Economic Policy Commons^™

Policy Frameworks And Citizens’ Use Of Fintech Solutions: The Pros And Cons In Egypt, Salma Al-Mohamady

Theses and Dissertations

This thesis provides a comprehensive analysis of the significant influence of financial technology (FinTech) on the banking industry, consumer finance, and economic growth. It specifically concentrates on the swiftly changing FinTech environment in Egypt. The study investigates the impact of incorporating advanced technologies on worldwide financial practices, which has significantly transformed traditional banking models and facilitated the emergence of inventive financial services. The transition is clearly apparent in Egypt, where the expansion of FinTech has been driven by advances in regulations, adaptation to technology, and a population that is becoming more comfortable with digital solutions.

Using a combination of quantitative …

Green Transition And Financial Stability: The Role Of Green Monetary And Macroprudential Policies And Vouchers, Ying Tung Chan, Maria Teresa Punzi, Hong Zhao

Sim Kee Boon Institute for Financial Economics

This paper analyzes a mix of alternative policies in supporting the green transition and the phase-out of fossil fuels, without compromising financial stability. An environmental dynamic stochastic general equilibrium (E-DSGE) model with two sectors (green and brown) and endogenous default is developed to assess potential climate-induced financial stability threats that can be mainly generated through physical and transition risks mechanism. Those risks are evaluated through a compound capital depreciation shock and a carbon tax shock. The paper offers several findings. First of all, a too stringent carbon tax would increase the medium-term default rate in both sectors, harming financial stability …

U.S. Trade And Investment Restrictions: Laudable But Costly Goals, Christine Mcdaniel

Yeutter Institute International Trade Policy Review

U.S. Commerce Secretary Raimondo’s recent visit to China resulted in the announcement of a new “export control enforcement information exchange” between the United States and China. The laudable goal is to prevent China from using U.S. technology for military purposes against the United States or our allies. An information exchange may be a way to explain things to each other, but the fact remains that the export controls are indeed in place. China represents large revenue streams for three of the largest US chip producers—about 20% for Nvidia, 60% for Qualcomm, and 20-30% for Intel. If these U.S. companies cannot …

U.S. Trade And Investment Restrictions: Laudable But Costly Goals, Christine Mcdaniel

Yeutter Institute International Trade Policy Review

U.S. Commerce Secretary Raimondo’s recent visit to China resulted in the announcement of a new “export control enforcement information exchange” between the United States and China. The laudable goal is to prevent China from using U.S. technology for military purposes against the United States or our allies. An information exchange may be a way to explain things to each other, but the fact remains that the export controls are indeed in place. China represents large revenue streams for three of the largest US chip producers—about 20% for Nvidia, 60% for Qualcomm, and 20-30% for Intel. If these U.S. companies cannot …

Higher Education Exports Before And After Covid, John C. Beghin, Byungyul Park

Yeutter Institute International Trade Policy Review

Historically, the higher education system in countries belonging to the Organization for Economic Cooperation and Developing (OECD), a grouping of advanced economies, and especially in the United States, has been a magnet for foreign students, both graduate and undergraduates. Graduate students tend to be supported by teaching and research assistantships from the hosting university and do not generate direct revenues for the hosting institution. They do contribute to the economy with their productivity in research projects and with their private consumption. In contrast, most undergraduate foreign students pay fees and tuition which are often higher than those paid by local …

Could Information About Honey Fraud Increase Consumers’ Valuation Of Domestic Honey In The Face Of Rising Honey Imports In The U.S. And Eu?, Christopher Gustafson, Antoine Champetier

Yeutter Institute International Trade Policy Review

The consumption of honey, which has been sought out by humans for use as food and medicine for thousands of years, has been increasing in recent decades with rising incomes and attention paid to food choices and health. In two decades, honey consumption in the U.S. has risen from 1.2 pound per capita per year to 1.9 in 2021. In the European Union, per capita consumption rose from 1.5 to 2.1 pounds per capita over the same period. While this might appear to be a boon for U.S. and EU beekeepers, honey is a heavily traded product, and imports from …

Can Sanctions End Wars?, E. Wesley F. Peterson

Yeutter Institute International Trade Policy Review

Russia’s invasion of Ukraine has led to extensive economic, financial, trade, and other types of sanctions directed at individual Russians and the Russian economy. Most European and North American countries as well as Australia, New Zealand, Japan, and Korea have enacted sanctions and many of them are also supporting Ukraine with military and economic assistance. Many other countries including China, India, and Brazil do not support the sanctions although 141 countries belonging to the United Nations (out of a total membership of 193) voted to condemn the war. Although the use of economic sanctions to influence the behavior of foreign …

Economic Impacts Of Investment Facilitation, Edward J. Balistreri, Zoryana Olekseyuk

Yeutter Institute International Trade Policy Review

After the successful adoption of the Trade Facilitation Agreement (TFA) in 2014, investment facilitation is gaining importance as the next policy priority for a plurilateral agreement under the World Trade Organization (WTO). In fact, more than 110 WTO Members aim to conclude the negotiations on the Investment Facilitation for Development (IFD) Agreement by mid-2023 after only three years of formal negotiations. Investment facilitation refers to actions taken by governments designed to attract foreign investment and maximize the effectiveness and efficiency of its administration through all stages of the investment cycle. The IFD agreement focuses on allowing investment to flow efficiently …

How’S It Going With The Cptpp?, Christine Mcdaniel

Yeutter Institute International Trade Policy Review

There is no doubt that the United States is losing out on market access. But one of the original goals of the Trans-Pacific Partnership (TPP) was for a rules-based trading regime in the Pacific, namely rules not written by China. Thanks to Australia and Japan that seems to be happening even with the U.S. no longer at the helm.

The Comprehensive and Progressive Trans-Pacific Partnership or the awkwardly nicknamed CPTPP is a Pacific trading bloc that consists of 11 countries, spanning the Pacific Rim, and includes Malaysia and Chile. The member countries represent 13% of world GDP. Once the UK …

Liquidity Constraints, Consumption, And Debt Repayment: Evidence From Macroprudential Policy In Turkey, Sumit Agarwal, Muris Hadzic, Changcheng Song, Yildirim Yildiray

Research Collection Lee Kong Chian School Of Business

Using account-level credit card data from a large Turkish bank, we study the impact of a unique credit card policy that increases minimum payment on consumption and debt repayment. We show that the policy reduces credit card spending and debt, boosts existing debt repayment, and reduces credit card delinquency. The credit card debt of affected consumers falls on average by 50% two years into the policy’s implementation. An increase in minimum payment has a stronger effect than does a decrease of a similar magnitude. We build a benchmark life cycle model with soft liquidity constraint to explain the reduction in …

Recessionary Woes: Examining Economic Policies And Their Impact On Student Loan Debt And Housing Stability In The United States, Connor Recck

Senior Theses and Projects

Recessionary periods can seldom be avoided, but our modern public infrastructure has designed mechanisms to respond to these downturns. Economic policy has rapidly changed over the last 50 years, and the types of tools policymakers use have evolved with it. When looking at the Great Recession (2007-2009) and the COVID-19 recession (2020), a federal response structure was vital for the health of the macroeconomy. These recessionary periods serve as case studies for a review of economic policymaking activity in the United States since 2000. To examine the efficacy of the federal government’s fiscal and monetary infrastructure, policies focused on supporting …

Public Support: A Missing Variable In The Trade Policy Equation, Jill O’Donnell

Yeutter Institute International Trade Policy Review

As Canada considers launching free trade agreement (FTA) negotiations with Ecuador, the government wants to know what Canadians think. Ottawa makes it easy for citizens to weigh in, inviting Canadians to “join the discussion” and submit their “views, reflections and priorities” on the potential FTA through a Global Affairs Canada web page that is clear, inviting, and user-friendly. Under a section titled, “Who should participate?” the first answer given is “individuals.”

Although the Biden administration has been clear that it will not seek new FTA negotiations, taking a page from Canada’s public consultation playbook may be instructive, at least when …

Lessons Learned: Kevin Stiroh, Mercedes Cardona

Journal of Financial Crises

Kevin Stiroh was head of the Financial Sector Analysis Supervision Group at the Federal Reserve Bank of New York (FRBNY) during the Global Financial Crisis of 2007–2009 (GFC). At the FRBNY, Stiroh was a leader in the design of the “stress test” for the banking system, the Supervisory Capital Assessment Program (SCAP). In the aftermath of the GFC, members of the FRBNY, including Stiroh, drafted a report on systemic risk and bank supervision, laying out lessons learned from the crisis and their recommendations. In February 2021, Stiroh transitioned from the FRBNY to a leadership position with the Federal Reserve Board …

Lessons Learned: Gaurav Vasisht, Sandra Ward

Journal of Financial Crises

Gaurav Vasisht served as assistant counsel, banking and financial services, to the governor of New York during the Global Financial Crisis of 2007–2009 (GFC). In his role, Vasisht set the governor’s agenda for banking and financial policy and oversaw the regulatory and legislative priorities of the state banking and insurance departments. Vasisht played a pivotal role in developing and drafting consumer protection legislation, particularly as it related to housing foreclosures at the time of the crisis. This Lessons Learned is based on an interview with Vasisht that occurred on September 27, 2019.

Lessons Learned: Veerathai Santiprabhob, Maryann Haggerty

Journal of Financial Crises

Veerathai Santiprabhob was the governor of the Bank of Thailand from 2015 to 2020, a period that included the onset of the COVID-19 pandemic. Earlier in his career, he was an economist at the International Monetary Fund. At the time of the 1997–1998 Asian Financial Crisis, he returned to his home country to take a position at the Ministry of Finance. There, he was involved with the government response to that financial crisis. From 2000 to 2015, he held private-sector finance jobs before going to lead the Bank of Thailand. This Lessons Learned is based on an interview with Santiprabhob …

Lessons Learned: Erik Sirri, Mercedes Cardona

Journal of Financial Crises

Erik Sirri served as director of the Division of Trading and Markets at the US Securities and Exchange Commission (SEC) from 2006 to 2009. In his post, he was responsible for matters relating to the regulation of stock and option exchanges, national securities associations, brokers-dealers, clearing agencies, transfer agents, and credit rating agencies. Before joining the SEC in 1996, he was an assistant professor of finance at the Harvard Business School from 1989 to 1995. Sirri served as the SEC’s chief economist until 1999, before returning to academia. He is currently a professor of finance at Babson College. His research …

Lessons Learned: Claudia Sahm, Mercedes Cardona

Journal of Financial Crises

Claudia Sahm was a principal economist in the Division of Research and Statistics of the Board of Governors of the Federal Reserve System from 2007 to 2017 and section chief for the Consumer & Community Development section in the Division of Consumer and Community Affairs from 2017 to 2019. Her work focused on macro forecasting; she also researched household behavior and responses to fiscal stimulus. While at the Fed, she proposed the Sahm Rule, a gauge to call the start of a recession, based on an average of the unemployment rate. The rule is part of Sahm’s work on the …

Lessons Learned: Deborah Perelmuter, Mercedes Cardona

Journal of Financial Crises

Deborah Perelmuter has spent more than three decades with the Federal Reserve System. In 2008, as senior vice president at the Federal Reserve Bank of New York (FRBNY) and co-head of Capital Markets Analysis and Trading (CMAT) within the Markets Group, she was tasked with setting up the operational details of the Term Securities Lending Facility (TSLF). The TSLF auctioned Treasury securities to primary dealers in exchange for less liquid collateral to provide liquidity to those firms during the Global Financial Crisis of 2007–2009. Perelmuter became senior financial stability adviser within the office of the director in the FRBNY’s Research …

Lessons Learned: Hiroshi Nakaso, Maryann Haggerty

Journal of Financial Crises

Hiroshi Nakaso joined the Bank of Japan (BOJ) in 1978, rising to deputy governor in 2013. He was instrumental in addressing Japan’s domestic crisis of 1997 and its response to the Global Financial Crisis (GFC). He retired from the bank in 2018 and has since served as chairman of the Daiwa Institute of Research in Tokyo. This Lessons Learned summary is based on a November 2021 interview with Nakaso

Lessons Learned: Patrick Honohan, Maryann Haggerty

Journal of Financial Crises

Patrick Honohan, an economist, was governor of the Central Bank of Ireland and a member of the Governing Council of the European Central Bank (ECB) from September 2009 until November 2015. Early in his tenure, he led a team that investigated the causes of the Irish banking crisis that broke out in 2008 during the Global Financial Crisis. Resolving the problems of bank failure and over-indebtedness that emerged in that crisis dominated his term of office. In late 2010, Ireland had to request financial assistance from the “troika” of the International Monetary Fund (IMF), the European Commission, and the European …

Lessons Learned: Mike Leahy, Yasemin Sim Esmen

Journal of Financial Crises

Mike Leahy was associate director at the Federal Reserve Board’s Division of International Finance between 2008 and 2010. He was instrumental in establishing swap lines with foreign central banks and reviewed and reported on excess reserve balances and required interest payments to depository institutions. This Lessons Learned is based on a phone interview with Leahy on October 22, 2020.

Lessons Learned: Andrew Gray, Mercedes Cardona

Journal of Financial Crises

Andrew Gray joined the FDIC in 2007, after having been majority director of communications for the US Senate Committee on Banking, Housing, and Urban Affairs and press secretary for US Senator Richard C. Shelby (R–AL). Gray’s initial project was a campaign to mark the 75th anniversary of the creation of the Federal Deposit Insurance Corporation (FDIC); his role evolved into running crisis communications as the FDIC stepped in during several bank failures triggered by the Global Financial Crisis (GFC) and conducted 489 bank resolutions during 2008–2013. After the crisis, the FDIC also assumed new responsibilities over the winding down of …

Venezuela: Reserve Requirements, Gfc, Corey N. Runkel

Journal of Financial Crises

Leading up to the Global Financial Crisis (GFC), the Banco Central de Venezuela (BCV) sought to tamp down inflation by raising its interest rate target and by raising the marginal reserve requirement for banks, which it had introduced in 2006. By late 2008, the GFC began to hit Venezuelan banks and the country’s public oil producer (PDVSA). Widespread deposit withdrawals squeezed banks and pushed the interbank lending rate to 28%. The BCV responded in December 2008 by lowering the marginal reserve requirement, applicable to deposits above 90 billion bolívars (USD 4.2 million), from 30% to 27% of deposits. It held …

Thailand: Reserve Requirements, Afc, Ezekiel Vergara, Corey N. Runkel

Journal of Financial Crises

Following years of growth, the Thai economy began showing confidence-busting signs in 1996, including a liquidity crunch. In May 1997, the Bank of Thailand (BOT) announced that it would expand the list of short-term assets that banks and finance companies could use to satisfy the BOT’s liquidity reserve requirement, including obligations of the Financial Institution Development Fund (FIDF), which provided liquidity support to illiquid financial institutions. In the summer of 1997, the BOT suspended the operations of 58 finance companies and floated the Thai baht (THB), unleashing the Asian Financial Crisis (AFC). Tight liquidity conditions continued and, in September 1997, …

Russia: Reserve Requirements, Gfc, Benjamin Hoffner

Journal of Financial Crises

In August 2008, Russian banks and financial markets experienced significant capital outflows after Russia invaded neighboring Georgia. The collapse of Lehman Brothers on September 15 led to further outflows and a 25% drop in Russia’s main stock index. On September 17, regulators halted stock-market trading. Later that day, the Central Bank of the Russian Federation (CBR) announced cuts to the three required reserve ratios (RRRs) it imposed on commercial banks—based on their ruble liabilities to foreign banks, ruble liabilities to individuals, and other liabilities—by 400 basis points, effective September 18, in an effort to promote banking sector liquidity. The CBR …

Russia: Reserve Requirements, 1998, Benjamin Hoffner

Journal of Financial Crises

During the 1998 ruble crisis, the Central Bank of the Russian Federation (CBR) relied on reserve requirements (RR) to bring stability to the ruble’s exchange rate corridor and, over time, to inject liquidity into the frozen domestic banking system. First, in February 1998, the CBR unified the RR ratio on ruble and foreign currency liabilities to facilitate ruble financing. Second, after the devaluation of the ruble in August, the CBR lowered the RR ratio to provide liquidity to the banking system. Third, the CBR revised the computation of the RR ratio to provide relief to banks in an effort to …

Peru: Reserve Requirements, Gfc, Sean Fulmer, Bailey Decker

Journal of Financial Crises

Peru experienced the Global Financial Crisis of 2007–2009 (GFC) in two distinct phases. First, starting in the summer of 2007, record capital inflows to the Peru banking sector contributed to an overheating economy. The Banco Central de Reserva del Perú (BCRP) responded in September 2007 by removing reserve requirements on long-term external credit to promote long-term, rather than short-term, capital inflows. In February 2008, for similar reasons, it began to raise the ordinary minimum reserve requirement on bank liabilities and implemented new marginal reserve requirements on increases in those liabilities. Second, when the collapse of the US investment bank Lehman …

Malaysia: Reserve Requirements, Afc, Bailey Decker

Journal of Financial Crises

Bank Negara Malaysia (BNM) unpegged the ringgit in July 1997, days after Thailand floated the baht. Ringgit depreciation and adverse investor sentiment worsened, contributing to a domestic liquidity shortage and capital flight. Malaysia experienced market instability in the early months of 1998, particularly pressure on its exchange rate, foreign currency reserves, and interest rates. At the same time, disruptions in the domestic money market and loan intermediation process caused an increase in lending rates, which resulted in debt servicing problems and weakened financial stability. To facilitate lending and productive economic activity, BNM twice lowered the statutory reserve requirement (SRR) at …

India: Reserve Requirements, Gfc, Sharon Nunn, Carey K. Mott

Journal of Financial Crises

As international funding sources dried up during the Global Financial Crisis of 2007–2009 (GFC), businesses in India sought funds from domestic financial institutions, straining banks and lifting short-term lending rates. The liquidity pressure, coupled with sharp asset price corrections and rupee depreciation, restricted credit expansion in India. The Reserve Bank of India (RBI) responded with a suite of liquidity measures, including cuts to its two reserve requirement ratios, the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR). The RBI cut the CRR over the course of four months from October 2008 to January 2009, lowering the ratio from …

Jamaica: Reserve Requirements, Gfc, Corey N. Runkel

Journal of Financial Crises

In October 2008, the Global Financial Crisis (GFC) and liquidity shortages rocked American and European markets, causing investors to exit liquid Jamaican-dollar assets. The Bank of Jamaica (BOJ) feared a “disorderly depreciation” in the Jamaican-dollar (JMD) exchange rate to the US dollar (BOJ 2009, 44). In response, the BOJ raised required reserve ratios for cash and other liquid assets, the first increases since 2002. The BOJ raised reserve ratios three times—in December 2008, January 2009, and February 2009—because the central bank could not change its requirements by more than 200 basis points per month. The BOJ raised the requirement for …