Journal of Economics Business Industry

Exchange Rate Shocks and Domestic Price Adjustment in Southeast Asia

Sat, 28 Mar 2026 00:00:00 +0700

Exchange rate pass-through (ERPT) has emerged as a central concern for monetary authorities in open emerging economies navigating the dual pressures of external volatility and domestic price stability. This study examines the dynamics of ERPT in three Southeast Asian economies Malaysia, Thailand, and the Philippines over the period from 2010 to 2024. The analysis employs a Vector Autoregressive (VAR) model and a Vector Error Correction Model (VECM), with Cholesky decomposition for structural identification. Impulse response functions (IRFs) trace the response of producer prices, import values, and consumer prices to real effective exchange rate shocks over a twelve-month horizon. The Johansen cointegration procedure confirms long-run equilibrium relationships among variables, and the Granger causality test is applied to determine the direction of short-run causality. The findings indicate that ERPT to consumer prices is low and incomplete across all three countries, though heterogeneous in magnitude and persistence. Malaysia exhibits a unidirectional causal flow from the real effective exchange rate (REER) to the Consumer Price Index (CPI), with a low long-run pass-through coefficient of 0.145. Thailand shows an insignificant short-run response to REER shocks, consistent with its credible inflation-targeting framework, yet a moderate long-run estimate of 1.089. The Philippines records the highest pass-through coefficient of 1.823 in the long run, reflecting its greater exposure to external price pressures and more volatile currency dynamics. The error correction terms are negative and significant in all three countries, confirming a self-correcting mechanism toward long-run price equilibrium. These findings carry important implications for the design of inflation-targeting frameworks, the management of exchange rate regimes, and subsidy reform strategies across ASEAN economies.

Macroeconomic Scalar Adjustment for Probability of Default in Expected Credit Loss Models

Sun, 29 Mar 2026 00:00:00 +0700

The expected credit loss framework established under International Financial Reporting Standards Foundation 9 is structured around three core components: probability of default, loss given default and exposure at default. Among these three elements, the probability of default component most frequently lacks a coherent mechanism for embedding macroeconomic dynamics into the estimation process, a deficiency that carries particular weight in Latin American developing economies where economic volatility is a persistent structural feature. This article applies a novel five-step macroeconomic scalar methodology for dynamically adjusting the probability of default through the systematic integration of forward-looking macroeconomic information, with empirical application to unsecured retail portfolios in Brazil and Mexico. Unsecured retail lending portfolio datasets sourced from regional banking institutions in Brazil and Mexico provide the empirical basis through which the proposed methodology is validated across two economically distinct Latin American environments. The methodology advances through five sequential stages: research and planning; data preparation; model development; scalar calculation; and model validation. Comparative modelling draws on multiple regression, generalised linear models with logit and probit specifications, and machine learning techniques encompassing feedforward neural networks, random forests and gradient boosting. Model performance is evaluated through mean absolute error, mean absolute percentage error and mean squared error. Data collection extends to December 2024. The macroeconomic scalar produced consistent and economically coherent probability of default adjustments within the expected credit loss model for both Brazil and Mexico. Each modelling technique contributed distinct analytical insights, and the scalar demonstrated reliable capacity to improve expected credit loss forecasts across environments characterised by interest rate volatility, persistent inflation and exchange rate depreciation. Embedding a macroeconomic scalar within the expected credit loss framework constitutes a disciplined and auditable method for incorporating forward-looking information while preserving the model interpretability that bank boards, auditors and regulators require in Latin American credit markets. This article delivers a replicable approach for macroeconomic probability of default adjustment in expected credit loss models calibrated specifically to Latin American economic conditions. Structured implementation guidelines are provided for practitioners operating under International Financial Reporting Standards Foundation 9 in Brazil and Mexico.

Fish Value Addition and Livelihood Outcomes of Fishing Communities: Evidence from Mkinga District, Tanzania

Abeid Hussein Rashid — Sun, 29 Mar 2026 00:00:00 +0700

Fish value addition has been widely recognised as a catalyst for improving the livelihoods of fishing communities in sub-Saharan Africa. However, empirical evidence on its structural, economic, and socio-livelihood implications within specific coastal districts of Tanzania remains sparse. Objective: This study investigates the implications of fish value addition on the livelihood outcomes of fishing communities in Mkinga District, Tanga Region, Tanzania. Methods: A cross-sectional design was employed. Data were collected from 338 randomly selected registered fishermen using structured questionnaires, supplemented by semi-structured interviews, focus group discussions, and documentary analysis. Value chain mapping, descriptive statistics, and financial profitability analysis were applied. Results: The fishing value chain in Mkinga comprises eight distinct strands involving fishers, assemblers, wholesalers, processors, retailers, food vendors, and consumers. Fishermen demonstrated high awareness of value addition benefits (99.1% affirmed income-enhancement potential), yet practical adoption remains severely constrained by limited access to processing equipment (8.7% reported access), high initial costs (98.3%), and market barriers (93.0%). Average daily fish revenue stood at TZS 83,904 (approximately USD 32), with processed fish strands achieving up to TZS 9,000 per kilogram compared to TZS 3,983 for fresh fish. Housing conditions are predominantly rudimentary, 53.9% of households face regular food insecurity, and all respondents rely exclusively on uncovered wells for drinking water. Conclusion: Value addition holds transformative potential for coastal fishing communities in Mkinga but remains constrained by structural gaps in infrastructure, finance, and market access. Targeted policy interventions involving cooperative strengthening, processing technology subsidies, and market information systems are urgently needed.

Financial Wellbeing of Poor Households in Eastern Indonesia: Role of Digital Financial Inclusion

Maria Oktaviani Lede, Yohanes Rafael Benu, Daniel Putra Nggili — Sun, 29 Mar 2026 00:00:00 +0700

This study examines the determinants of financial wellbeing among poor households in Eastern Indonesia, with particular emphasis on the mediating role of digital financial inclusion. Focusing on East Nusa Tenggara (NTT) and West Nusa Tenggara (NTB), the study addresses the persistent financial vulnerability of poor households living in regions characterized by high poverty, limited formal financial access, and uneven digital infrastructure. Primary survey data were collected from 405 poor households whose income fell below the provincial poverty line, consisting of 248 respondents from NTT and 157 respondents from NTB. The data were analyzed using partial least squares structural equation modeling (PLS-SEM), followed by multigroup analysis to compare provincial differences. The findings show that financial behavior, financial literacy, and digital financial inclusion have significant positive effects on household financial wellbeing. However, digital literacy, digital financial service infrastructure, and financial service providers do not directly affect financial wellbeing. Instead, digital financial inclusion fully mediates the effects of infrastructure and financial service providers on financial wellbeing. The multigroup analysis reveals that digital financial inclusion has a stronger impact on financial wellbeing in NTT, while infrastructure and financial service providers have stronger effects on digital financial inclusion in NTB. These results highlight the importance of strengthening digital financial inclusion as a strategic pathway to improve the financial wellbeing of poor households. Policy interventions should prioritize financial education, affordable digital financial products, reliable digital infrastructure, and locally adapted financial services for underserved communities in Eastern Indonesia.

Inequality Persistence in Papua and West Papua through Urban Rural Spatial Divergence

Mon, 30 Mar 2026 00:00:00 +0700

This study analyzes the persistence of consumption inequality in Papua and West Papua by emphasizing the role of spatial divergence between urban and rural areas. The study uses six waves of Indonesia’s National Socioeconomic Survey (SUSENAS) from March 2010, 2014, 2017, 2020, 2022, and 2025, with a consistent classification of ten spatial zones to ensure comparability before and after administrative expansion. The methods employed include Shapley decomposition to separate spatial and non-spatial inequality across the Gini index, Mean Log Deviation, Theil index, and GE(2), as well as Recentred Influence Function (RIF) regression and the Blinder-Oaxaca approach to identify regional contributions and household-level determinants. The findings show that consumption inequality increased from a Gini coefficient of 0.355 in 2010 to 0.412 in 2020, declined to 0.389 in 2022, and rose again to 0.393 in 2025. Since 2014, spatial inequality has become the main driver of rising inequality, particularly through the concentration of formal economic activity and mining rents in Jayapura and Timika, alongside the continued isolation of rural areas in the Papuan Highlands. Education and participation in non-subsistence employment are identified as key mediating factors that reinforce disparities across spatial zones. These findings indicate that reducing inequality in Papua and West Papua requires policies that go beyond fiscal transfers, including equal access to education, market integration, infrastructure development, and conflict resolution in highland areas.