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1 – 10 of 337Fisnik Morina, Albulena Syla and Sadri Alija
Purpose: This study analyses how investments and specific financial factors affect the financial performance of businesses in Kosovo. Exploring the relationship between…
Abstract
Purpose: This study analyses how investments and specific financial factors affect the financial performance of businesses in Kosovo. Exploring the relationship between investments and financial performance and their impact on performance volatility, performance is assessed using return on assets (ROA) and return on equity (ROE) investments.
Methodology: Quantitative methods using secondary data from audited financial statements of Kosova manufacturing and commercial enterprises cover a 3-year period (2019–2021), involving 40 enterprises with 120 observations. Statistical tests such as descriptive statistics, correlation analysis, linear regression, Hausman–Taylor regression, fixed effects, random effects, and generalised estimating equations (GEE) model are applied. The study also utilises ARCH–GARCH analysis to assess the relationship between investments and performance volatility.
Findings: Investments positively impact the financial performance of Kosova businesses and significantly reduce performance volatility. Long-term liabilities, retained earnings, and short-term liabilities also play a role in reducing asset return volatility, while cash flow from financial activities increases it. Investments, cash flows from financial activities, long-term liabilities, short-term liabilities, retained earnings, and solvency affect equity return volatility.
Practical Implications: The study sheds light on how investments and financial factors influence the financial performance and volatility of Kosova businesses. Policymakers can use these insights to create policies that foster the development of commercial and manufacturing enterprises, given their importance in Kosovo’s economy.
Significance: This research provides valuable insights for business managers to enhance investment strategies and improve financial performance. Policymakers can rely on this academic study to enhance the economic environment and promote the growth of businesses in Kosovo.
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Rexford Abaidoo and Elvis Kwame Agyapong
The study evaluates the role of institutional framework and macroeconomic instability on financial market development among emerging economies.
Abstract
Purpose
The study evaluates the role of institutional framework and macroeconomic instability on financial market development among emerging economies.
Design/methodology/approach
The study uses panel data compiled from 32 countries from the sub-region of Sub-Sahara Africa (SSA), covering the period starting from 1996 to 2019. Empirical analyses were carried out using the two-step system generalized method of moments (TS-GMM) statistical framework.
Findings
Reviewed results suggest that institutional quality, effective governance and corruption control have a significant positive impact on financial market development among economies in the sub-region. Further empirical estimates show that macroeconomic risk and macroeconomic uncertainty have significant adverse effects on financial market development. Additionally, reported empirical estimates suggest that an improved institutional framework has the potential to lessen the adverse effect of macroeconomic instability on financial market development among economies in the sub-region.
Originality/value
The uniqueness of this empirical inquiry compared to related studies in the present literature stems from the fact that studies employing similar empirical approaches on the subject matter for economies in the sub-region are rare. Additionally, the analysis pursued in this study employs critical variables whose impact on financial market performance in the sub-region has not been examined per our review. These variables include indexes such as macroeconomic risk and institutional quality, which are unique to this study based on their construction; these indexes are generated using a principal component analysis procedure with different underlying variables compared to what may be found in the literature.
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Anthony Smythe, Igor Martins and Martin Andersson
With the recognition that generating economic growth is not the same as sustaining it, the challenge to catch-up and growth literature is discerning between these processes…
Abstract
Purpose
With the recognition that generating economic growth is not the same as sustaining it, the challenge to catch-up and growth literature is discerning between these processes. Recent research suggests that the decline in the frequency of “shrinking” episodes is more important for long-term development than higher growth rates. By using a framework centred around social capabilities, this study aims to investigate the effects of income inequality and poverty on economic shrinking frequency, as opposed to previous literature that has exclusively had a growth focus. The aim is to investigate how and why some societies might be more resilient to economic shrinking.
Design/methodology/approach
The research is a quantitative study, and the authors build a longitudinal data set including 23 developing countries throughout 42 years to test the paper’s purpose. This study uses country and period fixed-effects specifications as well as cross-sectional graphical representations to investigate the relationship between proxies of economic inclusivity and the frequency of shrinking episodes.
Findings
The authors demonstrate that while inclusive societies are more resilient to shrinking overall, it is changes in poverty levels, but not changes in income inequality, that appear to be correlated with economic shrinking frequency. Inequality, while still an important element to explain countries’ growth potential as an initial condition, does not seem to make the sample more resilient to shrinking. The authors conclude that the mechanisms in which poverty and inequality are correlated with the catch-up process must run through different channels. Ultimately, processes that explain growth may intersect but not always overlap with the ones that explain resilience to shrinking.
Originality/value
The need for inclusive growth in long-term development has been championed for decades, yet inclusion has seldom been explored from the shrinking perspective. Though poverty reduction is already an important mainstream political objective, this paper differentiates itself by providing an alternate viewpoint of why this is important. Income inequality could have more of an economic growth limiting effect, while poverty reduction could be required to build resilience to economic shrinking. Developing countries will need both growth and resilience to shrinking, to catch-up with higher-income economies, which policymakers might need to balance carefully.
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This study aims to provide empirical evidence on the relationship between formal institutions and stock price crash risk from a global perspective.
Abstract
Purpose
This study aims to provide empirical evidence on the relationship between formal institutions and stock price crash risk from a global perspective.
Design/methodology/approach
This paper uses data of 35,468 firms globally over the years 1987–2019 and address the endogeneity issue by employing the Mundlak random effects estimator.
Findings
The authors find a significant negative impact of institution quality on stock price crash risk (i.e. better institutions reduce crash risk), after controlling for common determinants of crash risk such as leverage, return on asset, firm size, investment, etc. as well as macro factors such as GDP growth. This effect is robust to different measures of crash risk and sub-indicators of institutions quality. In addition, the authors also find this effect to be universally present in economies characterized by different levels of income.
Originality/value
To the best of the authors' knowledge, there's no known study that explores the potential causal relationship between institution quality and stock price crash risk. Therefore, the research topic in this study is original and can contribute significantly to the existing literature.
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Harold Delfín Angulo Bustinza, Bruno de Souza and Roberto De la Cruz Rojas
The purpose of this paper is to empirically analyze the impact of remittance inflows on sustained economic growth in India.
Abstract
Purpose
The purpose of this paper is to empirically analyze the impact of remittance inflows on sustained economic growth in India.
Design/methodology/approach
This study has taken a time series dataset for the period of 1976–2021, and a nonlinear autoregressive distributed lag model technique (NARDL) has been applied to check the impact of remittance inflows along with other control variables, including broad money and service sector performance, on the sustained economic growth of India.
Findings
The results of the study indicated that in both the short and long runs, any positive shock in remittance inflows has a positive impact on the economic growth of India, while negative shocks do not affect economic growth.
Practical implications
The economic policymakers of India can use the findings of the study by implementing remittance-friendly policies. Moreover, NITI Aayog, the body working toward achieving sustainable development goals (SDGs) in India, can also use this study as a reference while making strategies to achieve SDG.
Originality/value
Economic growth has always been an area of interest among economists, researchers and policymakers. However, achieving sustained economic growth requires an analysis of those factors that themselves have sustained performance over a long period of time and have the potential to sustain it over the upcoming years. This study has taken remittance inflows as one such factor and investigated its impact on the sustained economic growth of India. At present, there is an evident gap in the literature that very little attention has been given to sustained Indian economic growth. Moreover, there is no study available in which the nonlinear impact of different variables has been tested on the economic growth of India.
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Alcides J. Padilla and Jorge David Quintero Otero
The purpose of this paper is to assess sub-national business cycle (BC) synchronization's impact on national cycles in four emerging markets economies with inflation targeting…
Abstract
Purpose
The purpose of this paper is to assess sub-national business cycle (BC) synchronization's impact on national cycles in four emerging markets economies with inflation targeting (IT-EMEs): Brazil, Colombia, South Korea and Mexico.
Design/methodology/approach
The authors use panel data models with fixed-effects and distributed lags.
Findings
The authors disclosed that sub-national synchronization increased national cycle amplitudes during expansion and recession phases. The authors also noticed that South Korea exhibited a more pronounced effect compared to Latin American countries, and this seemed to be associated with differences in the homogeneity of the production structures in the regions of these countries.
Research limitations/implications
The authors cautioned that contrasting the findings with prior research on the effects of regional BC synchronization in IT-EMEs or with studies in different geographical contexts, is not possible due to the absence of prior research endeavors with this specific focus.
Originality/value
This study constitutes a first attempt to explain the impact of subnational cycle synchronization on the magnitude of national cycles in four IT-EMEs.
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Ali Asghar Mahmoodi, Mohammadreza Abdoli, Maryam Shahri and Farhad Dehdar
The purpose of this research is to investigate the importance and status of conditional accounting conservatism indicators and financial flexibility for the management of legal…
Abstract
Purpose
The purpose of this research is to investigate the importance and status of conditional accounting conservatism indicators and financial flexibility for the management of legal claims of the company during the outbreak of Corona.
Design/methodology/approach
The research method was implemented using statistical analysis in the SPSS environment. The participants of this research can be experts and specialists working in companies admitted to the stock exchange and expert professors in accounting fields; auditing; economy; financial engineering and financial management, categorized. The data related to the localization tool of research variables were collected by snowball sampling method in the summer of 2022.
Findings
One of the main results of the research is that based on the opinions and professional experience of experts and professionals working in companies admitted to the stock exchange and academic experts, within a range of seven, “The number of legal claims of the company with electronic businesses” under the title of the main indicator in the legal claims of the company in the outbreak of Corona from the importance dimension; “Exchange rate fluctuations in financial resilience” under the title of the main indicator in financial resilience in the Corona outbreak from the functional dimension; “The number of legal claims of the company with government institutions” under the title of the main indicator in the company’s legal claims in the Corona outbreak from the functional dimension; “The company’s conservatism score” under the title of the main indicator in the conditional conservatism of accounting in the Corona outbreak from the functional dimension; “oil price fluctuations in financial resilience” under the title of the main indicator in financial resilience in the Corona outbreak from the importance dimension; and “type of industry based on total assets” under the title of the main indicator in the conditional conservatism of accounting in the Corona outbreak was calculated from the importance dimension.
Originality/value
Although the previous literature has studied the direct correlation between accounting conservatism and financial flexibility, this work focuses on examining the direct association between accounting conservatism and financial flexibility in the post-Corona era and is carried out to resolve legal claims.
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Nadia Yusuf, Inass Salamah Ali and Tariq Zubair
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC…
Abstract
Purpose
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC) region, with an emphasis on understanding how these factors influence SME financing constraints in economies with fixed currency regimes.
Design/methodology/approach
Employing a random effects panel regression analysis, this research considers US dollar volatility and oil rents as independent variables, with SME performance, measured through the financing gap, as the dependent variable. Controls such as trade balance, inflation deltas and gross domestic product (GDP) growth are included to isolate their effects on SME financing constraints.
Findings
The study reveals a significant positive relationship between dollar volatility and the financing gap, suggesting that increased volatility can exacerbate SME financing constraints. Conversely, oil rents did not show a significant direct influence on SME performance. The trade balance and inflation deltas were found to have significant effects, highlighting the multifaceted nature of economic variables affecting SMEs.
Research limitations/implications
The study acknowledges potential biases due to omitted variables and the limitations inherent in the use of secondary data.
Practical implications
Findings offer pertinent guidance for SMEs and policymakers in the GCC region seeking to develop strategies that mitigate the impact of currency volatility and support SME financing.
Originality/value
The research provides new insights into the dynamics of SME performance within fixed currency regimes, which significantly contributes to the limited literature in this area. The paper further underscores the complex connections between global economic factors and SME financial health.
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Ayuba Napari, Rasim Ozcan and Asad Ul Islam Khan
For close to two decades, the West African Monetary Zone (WAMZ) has been preparing to launch a second monetary union within the ECOWAS region. This study aims to determine the…
Abstract
Purpose
For close to two decades, the West African Monetary Zone (WAMZ) has been preparing to launch a second monetary union within the ECOWAS region. This study aims to determine the impact such a unionised monetary regime will have on financial stability as represented by the nonperforming loan ratios of Ghana in a counterfactual framework.
Design/methodology/approach
This study models nonperforming loan ratios as dependent on the monetary policy rate and the business cycle. The study then used historical data to estimate the parameters of the nonperforming loan ratio response function using an Autoregressive Distributed Lag (ARDL) approach. The estimated parameters are further used to estimate the impact of several counterfactual unionised monetary policy rates on the nonperforming loan ratios and its volatility of Ghana. As robustness check, the Least Absolute Shrinkage Selection Operator (LASSO) regression is also used to estimate the nonperforming loan ratios response function and to predict nonperforming loans under the counterfactual unionised monetary policy rates.
Findings
The results of the counterfactual study reveals that the apparent cost of monetary unification is much less than supposed with a monetary union likely to dampen volatility in non-performing loans in Ghana. As such, the WAMZ members should increase the pace towards monetary unification.
Originality/value
The paper contributes to the existing literature by explicitly modelling nonperforming loan ratios as dependent on monetary policy and the business cycle. The study also settles the debate on the financial stability cost of a monetary union due to the nonalignment of business cycles and economic structures.
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