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International Journal of Monetary Economics and Finance

International Journal of Monetary Economics and Finance (IJMEF)

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International Journal of Monetary Economics and Finance (23 papers in press)

Regular Issues

  • Central Bank Independence and Monetary Policy Outcomes in Ghana: A Bayesian Structural Time Series Approach   Order a copy of this article
    by Isaac Bentum-Ennin, Paul O. Takyi 
    Abstract: The paper examines the impact of central bank independence (CBI) on monetary policy outcomes in Ghana using annual data from 1985 to 2019 and the novel Bayesian structural time series approach. The results reveal that the granting of autonomy to the Bank of Ghana has increased economic growth by about 43% in relative terms and 1.9% in absolute terms. In absolute terms, the CBI has increased the value of the Ghana cedi to the US dollar by 1.8. Relatively, the loss in value of the local currency during the CBI period is about 400%. Also, although CBI resulted in a reduction in inflation by 10% and 41% in absolute and relative terms respectively, these effects are not statistically significant. From a policy perspective, strengthening the operations of the Bank of Ghana is necessary to achieve its desired objectives of lower inflation, higher economic growth, and strong local currency.
    Keywords: Central Bank Independence; Bayesian Structural Time Series; Monetary Policy; Inflation; Exchange Rate; Ghana.
    DOI: 10.1504/IJMEF.2023.10061003
  • Nexus between Monetary Policy, Net Foreign Assets and Exchange Rate: Fresh insight from Lao PDR   Order a copy of this article
    by Sorphasith Xaisongkham, Liu Xia, Muhammad Saeed Meo, Phetphongphanh Savangchakavane, Somchith Sompaseuth 
    Abstract: This research aims to discover the nexus between monetary policy, net foreign assets and exchange rate in Lao PDR by applying an Autoregressive Distributed Lag (ARDL) model and a modified version of Toda & Yamamoto approach to Granger causality relationship. The findings aver the presence of cointegration when exchange rate and monetary policy were utilized as response variables, and corroborated a feedback effect between exchange rate with currency in circulation and monetary policy. Similarly, the article found a negative effect of net foreign assets on exchange rate, while monetary policy was a major cause of depreciation for domestic currency against US dollar in Lao PDR. The results confirmed a bidirectional causality between exchange rate and currency in circulation, whilst there was one-way causality running from currency in circulation to monetary policy and net foreign assets, which policy recommendations are essential tools to exploit in practical application for Laos and other small developing countries.
    Keywords: Exchange Rate; Net Foreign Assets; Monetary Policy; ARDL model; Toda & Yamamoto Approach.
    DOI: 10.1504/IJMEF.2024.10061324
  • How does organisational capital influence firm value? Moderating effect of tax haven utilisation   Order a copy of this article
    by Elisa Tjondro, I. Made Narsa, Heru Tjaraka 
    Abstract: This study investigates whether organisational capital and tax haven utilisation through subsidiaries are associated with firm value. We use 705 observations of Indonesia-listed firms from the agriculture and manufacturing sectors as the main contributors to the gross domestic product (GDP). The sample has been analysed using the weighted least square panel regression technique over the period 2015
    Keywords: Organisational capital; intangible capital; tax haven utilisation; firm value; tax audit; sustainable tax behaviour.
    DOI: 10.1504/IJMEF.2024.10062537

Special Issue on: ACFA2021 Financial Markets and Stabilisation Policies in Turbulent Times

  • The Effect of Demographic Changes on Real Interest Rates: Theory and Empirical Evidence from the OECD.   Order a copy of this article
    by Kristine Gevorgyan 
    Abstract: Do demographic changes a_ect the real interest rates? Using an analytical three-period overlapping generation model we show that the equilibrium real interest rate increases when the fertility and the mortality rates are higher. A larger share of younger population in the economy increases the demand for loans which subsequently increases the real interest rate. We empirically con_rm these relationships using cross-country regressions with data on long-term real interest rates, fertility, and mortality rates from the OECD.
    Keywords: Real Interest Rates; Demographics; Aging Population; Overlapping Generations Model; Cross-Country Regressions.
    DOI: 10.1504/IJMEF.2023.10060999
  • The effects of COVID-19 pandemic on the exchange rate: an empirical analysis for turkey as an emerging economy   Order a copy of this article
    by Fatih Ayhan 
    Abstract: The COVID-19 pandemic has deeply affected all economies, especially the macroeconomic indicators of developing countries. There have also been changes in all economic indicators in Turkish economy since COVID-19 cases appeared in March 2020. The USD/TRY exchange rate (EXC) also fluctuated in this period. In this study, the determinants of the USD/TRY exchange rate were empirically tested for 11/03/202006/11/2020 when the cases of COVID-19 increased. This research investigated the relationship between the daily number of COVID-19 cases (COVID), oil prices (OIL), and gold prices (GOLD) in Turkey. The findings of the residual augmented least squares (RALS) regression model showed that COVID, GOLD, and OIL have a statistically significant and negative effect on EXC. According to the regression model results, the increase in the COVID, GOLD, and OIL variables decrease the USD/TRY exchange rate, respectively. The most influential factor in determining the USD/TRY appears to be the rate of oil prices during the pandemic period. The most effective tool for policymakers to control exchange rate volatility seems to seek solutions for oil and energy prices.
    Keywords: exchange rate; oil prices; COVID-19; RALS; residual augmented least squares; Turkish economy.
    DOI: 10.1504/IJMEF.2022.10050901
  • The Markov-switching drivers of foreign exchange rate comovements in the case of CEE countries   Order a copy of this article
    by Mercédesz Mészáros, Dóra Sallai, Gabor David Kiss 
    Abstract: Significant foreign exchange market turbulences have emerged in recent years, which makes it worthwhile to monitor the co-movements of the exchange rates which are influenced by the variables of macroeconomic and financial environment. Regarding the effects of market contagion after exogenous shocks, it is also essential to capture the less examined elements linked to this like the measures of unconventional monetary policy. Fitting a Dynamic Conditional Correlation and Markov-Switching models to the sample of the Czech, Hungarian and Polish foreign exchange markets we analyzed whether their currencies moved together with their euro area benchmarks between 2007 and 2020. Our results showed the heterogeneity of the regional currencies. In addition, the research finding is that regime-changes revealed more similarities in case of the Polish and Hungarian currencies than what we were able to identify in the case of CZK.
    Keywords: contagion; CEE; foreign exchange markets; unconventional monetary policy; Markov-Switching.
    DOI: 10.1504/IJMEF.2023.10057736
  • Recovery Theorem and the Risk Aversion. Evidence from the Czech Republic.   Order a copy of this article
    by Martin ?asta 
    Abstract: The main goal of this study is to obtain expectations regarding the future development of the exchange rate using derived option probabilities and based on them to calculate the perception of risk by investors. More specifically, this study deals with the application of the Ross recovery theorem in the FOREX market using the CZK/EUR exchange rate. From a theoretical point of view, I offer an expression of the Ross recovery theorem using different Numeraire and I also apply a novel approach to the calculation of the implied risk premium. The results show that both subjective and risk-neutral densities are not unbiased probability estimates of a future exchange rate. However, the results show a significant increase in the implied risk aversion during the Covid19 pandemic.
    Keywords: Risk Aversion; Ross Recovery Theorem; Risk-neutral densities; Risk aversion; Risk premium; Covid19; FX options; Czech Republic; Czech Koruna.
    DOI: 10.1504/IJMEF.2023.10057737

Special Issue on: Islamic banking Novel topics and challenges

  • Dynamic Behavior of Islamic Banking Financing in the Real Sector   Order a copy of this article
    by Faizul Mubarok, M. Nur Rianto Al Arif, Abdul Hamid 
    Abstract: One of the activities of Islamic banking is channeling financing to the real sector, comprising different characteristics, therefore appropriate management of the distribution process is needed. The purpose of this study is to analyze the effect of real sector financing on non-performing Islamic banking in the short and long terms and analyzes its response in facing real sector financing shocks. This study uses a Vector Error Correction Model with data collected monthly from Islamic commercial banks and business units from 2007 to 2020. The results showed no effect in the short term, with a significant effect in the long term on the industrial sector. Islamic banking stabilized the fastest when it responded to the agricultural sector financing shock. Furthermore, the transportation, warehousing, and communication sectors dominate the non-performing financing of Islamic banking, therefore a reserve fund is needed to create a portfolio and a priority scale.
    Keywords: Financing; Non-Performing Financing; Real Sector; Islamic Bank.
    DOI: 10.1504/IJMEF.2024.10057738

Special Issue on: Monetary Policy and Financial Stability in the Post-COVID-19 Economies

  • A Correspondence Analysis on Dynamics of Local Gold Price among Major Consumer Economies During the Pre-Covid Period and the Pandemic Period   Order a copy of this article
    by SREEJITH S, Hareesh Ramanathan 
    Abstract: Gold is known as one of the precious metals The largest consumers of physical gold are China and India The consumer's attitude towards gold in these emerging markets for both consumption and investment is linked with their culture The price of gold in Indian and Chinese local markets mostly differs from International markets, either at a premium or at a discount price The recent economic slowdown during the outbreak of the covid19 also affected the investment preferences of investors, especially towards safe-haven investments However, due to the global pandemic, the demand for physical gold dropped to its lowest quarterly total since 2009 Social restrictions, economic slowdown, and strong gold-price are contributed to the same The premium or discount offered to gold prices in the local market also gives leverage for the economy to perform The study compares the strategies adopted by the largest consumer markets of gold.
    Keywords: Gold Price; Premium Gold Price; Discount Gold Price; Pandemic; Covid19; Correspondence Analysis.
    DOI: 10.1504/IJMEF.2024.10059847

Special Issue on: SIBR 2023 Post-pandemic Business Strategies and Policies in Emerging Markets

  • Conservatism Culture, Earnings Management, and Corporate Governance: Studies on Asia Pacific Countries   Order a copy of this article
    by Anna Purwaningsih 
    Abstract: This study aims to investigate the effect of conservatism culture on earnings management practices, both accrual and real earnings management. In addition, this study also investigates corporate governance to the relationship between conservatism culture and earnings management. The research samples were eleven Asia Pacific countries from 2010 to 2019. The data were taken from the Bloomberg and Thomson Reuters databases. Hypothesis testing was done with Multiple Linear Regression. The results provide empirical evidence that: (1) the conservatism culture has a positive effect on accrual (real) earnings management, and (2) corporate governance weakens the positive relationship between conservatism culture and accrual (real) earnings management practices. Therefore, these test results confirmed consistency-built hypotheses.
    Keywords: conservatism; accrual earnings management; real earnings management; corporate governance.
    DOI: 10.1504/IJMEF.2024.10062536

Special Issue on: SIBR2022 SMEs' New Financial and Operational Strategies in the Post-Pandemic Global Markets

  • Effect of organisational agility and competitive action on competitive advantage study on small businesses in Banten Province, Indonesia   Order a copy of this article
    by Sitti Ma’ani Nina, Sam’un Jaja Raharja, Rusdin Tahir, Margo Purnomo 
    Abstract: Women entrepreneurs play important role in economic growth, domestically and internationally. The purpose of this study is to test the influence of organisational agility and competitive action on competitive advantage in small businesses managed by women entrepreneurs in Banten Province, Indonesia. This research method used explanatory survey with a quantitative approach. The data were collected by surveying using instruments in the form of questionnaires. The data were analysed descriptivelyinferentially by using partial least squares structural equation modelling (SEM). Results showed that organisational agility and competitive action simultaneously and partially had a positive and significant effect on competitive advantage. The research contribution provides a new look at the field of strategic entrepreneurship because capability-building processes and entrepreneurial action processes at the typical organisational level build the creation theory of entrepreneurial action.
    Keywords: organisational agility; competitive action; women’s entrepreneurial action; competitive advantage; entrepreneurial action; Banten Province.
    DOI: 10.1504/IJMEF.2022.10053175
  • Cultural and Institutional Interaction Effects on Firm Bribery   Order a copy of this article
    by Piyaphan Changwatchai, Siwapong Dheera-aumpon 
    Abstract: Firm bribery can be influenced by culture and institutions. They may have both direct and indirect effects on firm bribery. The aim of the study, therefore, is to examine the interaction effects of culture and institutions on firm bribery. This study relies on data from the World Bank's Enterprise Surveys on firm bribery, Hofstede's cultural data, and the Worldwide Governance Indicators for institutional data. According to the findings, a country's level of power distance has a moderating effect on the negative relationship between firm bribery and some institutional factors, including government effectiveness as well as voice and accountability. To combat bribery, the government of a nation with a high power distance should focus on enhancing its service quality while also allowing for greater freedom of speech and free media.
    Keywords: bribe; business; culture; institution.
    DOI: 10.1504/IJMEF.2023.10057731
  • The Effect of Institutional Distance on Foreign Direct Investment in Thailand   Order a copy of this article
    by Siwapong Dheera-aumpon, Piyaphan Changwatchai 
    Abstract: Inward foreign direct investment (FDI) is important for Thailand in terms of increasing value added and productivity while also fostering economic growth. The analysis of FDI determinants is necessary in order to promote inward FDI. This research then aims to study the FDI determinants focusing on institutional distance. This research uses secondary data from 2006
    Keywords: Institutional Distance; FDI; Thailand.
    DOI: 10.1504/IJMEF.2023.10057732
  • The Reconciliation of Management and Shareholders through Indonesia Government Policy on Voluntarily Corporate Social Activities Disclosure   Order a copy of this article
    by Yavida Nurim, Nung Harjanto, Nur Rizki Wijaya, Agung Nur Probohudono 
    Abstract: This study examines the effect of corporate social responsibility (CSR) disclosure on bond ratings and market share to represent the alignment of interest between management and shareholder. In a country that is dominated by the family firm, such as Indonesia, the CSR of family firm underperform that of non-family firms. Moreover, in a voluntary CSR disclosure atmosphere, the reporting does not have the objective of fulfilling the Government's rule. We assume that CSR activity needs support from majority shareholders in family firms because it will reduce their welfare. We predict that higher CSR disclosure implies an effort of management to impress creditors and society. The creditor needs to guarantee the ability to pay back loans and interest, while society-represented customers prefer high-quality products. It implies that investors can consider non-financial performance, such as CSR performance because it becomes a benchmark for the company's efforts to avoid the financial problem from negative events related to reputation.
    Keywords: corporate social responsibility; bond rating: market share; sustainability report; stakeholder theory; reputation; environmental performance; social performance; economic performance.
    DOI: 10.1504/IJMEF.2023.10057733
  • Peer-to-Peer Lending Default Prediction Model: A Credit Scoring Application with Social Media Data   Order a copy of this article
    by Taufik Faturohman, Sudarso Kaderi Wiryono, Hasna Laila Nabila Khilfah, Allesandra Andri, Muhammad Abdullah Hamzah Syaiful Mukminin, Okta Saputra, Gun Gun Indrayana 
    Abstract: This study applied social media data to build credit scoring models in reducing non-performing loans in a peer-to-peer (P2P) lending portfolio. P2P lending can increase financial inclusion that has been known as one of the important factors in reducing poverty and enhancing prosperity. Discriminant analysis (DA), logistic regression (LR), neural network (NN), and support vector machine (SVM) were employed to compare effectiveness of the models. Results show that NN and SVM provide better outputs in predicting the default prediction model. Furthermore, social media data comprehensively increase the accuracy of lending default predictions.
    Keywords: peer-to-peer lending; credit scoring; social media; neural network; support vector machine; financial technology; non-performing loan.
    DOI: 10.1504/IJMEF.2023.10057734
    by Taufik Faturohman, Mega Zhafarina Purwono, Say Keat Ooi 
    Abstract: Muslim customers’ demands for financing in accordance with their religious values urge the emergence of Islamic banks. However, for the past 30 years, the public has not shown great concern for the development of Islamic banks. Therefore, the Indonesian people have the potential to develop Islamic banks, especially by Muslims. The purpose of this study was to assess factors influencing Indonesian customers’ acceptance in Islamic banking using the technology acceptance model. This study found that perceived usefulness, perceived ease of use, trust, religiosity, and amount of information influenced Indonesian customers’ acceptance in Islamic banking.
    Keywords: Islamic Bank; Acceptance; Technology Acceptance Model (TAM); Indonesia.
    DOI: 10.1504/IJMEF.2023.10057735
  • The Determinant of Innovations and Its Impact on Business Performance in Indonesia during Covid-19 Pandemic.   Order a copy of this article
    by Anang Muftiadi, Ratih Purbasari, Raden Marsha Aulia Hakim, Richa Nahdalaily Fathara, Arbi Abdul Kahfi, Donghyun Park, Cynthia Castillejos Petalcorin, Jinjarak Yothin 
    Abstract: Innovation is regarded as an important source of economic growth. Therefore, this study aims to analyze the effect of economic sector structures on innovations and the impact of innovations on business performance. It uses a regression model based on data from Statistics Indonesia 2020-2021. The results showed that the market structure is highly significant in determining the level of innovations. Other factors affecting this inventive method include the gender balance of executives, domestic investment, companies age of 5-10 years, and the existence of innovations division. In 2020, Covid-19 Pandemic affected the level of innovation by declining to 29.7% from 32% in 2019. There are two innovation types including product and process. A total of 24% of companies internally produce new innovations in 2020. It was discovered that product innovation significantly increased revenue and efficiency, while the process innovations only contribute to increased competitiveness. In business governance, market structure can be used to assess the level of innovations, furthermore the level of innovations of economic sectors has the potential impact on business and economic growth.
    Keywords: business innovation; market structure; innovation performance; business governance.
    DOI: 10.1504/IJMEF.2023.10058591
  • The impact of CEO’s age on corporate performance in the medical industry: Evidence from China   Order a copy of this article
    by Qing Xu, Chunxiao Xue, Jianing Zhang 
    Abstract: The study examines the relationship between CEO age and firm performance in Chinese medical companies and explores how CEOs of different ages have responded to the coexistence of opportunities and challenges during COVID-19. The study focuses on the healthcare and medical industry, exploring whether this particular industry would perform differently during the pandemic. We find no significant relationship between CEO age and company ROA, but a positive relationship between CEO age and company Tobin’s Q. And the significantly positive relationship between CEO age and company Tobin’s Q disappears during COVID-19. This study provides valuable guidance for the corporate governance of managers and policymakers. China’s central role in global trade makes insights from its medical industry pertinent to international markets, affecting investment strategies and policy-making globally. The study’s findings on CEO age and firm performance offer valuable lessons for management and governance practices worldwide.
    Keywords: CEO age; firm performance; medical industry; COVID-19; China.
    DOI: 10.1504/IJMEF.2024.10061000
    by Yosi Amelia Fitri, Niki Lukviarman, Erna Setiany 
    Abstract: This study investigates the connection between intellectual capital and firm productivity. Intellectual Capital, represented by the value-added intellectual capital-coefficient, human capital efficiency, structural capital efficiency, and capital employed efficiency, influences the employee productivity and asset turnover of banks, which are measures of productivity. Utilises purposive sampling between 2017 and 2019, 35 banks listed on the Indonesia Stock Exchange were sampled. Using Eviews, panel data are analysed in this study. According to the study, the value-added intellectual capital-coefficient increases banks' productivity and asset turnover. Human capital efficacy increased employee productivity, but not asset turnover. Capital efficiency influences the output of personnel and the turnover of assets. The efficiency of capital deployed reduces employee output and has little effect on asset turnover. According to the study, investing in intellectual capital increases bank productivity. The implication of this study is that intellectual capital produces bank productivity, which benefits both domestic and international economies.
    Keywords: intellectual capital; firm productivity; assets turnover.
    DOI: 10.1504/IJMEF.2024.10061001
  • Asymmetric volatility spillovers between Bitcoin, oil, and global stock in economic uncertainty   Order a copy of this article
    by Surachai Chancharat, Parichat Sinlapates 
    Abstract: The shifting nature of volatility spillovers among Bitcoin, WTI oil, and the MSCI global index between two financial crises: the COVID-19 outbreak and the Russia-Ukraine war is examined in this paper. It does this by applying the BEKK-GARCH model to daily data for Bitcoin, crude oil, and the world stock index. Our empirical results suggest that the return spillovers for the Bitcoin-WTI, Bitcoin-MSCI, and WTI-MSCI pairings change among the four different periods. However, the volatility transmissions for the Bitcoin-WTI and Bitcoin-MSCI pairings change throughout the four study periods. These findings offer policymakers and portfolio managers useful information about risk management, forecasting, hedging, and portfolio diversification. Keywords: Bitcoin; multivariate GARCH; oil; stock market; volatility spillover.
    Keywords: Bitcoin; multivariate GARCH; oil; stock market; volatility spillover.
    DOI: 10.1504/IJMEF.2024.10061002
  • The Perceived Usefulness of Accrual-Based Financial Statements and Influencing Factors at Local Government   Order a copy of this article
    by Rindu Rika Gamayuni  
    Abstract: This study provides empirical evidence on the perceived usefulness of accrual basis financial statements for decision-making in local governments and the factors influencing it. The results showed that the application of e-government positively significantly affects the quality of accrual basis financial reporting on local governments. However, the quality of financial reporting has yet to be proven to affect the usefulness of financial statements in the decision-making process. Applying the accrual basis to local government financial reports in Indonesia is a coercive and mimetic isomorphism. The implementation of e-government and qualified financial reporting will encourage international market and sustainable economic growth.
    Keywords: usefulness; accrual-based accounting; e-government; financial reporting quality.

  • Building Trust in Airline Service: An Empirical Study   Order a copy of this article
    by Marcellia Susan, Hamfri Djajadikerta 
    Abstract: Airlines' operation of flight services has specific service characteristics that cannot rely only on physical aspects. Service deliveries are designed to cater to the needs of flight passengers to maintain a high standard of quality held by airline services. This study analyzes the factors determining passenger trust and its impact on airline service continuance. Structural equation modeling has confirmed the relationship between variables in the developed model regarding airline services. The study’s finding of the importance of airline integrity as a determinant of customers’ trust will contribute to research on trust building. By identifying the determinants of passenger trust, the results of this study can be beneficial for airlines when building customers’ trust in their services, which will positively impact their service continuance.
    Keywords: Airline; Trust; Service Continuance.
    DOI: 10.1504/IJMEF.2024.10061323
  • Corporate Social Responsibility and Types of CEO Turnover   Order a copy of this article
    by Dmitriy Chulkov, Xiaoqiong Wang 
    Abstract: This study examines the relationship between corporate social responsibility (CSR) and different types of CEO turnover. Our findings based on a sample of over 2,500 US firms clarify how CSR engagement relates to CEO turnover by reason and source of new CEO. Firms with higher CSR measures are positively associated with the firing of CEOs and negatively associated with normal retirements. Low CSR firms are more likely to experience contender successions that indicate a power struggle within the firm’s management. This relationship becomes stronger when other members of the top management team leave the firm at the time of CEO turnover. The results suggest that CSR is an indicator of good corporate governance.
    Keywords: CEO Turnover; Corporate Social Responsibility; Financial Economics.
    DOI: 10.1504/IJMEF.2024.10063180