Investigating the policy implications of financial technology shocks on macroeconomic stability : evidence from emerging African economies
The disruptive impact of financial technology (fintech) on banks and the entire macroeconomic condition motivated this study. We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The princ...
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Veröffentlicht in: | African Journal of Development Studies 2020-09, Vol.10 (3), p.123-146 |
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description | The disruptive impact of financial technology (fintech) on banks and the entire macroeconomic condition motivated this study. We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The principal component analytical (PCA) technique revealed that instability among emerging Africa is more susceptible to fiscal and trade deficits with Nigeria and Algeria being the worst hit. Moreover, the forecast error variance decomposition and impulse response of the structural vector autoregressive (SVAR) estimation technique found that variability in macroeconomic instability were more susceptible to shocks from automated teller machine (ATM) adoption. Under the assumption of fixed exchange rate regime with perfect/relative capital mobility, fiscal policy was effective to restore a steady state when contemporaneous shocks from fintech threatens the economy both in the short and long-run. Although monetary policy was explosive in the short-run, it becomes effective to fintech shock in the long-run under a freely floating exchange rate assumption. The study therefore recommends a fiscal-monetary policy mix under a float-managed exchange rate system with relative capital mobility when contemporaneous shocks from fintech hit the economy. |
doi_str_mv | 10.31920/2634-3649/2020/10n3a7 |
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We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The principal component analytical (PCA) technique revealed that instability among emerging Africa is more susceptible to fiscal and trade deficits with Nigeria and Algeria being the worst hit. Moreover, the forecast error variance decomposition and impulse response of the structural vector autoregressive (SVAR) estimation technique found that variability in macroeconomic instability were more susceptible to shocks from automated teller machine (ATM) adoption. Under the assumption of fixed exchange rate regime with perfect/relative capital mobility, fiscal policy was effective to restore a steady state when contemporaneous shocks from fintech threatens the economy both in the short and long-run. Although monetary policy was explosive in the short-run, it becomes effective to fintech shock in the long-run under a freely floating exchange rate assumption. 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We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The principal component analytical (PCA) technique revealed that instability among emerging Africa is more susceptible to fiscal and trade deficits with Nigeria and Algeria being the worst hit. Moreover, the forecast error variance decomposition and impulse response of the structural vector autoregressive (SVAR) estimation technique found that variability in macroeconomic instability were more susceptible to shocks from automated teller machine (ATM) adoption. Under the assumption of fixed exchange rate regime with perfect/relative capital mobility, fiscal policy was effective to restore a steady state when contemporaneous shocks from fintech threatens the economy both in the short and long-run. Although monetary policy was explosive in the short-run, it becomes effective to fintech shock in the long-run under a freely floating exchange rate assumption. The study therefore recommends a fiscal-monetary policy mix under a float-managed exchange rate system with relative capital mobility when contemporaneous shocks from fintech hit the economy.</description><subject>Africa</subject><subject>Algeria</subject><subject>Automated teller machines</subject><subject>Balance of trade</subject><subject>Bank technology</subject><subject>Banks (Finance)</subject><subject>Capital movement</subject><subject>Economic aspects</subject><subject>Financial Technology</subject><subject>Fiscal Policy</subject><subject>Fixed exchange rates</subject><subject>Floating exchange rates</subject><subject>Foreign exchange rates</subject><subject>Growth</subject><subject>International trade</subject><subject>Investigations</subject><subject>Macroeconomic Stability</subject><subject>Macroeconomics</subject><subject>Monetary policy</subject><subject>Nigeria</subject><subject>Technology</subject><issn>2634-3630</issn><issn>2634-3649</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2020</creationdate><recordtype>article</recordtype><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>AZQEC</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>GNUQQ</sourceid><recordid>eNo9Udtq3DAQNaWFhCS_EAR93kQXW7L6UpYlTRMCeWmfhSxLtlJbciVtYH8hX91xHYIEI83MmcOcU1XXBN8wIim-pZzVO8ZreUsxfAkOTItP1flH_vPHm-Gz6irnF4wxbRtBhDiv3h7Cq83FD7r4MKAyWrTEyZsT8vMCEdIxZBQdcj7oYLyeULFmDHGKwwnlMZo_UA5o1iZFa2KIszcoF935yZcT-obsq-9tMBa5FGdkZ5uGlWrvEowP6B1j82X1xekp26v3eFH9_nH36_Bz9_R8_3DYP-0MEVjuTKuZoIy3sjaYSF1zuJ3QsqeWUVk3tegoFn3Lm47pHve0Z5w7Q6ToBHEtu6i-bnOXFP8eYXn1Eo8pAKWinGDZtk1bQ9fN1jXoySofXCxJGzi9hQVjsM5Dfs8FAzVBSwDwDQA65JysU0vys04nRbD675VafVCrJ2r1Sm1eAfD7BsygWbBFZW2XY6fGUpasxn5Sow49kK01ghtA3j0eFHGuMbqRQrJ_F-Wfeg</recordid><startdate>20200901</startdate><enddate>20200901</enddate><creator>Okoli, Tochukwu Timothy</creator><creator>Tewari, Devi Datt</creator><general>Adonis & Abbey Publishers</general><general>Sabinet Online</general><general>Adonis & Abbey Publishers Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0-V</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>88J</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ALSLI</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DPSOV</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRNLG</scope><scope>F~G</scope><scope>GNUQQ</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>KC-</scope><scope>L.-</scope><scope>M0C</scope><scope>M2L</scope><scope>M2R</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PRINS</scope><scope>PYYUZ</scope><scope>Q9U</scope></search><sort><creationdate>20200901</creationdate><title>Investigating the policy implications of financial technology shocks on macroeconomic stability : evidence from emerging African economies</title><author>Okoli, Tochukwu Timothy ; 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We investigate fintechs‘ dynamic impact on macroeconomic stability and their policy response in a panel of five emerging African economies for the period 2002-2018. The principal component analytical (PCA) technique revealed that instability among emerging Africa is more susceptible to fiscal and trade deficits with Nigeria and Algeria being the worst hit. Moreover, the forecast error variance decomposition and impulse response of the structural vector autoregressive (SVAR) estimation technique found that variability in macroeconomic instability were more susceptible to shocks from automated teller machine (ATM) adoption. Under the assumption of fixed exchange rate regime with perfect/relative capital mobility, fiscal policy was effective to restore a steady state when contemporaneous shocks from fintech threatens the economy both in the short and long-run. Although monetary policy was explosive in the short-run, it becomes effective to fintech shock in the long-run under a freely floating exchange rate assumption. The study therefore recommends a fiscal-monetary policy mix under a float-managed exchange rate system with relative capital mobility when contemporaneous shocks from fintech hit the economy.</abstract><cop>London</cop><pub>Adonis & Abbey Publishers</pub><doi>10.31920/2634-3649/2020/10n3a7</doi><tpages>24</tpages></addata></record> |
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subjects | Africa Algeria Automated teller machines Balance of trade Bank technology Banks (Finance) Capital movement Economic aspects Financial Technology Fiscal Policy Fixed exchange rates Floating exchange rates Foreign exchange rates Growth International trade Investigations Macroeconomic Stability Macroeconomics Monetary policy Nigeria Technology |
title | Investigating the policy implications of financial technology shocks on macroeconomic stability : evidence from emerging African economies |
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