The March 2023 Issue of Financial and Economic Review Is Now Published

The Future Vision column in the March issue of our scientific journal examines the systemic risks and regulatory issues related to technology giants. The published studies discuss households’ difficulties meeting their loan repayments, climate risk measurement, the valuation of household loans, and the relationship between corporate social responsibility and competitiveness. An essay presents the work of the 2022 Nobel Prize-winning economists, and a technical paper examines the issue of digitalisation and convergence through the example of Estonia.

Technological innovation in the financial sector has brought new challenges in many ways over the last decade. In addition to new products, services and access channels, new players have also appeared in the field: technological giants are increasingly active in the financial services market. In their study, Roland Bódi, Péter Fáykiss and Ádám Nyikes explore the systemic importance of BigTechs and the regulatory approaches to managing their risks in the field of financial services.

Ákos Aczél, Márton Nedim El-Meouch, Gergely Lakos and Balázs Spéder investigate how difficult it is for households that participated in the general payment moratorium to restart loan repayments. Examining the relevant observable characteristics of all affected loans, they find that only long-term participation in moratorium is associated with greater subsequent payment problems compared to staying out of the moratorium. Although the strong relationship demonstrated does not imply causation, it can be used to help predict loan repayment problems after voluntary temporary payment relief programmes.

Quantifying the impacts of climate change also poses new challenges for financial market participants. However, measurement methods may not adequately describe the relationship between investment and natural resources, as they rely solely on direct emissions, while indirect impacts, which represent a significant share of total emissions, are not taken into account. In their study, Orsolya Szendrey and Mihály Dombi examine how the results quantified by climate risk measurement methods are affected by including indirect effects in the calculations.

Éva Gulyás and Márton Miklós Rátky examine the accounting treatment of the Prenatal baby support loan, the Home purchase subsidy and Home renovation loans. In recent years, the volume of these loans has increased significantly, but the method of accounting treatment has not been uniform among banks or auditors. Although several large banks have changed their assessment, the current – uniform – practice still poses challenges for stakeholders affected by the reports. The authors present the possible valuation methods, the consequences of their application, the dilemmas involved, and argue against the current practice, in favour of applying measurement at amortised cost.

Based on domestic and international research, there is no consensus on the type of relationship between corporate social responsibility (CSR) and corporate competitiveness. In her study, Adrienn Reisinger, based on the relevant literature, collected the reasons that contribute to the divergent results: there is no single definition of the concept of competitiveness and social responsibility, there are many methods for measuring them, and the size of the companies being examined is also a determining factor. The study attempts to provide a detailed presentation of the individual causes, providing a basis for further research and a more complex approach to the issue.

In his essay, Balázs Világi presents the work of Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig, winners of the Nobel Prize in Economics in 2022, on the functioning of financial systems. Diamond and Dybvig pointed out that the banking system is fundamentally fragile and that if not properly regulated, bank panics can occur. Bernanke proved the macroeconomic importance of the banking system and analysed the adverse macroeconomic effects of banking panics. Their research activity contributed to the theoretical foundation of a regulatory environment that promotes the efficient and panic-free functioning of financial systems.

In his feature article, Szabolcs Szentmihályi explores the reasons for Estonia’s successful convergence. By applying appropriate competitiveness and structural policies, Estonia has developed a growth path based on digitalisation, which has made it the region’s digital leader and contributed to the creation of large companies known worldwide.

In addition to the above, the March issue of the Financial and Economic Review includes two book reviews and two conference reports.

The publication can be viewed on the website of our Journal:

https://en-hitelintezetiszemle.mnb.hu/

We wish you a very pleasant reading.

Editorial staff of the Financial and Economic Review