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The age-long debate between SME-growth nexus has ignored environmental sustainability, as evident by many previous empirical studies. However, the pivotal role of SMEs and their undeniable dominance in the business landscape of Africa presents itself as a potential instrument for leading sustainability advocacy on the African continent. The study investigates whether credit flows from the private sector and government-owned enterprises to small and medium enterprises guarantee growth and environmental sustainability using data from World Bank Databases for 35 African countries from 2006 to 2019. Results from the econometric analysis show that domestic credit flowing from the private sector and government-owned enterprises to SMEs leads to significant growth with greater impact at lower quantiles in the case of Africa. On the issue of environmental sanctity, credit flowing from the private sector to SMEs counteract the adverse effect of SMEs activities on the environment, while credit flowing from government enterprises intensify the negative effect of SMEs activities on the environment in the case of Africa. Furthermore, renewable energy significantly reduces environmental decay more efficiently in upper quantiles while natural resource rents aggravate environmental decay only for African countries in the lower quantiles. Policy recommendations are proffered in the manuscript within the ambit of the study findings.

This study examines the causal relationship between financial technology startup venture capital (VC) financing and its deals with domestic credit provided by the banking sector and equity market movement. Despite the rise of alternative finance, such as fintech venture capital (it is the fund that venture capital firms put into young, promising fintech companies so that they can help them expand and scale quickly), which is yet underexplored, borrowers still heavily rely on banks and the stock market for financing. We use panel data from 57 countries from 2010 to 2020 and an advanced econometric method called the cross-sectional autoregressive distributed lag model (CS-ARDL) to determine how the size and number of fintech equity funds dealt with by venture capital firms, banking sector credit, and stock market returns are interrelated at the global level and across regional, income, and economic levels. Our results reveal a cointegrating relationship between fintech venture capital funding and deals with bank loans and equity market returns. However, this relationship varies across the regions studied and between developed and developing economies. Our findings provide crucial guidelines for policymakers to create policies that support balanced financial development by highlighting the global interaction of equity market movements, banking credit, and fintech venture capital investment and lay the groundwork for internationally aligned policies to guarantee the optimal distribution of financial capital and improve economic stability and adaptability by illustrating how these links differ across geographical locations and economic conditions.

This paper applies an empirical model of corporate capital structure, optimal debt, and overleveraging to estimate overleveraging measured as the difference between actual and optimal debt. Estimated using a sample of the twenty largest pharmaceutical firms, covering the time span from 2000 to 2018, the model sheds light on an industry-specific default risk. The analysis presented in this paper reveals a concerning trend in the pharmaceutical industry, with corporate excess debt steadily increasing over the past two decades, particularly peaking during the 2008 crisis and after 2013. These findings underscore the critical role of excess debt in exacerbating financial instability and highlight the pharmaceutical sector’s unique challenges, including high R&D intensity and regulatory pressures. By quantifying overleveraging and linking it to financial risk, the paper offers valuable policy implications, emphasizing the need for proactive management of optimal debt levels to mitigate default risks and enhance macroeconomic resilience.

This paper addresses if and how excess debt can be considered as an early warning signal for banks and takes an additional dimension by comparing the excess leverage between Islamic and conventional banks in Indonesia before, during, and after the Global Financial Crisis (GFC). To do so, this research develops an empirical model of banks' capital structure and optimal and excess debt, and it conducts an empirical analysis on the overleveraging of eleven conventional and Islamic banks in Indonesia. Results show that all banks became vulnerable to the GFC in 2007-2009 while credit build-up, i.e., overleveraging, started in 2005. However, for most of the banks in the sample, Islamic banks performed better and leveraged less prior to the GFC, which made them more resilient to the crisis.

It is generally argued that Islamic banks are safer than conventional banks. The prime reason is that their product structure is essentially asset-backed financing, while conventional banks rely heavily on leveraging, which was considered one of the main causes of the 2008 global financial crisis. This paper examines the riskiness of Islamic and conventional banks during the 2008 global crisis by measuring overleveraging, defined as the difference between actual and optimal debt. This research conducted empirical analysis on the overleveraging of 20 banks (10 conventional and 10 Islamic banks) from five different countries, namely, Bahrain, Kuwait, Malaysia, the United States, and the United Kingdom. The analysis is double-folded: on the one hand, the results in this paper suggest that excess debt, rather than the mere holding of debt, was the reason behind the severe financial meltdown in 2007-2009; on the other hand, this paper shows that Islamic banks, in most of the countries in context, performed better during the recent crisis, but were subject to the second-round effect of the global crisis around the years of 2011-2013.

This study examines how foreign banks affect private credit flows in 135 nations, including 57 emerging markets for 1995-2013. Employing different econometric techniques, I find both higher share of foreign banks and foreign assets to significantly reduce credit flows. Such decline in credit is highest in nations with more than 50 percent foreign banks. The findings support the view that foreign banks face informational asymmetries that hamper them from lending to the more informationally opaque firms. The results call for strengthening accounting standards, disclosure rules in host markets and for prospective foreign banks to modify their credit risk evaluation methods.

'Investing with Confidence: Understanding Political Risk Management in the 21st Century' is the latest book in a series based on the MIGA–Georgetown University Symposium on International Political Risk Management. The most recent symposium brought together almost 200 senior practitioners from the political risk insurance (PRI) industry, including investors, insurers, brokers, lenders, academics, and members of the legal community. This volume addresses the key issues relevant for investors today, including arbitration, understanding and pricing for risk, and new developments in investments through timely assessments from 15 experts in the fields of international investment, finance, insurance, law, and academia. Contributors to this volume examine key political risk issues including claims and arbitration, perspectives on pricing from private, public and multilateral providers, and explore new frontiers in sovereign wealth funds and Islamic finance. The volume begins with a look back to the founding of International Center for the Settlement of Investment Disputes (ICSID) and MIGA and the respective visions for both of these important institutions. It continues with a review of new developments in global finance and risk management, including Islamic finance and sovereign wealth funds, and provides an investor perspective of what drives the decision making process on procuring political risk insurance. The volume then turns to consider methodologies of pricing from the private, public, and multilateral perspectives, and examines the expropriation and the pledge of shares. This section focuses on key legal questions such as understanding expropriation and the outcome of arbitration hearings, the latter being particularly relevant given the number of cases currently before arbitral panels. The volume concludes with an overview of the key thoughts raised by the authors and the implications for investors going forward. 'Investing with Confidence' offers valuable insights for practitioners and investors alike and is particularly relevant in today's uncertain markets.

A Development Emergency: the title of this year's Global Monitoring Report, the sixth in an annual series, could not be more apt. The global economic crisis, the most severe since the Great Depression, is rapidly turning into a human and development crisis. No region is immune. The poor countries are especially vulnerable, as they have the least cushion to withstand events. The crisis, coming on the heels of the food and fuel crises, poses serious threats to their hard-won gains in boosting economic growth and reducing poverty. It is pushing millions back into poverty and putting at risk the very survival of many. The prospect of reaching the Millennium Development Goals (MDGs) by 2015, already a cause for serious concern, now looks even more distant. A global crisis must be met with a global response. The crisis began in the financial markets of developed countries, so the first order of business must be to stabilize these markets and counter the recession that the financial turmoil has triggered. At the same time, strong and urgent actions are needed to counter the impact of the crisis on developing countries and help them restore strong growth while protecting the poor. Global Monitoring Report 2009, prepared jointly by the staff of the World Bank and the International Monetary Fund, provides a development perspective on the global economic crisis. It assesses the impact on developing countries, their growth, poverty reduction, and other MDGs. And it sets out priorities for policy response, both by developing countries themselves and by the international community. This report also focuses on the ways in which the private sector can be better mobilized in support of development goals, especially in the aftermath of the crisis.

Most of indexes regarding Credit Rating of the national debt bonds are associated to Gross National Product, which involves the well-known Keynesian Multiplicator of the IS-LM Equilibrium. Specifically, a common way of Sovereign Debt evaluation is its percentage of the Gross National Product in terms of a spot value. Another index is the spot value of the percentage of the annual interest rate payments of the state to the owners of sovereign debt. These indexes provide an inefficient evaluation of the national debt and moreover they are sensitive in their calculative aspect. Hence, we propose another index of national debt evaluation, which is more realistic, since public debt is a part of the balance sheet of the state itself. Moreover, this index may be translated into growth variables of the national economy. Since Gross National Product relies on consumption of the Economy, more consumption implies an ’illusion’ about sovereign debt. On the other hand, this index has limits to its credibility because it depends on the size of the annual investments.

The bursting of the subprime mortgage market in the United States in 2008 and the ensuing global financial crisis were associated with a rapid decline in global trade. The extent of the trade collapse was unprecedented: trade flows fell at a faster rate than had been observed even in the early years of the great depression. G-20 leaders held their first crisis-related summit in November 2008. The goal was to understand the root causes of the global crisis and to reach consensus on actions to address its immediate effects. In the case of trade, a key question concerned the extent to which a drying up of trade finance caused the observed decline in trade flows. This book brings together a range of projects and studies undertaken by development institutions, export credit agencies, private bankers, and academics to shed light on the role of trade finance in the 2008-09 great trade collapse. It provides policy makers, analysts, and other interested parties with analyses and assessments of the role of governments and institutions in restoring trade finance markets. A deeper understanding of the complexity of trade finance remains critical as the world economy recovers and the supply of trade finance improves. The international community continues to know too little about the fragility of low income economies in response to trade finance developments and shocks, as well as about the ability and conditions of access to trade finance by small and medium enterprises and small banks in developing countries. Similarly, there is uncertainty regarding the impact on trade finance of recent changes in the third Basel regulatory framework.