DOI: 10.3897/brics-econ.7.e166608

Authors: Elena Zavyalova, Aleksandra Bordunos, Victoriia Tserkovnaia

Abstract: Business schools seek to promote financial literacy and career engagement among undergraduate and graduate students, equipping them with the skills to navigate real-world financial challenges effectively and take the initiative in their career development. This improves students’ future employability and long-term professional success, while also enhancing the reputations of business schools and their positions in international and domestic rankings. Such rankings increasingly rely on graduate employability, career readiness and the inclusion of financial education in curricula, which aligns with market demands and government education strategies. This study investigates the relationship between financial literacy and career engagement among business school students. Financial literacy is assessed using the Financial Wellbeing questionnaire, while proactive career behavior is measured using the Career Engagement scale. Regression analysis, controlling for gender, region and academic year, reveals that financial literacy significantly predicts career success. These findings provide policymakers and educators with empirical evidence that, beyond improving financial outcomes, cultivating financial literacy from a behavioral perspective within business education fosters greater career engagement. This dual focus is in line with Russia’s and other BRICS countries’ strategic goals of developing skilled, adaptable professionals who can contribute to sustained economic growth.

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DOI: 10.3897/brics-econ.7.e183393

Authors: Mahesh Dahal, Joy Das

Abstract: Liberalisation has been a catalyst for the strengthening of India’s banking sector; however, financial distress, fraud, and unethical practices continue to threaten the stability of the financial and stock markets. Such incidents have recently become both more frequent and significant in scale and impact (Singh et al., 2016). The primary focus of this study is to examine the short-term effects on valuations and the dynamics of spillover between public and private sector banks. This research examines how the equity market responds to major news of bank fraud, investigating short-term value effects and spill-over dynamics between government-owned and privately owned banks. The findings, based on an enhanced event study combined with regression analysis, suggest that fraud in private banks does not affect the victim bank, but is accompanied by negative spillovers to public sector banks. Additionally, the results show that investment shifts occur within both public and private bank segments following fraud disclosures. These patterns are further interpreted in light of institutional characteristics, such as ownership structure and operational scale. The study provides evidence specific to India on how markets respond to announcements of banking fraud.

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DOI: 10.3897/brics-econ.7.e170500

Authors: Hilder Charles Nyangi, Peter Moores-Pitt, Kazeem Ovanero Isah

Abstract: This study examines the relationship between environmental, social, and governance (ESG) performance and the cost of capital among firms listed on the Johannesburg Stock Exchange (JSE), using a dynamic panel approach via the two-step System Generalized Method of Moments (System GMM). The analysis explores whether the impact of environmental, social and governance (ESG) factors varies depending on firm size (large, medium or small) and economic sector (financial services, consumer services, industrials and basic materials). The findings reveal that aggregate ESG performance does not have a statistically significant effect on the cost of capital for the full sample or across firm size categories. Disaggregated ESG components (environmental, social and governance) also demonstrate limited influence, though there are some exceptions specific to certain sectors. For example, in the financial sector, the governance pillar is associated with a reduction in capital costs, whereas in the basic materials sector, it is the social pillar that reduces capital costs. However, ESG efforts in most sectors are either perceived as neutral or potentially costly, especially where the financial benefits are not immediately observable. These results suggest that ESG activities are not yet fully priced by capital markets in South Africa as risk-reducing or value-enhancing. Traditional financial indicators such as leverage and book-to-price ratios remain better predictors of financing costs. The study highlights the need for improved ESG disclosure practices, stronger regulatory frameworks and greater investor awareness to ensure that ESG considerations are effectively integrated into decisions in the capital markets. Overall, while ESG initiatives are important for corporate legitimacy and sustainability, they currently offer limited financial benefits in the form of lower capital costs. ESG initiatives need to be tailored to specific sectors and supported by clear financial linkages if they are to deliver measurable economic benefits.

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DOI: 10.3897/brics-econ.7.e185197

Authors: David Umoru, Rashidah Elamah, Beauty Igbinovia

Abstract: The study explores the stochastic impacts of the exchange rate fluctuation and the synergistic effects of monetary-fiscal expansion simulations on export growth in Asia. It attempts to fill the gap between theoretical policy development and the practical uncertainty of policymakers in the emerging Asian markets. The study is based on dual methodological approach. The study is based on a dual methodological approach. First, a Panel System Generalised Method of Moments (GMM) is used on a panel of Asian economies to identify structural determinants and interaction effects. Second, a Bayesian-estimated Medium-Scale version of the Dynamic Stochastic General Equation (DSGE) is employed to simulate the time-dependent reactions of exports to different policy and uncertainty shocks within twenty years span (the horizon taken to be twenty quarters). DSGE estimation was based on 26 years of historical data (January 1, 2000-December 31, 2025), and the impulse-response functions were simulated with horizon of twenty quarters (five years), which is compatible with canonical frequencies of business cycles taking into cognizance the transmission lags that accompany monetary and fiscal policy interventions required for the confirmation of the DSGE model convergence to the steady state. Besides, the homogeneity of monetary-fiscal policy regime that characterized the post-2000 era provides stability in the estimated deep parameters over the sample thus fulfilling the Lucas critique. The GMM estimation shows that financial development and credit expansion are the most powerful structural forces of exports. Financial maturity only amplifies the advantages of competitive devaluations, according to the correlation between exchange rates and financial depth. The simulations in DSGE also show a coordinated expansion to be the most powerful stimulus as it will result in the greatest growth of exports of 0.934. A significant dampening in export growth is seen through policy uncertainty which is a big pull of exports in the economies of Asia. Conversely, the level of expansion of money supply, availability of domestic credit, financial development and consumption of energy has a positive impact on exports which in turn brings about the significance of liquidity, financial depth and production capacity in export expansion. The empirical evidence suggests that the competitiveness channel effect in the region of Asia is 0.867%. This gain is, nevertheless, dependent on financial maturity. In the case of the 16 poorest nations, the overall impact of monetary and fiscal expansion is expected to be positive if these economies are coupled with institutional reforms that reduce the cost of energy and debt. The simulated responses reveal stark structural asymmetries across the sample. While nominal exchange rate depreciation and co-ordinated monetary expansions represent extremely effective but necessarily short-lived export shocks - peaking invariably in Quarter four and reverting to the mean in Quarter twelve - the longer-run effects differ markedly. Bayesian inferences confirm that financial development is the only structural parameter that may lead to permanent (non-mean-reverting) export growth. By contrast, institutional weakness in forms of policy uncertainty, energy costs and black market labour exports inflicts significant negative asymmetries upon the fragile. The results show that the only way to avoid cyclical volatility is to prioritise holistic financial market development over short-term macroeconomic policymaking. The study provides a contribution to the literature by developing a methodological interface between the reduced-form empirical research and structural general-equilibrium modelling in the emerging Asian markets. It separates the structural processes to determine the causal transmission processes of monetary-fiscal synergy and exchange-rate volatility on export growth in a Bayesian DSGE model with diffuse priors adapted to the high-volatility regime typical in developing Asia. The model explicitly measures the sensitivity of the effectiveness of conventional policies that promote exports to policy uncertainty, as well as the fear of floating, which can be unduly precarious in linear panel regressions by including a stochastic volatility factor. The research establishes that the Asian poorest economies are constrained by structural asymmetries. The credibility intervals around the 90% high-posterior-density (HPD) intervals with prior means robustly confirm that, while these countries are equipped with highly elastic short-term absorption capacities to monetary and currency shocks, these economies are by nature incapable of permanently shifting their long-term economic paradigms via cyclical policies. Weak economies disproportionately suffer from policy uncertainty and supply-side restrictions, and are thus more likely to cancel out the effects of positive exchange rates.

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DOI: 10.3897/brics-econ.7.e172961

Authors: Arshi Firdous, Sarbapriya Ray

Abstract: This study investigates the dynamic links between key macroeconomic variables and the performance of stock market in India. With 420 monthly observations and a comprehensive econometric framework, the analysis attempts to assess the impact of Consumer Price Index (CPI), Exchange Rate (EXRATE), Foreign Direct Investment (FDI), and Gross Domestic Product (GDP) on BSE stock returns. Descriptive statistics reveal significant non-normality and volatility, justifying the use of GARCH models to capture market fluctuations. Granger causality and Johansen cointegration tests indicate a unidirectional and long-term influence of macroeconomic factors — particularly FDI, exchange rate, and GDP — on stock returns. Inflation and exchange rate have a positive impact, whereas FDI and GDP show negative associations, highlighting market sensitivity to capital flows and policy conditions. The GARCH (1,1) model accurately describes time-varying stock return volatility. The large ARCH and GARCH coefficients confirm the effects of previous shocks on volatility persistence. Impulse response functions support these conclusions, whereas error correction estimates emphasize the stock market’s role as a shock absorber for the economy. Diagnostics confirm the robustness and structural stability of the model, reflecting the post-liberalization resilience. The research underscores the significant and predominantly unilateral influence of macroeconomic variables on Indian stock markets. It highlights the critical role of a stable macroeconomic framework and investor sentiment in determining market trends.

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DOI: 10.3897/brics-econ.7.e151598

Authors: Tijani Forgor Alhassan, Gaukhar Kalkabayeva, Anar Kurmanalina

Abstract: The adoption and integration of artificial intelligence (AI) in Ghana’s and Kazakhstan’s financial sectors signifies a transformative change, driven by technological advancement and pursuit of greater efficiency, improved risk management and enhanced customer experience. The study provides a comparative analysis of AI adoption in developing countries, focusing on key areas such as banking, investment management, legal compliance and financial inclusion. AI adoption is gradually gaining attention in Ghana, where fintech start-ups and traditional banks are using AI for mobile banking, fraud detection, and credit scoring. However, challenges such as poor infrastructure, data security concerns and lack of a skilled workforce impede the widespread implementation of AI and its full realization. In contrast, Kazakhstan has made significant progress in adopting AI, driven by government initiatives, robust digital infrastructure, and growing fintech ecosystem. Financial institutions in Kazakhstan use AI for algorithmic trading, regulatory compliance and customer service automation, positioning the country as a regional leader in fintech innovation. Despite differences in the countries’ approaches to adopting AI, both economies face similar challenges, such as algorithmic bias, regulatory uncertainty and capacity-building needs. The present paper explains why tailored growth strategies are needed to address these issues. It highlights the importance of investment, public-private partnerships and legal frameworks in upskilling professionals and creating technological infrastructure. The two countries should develop roadmaps for AI-tailored growth policies in their financial sectors to ensure their effective adoption and implementation for financial development.

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DOI: 10.3897/brics-econ.6.e162459

Authors: Oluwafemi Adeboje, Frank Ogbeide, Isiaka Akande Raifu

Abstract: This paper examines the influence of financial sector reform on macroeconomic stability in 14 SSA countries by employing a traditional panel, dynamic panel framework, and causality tests on data from 2000 to 2021. It explores whether income groupings of the sampled countries in line with the World Bank classification matter for the outcomes of the analysis. The results suggest that financial reform policies can both induce and prevent economic instability. They increase instability in the lower-middle and upper-middle-income countries, as seen in the overall estimated dynamic panel models, but they reduce it in low-income economies. The static panel models produced similar results. It has also been shown that the rent from natural resources had uniformly damaging effects on the macroeconomic stability of all income groups in SSA, effectively confirming the “resource curse” thesis. Yet, the findings of the panel as a whole contradicted this, suggesting that revenue from natural resources can effectively play a role in stabilizing macroeconomic conditions. The results also suggest the existence of what can be called “a human capital-misery trap”, in which higher human capital development can lead to macroeconomic instability. Inflation was found to have a detrimental effect, and the impact of government interventions appeared to be mixed. This paper emphasizes the need for robust financial reforms and comprehensive policy measures in Sub-Saharan Africa (SSA), aiming to enhance the effectiveness, competitiveness, and stability of the financial sector and the broader economic landscape, which will require prudent management of natural resources.

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DOI: 10.3897/brics-econ.6.e141556

Authors: Gladys Fernandes-Gondoza, Ronney Ncwadi, John Manuel Fernandes, Farai Nyika

Abstract: Purpose: In this paper, we study the potential of using Artificial Neural Network (ANN) models to predict currency crises in emerging markets, with a specific focus on the South African economy. South Africa’s rand is one of the most volatile currencies in the world and is prone to crises. Methodology: We built two ANN models, where Model 1 uses ten economic indicators and Model 2 uses four. These models were assessed for statistical significance (using probit analysis), and their performance in predicting major South African currency crises (e.g., 1998, 2001, and 2008) was tested with both in-sample and out-of-sample data. Results: The first model was much more accurate than Model 2 in predicting early warning signs nearly two years before the currency crises occurred. Model 1’s higher accuracy is attributed to its inclusion of a greater number of economic variables. Both models occasionally produced false positives, though overall, they were very accurate in predicting crises. Originality: Our paper highlights the importance of ANNs in capturing nonlinear patterns in economic data, demonstrating their strength as early warning tools for financial crises. We recommend that ANN methods continue to be researched and advanced to further reduce false positives and improve predictive performance.

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DOI: 10.3897/brics-econ.6.e138454

Authors: Palesa Lefatsa, Gabila Nubong

Abstract: The paper presents an empirical study of the relationships between financial development, economic growth, urbanisation and energy consumption in the Southern African Development Community for the years 1980 to 2023. The researchers applied the Bayesian approach via Metropolis-Hasting and Gibbs samples as the MCMC methods, and Dumitrescu and Hurlin (2012) and Diagnostic tests to check the causality among all the variables in question and accuracy of the data and model. Over time, there has been a significant positive correlation between financial development, economic growth, industrialization, urbanization, and energy consumption. The results of the Granger causality test showed a unidirectional causal relationship between financial development, urbanization, and energy consumption supporting the alternative hypothesis that there is a relationship between financial development and energy consumption in the Southern African Development Community. It has been found that there is a Bi-directional (feedback) Granger causal relationship between economic growth and energy consumption in the Southern African Development Community; this also supports the alternative hypothesis. The results align with endogenous growth theory, which emphasizes that economic growth is driven by internal factors such as capital accumulation, innovation, and improved efficiencies, where energy plays a significant role. This also supports the view that energy infrastructure development is vital for sustaining economic growth in the region. The diagnostic tests confirm that the model is correct.

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DOI: 10.3897/brics-econ.5.e137243

Authors: David Umoru, Rafat Hussaini, Beauty Igbinovia, Enike I. Abu

Abstract: The fixed and floating exchange rate systems exhibit essential differences. The paper attempts to provide empirical clarification concerning the type of exchange rate regime that has the most favourable impact on stock market returns and prices of the BRICS and African markets using the GLM regression method. The results are based on the inverse Gaussian functions and also identity and 1og functions of the estimated generalized linear model. The fixed exchange regime impacted adversely and significantly on the stock prices of both stock markets. The floating regime impacted favourably and significantly on the stock prices of the BRICS and African stock markets at the inverse Gaussian and Gamma identities. Whereas the fixed regime impacted adversely on stock returns of the BRICS markets at Gaussian identity, it impacted positively but rather insignificantly on the performance of stock returns of African markets. For African stock markets, both the floating and fixed regimes impacted stock returns positively, but the impact of the fixed regime is significant and also of a higher magnitude compared to that of the floating regime (17.313>10.885) HIV and Covid-19 deaths have significant inverse effects on stock prices of African stock markets. For the BRICS markets, the effect of Covid-19 on prices and returns was negative but insignificant. Only stock return effect of HIV was adverse and significant for the BRICS markets. The research findings will be useful for financial marketers involved in international financial trade and seeking to align with developments in international financial markets.

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DOI: 10.3897/brics-econ.5.e139618

Authors: Marina Malkina, Dmitry Rogachev

Abstract: The paper explores the financial contagion of the Russian stock market from the Chinese stock market during the global COVID-19 pandemic. Its objectives are to confirm or refute the contagion of these markets during the acute phase of the pandemic and establish the direction, intensity and types of contagion. The study employed average daily values of the RTSI (Moscow exchange) and HSI (Hong Kong stock exchange) indices. To distinguish between the period of exposure of the two countries’ assets to an external shock and the period of relatively calm markets, we calculated the moving normalized coefficients of variation. To test for the presence of contagion, we constructed vector autoregression (VAR) models for the logarithmic returns RTSI with an exogenous variable of the logarithmic returns HSI in the pre-crisis, crisis and post-crisis periods, estimated the coefficients for HSI and established their significance. The intensity of contagion was determined by the change in the contribution of the tested variable (HSI) to the variance of the dependent variable (RTSI) during the crisis period compared to the pre-crisis and post-crisis periods. The Granger causality test allowed us to establish the direction of contagion; the types of contagion were identified using the method of co-moments of return distribution. The study confirmed the existence of contagion from Chinese to Russian stock market during the acute phase of the pandemic and proved its directionality (HSI→RTSI), and the decomposition of the coefficient of determination established the intensity of the contagion. In the post-crisis period, market interdependence was observed, caused by incompleteness of the pandemic crisis and changes in contagion foci. Contagion during the crisis occurred in the form of an increase in the lower co-moments of distribution (the impact of HSI returns on RTSI returns, volatility and asymmetry) compared to the pre-crisis period, and manifested itself in the upper co-moments of distribution and market anomalies compared to the post-crisis period. The research results may assist in formulating policies aimed at maintaining financial stability; they will also be useful for investment portfolio optimization.

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DOI: 10.3897/brics-econ.5.e122586

Authors: Kago Matlhaku

Abstract: This study examines the effects of financial development on the stock market comovement of Brazil, Russia, India, China and South Africa (BRICS) on the one hand and the US Dow Jones on the other. Its main goal is to find out if trust has a mediating effect on financial development using data from the World Bank and the World Value Survey (WVS). Panel data analysis along with ARDL methods helped the authors obtain robust results. It was found that financial development plays a significant role in determining stock market comovement among the countries in question and that trust also has a moderating impact. The analysis was extended to the institutional and market factors of financial development. The paper introduces trust as a mediating variable that positively affects financial development, which in turn promotes stock market integration and comovement. Its results imply that investors should consider financial development and trust levels of a country when considering portfolio allocation for global diversification purposes, especially in emerging markets. Countries with insufficient trust levels, like Brazil, could benefit from improving their trust score through enhancing financial development and stability.

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DOI: 10.3897/brics-econ.5.e121429

Authors: Sharofiddin Ashurov, Osman Sayid Hassan Musse, Taalbi Abdelhak

Abstract: This study delves into the conceptualization of Corporate Social Responsibility (CSR) as a crucial factor for fostering sustainable development and enhancing social welfare. It addresses the challenge of comprehensively perceiving the contributions of CSR activities to sustainable and socially responsible corporate practices. Using a bibliometric approach, this research scrutinizes a substantial corpus of literature, extracting 4,276 documents covering from 2009 to 2024 from the Scopus database, centered on the interplay between CSR, sustainable development, and social welfare. The research utilized the R Biblioshiny software for data analysis incorporates descriptive, annual scientific production, most relevant sources, core sources by Bradford’s Law, most relevant affiliations, corresponding author’s countries, network, and trend analyses to chart the progression and influence of CSR within these realms. Findings underscore a marked expansion in CSR-related research, spotlighting its evolution from mere charity to an integral component of strategic business operations. Emerging patterns reveal that businesses increasingly view CSR as a pivotal part of their value proposition rather than an optional extra. Despite the growth of academic interest, the study has identified a lacuna in the empirical understanding of how CSR strategies are effectively implemented. Recommendations call for a more seamless incorporation of CSR into the very fabric of corporate strategy and operations. Furthermore, the study highlights the need for future research to develop precise metrics capable of quantifying CSR’s social and environmental effects. Contributing a nuanced perspective to the discourse on CSR, this research provides a foundational schema for further scholarly investigation, underscoring CSR’s dynamic and essential role in today’s corporate world.

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DOI: 10.3897/brics-econ.5.e121212

Authors: Ilya Gurov

Abstract: The study aims to identify the impact of digitalization on predictability in the BRICS countries’ stock markets. It is based on an analysis of the dynamics of stock markets volatility during the 1990-2023 period. The paper seeks to prove that the standard deviation of stock returns is determined by the volume of incoming new information, and higher volatility of returns indicates lower predictability. Digitalization may cause a reduction in uncertainty as it uses more data, improves their quality and develops data analysis methods. On the other hand, digitalization may lead to increased uncertainty due to the emergence and development of new industries, in which it is more difficult to predict cash flows in comparison with traditional industries because of increased complexity of supply chains and technologies. Based on quantitative analysis, it has been revealed that digitalization has led to a statistically significant decrease in the volatility of stock markets in the BRICS countries. In 2015-2023, relative to the period of the 1990s-2006, volatility in Russia decreased by 1 percentage point, in India by 0.4–0.5 percentage points, in China by 0.8 percentage points, in the UAE (Dubai) by 0.5-0.7 percentage points. Statistically insignificant decreases in volatility were observed in Brazil and South Africa. In the developed capital markets, the decrease in volatility between these two periods was also statistically insignificant, amounting to less than 0.1 percentage points. These findings may indicate that the processes of digitalization in the BRICS countries contributed to an accelerated increase in predictability thanks to an increase in the volume and quality of information and the emergence of new methods of analysis. At the same time, part of the decrease in volatility may be explained by further development and improved efficiency of capital markets. The joint influence of these effects on the complexity of forecasting turned out to be more significant than the impact of innovative technologies and new industries.

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DOI: 10.3897/brics-econ.5.e121606

Authors: Akim M. Rahman, Lavina Maureen Zaman

Abstract: In today’s business-driven world, e-banking service is an important product in financial sectors of many countries and Pakistan is no exception. Many affect the delivery of these services, often unpredictable, factors and are fraught with serious pitfalls including those of psychological nature. The Voluntary Insurance scheme can help the country overcome existing difficulties and move closer to a cashless society, contributing to the growth of the banking sector and safety of the e-banking operations in Pakistan. The new e-banking legal products are expected to gratify consumers, make the banks stronger, and contribute to the overall social development; the proposed Voluntary Insurance is to guarantee their success. The Welfare Analyses have been used for setting the VI prices so that the customers’ efficiency-cost balance could become appealing. Once the policymakers and policy practitioners of Pakistan recognize the importance of the proposed VI product and make the necessary arrangements for its use in the e-banking services market, it may spread from bankers to their customers and thus over the whole economy. The process of life cycle of the VI product will follow the “S-curve” in progression. These developments will become drivers of economic growth and e-services will eventually replace traditional banking.

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DOI: 10.3897/brics-econ.5.e117828

Authors: Mohammed Saaida

Abstract: This article examines the de-dollarization phenomenon of the BRICS Plus and its impact on global economic dynamics. The research employs analytical descriptive technique to explore the factors that influence the BRICS Plus-led de-dollarization and the results it may lead to. The study discusses the BRICS Plus strategy, considering economic and political factors, and identifies potential areas of divergent interests within the changing global landscape. The BRICS Plus’s emergence involves an interplay between economic capabilities and geopolitical influence, potentially impacting existing global power dynamics. To achieve its goals, the BRICS Plus needs to address internal differences, establish institutions, and navigate complex geopolitical situations with diplomacy. The United States faces challenges, including its diminishing economic influence, which necessitates strategic choices and diplomatic measures for adaptation. The paper proposes recommendations based on creating internal strategies to meet the BRICS Plus’s economic needs and external strategies to be designed in response to proactive economic challenges of the United States in the international context.

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DOI: 10.3897/brics-econ.3.e91170

Authors: Alina Steblyanskaya, Artem Denisov, Sergey Bobylev, Svetalna Razmanova

Abstract: The Sino-Russian partnership has become one of the hottest issues in contemporary international politics. Significantly, the highest potential is in the movement of both countries to Carbon Neutrality. China pursues the goal to reach its carbon peak by 2030, aiming to achieve net-zero carbon dioxide emissions. The Russian government is also involved in new programs concerning emissions reduction. The two countries plan to collaborate on a new level of responsibility and transregional interconnection. The paper aims to analyze the influence of Russia’s trade with China on carbon dioxide emissions in Russian regions. The authors present a review of carbon dioxide emissions between the two countries, explore the processes of trade in several categories of products and outline forward forecast tendencies. The paper uses complicated forecasting modeling in Python to assess the prospects of trade collaboration between Russia and China untill 2030. It makes forecasts of the volumes of carbon dioxide emissions and environmental trends till 2030. The research results show that the highest levels of emissions are observed in the industries “Mineral products”, “Chemical products” and “Animal husbandry and fishing products and services”, while “Wood works and furniture”, and “Agriculture products and services” produce considerably fewer emissions.

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DOI: 10.3897/brics-econ.3.e91590

Authors: Ding Xiaowei, Maria Petrovskaya

Abstract: As a formal environmental regulation, environmental tax is important for the green upgrading of industrial structure. In order to explore the impact mechanism of environmental tax on corporate financial performance, this paper constructs a difference-difference (DID) model with two-way fixed effects based on financial data of Chinese A-share manufacturing listed companies from 2015 to 2019. We have found that environmental taxes contribute directly and significantly to the improvement of financial performance and that technological innovation, in some degree, produces mediating effect. Financing constraints not only negatively moderate the relationship between environmental taxes and technological innovation; they also inhibit the impact of technological innovation on financial performance and have a moderate mediating effect as part of the indirect influence. In the heterogeneity analysis, the direct effect is more significant among State-owned enterprises (SOEs) and eastern enterprises, and the moderating effect of financing constraints is more significant among non-SOEs and eastern enterprises. This paper advances the understanding of economic consequences of environmental tax levies from the perspective of property and regional heterogeneity. It provides empirical evidence in support of the applicability of Porter’s hypothesis in China and makes suggestions for the optimization of environmental policy and improvement of financial performance of enterprises.

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DOI: 10.3897/brics-econ.3.e84676

Authors: Dipak Chaudhari, Pushpa Trivedi

Abstract: Central bank intervention plays a major role in managing exchange rate volatility. In comparison to advanced economies, emerging market economies are generally active in the forex market as excessive volatility of the local currency persists. The BRICS countries (Brazil, Russia, India, China and South Africa) are the major emerging economies influencing the international financial system. The paper empirically investigates the efficacy of central bank intervention in the case of the BRICS countries. It has been observed that intervention generally did not impact the exchange rate level; however, it reduced the volatility of the exchange rate. Furthermore, interventions in spot and derivatives markets are equally effective in containing exchange rate volatility, except in South Africa. It has been identified that sovereign yield spread impacts the exchange rate returns in China and South Africa and impacts the volatility in the returns in Brazil and Russia.

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DOI: 10.3897/brics-econ.3.e83129

Authors: Ololade Mistura Aromasodun

Abstract: Abstract This paper examines the determinants of foreign direct investment (FDI) inflow into West Africa. FDI is regarded as the central engine for growth. Such inflows are not often satisfactory, both in terms of their volume and in terms of their sectoral distribution, particularly in developing countries. The study carried out a unit root test using the Im-Pesaran-shin (IPS) method, which revealed that four out of many variables were stationary at first difference, while other variables were stationary at level. Consequently, the Kao co-integration test methodology was used to analyze the long-run relationship. Thus, the regression analysis was carried out using the Panel ARDL method in an equation with a 50-year observation period. Concerning the remaining seven equations with shorter time series observations, the Pooled OLS estimation method was used to analyze the factors determining the inflow of FDI. The results indicate that financial development has a negative effect on FDI flows (and hence on globalization processes) in West Africa, while trade openness, institutional composite index and control of corruption have positive effects on FDI and hence increase globalization tendency. Based on these findings, the study recommends, among other things, that the authorities in West African countries vigorously pursue trade liberalization policy as an effort to globalize the region through FDI inflows. The study examined the macroeconomic determinants on FDI alongside institutional and socio-political determinants that are difficult to study in the case of West Africa as a region. The use of a composite institutional quality index, which combines multiple indicators of institutional quality, is another novelty of this research. Another unique contribution of the study is the use of the Africa Infrastructure Development Index (AIDI), which serves as a composite infrastructure index, as an explanatory variable.

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