Volume 18, Issue 4 (12-2023)
J. Mon. Ec. 2023, 18(4): 511-546 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Hafezi E, Najarzadeh R, Heydari H, Hosseini S S. The Role of Adoption and Expansion of Global Cryptocurrencies in Financial Globalization. J. Mon. Ec. 2023; 18 (4) : 5
URL: http://jme.mbri.ac.ir/article-1-660-en.html
URL: http://jme.mbri.ac.ir/article-1-660-en.html
1- Faculty of Management & Economics, Tarbiat Modares University
2- Faculty of Economics, Allameh Tabataba'i University
2- Faculty of Economics, Allameh Tabataba'i University
Abstract: (321 Views)
In international trade and financial exchanges, global cryptocurrencies have a prominent and effective role. In this paper, using the KOF index, the structure of financial globalization is extracted and the effect of the expansion of global cryptocurrencies is examined in the two components: Foreign Direct Investment and Portfolio Investment. The Ordinary Least Squares (OLS) model has been used separately for 2020, 2021, and 2022 to analyze the results of the expansion of global cryptocurrencies in the foreign direct investment component. Also, the price changes of Bitcoin and Ethereum from March 10, 2016, to the end of December 2022 have been used to investigate the effect of global cryptocurrencies in portfolio investment by applying Modern Portfolio Theory (MPT). Also, according to the availability of data in research sources, the data of 111 countries have been used. OLS estimated results suggest that the adoption and expansion of global cryptocurrencies has no significant relationship with Foreign Direct Investment. Also, using MPT, the results of portfolio optimization suggest that global cryptocurrencies improve the effectiveness of the selected portfolios, and with the same corresponding returns, the risk of the portfolios including global cryptocurrencies decreases as well. Therefore, the results emphasize the role of global cryptocurrencies in financial globalization only as crypto-assets.
Article number: 5
Keywords: Global Cryptocurrencies, Financial Globalization, Foreign Direct Investment, Portfolio Investment, OLS, Modern Portfolio Theory.
Type of Study: Original Research - Empirical |
Subject:
Economics
Received: 30 Apr 2024 | Accepted: 9 Oct 2024 | Published: 18 Feb 2025
Received: 30 Apr 2024 | Accepted: 9 Oct 2024 | Published: 18 Feb 2025
References
1. Adrian, T., & Mancini-Griffoli, T. (2021). The Rise of Digital Money. Annual Review of Financial Economics, 13, 57-77. doi:10.1146/annurev-financial-101620-063859. [DOI:10.1146/annurev-financial-101620-063859]
2. Arnold, S., & Auer, B. R. (2015). What do scientists know about inflation hedging? The North American Journal of Economics and Finance, 34, 187-214. doi: 10.1016/j.najef.2015.08.005. [DOI:10.1016/j.najef.2015.08.005]
3. Baur, D. G., Hong, K. H., & Lee, A. D. (2018). Bitcoin: medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177-189. doi: 10.1016/j.intfin.2017.12.004. [DOI:10.1016/j.intfin.2017.12.004]
4. Braïek, S., & Jeribi, A. (2023). Cryptocurrencies' Time to Shine in the World. Iranian Economic Review, 27(4), 1154-1198. doi:10.22059/IER.2023.324788.1007172.
5. Chainalysis Company. (2020). The 2020 Geography of Cryptocurrency Report. Chainalysis report. September 8. https://ag-pssg-sharedservices-ex.objectstore.gov.bc.ca/ag-pssg-cc-exh-prod-bkt-ex/258%20-%20002%20Appendix%20B%20-%202020-Geography-of-Crypto%201.pdf
6. Chainalysis Company. (2021). The 2021 Geography of Cryptocurrency Report. Chainalysis report. https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index.
7. Chainalysis Company. (2022). The 2022 Geography of Cryptocurrency Report. Chainalysis report. https://go.chainalysis.com/geography-of-crypto-2022-report.html.
8. Chainalysis Company. (2023). The 2023 Geography of Cryptocurrency Report. Chainalysis report. https://go.chainalysis.com/geography-of-cryptocurrency-2023.html.
9. Cohen, B. (2017). The rise of alternative currencies in post-capitalism. Journal of Management Studies, 54(5), 739-746. doi:10.1111/joms.12245. [DOI:10.1111/joms.12245]
10. Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). Blockchain technology: Beyond bitcoin. Applied Innovation Review, 2, 6-19. https://j2-capital.com/wp-content/uploads/2017/11/AIR-2016-Blockchain.pdf.
11. Dhini, K. V. (2019). Evaluate The Adoption of Cryptocurrency. Think India Journal, 22(14), 9129-9138. https://thinkindiaquarterly.org/index.php/think-india/article/view/15290/10436.
12. Dierksmeier, C., & Seele, P. (2018). Cryptocurrencies and business ethics. Journal of Business Ethics, 152(1), 1-14. doi:10.1007/s10551-016-3298-0. [DOI:10.1007/s10551-016-3298-0]
13. Dodgson, M., Gann, D., Wladawsky-Berger, I., Sultan, N., & George, G. (2015). Managing digital money. Academy of Management Journal, 58(2), 325-333. doi:10.5465/amj.2015.4002. [DOI:10.5465/amj.2015.4002]
14. FATF. (2014). Virtual currencies - key definitions and potential AML/CFT risks. FATF report. https://www.fatfgafi.org/media/fatf/documents/reports/Virtual-currency-keydefinitions-and-potential-aml-cft-risks.pdf.
15. Grym, A., Heikkinen, P., Kauko, K., & Takala, K. (2017). Central bank digital currency. BoF Economics Review, 5. https://www.econstor.eu/bitstream/10419/212990/1/bofer-2017-05.pdf.
16. Hamilton, A., & Hammer, C. (2017). Can We Measure the Power of the Grabbing Hand? A Comparative Analysis of Different Indicators of Corruption. World Bank Policy Research, (Working Paper Series WPS8299). https://documents1.worldbank.org/curated/en/113281515516828746/pdf/WPS8299.pdf. [DOI:10.1596/1813-9450-8299]
17. Hays, D. (2018). Will cryptos fulfill Hayek's vision of private, De-nationalized money. Mises Wire. https://mises.org/wire/will-cryptos-fulfill-hayeks-vision-private-de-nationalized-money.
18. Huang, W., Meoli, M., & Vismara, S. (2019). The geography of initial coin offerings. Small Business Economics, 55, 77-102. doi:10.1007/s11187-019-00135-y. [DOI:10.1007/s11187-019-00135-y]
19. Huu Cung, N., & Hong Nhung, N. T. (2020). Impact of Economic Freedom and Corruption Perceptions Index on Foreign Direct Investment in Vietnam. European Scientific Journal, 16(10), 1857-7881. doi:10.19044/esj.2020.v16n10p25. [DOI:10.19044/esj.2020.v16n10p25]
20. Iyidogan, E. (2020). An equilibrium model of blockchain-based cryptocurrencies. SSRN: Elsevier. doi:10.2139/ssrn.3152803. [DOI:10.2139/ssrn.3152803]
21. Jalali-Naini, A. H., & Rabie Hamedani, H. (2018). Crypto Currencies and the Blockchain Technology: An Evolutionary Review of Money and the Payment Systems. Journal of Money and Economy. 11(3), 245-265.
22. Kojima, K. (1973). A macroeconomic approach to foreign direct investment. Hitotsubashi Journal of Economics, 14(1), 1-21. https://www.jstor.org/stable/43295560.
23. Kojima, K. (1975). International trade and foreign direct investment: substitutes or complements. Hitotsubashi Journal of Economics, 16(1), 1-12. https://www.jstor.org/stable/43295590.
24. Koutmos, D., King, T., & Zopounidis, C. (2021). Hedging uncertainty with cryptocurrencies: Is bitcoin your best bet? Journal of Financial Research, 44(4), 815-837). doi:10.1111/jfir.12264. [DOI:10.1111/jfir.12264]
25. Kuikka, O. (2019). Can cryptocurrency come to fulfil the functions of money? An evaluation of cryptocurrency as a global currency. Metropolia University of Applied Sciences (Bachelor's Thesis). https://www.theseus.fi/bitstream/handle/10024/170337/Kuikka_Oona.pdf?sequence=2&isAllowed=y.
26. Markowitz, H. M. (1952). Portfolio Selection. The Journal of Finance, 7(1), 77-91. doi:10.2307/2975974. [DOI:10.2307/2975974]
27. Moradi, P. (2017). The effect of financial liberalization on attracting foreign investment in Iran. Journal of Maritime Transport Industry, 3(3), 27-34. https://jmti.pmo.ir/article_55257.html?lang=en.
28. Majewski, M. (2019). Cryptocurrencies as a tool accelerating the process of globalization. Research Papers of Wroclaw University of Economics, 63(4). doi:10.15611/pn.2019.4.01. [DOI:10.15611/pn.2019.4.01]
29. Nakamoto, S. (2008). Bitcoin: a peer-to-peer electronic cash system. "bitcoin.org". https://bitcoin.org/bitcoin.pdf.
30. NDIC. (2008). Money laundering in digital currencies. U.S. Department of Justice: National Drug Intelligence Center. https://www.justice.gov/archive/ndic/pubs28/28675/28675p.pdf.
31. Nori, M. (2019). Analyzing the monetary nature of Cryptocurrencies in Economics: Emphasizing on the volatility of selected Cryptocurrencies, Euro-Dollar and Gold. Defense Economics, 3(10), 109-130. https://eghtesad.sndu.ac.ir/article_769.html?lang=en.
32. Saiedi, E., Broström, A., & Ruiz, F. (2021). Global drivers of cryptocurrency infrastructure adoption. Small Business Economics, 57, 353-406. doi:10.1007/s11187-019-00309-8. [DOI:10.1007/s11187-019-00309-8]
33. Saiedi, E., Mohammadi, A., & Broström, A. (2018). Distrust in banks and fintech adoption: the case of P2P loans. SSRN Electronic Journal. doi:10.2139/ssrn.3124301. [DOI:10.2139/ssrn.3124301]
34. Sharpe, W. F. (1994). The Sharpe Ratio. The Journal of Portfolio Management. 21, 49-58. https://doi.org/ 10.3905/jpm.1994.409501.
https://doi.org/10.3905/jpm.1994.409501 [DOI:10.3905/jpm.1994.409501.]
35. Teo, E. G. S. (2015). Emergence, Growth, and Sustainability of Bitcoin: The Network Economics Perspective. ScienceDirect: Elsevier (Handbook of digital currency: Chapter 9). doi:10.1016/B978-0-12-802117-0.00009-6. [DOI:10.1016/B978-0-12-802117-0.00009-6]
36. Transparency International Organization. (2022). Corruption Perceptions Index. Transparency International Report. https://www.transparency.org/en/cpi/2022.
37. Vigna, P., & Casey, M. J. (2015). The age of cryptocurrency: how bitcoin and digital money are challenging the global economic order. New York, N.Y: St. Martin's Press. ISBN: 978-1-250-06563-6.
38. World Economic Forum. (2023). Pathways to the Regulation of Crypto-Assets. White Paper. https://www3.weforum.org/docs/WEF_Pathways_to_the_Regulation_of_Crypto_Assets_2023.pdf.
39. Wu, C. Y., & Pandey, V. K. (2014). The Value of Bitcoin in Enhancing the Efficiency of an Investor's Portfolio. Journal of Financial Planning, 27(9), 44-52. https://www.financialplanningassociation.org/article/journal/SEP14-value-bitcoin-enhancing-efficiency-investors-portfolio.
40. Yanuar, A., & Yoda, D. (2018). The effect of cryptocurrency on investment portfolio effectiveness. Journal of Finance and Accounting, 5(6), 229-238. doi:10.11648/j.jfa.20170506.14. [DOI:10.11648/j.jfa.20170506.14]
| Rights and permissions | |
 |
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. |
