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Do Exchange Rate Volatility, Inflation, and Stock Price Index Affect the Financial Institution Efficiency Index in G20 Emerging Markets?

Author

Listed:
  • Liliana Liliana
  • Ariodillah Hidayat
  • Eka Meirawati
  • Xenaneira Shodrokova

Abstract

This study aims to analyse the effect of exchange rate volatility, inflation, and stock price indices on the Financial Institution Efficiency (FIE) index in G20 Emerging Market countries. This study uses secondary data in the form of annual data for the period 2001-2021 obtained from the International Monetary Fund, FRED Economic Data, and the Central Banks of G20 Emerging Market countries. The analysis technique in this study uses qualitative analysis and regression of the Fixed Effect Model panel data. The results of the study show that exchange rate volatility, inflation, and stock price indices have a significant influence on the FIE Index. Based on the results of the interception score, Turkey is the country with the highest score, while China has the lowest interception. To address financial market risks and improve the efficiency of financial institutions, emerging market countries need to adopt macroprudential policies that focus on financial system stability. Previous research has mostly focused on aspects of banking profitability and financial system stability, but not much has specifically examined the institutional efficiency of the financial sector in an aggregate and measurable way, especially in the context of macroeconomic dynamics.

Suggested Citation

  • Liliana Liliana & Ariodillah Hidayat & Eka Meirawati & Xenaneira Shodrokova, 2026. "Do Exchange Rate Volatility, Inflation, and Stock Price Index Affect the Financial Institution Efficiency Index in G20 Emerging Markets?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 22-43.
    • Handle: RePEc:bas:econst:y:2026:i:3:p:22-43
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    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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