Journal of Banking and Financial Economics

Latest articles

Potential and Actual FDI Spillovers in Global Value Chains

The Role of Foreign Investor Characteristics, Absorptive Capacity and Transmission Channels

Deborah Winkler



Using unique survey data on direct supplier-multinational linkages in Chile, Ghana, Kenya, Lesotho, Mozambique, Swaziland, and Vietnam, this paper fi rst evaluates how foreign investors differ from domestic producers in terms of their potential to generate positive spillovers for local suppliers. It finds that foreign firms outperform domestic producers on several indicators, but have fewer linkages with the local economy and offer less supplier assistance, resulting in offsetting effects on the spillover potential. The paper also studies the relationship between foreign investor characteristics and linkages with the local economy as well as assistance extended to local suppliers. It finds that foreign investor characteristics matter for both. Additionally, this paper examines the role of suppliers’ absorptive capacities in determining the intensity of their linkages with multinationals. The results indicate that several supplier characteristics matter, but these effects also depend on the length of the supplier relationship. Finally, the paper assesses whether assistance or requirements from the multinational influence spillovers on suppliers. The results confirm the existence of positive effects of assistance (including technical audits, joint product development, and technology licensing) on foreign
direct investment spillovers, while we find no evidence for demand effects.


JEL classification: F1, F2
Keywords: Foreign direct investment, vertical spillovers, linkages, global value chains, foreign firm characteristics, absorptive capacity, transmission channels, agri-business, apparel, mining.

DOI: 10.7172/2353-6845.jbfe.2018.2.1

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Good Practices in Empirical Corporate Finance and Accounting Research

Marek Gruszczyński



This paper presents the risks of quantitative research pertaining to corporate finance and accounting. These is followed by a survey-like catalogue of good practices in modelling. All considerations are rooted in financial microeconometrics, the field for examining both practical and theoretical questions of applying econometric techniques in corporate finance and accounting research based on the use of microdata (Gruszczyński 2018a). Two major parts of the paper include: (1) discussion of the typical drawbacks in applying regression-type models, like causality vs. correlation, selection of explanatory variables and endogeneity, and (2) list of good practices in microeconometric applications to corporate finance and accounting research, based on Faff (2017), Kennedy (2002), Adams (2017), Hyndman ( and author’s own experience. Catalogue of good practices in microeconometric applications to corporate finance and
accounting may serve as the checklist for students and researchers.


JEL classification: C50, C58, G30, M40
Keywords: financial microeconometrics; empirical corporate finance; applied accounting; good
practices in research.

DOI: 10.7172/2353-6845.jbfe.2018.2.2

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Sustainability and Equity Challenges to Pension Systems: The Case of Lebanon

Mariusz Jarmuzek, Najla Nakhle



Reform of Lebanon’s pension system is indispensable. The country already faces fiscal sustainability risks, which will be compounded in the future by significantly higher pension- related spending and liabilities, mainly reflecting adverse demographics. In addition to sustainability issues, the pension system also suffers from equity shortcomings – Lebanon is the only MENA country that does not offer social security for retirees in the private sector. While several reform proposals have been formulated since the early 2000s, none has been implemented to date. Costs mount with every year of delay, so action is required soon to address these challenges.


JEL classification: E62, H55, J11
Keywords: ageing, demographics, equity, pensions, pension reform, fiscal policy, sustainability

DOI: 10.7172/2353-6845.jbfe.2018.2.3

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Sovereign Debt Restructurings in Grenada: Causes, Processes, Outcomes, and Lessons Learned

Tamon Asonuma, Mike Xin Li, Michael G. Papaioannou, Saji Thomas, Eriko Togo



This paper documents the two debt restructurings that Grenada undertook in 2004–06 and 2013–15. Both restructurings emerged as a consequence of weak fiscal and debt situations, which became unsustainable soon after external shocks hit the island economy. The two restructurings provided liquidity relief, with the second one involving a principal haircut. However, the first restructuring was not able to secure long-term debt sustainability. Grenada’s restructuring experience shows the importance of (1) establishing appropriate debt restructuring objectives; (2) committing to policy reforms and maintaining ownership of the restructuring goals; and (3) engaging closely and having clear communications with creditors.


JEL classification: F34, G15, H63
Keywords: Sovereign Debt; Sovereign Defaults; Sovereign Debt Restructurings; Serial Debt Restructurings; Serial Defaults; Grenada; Disaster Clause

DOI: 10.7172/2353-6845.jbfe.2018.2.4

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Comparison on Effi ciency of Foreign and Domestic Banks Evidence from Algeria

Ishaq Hacini, Khadra Dahou



The study investigates the differences in technical, pure technical, and scale effi ciencies of domestic and foreign banks in Algeria over the period of 2000–2012. The study uses annual data of 10 foreign banks and 05 domestic banks operated in Algeria. The input-oriented Data Envelopment Analysis model is used to measure the banks’ effi ciency score. In addition, a set of parametric and non-parametric tests are used for investigating the differences in efficiency between foreign and domestic banks. The fi ndings reveal that the banks in Algeria could improve their technical effi ciency by 23%. In addition, it seems that banks in Algeria suffer from the scale inefficiency. On the other hand, the foreign banks are more technically effi cient than domestic banks. The superiority of foreign banks in technical effi ciency is due to their superiority in the scale efficiency.


JEL classification: C14, G21, G28
Keywords: Algeria, Data Envelopment Analysis, Effi ciency, Domestic banks, Foreign banks

DOI: 10.7172/2353-6845.jbfe.2018.2.5

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JBFE No 1/2018

Journal of Banking and Financial Economics No 1 (9) 2018




Determinants of banks’ profitability and efficiency: Empirical evidence from a sample of Banking Systems

Mouna Rekik, Maha Kalai


EU banks after the crisis: sinners in the hands of angry markets

Antonio Sánchez Serrano


Animal Spirits and Risk in Financial Markets

Jukka Ilomäki


Macroprudential Policy Effectiveness: Lessons from Southeastern Europe

Jérôme Vandenbussche, Piyabha Kongsamut, Dilyana Dimova


Macroeconomic Stability in Resource-rich Countries: The Role of Fiscal Policy

Elva Bova, Paulo Medas, Tigran Poghosyan

JBFE No 2/2017

Journal of Banking and Financial Economics No 2 (8) 2017




Sovereign Debt Restructurings in Belize: Debt Sustainability and Financial Stability Aspects

Tamon Asonuma, Michael G. Papaioannou, Gerardo Peraza, Kristine Vitola, Takahiro Tsuda


Does persistence in idiosyncratic risk proxy return-reversals?

Harmindar B. Nath, Vasilis Sarafidis


Mauritius: The Drivers of Growth – Can the Past Be Extended?

Katsiaryna Svirydzenka, Martin Petrib


The European system of financial supervision – regulatory impact assessment

Mariusz Szpringer, Włodzimierz Szpringer


Assessing Countries’ Financial Inclusion Standing — A New Composite Index

André Mialou, Goran Amidzic, Alexander Massara


Bank prudential and bank stability– how far do they go

Gerti Shijaku

JBFE No 1/2017

Journal of Banking and Financial Economics No 1 (7) 2017




Determinants of Banks’ Net Interest Margins in Honduras

Koffie Nassar, Edder Martinez, Anabel Pineda


Inflation and Public Debt Reversals in the G7 Countries

Bernardin Akitoby, Ariel Binder, Takuji Komatsuzaki


Unstash the Cash! Corporate Governance Reform in Japan

Chie Aoyagi, Giovanni Ganelli


Global Thermoeconomics

Mario W. Cardullo, Manhong Mannie Liu


An Econometric Analysis for the Bid-Ask Spread in the Emerging Chilean Capital Market

David Cademartori-Rosso, Berta Silva-Palavecinos, Ricardo Campos-Espinoza, Hanns de la Fuente-Mella


JBFE No 2/2016

Journal of Banking and Financial Economics No 2 (6) 2016




Comparing the Performance of Logit and Probit Early Warning Systems for Currency Crises in Emerging Market Economies

Fabio Comelli


Investigating Impact of US, Europe, Frontier and BRIC Stock Markets on Indian Financial Stress Index

Amanjot Singh, Manjit Singh


Foreign Investor Flows and Sovereign Bond Yields in Advanced Economies

Serkan Arslanalp, Tigran Poghosyan


Financial Inclusion, Growth and Inequality: A Model Application to Colombia

Izabela Karpowicz


Spotting Bubbles: A Two-Pillar Framework for Policy Makers

Bradley A. Jones


Does it pay to be good? An analysis of vice and virtue stock performance in the Eurozone

Toni Vide



JBFE No 1/2016

Journal of Banking and Financial Economics No 1 (5) 2016




The Finance and Growth Nexus Re-Examined: Do All Countries Benefit Equally?

Adolfo Barajas, Ralph Chami, Seyed Reza Yousefi


Intermediary networks under the rule of equi-repartition of profits

Fabien Mercier


What Drives the Volatility of Firm Level Productivity in China?

Xubei Luo, Nong Zhu


External Factors in Debt Sustainability Analysis: An Application to Latin America?

Gustavo Adler, Sebastian Sosa


The relationship between distance-to-default and CDS spreads as measures of default risk
for European banks

Kim Ristolainen


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