Journal of Advances in Economics and Finance

6

Authors: Ao Chen

In order to study the impact of international capital flow, monetary policy on commercial banks’ risk-taking, this paper uses the unbalanced panel data of 48 banks in China from 2004 to 2018 China as the research sample. The GMM estimation method is used in the empirical test, empirical results show that (1) Both quantitative-based and price-based monetary policy have a significant impact on the stability of commercial banks in China. Loose monetary policy weakens the ability of commercial banks to identify and assess risks, which increases their risk-taking level. (2) The international capital flow index has a significant impact on the stability of China's commercial banks. International capital flows will increase bank risk levels and significantly reduce the stability of commercial banks, and vice versa. (3) Under the combined effect of interest rates and international capital flows, the robustness of commercial banks has been significantly magnified.

8

Authors: Yaya KEHO

This study investigates the relationship between consumption and income from the Absolute Income Hypothesis perspective for the Economic Community of West African States (ECOWAS). As a modelling strategy, we use the Common Correlated Effect Mean Group (CCEMG) estimator that deals with both slope heterogeneity and cross-sectional dependence. The results show that consumption strongly depends upon current income in all the countries, thereby providing support for the Keynesian theory of consumption. The results also reveal heterogeneity in the elasticity of consumption with respect to income. Therefore, tax reductions may be a good instrument to stimulate household consumption in ECOWAS countries.