate the unique position of Shari’ah committees or Shari’ah Supervisory Board (SSB) in addressing the unique risks of Islamic banks. Using a comparative analysis, this study evaluated risk management guidelines in the CG codes of the United Kingdom, Germany, Saudi Arabia, and Malaysia. It found that board were ultimately responsible for risk management, regardless of the governance structure, and Shari’ah-related risks fell under the board’s purview. An innovative blend of Western CG frameworks and Islamic principles enhanced governance robustness through the strategic collaboration between board and SSBs.

Silver entrepreneurship: A golden opportunity for ageing society

Ivana Barković Bojanić — 2024-03-29

This paper aims to discuss the notion of silver entrepre-neurship in the context of the silver economy. Policy-wise knowing who silver entrepreneurs are and what it takes to support them is an essential step to productively managing the ageing population and promoting an age-ready but age-friendly approach to creating a sustainable economy and society in the new demographic reality. The paper provides a theoretical and empirical literature review of silver entre-preneurship to identify the current state of the art. It also identifies selected policies and strategies aiming to foster silver entrepreneurship, representing a more inclusive and age-diverse entrepreneurial landscape. The silver entrepre-neurship proves to be a challenging research field due to the elusive nature of entrepreneurship itself and the lack of universal definitions for this phenomenon.

Assessing the long-term asymmetric relationship between energy consumption and CO2 emissions: Evidence from the Visegrad Group countries

Błażej Suproń — 2024-03-29

This study investigates the impact of renewable (REW) and non-renewable (NREW) energy usage, along with econom-ic growth (GDP), on carbon dioxide (CO2) emissions in the Visegrad countries, which rely heavily on traditional energy sources. Using data from 1991 to 2021, the analysis employs a panel asymmetric regression with Driscoll-Kraay and FGLS standard errors. The latent cointegration test reveals long-term relationships with asymmetry among the variables. Real GDP fluctuations exhibit a negative impact on CO2emissions for both positive and negative shocks. A reduc-tion in conventional energy source consumption leads to a greater CO2 emission reduction, confirming asymmetry. Conversely, an increase in consumption positively impacts CO2 reduction. However, non-conventional energy sources show no asymmetries. The OLS-based model proposed by Driscoll-Kraay showed reduced standard errors, but lower significance in the estimated parameters compared to the FGLS model. The findings recommend a sustainable energy transition for Visegrad countries by eliminating traditional sources and promoting renewable resources.