Macroeconomic Perspective on Constructing Financial Vulnerability Indicator in China

Abstract

This paper attempts to develop a financial vulnerability indicator for China as a barometer for the state of financial vulnerability in the Chinese financial market, possibly for real-time application. Twelve variables from different sectors are utilised to extract a common vulnerability component using a dynamic approximate factor model. Through the implementation of a Markovswitching Bayesian vector autoregression (MSBVAR) model, the empirical results indicate that a high-vulnerability episode is associated with substantially lower economic activity, but a low-vulnerability episode does not incur substantial changes in economic activity. Notably, the constructed indicator can serve as a real-time early warning system to signify vulnerabilities in the Chinese financial market.

The impact of tax gap on macroeconomic stability: Assessment using panel VEC approach

“…Modern scientific research empirically confirms that social (Nelson, 2017;Kharazishvili et al, 2020;Hanić & Jevtić, 2020), environmental (Lyulyov et al, 2019;Miskiewicz, 2018;Pimonenko et al, 2020), cultural (Zandi et al, 2020), political (Yelnikova & Barhaq, 2020), institutional (Dkhili, 2018;Chygryn et al, 2018;Shkolnyk et al, 2020), financial Djalilov et al, 2015;Melnyk et al, 2018;Sanusi et al, 2017;Kuek et al, 2021), innovation and investment (Vasylieva & Kasyanenko, 2013;Povolná & Švarcová, 2017;Zakharkina et al, 2018;Pisár et al, 2020;Rutkauskas & Stasytytė, 2020;Petroye et al, 2020), marketing (Harust & Melnyk, 2019Bondarenko et al, 2020;Shymon et al, 2020) factors in various combinations could both significantly strengthen and reduce the current level of macroeconomic stability of the national economy and its economic growth. Scholars also argue that the level of shadowing of the economy by increasing tax gaps affects the country's investment attractiveness, increases barriers to the country's entry into trade unions, promotes the outflow of labor and capital from the country, which directly affects the macroeconomic stability of the national economy (Kasztelnik, 2020;Nguyen & Luong, 2020;Ostrowska-Dankiewicz & Simionescu, 2020).…”

“…Although these phenomena pose a severe problem to society because they limit the government's capacity to pursue its fiscal and economic policies, they also undermine basic tax principles. For the most part, the tax gap is viewed from two central positions Kuek et al, 2021): taxpayers' intentional illegal actions (tax compliance gap) and as a consequence of inefficient or fairly loyal tax policy gap. The latter is a potential amount of taxes and fees that do not go to the budget due to the government's decision not to tax a specific tax base.…”

Construction and Application of the Financial Early-Warning Model Based on the BP Neural Network

“…Therefore, the parameter solution of the perceptron is dependent on the number of samples. The more nodes there are, the more connections between the nodes will be, the more the parameters will be, and the required sample data will also increase [ 11 ]. The significance of activation function is to make the output data meet the requirements and avoid too scattered output data after weight vector multiplication.…”

The impact of digital transformation on macroeconomic stability: Evidence from EU countries

“…In general, digital transformation of the economy influence the level of GDP (Chou and Chin, 2011;Vasylieva et al, 2020;Obeid et al, 2020;Melnyk et al, 2018;Tiutiunyk et al, 2021), the competitive advantage of business (Bondarenko et al, 2020;Petroye et al, 2020;Chigrin and Pimonenko, 2014), its investment potential (Kliestik et al, 2020;Zolkover and Georgiev;2020;Kotenko & Bohnhardt;Kuzmenko et al, 2020), indicators of its financial (Kuek et al, 2021;Leonov et al, 2019) and labor (Smiianov et al, 2020;Didenko et al, 2021) markets, ecology security (Vasylieva et al, 2019;Lyeonov et al, 2019) etc.…”