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The June 2022 Issue of the Financial and Economic Review Is Now Published


The Our Vision section of the June issue of our journal examines the problem of development trap. The studies included in this issue deal with the social costs of payment methods, the trust in the banking system, and financial literacy, Solvency II, employees’ perceptions of part-time and fixed-term employment, and factors that support and discourage entrepreneurial intentions. The subject of the essay is the work of Irving Fisher. The feature article presents the most important steps in South Korea’s economic catching up process.

In her essay, Magdolna Csath draws attention to the fact that in a rapidly changing environment, it is not enough to examine growth trap situations. The key issue is development, and thus avoiding the development trap. And development, as evidenced by data, cannot be measured with standard macro indicators, as development depends on complex socio-economic and human factors. The author proposes to measure development as a process, and advancement as a level of state, and shows the example of the V4s and Austria that, despite favourable growth rates, Austria leads in the level of advancement, which can be a constraint on growth for the V4 countries in the long run.

The study by Vivien Deák, László Kajdi, István Nemecskó and Tamás Végső presents the evolution of the payments market and quantify the social costs associated with the use of payment methods. The number of transactions in Hungary increased 1.5 times in ten years, the use of electronic payment methods has increased dynamically, while the use of cash increased moderately. Based on the authors’ results, the real cost per transaction also decreased significantly for cash, cards and transfers, indicating improved efficiency. As electronic payment is already available in most cases, the cost per transaction may decrease further in the future as the volume of electronic payments increases.

In Hungary, foreign currency lending has resulted in a protracted crisis, thus it is an important question to what extent this affects the current behaviour of the population. Zita Fellner and Anna Marosi examined the impact of exposure to foreign currency lending on the trust in the banking system and financial literacy in a survey. They concluded that this type of exposure has no effect on confidence in the banking system and among the components of financial literacy, it only plays a role in the development of financial knowledge. This raises the question of whether the memories of the crisis have faded away or whether the groups of foreign currency debtors and non-foreign currency debtors do not differ significantly due to the wide awareness of the topic.

In their study, Zsuzsanna Bártfai-Bora, Ádám Huszárik and Norbert Holczinger examine the Hungarian experience of the Solvency II regulation (S2). The analysis, covering the first five years of the system of requirements governing the operation of insurance undertakings at European level, focuses on the most important quantitative elements, including technical provisions, own funds and capital requirements. The authors use empirical data to confirm the volatility of the S2 system and thus the viability of the volatility capital buffer recommended by the Magyar Nemzeti Bank (the central bank of Hungary).

The paper by Máté Vörös, Zsófia Ásványi and Diána Ivett Fűrész examines employees’ perception of part-time and fixed-term employment, a topic that is particularly relevant after the outbreak of Covid19. It is an important question whether we consider part-time work as a tool for crisis management or as an opportunity to improve efficiency. The dilemma is similar for fixed-term employment: an option or a forced choice? The authors believe that the benefits of both forms of employment can be sustained in the long run if their employee acceptance is sufficiently high.

Krisztofer Szabó, Márta Aranyossy and Dóra Bárczy examined the factors supporting and inhibiting the entrepreneurial intentions of master's students of business development at the Corvinus University of Budapest. The results show that young people with a higher-than-average entrepreneurial spirit are most distinguished from their peers by their desire for autonomy and courage, and for the lack of capital perceived as the most significant obstacle they would welcome more support even from the university.

Katalin Botos provides an overview of the work of Irving Fisher, an extremely influential economist who was the first to work with large amounts of data. He is credited with the Fisher Index, was a proponent of the Chicago Plan, was one of the first to advocate the abandoning of the gold standard, was the founder and first chairman of the Econometric Society, and a committee of the BIS is named after him. The essay covers quantitative money theory, interest rate theory, and points out the role that Fisher’s thoughts play in today’s monetary policy, why proponents of modern monetary theory refer to them, and why Fisher is considered an early predecessor in behavioural economics.

In their feature article, Gábor P. Kiss and Katalin Szőke examine the factors of South Korea's economic catching up process, namely how a poor, war-torn agricultural country in the middle of the 20th century has by now become the 12th largest economy in the world. The geopolitical situation, successful export-oriented growth, high corporate competitiveness, significant research and development expenditure, and a strong education system have all played a part in making South Korea a dominant player in the world economy. However, in addition to its successes, the country faces economic, social and demographic challenges.

In addition to the above, the June issue of the Financial and Economic Review includes four book reviews and a conference report.

We wish you a very pleasant reading.

Editorial staff of the Financial and Economic Review

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