Type of the article: Research ArticleAbstractThe rise of decentralized finance (DeFi) presents new opportunities for accessing modern financial services. Despite their transformative architecture, most DeFi applications are currently unregulated, which exposes market participants to unforeseen risks. Therefore, understanding the level of connectedness between DeFi and traditional finance (TradFi) is crucial, particularly in emerging Asian markets where the level of cryptocurrency acceptance is high. Applying the time-varying parameter vector autoregressive model, this study examines the return connectedness between leading DeFi assets and traditional financial sectors in Indonesia, India, and Vietnam â the top three countries in Asia for cryptocurrency adoption. By analyzing TradFi at the industry level, this study captures sector-specific spillover dynamics that are essential to the monitoring of systemwide risk. The empirical results reveal low, time-varying return spillovers between DeFi and traditional financial sectors in the selected emerging Asian markets. The emerging financial sectors exhibit stronger linkages with broader traditional market indicators than with DeFi, in which assets interact primarily with each other. Emerging financial sectors and gold are the recipients of return spillovers, and DeFi assets act as the return transmitters. The current low degree of integration between DeFi and TradFi offers policymakers a window of opportunity to develop a robust financial regulatory framework that addresses issues of market stability and consumer protection while promoting the advancement of financial innovation.AcknowledgmentsWe thank the editors and anonymous reviewers for their valuable and constructive feedback, which has contributed significantly to improving the quality of this manuscript.
This study explores how national institutional environments shape entrepreneurial activity in the context of decentralized finance. Focusing on Initial Coin Offerings (ICOs), we use fuzzy-set Qualitative Comparative Analysis (fsQCA) on data from 2,709 ICOs across 42 countries to identify institutional configurations associated with high and low ICO activity. Drawing on institutional theory and heuristic-driven decision-making, we find that entrepreneurs and investors navigate uncertainty through diverse, context-specific institutional combinations. The findings contribute to entrepreneurship research by uncovering multiple pathways through which macro-level regulatory, cultural, financial, and technological conditions enable or constrain token-based fundraising across national ecosystems.
This study investigates Granger-causality relationships between crypto-assets (Bitcoin and Ethereum) and traditional financial assets (stock indices and exchange rates) in BRICS-T countries over the 2016â2024 period. The findings highlight significant interlinkages: bidirectional causality exists between Bitcoin and Russia's stock market, and between Ethereum and both Brazil's stock market and the USD/INR exchange rate. Unidirectional causality is observed from Bitcoin to the stock markets of Brazil, India, and China, while the USD/TRY exchange rate influences Bitcoin. Similarly, Ethereum affects the stock markets of Russia, India, and South Africa, while the USD/TRY exchange rate also Granger-causes Ethereum. These results indicate a growing synchronization between crypto-assets and conventional financial markets. The presence of both unidirectional and bidirectional causalities emphasizes the increasing integration of global financial systems and highlights the importance for investors to consider cross-market interactions when making decisions. Crypto-assets are no longer isolated but are embedded in broader financial dynamics.
There has been significant excitement surrounding the potential of distributed ledger technology (DLT) in revolutionising the worldâs financial services markets in recent years. The aspiration of achieving a flawless method for trading, matching and settling security transactions is a far-reaching objective that all industry participants strive for. Financial services professionals do not begin their day aiming to create transaction failures. Such failures result in financial losses, including fines, staff expenses and overdraft charges across the industry. Despite decades of efforts to achieve a 100 per cent settlement rate, success has remained elusive. This paper delves into the evolution of our existing settlement framework, examines the risks it has brought about and speculates on potential improvements by enhancing our current systems and processes with necessary technological advancements.
Presented as fundamental instruments for a new era of digitalized commerce, this chapter investigates the transforming power of blockchain technology and distributed ledger technology (DLT) on trade finance.
<div> Blockchain technology is making a huge difference in the global technology system where it proves better security than traditional system, gaining trust among users for transparency and solving many problems which the current economy is facing. Transaction being done via decentralized network has gasps attractions of many industries including shipping, healthcare and supply chain with less time and accuracy. The decentralized Finance system is solving problems including traditional banking accessibility in remote regions where banks are not available for transactions, Decentralized Finance (DeFi) which reduces cost of infrastructure and mankind by providing direct access to their asset and trade via internet. Although there are governments policies and regulations that are still not clear amongst many countries, even technology is for good but not able to use it due to limited knowledge and guidance. This paper explores how the global economy can be put in such a situation where new technology can not only help government bodies to tackle traditional finance challenges but also mitigate risks, tackle cybercrimes and increase transparency so that everyone across globe can feel secure about innovation in blockchain. This paper will also do analysis of how big data is making a difference in global economy and how government policies are affecting big data and blockchain technology. </div>
Special Session Introduction China's Rise in Asia:China-Host Country Interactions and Transformations Alvin Camba (bio), Guanie Lim (bio), and Victoria Chonn Ching (bio) Chinese capital exports are at the front and center of China's globalization (Hung 2015), actualizing US$3.8 trillion of foreign direct investment (FDI) stock in 2018 (UNCTAD 2019) and around US$843 billion in Chinese concessionary and non-concessionary financing between 2000 and 2019 (Bluhm et al. 2018). Against this backdrop, China has emerged as an alternative capital exporter as Western firms and international institutions have increasingly shifted their development finance from hard to soft infrastructure, in addition to concentrating their FDI in key sectors not easily participated by countries in the Global South (Camba 2022). For those in the Global South, China has also become a provider of military aid, an ally in the international arena, and a model to emulate. These changes are expected to exert enormous consequences on executive power competition among political elites, socio-ethnic fissures within countries, and geopolitical strategies of individual countries and/or regions. These domestic transformations better inform the ongoing debates on China's rise both within and across the Global South. The current literature on China's globalization can be divided into three different dimensions. First, there is a question of how China's interests, state-business relations, and state-society structures figure into China's mode of exporting capital. This literature has debated the question of China's global economic position, the issue of centralization or decentralization, and the recent emergence of party-state capitalism (Pearson et al. 2021, 2022). A parallel group of scholarship analyzes how China's Communist Party (CCP) and its institutions prefigure into the country's capital export strategy and China's geopolitical ambitions and gains (Benabdallah 2020; Doshi 2021; Repnikova 2022). Second, another group of works has examined China's impact on host regions and countries. From an economic lens, this scholarship examines how Chinese development finance or direct investments have catalyzed gross [End Page 543] domestic production, industrial policy, supply chain linkages, or capital restructuring (Camba et al. 2022; Lin 2012; Wise and Chonn Ching 2018). Politically, some debate how much China has inspired or exported models of autocracy (see, for example, Bader 2015; Camba 2022). These works also discuss China's role as a global environmental actor (Gallagher and Qi 2021; Kong and Gallagher 2019; Saha 2020). Finally, more recent literature has examined how the host country has responded to China's overtures. This body of work varies from analyzing national government institutions, elite politics, bureaucracies, and civil society. Some have examined host country positioning amidst geopolitical tensions, while others analyze hedging strategies (Liao and Katada 2021; Stallings 2020). Others have looked at how elites have taken advantage of China to increase their political power (Liu and Lim 2019). Despite all these advancements, what is relatively less scrutinized is the kind of host country politics that has emerged in response toâor alongsideâChinese capital exports and the degree to which these changing dynamics address underlying socio-economic or historical cleavages (Camba 2021a; Liu and Lim 2023). Our special session further interrogates how China's rise has spurred innovative bureaucratic strategies, social cleavages, and ethnic tensions in South, Southeast, and Central Asia. These sub-regions are rich for empirical investigation and theory building because democratization and development processes have differed not only from the Global North or Western countries but also among themselves. Adopting a macroscale perspective, Southeast Asian countries have generally pursued labor-intensive industrialization and illustrated distinct development patterns (Higgott and Robinson 2013), South Asian countries are fraught with nationalist movements and inter-state rivalries (Bhattacharyya 2020), and Central Asian countries are transitioning from their communist past into newly emerging democracies (Cummings 2012). However, these regions haveâin varying waysâmanaged disillusionment with the West, increasing income inequalities, and intensified geopolitical tensions. Special Session Overview The first article focuses on Singapore. Xianbai Ji (2023) discusses how this quintessential city-state sought to engage the Belt and Road Initiative (BRI), China's signature global infrastructure strategy, since 2013. Compared to other economies, the Singaporean approach to the BRI shifted away from engaging with China...
Aiming to connect key financial infrastructures in ASEAN+3 markets, this publication examines the uses of distributed ledger technology (DLT) and blockchain (BC) for settling cross-border delivery-versus-payment (DVP) securities transactions.
Due to widespread decentralization of spending responsibilities, increasing revenue power and borrowing capacity of sub-national governments, sub-national borrowing has become an increasingly important source of sub-national finance. While there are arguments for and against giving sub-national authorities room for raising their own financial resources, appropriate sub-national borrowing regulatory framework can reduce chances of defaults and fiscal crises. This dissertation investigates the effectiveness of sub-national borrowing regulations in maintaining fiscal sustainability. More precisely, it tests the hypothesis that is sub-national borrowing is restricted to financing capital investments (the âgolden ruleâ), and if the sub-national governments are provided with some measure of revenue autonomy, then the sub-national borrowing should not endanger fiscal sustainability. Based on the sub-national government panel data for 57 countries between 1990 and 2008 and applying the system GMM estimator and the survival analysis, this dissertation provides support for this hypothesis. The results suggest that the âgolden ruleâ is effective in maintaining fiscal sustainability at both general and sub-national government level. Sub-national tax autonomy, however, seems to have positive but very small marginal effect on fiscal sustainability. The obtained results also emphasize the risk of the soft budget constraint and the moral hazard. Significant central government financing may give encouraging signs to the sub-national governments to over-borrow and to expect being bailed out by the central government. The results obtained in this dissertation imply following policy recommendations. First, sub-national government borrowing does not have to endanger fiscal sustainability if the borrowing regulation framework is well designed and according to specific country circumstances. Second, reducing fiscal dependence on central government financing reduces the risk of moral hazard and improves the effectiveness of borrowing control in maintaining fiscal balance at the sustainable level.
Abstract This chapter describes how the structure and governance of international trade financeâthe oldest domain of international financeâevolved from the Middle Ages until today. Trade finance products initially consisted of idiosyncratic assets issued by local merchants and bankers. The financing of international trade then became increasingly centralized and credit instruments were standardized through the diffusion of the local standards of consecutive leading trading centers (Antwerp, Amsterdam, London). This process of market centralization/product standardization culminated in the nineteenth century when London became the global center for international trade finance and the sterling bill of exchange emerged as the most widely used trade finance instrument. The structure of the trade finance market then evolved considerably following World War I and disintegrated during the interwar deglobalization and Bretton Woods period. The reconstruction of global trade finance in the post-1970 period gave way to the decentralized market structure that prevails nowadays.
While trade finance has been recognized as a key element in international trade, there is a persistent gap between supply and demand. On the other hand, distributed ledger technology (DLT) has given birth to the decentralised finance (DeFi) phenomenon, promising to revolutionize banking and the whole financial sector. This paper enquires whether a DeFi-based business model could address the trade finance gap problematic. To this end, it presents a sketch of a DeFi trade finance business model, showing how it could address the reasons behind the trade finance gap, while at the same time developing a broader meaning of the DeFi concept itself
Digital technologies are rapidly changing every aspect of our societies, and especially international trade where all these technologies are converging. From artificial intelligence (AI) and distributed ledger technology (DLT)* to 3D printing and 5G networks, emerging technologies are no longer abstract ideas but daily realities of international trade.
Blockchain is a peer-to-peer (P2P) technology that records and verifies transactions in a decentralised, cryptography-secure manner. Blockchain applications can globally manage records of any sort, such as import-export declarations, invoices, bills of lading (BLs) and certificates of origin (COs). It is a promising technology for several areas, including international trade. This paper presents blockchain, comments on blockchain platforms such as Ethereum, gives examples of private sector initiatives, shares an idea for a CO blockchain application, and discusses regulatory issues. In doing so, the paper aims to attract attention for blockchain in international trade.
In highly decentralized countries the subnational dimension of economic developments acquires particular relevance, given the existence of potential spillover effects across jurisdictions or the existence of asymmetric impacts of national-wide macroeconomic shocks. At the same time, though, the analysis of sub-national macroeconomic and public finance short-term developments tend to be restricted in many countries due to data limitations. Against this backdrop, the aim of this paper is to provide an overview of the available data for monitoring macroeconomic and public finance developments at the regional level in Spain, and to present some examples of its practical use in real time. After a thoroughly review of the publicly available information, we identify two key informational gaps in this area of conjunctural analysis, namely: (i) the lack of homogeneous and official quarterly measures of aggregate regional economic activity (in particular, real GDP), and (ii) the limited sample size of time series pertaining to government budgetary developments at the regional level.
This study analyzes which types of firm-level shocks were associated with the centralization of strategic decision-making during the recession of 2008-09. We use a unique survey dataset of more than 14000 manufacturing firms from seven European countries which includes direct information on whether the firms centralized or decentralized their strategic decision-making process. Motivated by theoretical approaches claiming that organizations under considerable stress are more likely to centralize, we use multinomial logit models to test whether firms facing a larger fall in turnover, employment, investment or having to postpone their innovations were more likely to change their decision-making process. We find evidence that employment change and postponing innovations are indeed associated with centralization even when we control for ownership, group structure, financing, management, and strategy.
We provide novel insights on the decentralization of optimal outcomes under monopolistic competition with nonseparable utility, variable demand elasticity, and endogenous firm heterogeneity. Relative to the unconstrained optimum, equilibrium firm selection is too weak, average firm size is too small, low-cost firms are too small, and high-cost firms are too large. The unconstrained optimum can be decentralized through differentiated production subsidies to producers financed through lump-sum taxes on entrants and consumers. When differentiated subsidies and transfers from entrants are not viable, the constrained optimum can be decentralized through a common production subsidy financed by a lump-sum tax on consumers.
In its first decade, the International Competition Network has prospered, contributed to the development of widely accepted international policy norms, and come to exemplify the form of voluntary multinational collaboration that commentators have identified as a promising way to facilitate international ordering amid the global decentralization and diversification of economic regulations. This article takes stock of ICNâs achievements, considers why it has succeeded in many of its aims, and asks a number of questions regarding what comes next. It seeks to inform the ICNâs future by offering a way to think of its institutional characteristics to assess its relative advantages.The ICNâs paramount goal is to facilitate convergence - the broad acceptance of standards concerning the substantive doctrine and analytical methods of competition law, the procedures for applying substantive commands, and the methods for administering a competition agency - on superior approaches concerning the substance, procedure, and administration of competition law with the expectation that if competition systems around the world opt in to superior techniques, they will achieve greater progress toward dismantling competitive restraints. The article begins by examining the convergence methods, specifically the four elements of ICNâs convergence strategy. It then discusses the context of the ICN within the major international competition networks that have played important roles in the development of international competition policy standards - OECD, UNCTAD, and the WTO. Finally, it looks at the ICCâs interaction with other multinational networks and considers how much the ICNâs convergence-related initiatives will reduce conflicts among jurisdictions with respect to the treatment of specific matters and whether ICN inspired convergence will suffice to eliminate transnational conflicts.The authors see three major focal points for the ICN in the coming decade. The first is to build on its past successes and continue to pursue the identification and adoption of best practices with respect to substantive standards, procedures and the administration of competitive agencies. The second is for future ICN efforts to identify and make use of complementarities with the OECD and UNCTAD to provide a basis for the networks to identify areas in which collaboration will improve their collective effectiveness. The third is to examine and refine the ICNâs operational framework and determine whether its structure and operational forms are adequate to supports its current and future programs. Finally, the authors see major and administrative challenges ahead with problems of resources, financing, and management that must be resolved for the ICC to have a successful second decade.
This paper offers a brief overview of the Common Agricultural Policy (CAP) from its origins until the present day in order to identify the factors that have been shaping its evolution. It then attempts to evaluate how persistent these trends will be in the future, whether new policy imperatives are gaining relevance in CAP reform and what they imply for the CAP over the coming years. Budget crises, international trade pressures and enlargement have driven the CAP reforms of the last fifteen years. In the future, change will be driven by the need to maintain the economic rationality and political acceptability of agricultural policy in an enlarged European Union of twentyâseven heterogeneous member states. Further decentralization of decision making and financing can be expected.
Reviewed by: Assessing the Extent of China's Marketization, and: The Revival of Private Enterprise in China, and: Entrepreneurship in China Kun-Chin Lin (bio) Xiaoxi Li , editor. Assessing the Extent of China's Marketization. The Chinese Trade and Industry Series. Aldershot, UK: Ashgate, 2006. xix, 330 pp. Hardcover $114.95, ISBN 978-0-7546-4878-9. Shuanglin Lin and Shunfeng Song, editors. The Revival of Private Enterprise in China. China Trade and Industry Series. Aldershot, UK: Ashgate, 2007. Hardcover $114.95, ISBN 978-0-7546-4892-5. Keming Yang . Entrepreneurship in China. Aldershot, UK: Ashgate, 2007. Hardcover $114.95, ISBN 978-0-7546-4668-6. These three volumes signal the sustained commitment of Ashgate Publishing to contemporary Chinese political economyâthe first two titles belong to a handful of edited volumes published in the past three years under the Chinese Trade and Industry Series; the latter is a monograph not classified under any Ashgate series.1 Series editors for the said seriesâAimin Chen (Sichuan University) and Shunfeng Song (University of Nevada, Reno)âare well-respected economists with decades of experience in research and teaching in the United States and in China. Most volumes appear to be collections of conference papers by scholars from both sides of the Pacific, presented at symposiums supported by international funding agencies, corporate donations, and Chinese academic institutions. Previous volumes in the series have received scant attention in major journals of economics and China studies.2 I suspect this neglect reflects the relative abundance of edited volumes on various aspects of the Chinese economy as well as inconsistencies within the series. Reviewers of earlier volumes have voiced concerns with the following problems: numerous editorial errors; outdated data, in particular pertaining to "post-WTO" discussions; context-insensitive applications of econometrics models; and inconsistent efforts at theory building and comparative analysis across sectors and countries.3 To varying degrees, these problems resurfaced in the two edited volumes under consideration here. All three books address head-on the two most fundamental structural changes in the Chinese economy since the mid 1990sâthe historic shift from a socialist economy of chronic shortage to one of overall oversupply, and the diminishing importance of the state and collective forms of ownership in face of various property right reforms and the surging private sector. These trends have fairly overtaken and made unfashionable earlier scholarly attention on the reform of state-owned enterprises and debates over soft-budget constraints. However, a close reading of these volumes strongly suggests that the evolving [End Page 330] complexities in state-nonstate relationships remain the central institutional variables for economic growth and system transformation. The earlier debate over whether ownership form and corporate governance or market competition and the overall external environment (including financing options and regulatory risks) matter more for improving the performance and governance of state-owned enterprise finds new relevance in application to the analysis of private enterprises. In addition, central and local governmental relations over the process of decentralization enter into discussion but do not receive systematic attention and theorization in these volumes. It is almost as if, after lavishing praises for the entrepreneurial local state in the 1990s, scholars have decided that the private firms and entrepreneurs are the central, autonomous agents for China's present dynamism. There is certainly a need to rethink the research agenda in light of structural changes in favor of the private sector, but one should keep in mind necessary continuities and comparisons with the earlier scholarship. Assessing the Extent of China's Marketization, edited by Xiaoxi Li of Beijing Normal University and with twenty-eight of twenty-nine chapter contributors sourced from that university, is best read as issue-specific summaries of regulatory and institutional changes since 2000. Whether these changes actually translate into the development of robust political and institutional foundations for the market economy is largely implied through correlations to aggregate economic outcomes rather than through rigorous analyses. Anthropologists, sociologists, and political scientists would look in vain for relevant qualitative research such as in-depth case studies, contextualized narratives, or historical-institutional analysis of long-term trends. The underlying perspective of this volume assumes a congruence of state-building and market-building projects...