Economic Journal of Emerging Markets

Do global uncertainties and financial distress impact Sukuk issuance?

2025-10-29T07:17:19+00:00

Purpose ― This paper examines the impact of major uncertainty indices and global uncertainty on the volume of Sukuk issuance in Türkiye.
Method — The NARDL method is applied to determine the short- and long-term relationships between Türkiye's sukuk issuance and global uncertainty and financial stress indices, capturing both symmetric and asymmetric dimensions.
Findings — Although a symmetric relationship exists between Global Economic Policy Uncertainty (GEPU) and Sukuk issuance, the Financial Stress Index (FSI) has no long-term impact on Sukuk issuance. During periods of global uncertainty, sukuk issuances increase, whereas in conditions of less uncertainty, they fall. There is an inverse relationship between Geopolitical Risk (GPR) and Sukuk issuance. Since all factors affect sukuk issuance in the short run, GEPU has the highest impact. Decreases in the GEPU index positively affect sukuk securities and increase their issuance volumes. Therefore, GPR and GEPU indices have asymmetric effects on sukuk issuances in the short and long term.
Implication — Evidence suggests that sukuk is more resilient to crises than its conventional equivalents. Sukuks are strategically crucial for portfolios and provide sufficient assurance to reduce risk.
Originality — No study has assessed how global financial distress and uncertainty influence Türkiye's sukuk issuance. This study differs from previous studies by focusing on sukuk issuance volumes rather than sukuk yields.

Quantifying mark-to-market risk in Jamaica’s banking sector

2025-10-29T07:17:12+00:00

Purpose — This study evaluates how well parametric Value-at-Risk (VaR) and Conditional Value-at-Risk (CVaR) models measure market risk from Jamaican banks’ sovereign bond exposures.
Method — We calibrate VaR and CVaR models using banks’ aggregate portfolio holdings across the entire financial system.
Findings — The parametric VaR model performs reliably, passing standard statistical tests for consistency, independence, and reliability.
Implications — The results suggest that these standard risk measures effectively capture Jamaican banks’ market risk exposure to foreign currency-denominated sovereign bonds, which could serve as a helpful tool for regulators to monitor market risk and financial system stability.
Originality — This research applies VaR and CVaR to a novel dataset of Jamaica’s entire financial system, demonstrating how regulators can transition from the currently prescribed methods. The findings indicate that these standard risk measures effectively capture risk charges for market risk assessment, as allowed under Basel II, and align with more modern Basel-style frameworks.

Non-cash food assistance and household food security: Evidence from remote Indonesia

2025-10-29T07:17:23+00:00

Purpose ― This study aims to evaluate the impact of Indonesia’s Non-Cash Food Assistance Program (BPNT) on household consumption and food security in Sabu Raijua, a remote region in Indonesia with limited food access.
Methods ― The Propensity Score Matching (PSM) with kernel techniques is employed to estimate the BPNT program’s effects on household expenditure, caloric intake, and food insecurity using data from 536 households in Sabu Raijua, East Nusa Tenggara, Indonesia.
Findings ― The results indicate that the BPNT program had a limited effect on household spending, nutrition, and food security. Beneficiary households spent slightly more on food and non-food items, showed minor improvements in nutritional intake, and were less likely to face food shortages, though concerns about food adequacy persisted.
Implications ― The findings suggest that while BPNT helps alleviate food insecurity, further improvements in program implementation are needed to enhance its overall impact on household welfare.
Originality ― This research provides critical insights into the effectiveness of BPNT in a remote region with unique socioeconomic challenges that have not been subject to empirical study, highlighting the challenges and opportunities for improving non-cash food assistance programs in similar contexts.

Monetary policy and sectoral stock market in Malaysia

2025-10-29T07:17:16+00:00

Purpose ― This paper aims to examine the extent to which monetary policy shocks (domestic and international) will affect the movement of the sectoral stock index in Malaysia.
Methods ― The monetary policy shocks are identified using a structural vector autoregressive (SVAR) model to examine the propagation of both monetary policy shocks (domestic and international) on sectoral stock prices.
Findings ― The main results show that foreign monetary shocks significantly affect four sectoral stock indices: industrial and services, plantation, telecommunications, and utilities. In contrast, domestic monetary shocks impact three sectoral indices: industrial and services, technology, and utilities. However, domestic monetary policy shocks have a more dominant effect on the sectoral stock market in terms of magnitude.
Implication ― The analysis results provide policymakers, particularly Bank Negara Malaysia (BNM), with valuable insights into which sectors are most sensitive to monetary policy fluctuations. Additionally, the results are beneficial for investors, as the analysis can help them manage their assets more effectively by identifying which sectoral stock indices are most affected by both domestic and international monetary policy shocks, and by guiding them to make more accurate investment decisions.
Originality — First, it focuses specifically on sectoral indices, examining all 13 in Malaysia through the lens of theory, with particular emphasis on impulse-response analysis, which explores the cumulative effects of both domestic and foreign monetary policy shocks on these indices. Secondly, the study employs a lagged analysis using the SVAR model, providing a theoretical framework for comparison with other relevant studies.

Thrift-growth nexus for the regional comprehensive economic partnership countries

2025-10-29T07:17:14+00:00

Purpose — This study examines the relationship between savings and economic growth, accounting for the mediating role of financial development across the selected Regional Comprehensive Economic Partnership (RCEP) countries.
Methods — Using a panel data set spanning 1986 to 2022, the long-run interaction among the variables is investigated with panel cointegration methods that account for cross-sectional dependence. Moreover, the associated long-run elasticities were estimated using the augmented mean group estimation method. The causal nexus was examined for each country in the sample.
Findings — In addition to the presence of a long-run relationship, the findings revealed that both thrifts and growth have a positive influence on each other in the long run. In addition, bidirectional causality tends to exist between thrifts and growth.
Implication — Since the findings disclose the validity of two mainstream macroeconomic views, policymakers should rely on developing economic policies aiming at fostering thrift and economic growth, which may include support of institutional quality and financial deepening in those economies.
Originality — The originality and added value of the study stem from the development of a new perspective, particularly in the examination of causal relationships. Furthermore, this is one of the primary efforts focused on the RCEP bloc, which has significant potential in terms of trade, finance, thrifts, and economic size in the contemporary world economy.

Measuring Islamic Banking resilience: A case study of Nusa Tenggara Barat Province, Indonesia

2025-10-29T07:17:21+00:00

Purpose — Islamic banks in Nusa Tenggara Barat (NTB) province have experienced positive developments in assets, branches, and financing. This study aims to measure the resilience of Islamic banking in NTB using a composite bank variable and to determine how effectively the institution manages and absorbs various risks.
Method — The data used consisted of monthly data from 2010 to 2023, covering several banking variables, including the Financing to Deposits Ratio (FDR), Non-Performing Financing (NPF), Bank Size (BS), and Third-Party Fund (TPF). The analysis method employed in this study was the early warning system (EWS), utilising a non-parametric signal extraction approach.
Findings — All selected banking variables are used to measure the resilience of Islamic banking in NTB through the composite index of bank (CIB). The signal extraction method provides optimal thresholds for each selected banking variable and for the composite index (CIB). Visualisation results show the interval values that can absorb risk and maintain the resilience of Islamic banking as follows: (1) FDR between 81% and 102%; (2) NPF between 1.29% and 1.89%; (3) BS between 3.79% and 4.59%; (4) TPF between 4.16% and 4.58%; and (5) CIB between 10.66 and 28.14.
Implications — Assessing the resilience of Islamic banking in NTB involves identifying key banking variables to pinpoint sources of risk exposure, determining the optimal time horizon for policy interventions, and setting appropriate thresholds for the surveillance mechanism.
Originality — Currently, the resilience of Islamic banks at the provincial level has not been widely studied, particularly in NTB Province, where there has been a notable increase in Islamic banking offices and assets.

Green bond underdevelopment in Emerging Economies: Exploring the dynamic roles of institutional quality

2025-10-29T07:17:10+00:00

The underdevelopment of the green bond market in emerging markets is a thing of silent yet unventilated concern among experts and policymakers. Our study identified institutional quality as one of the fundamental determinants of financial development, and so we decided to impose these factors in a green bond situation. Thus, our study consider to examine the influences of institutional quality in explaining green bond development in twenty-one (21) emerging economies from 2010 to 2023. Due to data availability factor and nature of data, the most suitable technique is the panel Fully Modified Ordinary Least Squares (PFMOLS) estimator. The proxy for the institutional quality data is regulatory quality, voice and accountability, and rule of law as well as their PCA estimation. The main findings of the study include that comprehensive institutional qualities are more beneficial to green bond development in emerging economies than isolated institutional quality components. Also, that policy efforts in emerging economies that pursue comprehensive institutional quality will be more beneficial to green bond development in emerging economies if the detrimental influences of trade openness, exchange rate stability, savings are addressed. The study recommends for more institutional reforms in emerging economies to be associated with improvement in savings, financial development, exchange rate stability and trade openness necessary for developing the green bond market.

Asymmetric impacts of exchange rate and petroleum pump price on economic welfare in Nigeria

2025-10-29T08:06:13+00:00

Purpose — This study examines the asymmetric effects of exchange rate fluctuations and petroleum pump prices on economic welfare in Nigeria. While previous research examined these shocks in isolation, this study jointly evaluates their short-run and long-run effects, thereby addressing a key gap in the literature.
Methods — The study employs the Nonlinear Autoregressive Distributed Lag (NARDL) model to analyse time-series data from 1970 to 2023.
Findings — Exchange rate depreciations and petroleum price increases have larger and lasting welfare losses than the short-run benefits of appreciations and price declines. In the long run, these shocks can be turned into potential welfare benefits through structural changes and redistribution of the budget. Inflation, unemployment, subsidies and international oil prices further mediate outcomes.
Implications — Policymakers should strike a balance between short-term household protection and longer-term structural changes. With the complete removal of petroleum subsidies in Nigeria in May 2023, the focus should shift to special transfers, social security, and compensation to mitigate welfare losses. Exchange rate stability, fiscal discipline and diversification are equally essential for enhancing long-term welfare.
Originality — This study advances understanding of welfare by concurrently examining the asymmetries of exchange rates and petroleum pump prices, thereby moving beyond the single-shock approach.