The Relationship between U.S. Quantitative Easing Policy, Interest Rate Spread, and Control of Corruption on Short-Term Debt in Developing ASIAN Countries
DOI:
https://doi.org/10.24269/ekuilibrium.v20i2.2025.pp412-423Keywords:
Quantitative Easing, Interest Rate Spread, Control of Corruption, Short-Term DebtAbstract
This study examines the impact of U.S. Quantitative Easing (QE), Interest Rate Spread, and Control of Corruption on Short-Term Debt in developing Asian countries. Using panel data from Indonesia, Thailand, the Philippines, Vietnam, and China from 2000 to 2022, the analysis employs a Random Effect Model (REM) approach. The findings reveal that U.S. QE has a positive and significant impact, indicating that increased global liquidity encourages short-term borrowing in these economies. Conversely, Interest Rate Spread negatively affects short-term debt, suggesting that higher spreads reduce reliance on external short-term financing. Additionally, stronger Control of Corruption is associated with lower short-term debt levels, highlighting the role of governance in reducing financial vulnerabilities. These results underscore the importance of maintaining prudent monetary and fiscal policies to manage external debt risks. Policymakers should strengthen governance frameworks, ensure balanced interest rate policies, and develop strategies to mitigate risks from external financial shocks. By improving institutional quality and promoting long-term financing stability, developing Asian economies can enhance financial resilience and reduce excessive reliance on volatile short-term debt.
References
Akinci, Ö., & Queralto, A. (2024). Exchange Rate Dynamics and Monetary Spillovers with Imperfect Financial Markets. Review of Financial Studies, 37(2), 309–355. https://doi.org/10.1093/rfs/hhad078
Anginer, D., Demirguc-Kunt, A., Simsir, S. A., & Tepe, M. (2022). Is short-term debt a substitute for or complementary to good governance? Borsa Istanbul Review, 22(2), 197–208. https://doi.org/10.1016/j.bir.2021.05.004
Arestis, P. (2018). Monetary Policy Since the Global Financial Crisis. In Economic Policies since the Global Financial Crisis (pp. 1–39). Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-60459-6_1
Azis, I. J. (2018). Development and shortcomings of Indonesia’s financial sector. In Routledge Handbook of Banking and Finance in Asia (1st Editio). Routledge.
Bailey, A. J., Bridges, J., Harrison, R., Jones, J., & Mankodi, A. (2020). The Central Bank Balance Sheet as a Policy Tool: Past, Present and Future. SSRN Electronic Journal, 899. https://doi.org/10.2139/ssrn.3753734
Bakari, S. (2024). Unlocking Prosperity: Fresh Insights into Economic Growth Through Financial Development, Domestic Investment, and Corruption Trends in LAC Countries. In MPRA Paper (120411).
Beirne, J., Renzhi, N., Sugandi, E. A., & Volz, U. (2020). Financial Market and Capital Flow Dynamics During the COVID-19 Pandemic (1158). https://doi.org/10.2139/ssrn.3656848
Blanchard, O. (2019). Public debt and low interest rates. American Economic Review, 109(4), 1197–1229. https://doi.org/10.1257/aer.109.4.1197
Bouchetara, M., & Bendahmane, M. E. A. (2018). The Impact Of Monetary Policy On Economic Growth Of Algeria. African Research Review, 10(42), 9. https://doi.org/10.54666/2334-000-001-016
Chen, C., & Neshkova, M. I. (2020). The effect of fiscal transparency on corruption: A panel cross-country analysis. Public Administration, 98(1), 226–243. https://doi.org/10.1111/padm.12620
Chien, Y., & Stewart, A. H. (2023). Central Bank Balance Sheets and Policy Rate Decisions. Federal Reserve Bank of ST LouisST Louis.
Choi, S. (2024). Climate change exposure and the use of short-term debt. Finance Research Letters, 65(February), 105579. https://doi.org/10.1016/j.frl.2024.105579
Cui, W., & Sterk, V. (2018). Quantitative Easing (DP13322).
Data, F. E. (2024). Central Bank Assets to GDP for United States. FRED Economic Data.
Dell’Ariccia, G., Rabanal, P., & Sandri, D. (2018). Unconventional monetary policies in the Euro Area, Japan, and the United Kingdom. Journal of Economic Perspectives, 32(4), 147–172. https://doi.org/10.1257/jep.32.4.147
Della Seta, M., Morellec, E., & Zucchi, F. (2020). Short-term debt and incentives for risk-taking. Journal of Financial Economics, 137(1), 179–203. https://doi.org/10.1016/j.jfineco.2019.07.008
Elkhalfi, O., Chaabita, R., Benboubker, M., Ghoujdam, M., Zahraoui, K., Alaoui, H. El, Laalam, S., Belhaj, I., & Hammouch, H. (2024). The impact of external debt on economic growth: The case of emerging countries. Research in Globalization, 9(August). https://doi.org/10.1016/j.resglo.2024.100248
Engel, C. (2018). Exchange rates, interest rates, and the risk premium. American Economic Review, 106(2), 436–474. https://doi.org/10.1257/aer.20121365
Fabo, B., Oková, M. J., Kempf, E., & Pástor, U. (2020). Fifty shades of QE: Comparing findings of central bankers and academics (27849). https://doi.org/10.3386/w27849
Fernandez, R., Bortz, P., & Zeolla, N. (2018). The politics of quantitative easing. A critical assesment of the harmful impact of European monetary policy on developing countries (Issue June).
Grindle, M. S. (2004). Good enough governance: Poverty reduction and reform in developing countries. Governance, 17(4), 525–548. https://doi.org/10.1111/j.0952-1895.2004.00256.x
Handayani, B. D., Yanto, H., Pujiati, A., Ridzuan, A. R., Keshminder, J. S., & Shaari, M. S. (2022). The Implication of Energy Consumption, Corruption, and Foreign Investment for Sustainability of Income Distribution in Indonesia. Sustainability (Switzerland), 14(23). https://doi.org/10.3390/su142315915
Herr, H., Schweisshelm, E., & Truong, M. H. V. (2016). The integration of Vietnam in the global economy and its effects for Vietnamese economic development. Global Labour University Working Paper, 44.
Kiley, M. T. (2020). What can the data tell us about the equilibrium real interest rate? International Journal of Central Banking, 16(3), 181–209. https://doi.org/10.17016/feds.2015.077
Koepke, R. (2019). What Drives Capital Flows To Emerging Markets? a Survey of the Empirical Literature. Journal of Economic Surveys, 33(2), 516–540. https://doi.org/10.1111/joes.12273
Manasseh, C. O., Abada, F. C., Okiche, E. L., Okanya, O., Nwakoby, I. C., Offu, P., Ogbuagu, A. R., Okafor, C. O., Obidike, P. C., & Nwonye, N. G. (2022). External debt and economic growth in Sub-Saharan Africa: Does governance matter? PLoS ONE, 17(3 March), 1–28. https://doi.org/10.1371/journal.pone.0264082
Meilisa, M., Handra, H., & Yonnedi, E. (2024). The Long-Term Effect of Foreign Debt and Foreign Direct Investment (FDI) on Economic Growth in Indonesia. Marginal Journal of Management Accounting General Finance and International Economic Issues, 3(2), 325–338. https://doi.org/10.55047/marginal.v3i1.1004
Nirmali, H. R. (2018). Does the Theory of Uncovered Interest Rate Parity Hold for Sri Lanka. PRA Journal of Research and Development, 2(3), 115–125.
Phan, M. H., & Archer, L. (2020). Corruption and SME financing structure: the case of Vietnamese manufacturing. Journal of Economics and Development, 22(2), 265–279. https://doi.org/10.1108/jed-12-2019-0074
Sabuga, I. G., & Shirakawa, J. B. R. (2020). The Impact of the US Unconventional Monetary Policy and Its Normalization in the Philippines. Journal of Southeast Asian Economies, 37(2), 135–162.
Shi, Y., Zhu, Q., & Khan, M. A. (2024). The efficacy of green finance for environmental sustainability: Does control of corruption makes a difference? Borsa Istanbul Review, February. https://doi.org/10.1016/j.bir.2024.07.002
Sullivan, M. (2024). Understanding and predicting monetary policy framework choice in developing countries. Economic Modelling, 139(July 2023), 106783. https://doi.org/10.1016/j.econmod.2024.106783
Tang, Y., & Moro, A. (2020). Trade credit in China: Exploring the link between short term debt and payables. Pacific Basin Finance Journal, 59, 101240. https://doi.org/10.1016/j.pacfin.2019.101240
Tarek, B. A., & Ahmed, Z. (2018). Institutional Quality and Public Debt Accumulation: An Empirical Analysis. International Economic Journal, 31(3), 415–435. https://doi.org/10.1080/10168737.2017.1354906
Wang, B. (2018). Outward direct investment: Restricted, relaxed and regulated stages of development. In China’s 40 Years of Reform and Development: 1978–2018. https://doi.org/10.22459/cyrd.07.2018.30
Wang, C. S. H., Chen, Y., & Lo, H. (2021). A fresh look at the risk-return tradeoff. Pacific-Basin Finance Journal, April, 101546. https://doi.org/10.1016/j.pacfin.2021.101546
Wang, C. W., & Chiu, W. C. (2019). Effect of short-term debt on default risk: Evidence from Pacific Basin countries. Pacific Basin Finance Journal, 57, #pagerange#. https://doi.org/10.1016/j.pacfin.2018.05.008
Yahyaei, H., Singh, A., & De Mello, L. (2024). The Federal Reserve’s Quantitative Easing policy and volatility spillovers: Evidence from Australia. International Review of Economics and Finance, 94(April), 103397. https://doi.org/10.1016/j.iref.2024.103397
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Retained Rights/Terms and Conditions of Publication
1. As an author you (or your employer or institution) may do the following:
- make copies (print or electronic) of the article for your own personal use, including for your own classroom teaching use;
- make copies and distribute such copies (including through e-mail) of the article to research colleagues, for the personal use by such colleagues (but not commercially or systematically, e.g. via an e-mail list or list server);
- present the article at a meeting or conference and to distribute copies of the article to the delegates attending such meeting;
- for your employer, if the article is a ‘work for hire’, made within the scope of your employment, your employer may use all or part of the information in the article for other intra-company use (e.g. training);
- retain patent and trademark rights and rights to any process, procedure, or article of manufacture described in the article;
- include the article in full or in part in a thesis or dissertation (provided that this is not to be published commercially);
- use the article or any part thereof in a printed compilation of your works, such as collected writings or lecture notes (subsequent to publication of the article in the journal); and prepare other derivative works, to extend the article into book-length form, or to otherwise re-use portions or excerpts in other works, with full acknowledgement of its original publication in the journal;
- may reproduce or authorize others to reproduce the article, material extracted from the article, or derivative works for the author's personal use or for company use, provided that the source and the copyright notice are indicated, the copies are not used in any way that implies RCEPM-LIPI endorsement of a product or service of any employer, and the copies themselves are not offered for sale.
All copies, print or electronic, or other use of the paper or article must include the appropriate bibliographic citation for the article's publication in the journal.
2. Requests from third parties
Although authors are permitted to re-use all or portions of the article in other works, this does not include granting third-party requests for reprinting, republishing, or other types of re-use. Requests for all uses not included above, including the authorization of third parties to reproduce or otherwise use all or part of the article.
3. Author Online Use
- Personal Servers. Authors and/or their employers shall have the right to post the accepted version of articles pre-print version of the article, or revised personal version of the final text of the article (to reflect changes made in the peer review and editing process) on their own personal servers or the servers of their institutions or employers without permission from Universitas Muhamamdiyah Ponorogo, provided that the posted version includes a prominently displayed Universitas Muhamamdiyah Ponorogo copyright notice and, when published, a full citation to the original publication, including a link to the article abstract in the journal homepage. Authors shall not post the final, published versions of their papers;
- Classroom or Internal Training Use. An author is expressly permitted to post any portion of the accepted version of his/her own articles on the author's personal web site or the servers of the author's institution or company in connection with the author's teaching, training, or work responsibilities, provided that the appropriate copyright, credit, and reuse notices appear prominently with the posted material. Examples of permitted uses are lecture materials, course packs, e-reserves, conference presentations, or in-house training courses;
- Electronic Preprints. Before submitting an article to an Ekuilibrium: Jurnal Ilmiah Bidang Ilmu Ekonomi, authors frequently post their manuscripts to their own web site, their employer's site, or to another server that invites constructive comment from colleagues. Upon submission of an article to Ekuilibrium: Jurnal Ilmiah Bidang Ilmu Ekonomi, an author is required to transfer copyright in the article to Economy Faculty Universitas Muhammadiyah Ponorogo, and the author must update any previously posted version of the article with a prominently displayed Economy Faculty Universitas Muhammadiyah Ponorogo copyright notice. Upon publication of an article by the Universitas Muhammadiyah Ponorogo, the author must replace any previously posted electronic versions of the article with either (1) the full citation to the work with a Digital Object Identifier (DOI) or link to the article abstract in Ekuilibrium: Jurnal Ilmiah Bidang Ilmu Ekonomi journal homepage, or (2) the accepted version only (not the final, published version), including the Economy Faculty Universitas Muhammadiyah Ponorogo copyright notice and full citation, with a link to the final, published article in journal homepage.
4. Articles in Press (AiP) service
Economy Faculty Universitas Muhammadiyah Ponorogo may choose to publish an abstract or portions of the paper before we publish it in the journal. Please contact our Production department immediately if you do not want us to make any such prior publication for any reason, including disclosure of a patentable invention.
5. Author/Employer Rights
If you are employed and prepared the article on a subject within the scope of your employment, the copyright in the article belongs to your employer as a work-for-hire. In that case, Economy Faculty Universitas Muhammadiyah Ponorogo assumes that when you sign this Form, you are authorized to do so by your employer and that your employer has consented to the transfer of copyright, to the representation and warranty of publication rights, and to all other terms and conditions of this Form. If such authorization and consent has not been given to you, an authorized representative of your employer should sign this Form as the Author.
6. RCEPM-LIPI Copyright Ownership
It is the formal policy of Economy Faculty Universitas Muhammadiyah Ponorogo to own the copyrights to all copyrightable material in its technical publications and to the individual contributions contained therein, in order to protect the interests of the Economy Faculty Universitas Muhammadiyah Ponorogo, its authors and their employers, and, at the same time, to facilitate the appropriate re-use of this material by others. Economy Faculty Universitas Muhammadiyah Ponorogo distributes its technical publications throughout the world and does so by various means such as hard copy, microfiche, microfilm, and electronic media. It also abstracts and may translate its publications, and articles contained therein, for inclusion in various compendiums, collective works, databases and similar publication.
7. Licensing Terms
Ekuilibrium is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Permissions beyond the scope of this license may be available at https://journal.umpo.ac.id/
