Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks

This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs' integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies...

Ausführliche Beschreibung

Gespeichert in:
Bibliographische Detailangaben
Veröffentlicht in:European journal of economics and economic policies 2023-11, Vol.20 (2), p.282-298
Hauptverfasser: Prates, Daniela, Fritz, Barbara, de Paula, Luiz Fernando
Format: Artikel
Sprache:eng
Schlagworte:
Online-Zugang:Volltext
Tags: Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
container_end_page 298
container_issue 2
container_start_page 282
container_title European journal of economics and economic policies
container_volume 20
creator Prates, Daniela
Fritz, Barbara
de Paula, Luiz Fernando
description This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs' integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies (EMEs) to global financial shocks? We argue that the emergence of FMEs as a new group of the financial periphery fills a vacuum left for global investors by the major EMEs, whose spreads declined in the past decade due to high foreign currency reserve accumulation and other EME-related factors. To answer the second question, we introduce the concept of financial hierarchy as a second layer of the currency hierarchy: while the currency hierarchy is organized by the different degrees of liquidity premia currencies offer, in the financial hierarchy, not currencies, but financial assets are placed according to the nominal yield. While FMEs' currencies have a lower liquidity premium than those of EMEs, the difference between them is not vast – as both are not accepted at the international level – and are insufficient to explain FMEs' greater vulnerability to external financial shocks. We argue in the paper that this vulnerability stems mainly from the position of FMEs' at the bottom of the financial hierarchy, which results in a different pattern of international financial integration.
doi_str_mv 10.4337/ejeep.2023.0106
format Article
fullrecord <record><control><sourceid>econis_cross</sourceid><recordid>TN_cdi_crossref_primary_10_4337_ejeep_2023_0106</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>284332</sourcerecordid><originalsourceid>FETCH-LOGICAL-c348t-9c54878f29e5bdaf9abf3df085ad5c7033c3d758b3ae58c19430a5a5f229286b3</originalsourceid><addsrcrecordid>eNpVkNFKwzAUhoMoOOauvRLyAt3SpGlS72Q4FQbe6HVJ05M1W5eUJKJ7e1sVVDjwn4v_O3A-hK5zsiwYEyvYAwxLSihbkpyUZ2hGCaeZEIKe_9kv0SLGPSFkajKez9DHJniXLITsqMIBEgbtnT9aiFiNgx28413wbwP2BqcOsLFOOW1VjwcIduggnG7xoFKC4EbAtTgF5eLRxmi9w7pTzkEfJ3zX-2bkYuf1IV6hC6P6CIufnKPXzf3L-jHbPj88re-2mWaFTFmleSGFNLQC3rTKVKoxrDVEctVyLQhjmrWCy4Yp4FLnVcGI4oobSisqy4bN0er7rg4-xgCmHoIdfz3VOaknd_WXu3oyUk_uRgJ_E5MKG3_7UuQyF2Upx8rNv8oUMflQUzmepOwTjah5yA</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype></control><display><type>article</type><title>Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks</title><source>Alma/SFX Local Collection</source><creator>Prates, Daniela ; Fritz, Barbara ; de Paula, Luiz Fernando</creator><creatorcontrib>Prates, Daniela ; Fritz, Barbara ; de Paula, Luiz Fernando</creatorcontrib><description>This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs' integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies (EMEs) to global financial shocks? We argue that the emergence of FMEs as a new group of the financial periphery fills a vacuum left for global investors by the major EMEs, whose spreads declined in the past decade due to high foreign currency reserve accumulation and other EME-related factors. To answer the second question, we introduce the concept of financial hierarchy as a second layer of the currency hierarchy: while the currency hierarchy is organized by the different degrees of liquidity premia currencies offer, in the financial hierarchy, not currencies, but financial assets are placed according to the nominal yield. While FMEs' currencies have a lower liquidity premium than those of EMEs, the difference between them is not vast – as both are not accepted at the international level – and are insufficient to explain FMEs' greater vulnerability to external financial shocks. We argue in the paper that this vulnerability stems mainly from the position of FMEs' at the bottom of the financial hierarchy, which results in a different pattern of international financial integration.</description><identifier>ISSN: 2052-7772</identifier><identifier>ISSN: 2052-7764</identifier><identifier>EISSN: 2052-7772</identifier><identifier>DOI: 10.4337/ejeep.2023.0106</identifier><language>eng</language><publisher>Cheltenham: Edward Elgar Publishing</publisher><subject>financial globalisation ; financial periphery ; frontier market economies ; patterns of international financial integration</subject><ispartof>European journal of economics and economic policies, 2023-11, Vol.20 (2), p.282-298</ispartof><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27924,27925</link.rule.ids></links><search><creatorcontrib>Prates, Daniela</creatorcontrib><creatorcontrib>Fritz, Barbara</creatorcontrib><creatorcontrib>de Paula, Luiz Fernando</creatorcontrib><title>Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks</title><title>European journal of economics and economic policies</title><description>This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs' integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies (EMEs) to global financial shocks? We argue that the emergence of FMEs as a new group of the financial periphery fills a vacuum left for global investors by the major EMEs, whose spreads declined in the past decade due to high foreign currency reserve accumulation and other EME-related factors. To answer the second question, we introduce the concept of financial hierarchy as a second layer of the currency hierarchy: while the currency hierarchy is organized by the different degrees of liquidity premia currencies offer, in the financial hierarchy, not currencies, but financial assets are placed according to the nominal yield. While FMEs' currencies have a lower liquidity premium than those of EMEs, the difference between them is not vast – as both are not accepted at the international level – and are insufficient to explain FMEs' greater vulnerability to external financial shocks. We argue in the paper that this vulnerability stems mainly from the position of FMEs' at the bottom of the financial hierarchy, which results in a different pattern of international financial integration.</description><subject>financial globalisation</subject><subject>financial periphery</subject><subject>frontier market economies</subject><subject>patterns of international financial integration</subject><issn>2052-7772</issn><issn>2052-7764</issn><issn>2052-7772</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2023</creationdate><recordtype>article</recordtype><recordid>eNpVkNFKwzAUhoMoOOauvRLyAt3SpGlS72Q4FQbe6HVJ05M1W5eUJKJ7e1sVVDjwn4v_O3A-hK5zsiwYEyvYAwxLSihbkpyUZ2hGCaeZEIKe_9kv0SLGPSFkajKez9DHJniXLITsqMIBEgbtnT9aiFiNgx28413wbwP2BqcOsLFOOW1VjwcIduggnG7xoFKC4EbAtTgF5eLRxmi9w7pTzkEfJ3zX-2bkYuf1IV6hC6P6CIufnKPXzf3L-jHbPj88re-2mWaFTFmleSGFNLQC3rTKVKoxrDVEctVyLQhjmrWCy4Yp4FLnVcGI4oobSisqy4bN0er7rg4-xgCmHoIdfz3VOaknd_WXu3oyUk_uRgJ_E5MKG3_7UuQyF2Upx8rNv8oUMflQUzmepOwTjah5yA</recordid><startdate>20231101</startdate><enddate>20231101</enddate><creator>Prates, Daniela</creator><creator>Fritz, Barbara</creator><creator>de Paula, Luiz Fernando</creator><general>Edward Elgar Publishing</general><scope>OT2</scope><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20231101</creationdate><title>Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks</title><author>Prates, Daniela ; Fritz, Barbara ; de Paula, Luiz Fernando</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c348t-9c54878f29e5bdaf9abf3df085ad5c7033c3d758b3ae58c19430a5a5f229286b3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2023</creationdate><topic>financial globalisation</topic><topic>financial periphery</topic><topic>frontier market economies</topic><topic>patterns of international financial integration</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Prates, Daniela</creatorcontrib><creatorcontrib>Fritz, Barbara</creatorcontrib><creatorcontrib>de Paula, Luiz Fernando</creatorcontrib><collection>EconStor</collection><collection>ECONIS</collection><collection>CrossRef</collection><jtitle>European journal of economics and economic policies</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Prates, Daniela</au><au>Fritz, Barbara</au><au>de Paula, Luiz Fernando</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks</atitle><jtitle>European journal of economics and economic policies</jtitle><date>2023-11-01</date><risdate>2023</risdate><volume>20</volume><issue>2</issue><spage>282</spage><epage>298</epage><pages>282-298</pages><issn>2052-7772</issn><issn>2052-7764</issn><eissn>2052-7772</eissn><abstract>This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs' integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies (EMEs) to global financial shocks? We argue that the emergence of FMEs as a new group of the financial periphery fills a vacuum left for global investors by the major EMEs, whose spreads declined in the past decade due to high foreign currency reserve accumulation and other EME-related factors. To answer the second question, we introduce the concept of financial hierarchy as a second layer of the currency hierarchy: while the currency hierarchy is organized by the different degrees of liquidity premia currencies offer, in the financial hierarchy, not currencies, but financial assets are placed according to the nominal yield. While FMEs' currencies have a lower liquidity premium than those of EMEs, the difference between them is not vast – as both are not accepted at the international level – and are insufficient to explain FMEs' greater vulnerability to external financial shocks. We argue in the paper that this vulnerability stems mainly from the position of FMEs' at the bottom of the financial hierarchy, which results in a different pattern of international financial integration.</abstract><cop>Cheltenham</cop><pub>Edward Elgar Publishing</pub><doi>10.4337/ejeep.2023.0106</doi><tpages>17</tpages><oa>free_for_read</oa></addata></record>
fulltext fulltext
identifier ISSN: 2052-7772
ispartof European journal of economics and economic policies, 2023-11, Vol.20 (2), p.282-298
issn 2052-7772
2052-7764
2052-7772
language eng
recordid cdi_crossref_primary_10_4337_ejeep_2023_0106
source Alma/SFX Local Collection
subjects financial globalisation
financial periphery
frontier market economies
patterns of international financial integration
title Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks
url https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-01-06T05%3A12%3A51IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-econis_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Frontier-market%20economies%20as%20a%20new%20group%20of%20the%20financial%20periphery:%20patterns%20and%20transmission%20channels%20of%20global%20shocks&rft.jtitle=European%20journal%20of%20economics%20and%20economic%20policies&rft.au=Prates,%20Daniela&rft.date=2023-11-01&rft.volume=20&rft.issue=2&rft.spage=282&rft.epage=298&rft.pages=282-298&rft.issn=2052-7772&rft.eissn=2052-7772&rft_id=info:doi/10.4337/ejeep.2023.0106&rft_dat=%3Ceconis_cross%3E284332%3C/econis_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_id=info:pmid/&rfr_iscdi=true