The Role of Adoption and Expansion of Global Cryptocurrencies in Economic Globalization

Document Type : Original Article

Authors

1 Economical Science, Faculty of Management & Economics, Tarbiat Modares University, Tehran, Iran

2 Economical Science, Faculty of Management & Economics, Tarbiat Modares University, Tehran, Iran

3 Business Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

10.48308/jem.2024.233461.1869

Abstract

The entanglement of economies or the integration of world economies is increasingly taking place today. In the shadow of contemporary technological developments, the adoption and expantion of cryptocurrencies will undoubtedly bring challenges and benefits. These developments have had significant effects on the global economy, especially international trade and finance. In this research, using the KOF index, the structure of economic globalization is extracted and the effect of the expansion of global cryptocurrencies is examined in two dimensions: international trade and international finance. OLS and GLS estimated results in 2019, 2020 and 2021 suggest that the adoption and expansion of global cryptocurrencies has no significant relationship with the index of international trade and foreign direct investment. Also, using Modern Portfolio Theory, 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 cryptocurrencies in economic globalization only as crypto-assets.

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Journal of Economics and Modelling
Volume 14, Issue 2 - Serial Number 54
September 2023
Pages 135-166

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