Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

Industry 4.0 is a concept that originated from the German industry, and whose essence is the use of technology for efficient production. In business today, the emergence of Industry 4.0 for production, and its related technologies, such as the Internet of Things (IoT) and cyber-physical systems, amongst others, have, however, a negative impact on environmental sustainability as a result of air pollution, the poor discharge of waste, and the intensive use of raw materials, information, and energy. The method used in this study is an analysis of a literature review of manuscripts discussing topics related to Industry 4.0 and environmental sustainability published between 2000 and 2020. There is currently a gap existing between the actual and the desired situation, in that production occurs in a weak sustainability model, and, therefore, this research debates the effects on environmental sustainability and the challenges facing Industry 4.0. Four scenarios are discussed: a deployment scenario, an operation scenario, integration and compliance with sustainable development goals, and a long-run scenario. The results indicate that there is a negative relationship related to the flow of the production process from the inputs to the final product, including raw materials, energy requirements, information, and waste disposal, and their impacts on the environment. However, the integration of Industry 4.0 and the sustainable development goals enhance environmental sustainability to create ecological support that guarantees high environmental performance with a more positive impact than before. This paper will help stakeholders and companies to provide solutions to the existing environmental challenges that can be mediated through adopting new technologies. The novelty of this study is its depiction of Industry 4.0 and its technologies integrated with sustainable development goals to create a sustainable Industry 4.0 combining environmental protection and sustainability.

Impact of Industry 4.0 on Environmental Sustainability

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Monetary Policy in the Wake of the Crisis

The pre-eminence of Islamic finance from the perspective of economic growth has been a long-standing debate In recent decades, there has been a paradigm shift from interest-based banking to Islamic financial system This study intends to examine the dynamic interaction of Islamic financial depth (IFD), Islamic financial intermediation (IFI), and asset quality with economic growth in a dual banking system The paper employs autoregressive distributive lag regression (ARDL), error correction model (ECM) and Granger causality to examine the long and short run linkage by using the quarterly data of Pakistan from 2005 to 2019 The authors run two models to analyze the relative importance of financial depths (Islamic and conventional), financial intermediation (Islamic and conventional), and asset quality of both financial systems A long-run relationship flowing from finance to growth in both Islamic and conventional finance models has been observed in our study Furthermore, the findings recommend that strong financial intermediation plays an imperative role in driving economic growth by both financial sectors The presence of a higher degree of Islamic financial assets in the economy contributes towards economic growth in the short-run The results show that asset quality possibly plays an important intervening role in the overall finance-growth nexus

https://www.mdpi.com/2227-7099/9/2/49/pdf

Islamic Financial Depth, Financial Intermediation, and Sustainable Economic Growth: ARDL Approach

This paper examines the effect of currency conversion programs from Swiss franc-denominated loans to other currency loans on currency risk for banks in Central and Eastern Europe (CEE). Swiss franc mortgage loans proliferated in CEE countries prior to the financial crisis and contributed to the volume of non-performing loans as the Swiss franc strongly appreciated during the post-crisis period. Empirical findings suggest that Swiss franc loan conversion programs reduced currency mismatches in Swiss francs but increased bank exposure in other foreign currencies in individual countries. This asymmetric effect of conversion programs arises from the loan restructuring from Swiss francs to a non-local currency and the high level of euro mismatches in the CEE banking system.

Foreign currency loan conversions and currency mismatches

New dimensions of internal controls in banking after the GFC

Cohesive society, trust and social cooperation are among the social arrangements and meta-institutions required for building good institutions and a well-managed state. Before the global financial crisis, Hungary was characterized by unsustainable public finances, a flawed and irresponsible fiscal policy, and consequently, weak economic fundamentals. This represented a suboptimal state management, with the basics of cooperation between the state and the economic actors were seriously damaged. For this reason, by the beginning of the decade, the renewal of state management and, above all, public finances had become imperative. The first step was the adoption of the Fundamental Law (new constitution), including a chapter on public finances. The stabilization of Hungarian public finances is built on the Fundamental Law and the debt rule, and the

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The Pillars of a New State Management Model in Hungary

The global financial crisis highlighted the limitations of the mainstream economic thinking. The post-crisis reflection has not resulted yet in any new paradigm, however, several new, still separate, innovative approaches appeared in the field of public finances and economic governance. The aim of the paper is to provide a structured presentation of these new innovative approaches, which can serve as a potential basis of a new way of thinking about economic and financial governance and the innovation of public finances. The paper reviews the relevant international literature published after the global financial crisis and, as a result, presents the innovations, especially in respect of the role of the state, the renewal of central banking, the reassessment of the stability and geopolitical aspects of economic policy, the relevance of confidence and cooperation in public policy, the increasing role of the public sector concerning the sustainability of economic development and the renaissance of institutional economics. Based on these new approaches, the paper concludes that the smart, inclusive and sustainable, innovation-led growth requires the rethinking of the role, the functions, the objectives and the instruments of public policy and economic governance.

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Innovative ways of thinking concerning economic governance after the global financial crisis

Due to a peculiar constellation of demand, supply and institutional factors, Hungary faced the 2008 economic crisis with a massive portfolio of household foreign currency loans. After several measures to mitigate the exposure of households, the permanent solution of phasing out foreign currency and foreign currency based mortgage loans was achieved in 2014. In this article, we argue that at the time of conversion the legal and economic conditions reduced the unavoidable risks to a reasonable level, where the expected social and welfare benefits of the conversion offset such risks. The implementation of the conversion was made possible by the coordinated foreign currency sale programme of the MNB. Under the programme, the MNB provided a total amount of EUR 9.1 billion to the banking system in a coordinated fashion, while promoting banks’ cooperation and ensuring central bank FX reserve adequacy. Owing to the central bank’s programme, the conversion took place without significant impact on the forint exchange rate.

Phasing Out Household Foreign Currency Loans: Schedule and Framework

During the first decade of the 21st century, household FX loans spread in numerous countries in Central and Eastern Europe, where they caused serious macroeconomic and social problems with the spillover of the global financial crisis. Disregarding countries that joined the euro area, Hungary was the only state where household FX loans were completely phased out. The aim of the paper is to provide a structured presentation of the circumstances of the FX loan conversion in Hungary and to assess the potential risks related to the post FX loan period. The paper reviews the relevant international literature about the causes and the impact of unsecured FX lending in the household sector and analyses the phasing-out of the household FX loans in Hungary from the point of view of the legal considerations, the interest rate environment, the macroeconomic stability, the elbowroom in FX reserves and the timing of the process. The paper concludes that the conversion happened at the first date which was legally allowed and economically properly underpinned. The paper also presents that the central bank reacted to the new challenges of the phasing-out process with new macroprudential tools to prevent excessive indebtedness and over-lending, to reduce households' interest rate risks, and to ensure that customers have appropriate income reserves, in order to improve the quality and sustainability of lending to households in the future.

Pál Péter Kolozsi

Papers

New dimensions of internal controls in banking after the GFC

The Pillars of a New State Management Model in Hungary

Innovative ways of thinking concerning economic governance after the global financial crisis

Phasing Out Household Foreign Currency Loans: Schedule and Framework

Consolidation and Legacy of Foreign Currency Household Lending in Central and Eastern Europe: The Case of Hungary