G20 - Financial Institutions and Services: GeneralReturn

The effects of the shadow economy on the environment have been amply documented in the literature; however, the relevance of financial inclusion and the unpredictability of economic policy are still up for debate. Therefore, this study examines the diverse effects of financial inclusion, shadow economies and economic policy on carbon emissions in 21 Sub-Saharan African countries from 2002 to 2019. To determine whether this hypothesis is true, this study uses the panel spatial correlation consistent (PSCC), method of moments quantile regression (MM-QR) and Dumitrescu-Hurlin (D-H) (2012) methodologies. The findings of the PSCC show that financial inclusion increases carbon emissions in SSA countries but the shadow economy and economic policy uncertainty have an adverse impact on emissions. Using the MM-QR estimation with fixed effects, the same results are obtained across all quantiles after accounting for the effects of the shadow economy and economic policy uncertainty over the conditional distribution of CO₂. The effect of financial inclusion on CO₂ emissions is positive, but only statistically significant at the 30^th to 70^th quantiles until traces of significance are erased. In addition, there is evidence of a two-way causal relationship between the shadow economy and CO₂ emissions, financial inclusion and the shadow economy, urban population and CO₂ emissions, renewable energy use and economic policy uncertainty, trade liberalisation and economic policy uncertainty, and financial inclusion and economic policy uncertainty. The empirical results of this study offer insightful policy suggestions to counteract the direct impact of financial inclusion and to amplify the damaging effects of the shadow economy and economic policy uncertainty on carbon emissions.

The central banks of developed countries and those in the region of Central Europe responded to the global financial crisis of 2008 and subsequent economic recession by considerably easing monetary conditions and using new monetary policy tools. One of those tools was the entry into the so far uncharted territory of negative interest rates. The passage of some years after the inception of these new tools has allowed the emergence of new empirical literature, which addresses their effects and effectiveness. The primary objective of this paper is to examine and summarize the empirical literature that deals with the effective lower limit of interest rates, especially in relation to the banking sector and bank interest margins. We then use empirical findings from other countries and apply them to the Czech Republic and draw conclusions for the future monetary policy of the CNB. Our results confirm that the CNB has got enough manoeuvring room even in the area of negative interest rates, which it can take advantage of either for the purpose of price stability, or for more effective management of FX operations.

The paper shows the fundamental problems in the area of investment funds in terms of tax burden with special regard to closed-end real estate funds. Based on the characteristics of administrative costs, the study shows that closed-end real estate funds do not behave as investment funds. The study proves that closed-end real estate funds behave more like businesses that are hiding behind investment funds. This conclusion is confirmed on the basis of extensive research, by collecting data from annual reports of independent auditors of all types of funds. More than 51 percent of closed-end real estate funds indicate very high administrative costs and profit reduction by more than half. More than 17 percent of funds decrease their taxable income through higher administrative costs, and thus reduce their tax base to zero or to an absolute minimum. The study points out that if there was a tax-neutral environment in the area of the investment funds in the Czech Republic and investment funds paid 19% tax on corporate income, tax revenues for the state budget would increase by CZK 784 million per year.