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Business and Economics > Investments: Stocks

You are looking at 1 - 10 of 41 items for :

  • Type: Journal Issue x
  • Middle East and Central Asia x
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Cover Selected Issues Papers
Estimating Fiscal Multiplier for Qatar: Qatar
Ken Miyajima
Econometric results suggest that Qatar’s strong capital spending multiplier became less impactful as the stock of capital rose to a high level, likely as the marginal impact declined. This supports Qatar’s strategy to shifts the State’s role to an enabler of private sector-led growth, focusing on expenditure to support build human capital and implementation of broader reform guided by the Third National Development Strategy.
Keywords:
Capital spending; fiscal multiplier; GCC; Qatar; strategy to shift; Qatar's strategy; copyright page; Qatar country dummy; allocation decision; Fiscal multipliers; Current spending; Stocks; Global
Cover IMF Working Papers
Pricing Protest: The Response of Financial Markets to Social Unrest
Mr. Philip Barrett
,
Sophia Chen
,
Miss Mali Chivakul
, and
Ms. Deniz O Igan
Using a new daily index of social unrest, we provide systematic evidence on the negative impact of social unrest on stock market performance. An average social unrest episode in an typical country causes a 1.4 percentage point drop in cumulative abnormal returns over a two-week event window. This drop is more pronounced for events that last longer and for events that happen in emerging markets. Stronger institutions, particularly better governance and more democratic systems, mitigate the adverse impact of social unrest on stock market returns.
Keywords:
Social unrest; stock markets; abnormal returns; event study; institutions; cumulative abnormal returns; market model; stock index; income group; market liberalization reform; Stocks; Income; Global; Asia and Pacific
Cover IMF Staff Country Reports
Somalia: Enhanced Heavily Indebted Poor Countries (HIPC) Initiative-Decision Point Document
International Monetary Fund. Middle East and Central Asia Dept.
This paper presents an assessment of Somalia’s eligibility for assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The macroeconomic framework reflects the policy framework underlying the proposed three-year Fund-supported program. The debt relief analysis (DRA) remains largely unchanged, but some of the underlying debt data has been updated to reflect new information from creditors. In addition, this paper presents an assessment of debt management capacity in Somalia and a full Debt Sustainability Analysis under the Debt Sustainability Framework for Low-Income Countries. The DRA reveals that, after traditional debt relief mechanisms are applied, Somalia’s debt burden expressed as the net present value of debt-to-exports ratio is 344.2 percent at the end of December 2018—significantly above the HIPC Initiative threshold. Despite the challenging environment, progress on reform and policy implementation has been good and sustained reforms have translated into economic results. In addition to the coordinated support from the World Bank and the IMF, reforms have been supported by other development partners.
Keywords:
ISCR; CR; debt; Somalia; government; MDRI debt relief from IDA; HIPC debt relief analysis; HIPC Completion point; IMF in Washington; HIPC decision point; arrears clearance; burden indicator; Debt relief; Arrears; Debt service
Cover IMF Staff Country Reports
Somalia: Enhanced Heavily-Indebted Poor Countries (HIPC) Initiative-Preliminary Document
International Monetary Fund. Middle East and Central Asia Dept.
This Enhanced Heavily Indebted Poor Countries (HIPC) Initiative Program’s preliminary document discusses that as per the agreement by the IMF, Somalia can be eligible for debt relief under the Enhanced HIPC Initiative. It provides a clear recognition of Somalia’s sustained commitment to key economic and financial reforms under consecutive staff-monitored programs with the IMF. Helping Somalia achieve debt relief and unlock access to the needed resources to increase growth and reduce poverty is a key priority for the IMF. Once Somalia has reached the Completion Point, it would qualify for unconditional debt relief under the HIPC Initiative, and for debt relief under the Multilateral Debt Relief Initiative (MDRI) from the World Bank's International Development Association and the African Development Fund, together with beyond-HIPC assistance from the IMF. Paris Club creditors are also expected to provide further beyond-HIPC assistance at the Completion Point. With HIPC, MDRI and beyond HIPC assistance, Somalia’s NPV of debt-to-exports ratio is projected to decline from 491.7 percent in 2018 to 57.0 percent in 2027 and 41.5 percent in 2038.
Keywords:
ISCR; CR; authority; Enhanced HIPC Initiative; public finance management; reform agenda; reform; Somalia's eligibility; Somali authorities; sustained commitment; Club creditor; Debt relief; Arrears; Debt service; Debt service ratios; Stocks
Cover IMF Working Papers
Bank Capital and the Cost of Equity
Mohamed Belkhir
,
Samy Ben Naceur
,
Mr. Ralph Chami
, and
Anis Semet
Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.
Keywords:
WP; bank capital; capital requirement; financial risk; capital measure; Cost of equity; Banking regulation; Financial stability; return on equity; bank capitalization; bank cost; capitalized bank; bank capital measure; funding cost; financial leverage decrease; risk profile; Stocks; Capital adequacy requirements; Stock markets; Return on investment; Loan loss provisions; Global
Cover IMF Working Papers
Drivers of Cross-Border Banking in Sub-Saharan Africa
Mr. Paul Henri Mathieu
,
Mr. Marco Pani
,
Shiyuan Chen
, and
Mr. Rodolfo Maino
Using data collected from pan-African banks’ (PABs), balance sheets and other sources (Orbis, Fitch), this study identifies some key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses some of the determinants of this investment. Using a gravity model relating the annual value of a banking group’s investment in the net equity of its subsidiaries to a set of explanatory variables, the analysis finds that cross-border banking is in part driven by a search for yield, diversification, and expansion for strategic reasons.
Keywords:
WP; break; center; exchange rate; Cross-border banking flows; Bank leverage; Global banks; Group profitability; banking group variable; Group size; vis-à-vis intra-group; net equity; host country pair; bank subsidiary; pan-African banking groups; Exchange rates; Cross-border banking; Inflation; Stocks; Gravity models; Africa; Sub-Saharan Africa; Global; West Africa; North Africa
Cover IMF Working Papers
Rethinking Fiscal Policy in Oil-Exporting Countries
Mr. Tokhir N Mirzoev
and
Ling Zhu
We examine the existing fiscal policy paradigm in commodity-exporting countries. First, we argue that its centerpiece—the permanent income hypothesis (PIH)—is not consistent with either intergenerational equity or long-term sustainability in the presence of uncertainty. Policies to achieve these goals need to be more prudent and better anchored than the PIH. Second, we point out the presence of a volatility tradeoff between government spending and wealth and re-assess long-held views on the appropriate fiscal anchors, the vice of procyclicality, and the (im)possibility of simultaneously smoothing consumption and ensuring intergenerational equity and sustainability. Finally, we propose what we call a prudent wealth stabilization policy that would be more consistent with long-term fiscal policy goals, yet relatively simple to implement and communicate.
Keywords:
WP; interest rate; physical capital; government spending; Fiscal policy; oil exporters; permanent income hypothesis; fiscal rules; wealth stabilization; target path; oil price shock; spending policy; PIH expenditure benchmark; oil wealth; wealth target; subsoil wealth; level of wealth; PIH Policy; wealth dynamics; targeted wealth; Consumption; Oil prices; Stocks
Cover Policy Papers
Fourth Progress Report on Inclusion of Enhanced Contractual Provisions in International Sovereign Bond Contract
International Monetary Fund. Legal Dept.
and
International Monetary Fund. Monetary and Capital Markets Department
This paper reports on progress in inclusion of enhanced collective action clauses and modified pari passu clauses as of end-October 2018. The report finds that enhanced CACs have now become the market standard, with only a few issuers standing out from the market trend. Around 88 percent of international sovereign bonds (in aggregate principal amount) issued since October 2014 in the main jurisdictions of New York and England include such clauses. The modified pari passu clause continues to be incorporated as a package with the enhanced CACs, with few exceptions. In line with findings in previous reports, the inclusion of enhanced CACs does not seem to have an observable pricing effect, according to either primary or secondary market data. The outstanding stock of international sovereign bonds without enhanced CACs remains high, with about 39 percent of the outstanding stock including enhanced CACs.
Keywords:
PP; issuer; yield; trust; sovereign bond issuance; trust structures; enhanced CAC; Passu provision; law-governed bond; investment-grade issuer; International bonds; Sovereign bonds; Bonds; Collective action clauses; Stocks
Cover IMF Working Papers
Oil Prices and GCC Stock Markets: New Evidence from Smooth Transition Models
Nidhaleddine Ben Cheikh
,
Samy Ben Naceur
,
Mr. Oussama Kanaan
, and
Christophe Rault
Our paper examines the effect of oil price changes on Gulf Cooperation Council (GCC) stock markets using nonlinear smooth transition regression (STR) models. Contrary to conventional wisdom, our empirical results reveal that GCC stock markets do not have similar sensitivities to oil price changes. We document the presence of stock market returns’ asymmetric reactions in some GCC countries, but not for others. In Kuwait’s case, negative oil price changes exert larger impacts on stock returns than positive oil price changes. When considering the asymmetry with respect to the magnitude of oil price variation, we find that Oman’s and Qatar’s stock markets are more sensitive to large oil price changes than to small ones. Our results highlight the importance of economic stabilization and reform policies that can potentially reduce the sensitivity of stock returns to oil price changes, especially with regard to the existence of asymmetric behavior.
Keywords:
WP; oil price change; GCC country; correlation coefficient; GCC stock markets; oil prices; smooth transition regression models; GCC stock price volatility; hedging strategy; Stock markets; Asset prices; Oil; Stocks; Global
Cover IMF Working Papers
Financial Sector Debt Bias
Ms. Oana Luca
and
Alexander F. Tieman
Most tax systems create a tax bias toward debt finance. Such debt bias increases leverage and may negatively affect financial stability. This paper models and estimates debt bias in the financial sector, and present novel estimates for investment banks and non-bank financial intermediaries such as finance and insurance companies. We find debt bias to be pervasive, explaining as much as 10 percent of total leverage for regular banks and 20 percent for investment banks, with the effects most pronounced before the global financial crisis. Going forward, debt bias is likely to once again gain prominence as a key driver of leverage decisions, underscoring the importance of policy reform at this juncture.
Keywords:
WP; oil price; interest rate; Oil prices; equity prices; dividends; economic growth; oil supply; global oil markets; international business cycle.; equity price; standard error band; term interest rate; price relationship; price fall; oil price shock; oil price coefficient; Oil; Oil production; Stocks; Long term interest rates; Global