Search results

1 – 10 of 10
Article
Publication date: 31 October 2008

Shady Kholdy and Ahmad Sohrabian

The purpose of this paper is to investigate whether foreign direct investment (FDI) can stimulate financial development in countries with corrupt dominant élites. Financial…

6025

Abstract

Purpose

The purpose of this paper is to investigate whether foreign direct investment (FDI) can stimulate financial development in countries with corrupt dominant élites. Financial markets have not been expanded in many developing countries despite their proven positive effect on economic growth. Although three voluminous and parallel lines of research investigate the impact of financial markets, FDI, and political corruption on economic growth, no research up to now has examined the combined effect of foreign investment and corruption on financial development.

Design/methodology/approach

To investigate the causal links, a multivariate Error Correction Model (ECM) is applied on a sample of 22 developing countries, over the period of 1976‐2003.

Findings

Overall, the study provides some preliminary evidence that FDI may jump‐start financial development in developing countries. Furthermore, the results indicate that most of the causal links are found in developing countries which experience a higher level of corruption in the form of excessive patronage, nepotism, job reservations, “favor‐for‐favors”, secret party funding, and suspiciously close ties between politics and business.

Research limitations/implications

The study, however, does not provide any evidence that FDI can reduce political corruption. Much additional theoretical and empirical research is needed to explore whether FDI can influence political and economic traditions and stimulate financial markets.

Originality/value

The study is the first empirical attempt to examine the causal link between FDI and financial markets in interaction with political corruption.

Details

Journal of Economic Studies, vol. 35 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 10 November 2014

Shady Kholdy and Ahmad Sohrabian

The purpose of this paper is to compare and contrast the effect of individual and institutional sentiments on the US stock returns during a prolonged bull phase of ten years in…

Abstract

Purpose

The purpose of this paper is to compare and contrast the effect of individual and institutional sentiments on the US stock returns during a prolonged bull phase of ten years in the 1990s compared to shorter boom and bust cycles of the 2000s. The study is focussed on a set of stocks that are prone to sentiments and speculations.

Design/methodology/approach

To compare the dynamic interaction of individual and institutional sentiments and stock returns, the authors use the vector autoregression (VAR) approach. The VAR model has proven to be especially useful for describing the dynamic behavior of economic and financial time series because it does not impose a priori restriction on the structure of the system. Using impulse response function, the authors determine how stock returns respond over time to a shock in institutional and individual sentiments.

Findings

The authors find that sentiments of individual investors can affect returns mostly when there is a prolonged upward trend in stock prices, while sentiments of institutional investors can impact the returns when stock market is more volatile.

Originality/value

This paper compares the effect of noise traders and rational investors’ sentiment on stock returns during the persistent period of positive abnormal returns of the 1990s and the more volatile stock returns of the 2000s.

Details

Journal of Economic Studies, vol. 41 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 3 August 2015

Muhammad Aftab, Rubi Ahmad and Izlin Ismail

This study aims to examine the dynamics between exchange rate and equities contextualizing the current liberal currency regime in China. This investigation also extends the…

Abstract

Purpose

This study aims to examine the dynamics between exchange rate and equities contextualizing the current liberal currency regime in China. This investigation also extends the analysis to explore the potential important factors influencing the interactions between these two markets. After exchange rate reforms, currency issue has emerged as a new dimension in portfolio decisions and diversification strategies in Chinese equity markets.

Design/methodology/approach

This research uses the dynamic conditional correlation generalized autoregressive conditional heteroskedasticity model proposed by Engle (2002) to explore the dynamic interactions between the currency and stock markets. Further, the paper uses regression analysis to explore the explanatory channels of the correlation. The sample comprises 1,265 listed companies over the period 2005-2012 with daily, weekly and monthly observations. To make analysis robust, the study also considers different exchange rates and equities belonging to different industries.

Findings

The findings suggest that exchange rate and stock price are related negatively. This conduit increases during the financial crisis period. This association is more prominent at monthly frequency than that of daily and weekly frequencies, which may refer to the noise factor in the high-frequency data. For a portfolio diversification point of view, currency may be considered an alternative diversifier against equity in China. The results also suggest a weak influence of market forces on the association between the currency and stock markets.

Originality/value

Much of the related past research is based on co-integration approaches and limited to the relationship between currency and equity markets without exploring the determining channels of this important connection. This study uses a more suitable approach to examine the topic and also investigates the determinants. Besides, previous studies take index data which may be poor to depict the overall market outlook. This paper proceeds with firm-level data which are more appropriate to expose the overall market outlook and investor behavior. This research also draws valuable implications.

Details

Chinese Management Studies, vol. 9 no. 3
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 6 August 2019

Aamir Abbas, Qasim Ali Nisar, Mahmood A. Husain Mahmood, Abderrahim Chenini and Ahsan Zubair

Islamic marketing ethics focus on the principles of equity, justice and value maximization for the welfare of society. These ethics play a vital role in elevating the standards of…

2621

Abstract

Purpose

Islamic marketing ethics focus on the principles of equity, justice and value maximization for the welfare of society. These ethics play a vital role in elevating the standards of customer behavior. The strategy of focusing customer is now considered as important element because of rapidly changing marketing trends in Islamic banks. Therefore, the purpose of this study is to find out the important features of Islamic marketing ethics and identify their effect on customer’s satisfaction in Islamic banking.

Design/methodology/approach

This study is descriptive and quantitative. Data were collected from 1000 customers of Islamic banks by applying convenient sampling technique. Smart PLS was used to check the scale validation by confirmatory factor analysis. To test the hypotheses, structural equation modeling technique was used.

Findings

Results enlightened that Islamic marketing ethics play a significant role in enhancing the customer’s satisfaction. Islamic banks should focus on marketing mix along with Islamic and ethical perspectives to improve the customer’s satisfaction level.

Practical implications

This study highlighted that Islamic marketing ethics have great impact on customer satisfaction. Therefore, Islamic banks need to concentrate on the ethical perspective of Islamic marketing in order to develop long term customer relationships. Islamic banks need to revise their marketing practices, and they should align their marketing tactics with ethical Islamic boundaries. They need to design, communicate and enforce the code of Islamic ethics within organizations.

Originality/value

This paper fulfills an identified need to study how Islamic marketing ethics effect customer satisfaction.

Details

Journal of Islamic Marketing, vol. 11 no. 4
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 10 July 2020

Dolly Gaur and Dipti Ranjan Mohapatra

In recent years, the Indian banking sector is facing a major cause of concern in the form of Nonperforming Assets (NPA), and the priority sector lending (PSL) is generally…

Abstract

Purpose

In recent years, the Indian banking sector is facing a major cause of concern in the form of Nonperforming Assets (NPA), and the priority sector lending (PSL) is generally recognized as the major factor contributing to it. Thus, the present study has been carried out with the objective of examining the relationship between priority sector lending and GDP growth. Thereafter, the role of PSL and certain other bank-specific, industry-specific and macroeconomic variables in determining NPA has been studied.

Design/methodology/approach

Taking a sample of 45 scheduled commercial banks, the study has been carried out for 14 years (2004–2018). Granger causality between PSL and GDP has been examined by applying the Dumitrescu-Hurlin test. For the purpose of investigating the impact of PSL and other determinants on NPA, both static and dynamic panel regression have been performed. Under the dynamic panel, system generalized methods of moments (S-GMM) approach has been followed.

Findings

The findings show that there exists a positive correlation and bidirectional causal relationship between PSL and GDP, which implies that PSL brings additional growth for the whole economy. In addition to it, PSL is found to be insignificant for the NPA ratio, and thus, it can be inferred that credit extended to government-specified sectors does not bring any major increase in the bad loan portfolio of banks.

Practical implications

The policymakers and bank management can take a cue from the findings of this study to decrease the exposure to loan nonrepayment issue. The priority sectors are in need of formal credit for their growth, and since the rising population of the country can find employment in these sectors, banks should meet their credit needs while securing their position with regard to the NPA problem.

Originality/value

The issue of NPA determinants, and in particular, the contribution of priority sector lending in it has not been much explored for Indian banking sector. Also, the present study adds to the literature by using the causality approach for examining the importance of directed credit schemes for economic growth.

Details

South Asian Journal of Business Studies, vol. 10 no. 1
Type: Research Article
ISSN: 2398-628X

Keywords

Article
Publication date: 16 December 2021

Ameenullah Aman, Asmadi Mohamed Naim, Mohamad Yazid Isa and Syed Emad Azhar Ali

Both developed and developing countries, Muslim and non-Muslim, have been showing keen interest in sukuk financing. This interest was because of the lesson learned by both Asian…

Abstract

Purpose

Both developed and developing countries, Muslim and non-Muslim, have been showing keen interest in sukuk financing. This interest was because of the lesson learned by both Asian and non-Asian economies that having a developed capital market is very essential to enable an economy resilient to the financial crisis. Therefore, this study aims to produce theoretical relationships and identify empirical support for the determinants of sukuk market development.

Design/methodology/approach

By using panel data analysis, the study covers the period from 1993 until 2017, and includes 13 sukuk issuing economies as per the availability of data.

Findings

The findings of the study revealed that the stage of economic development, banking system, money supply and current account balance are positively associated with sukuk market. Interestingly, economic size and exports appear to be negatively associated with sukuk.

Practical implications

To flourish the domestic sukuk market, authorities need to strengthen the existing financial system and economic development.

Originality/value

The study contributes in a limited body of knowledge on determinants of sukuk market development by exploring novel determining factors of foreign capital inflows as well as macroeconomic and financial factors.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 15 no. 5
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 13 September 2021

Dalia M. Ibrahiem and Rasha Sameh

Achieving the goals of the sustainable development strategy and Egypt’s vision 2030 depends mainly on the existence of sources of funds. And since Egypt faces a great challenge in…

Abstract

Purpose

Achieving the goals of the sustainable development strategy and Egypt’s vision 2030 depends mainly on the existence of sources of funds. And since Egypt faces a great challenge in obtaining finance, then analyzing the drivers of financial development is a vital issue and there is a persistent need to shed light on the key obstacles for it. Thus, this paper aims to empirically assess the impact of natural resources, foreign direct investment (FDI) net inflows, education and clean energy sources on financial development in Egypt using the data of the 1971–2014 period.

Design/methodology/approach

The paper uses auto-regressive distributed lag and Toda-Yamomoto approaches to fulfill the purpose.

Findings

Empirical results signify that all variables except natural endowments stimulate financial development which can suggest the presence of the natural resources curse in Egypt. Moreover, the feedback effect between financial development and FDI is recognized. Clean energy sources cause financial development and natural endowments. Financial development causes natural endowments and FDI leads to the deployment of more clean energy resources.

Practical implications

Several crucial policy implications are suggested based upon these results as improving the quality and quantity of education and encouraging both domestic and foreign investors by providing several incentives. Moreover, the government has to enhance green finance through financing solar energy projects and other environmentally friendly projects.

Originality/value

It is the first research for Egypt that explores natural resource-financial development nexus using time series analysis according to our information, and two important variables are included in the model which is clean energy sources and FDI. Then, although several studies examined the impact of financial development on clean energy no empirical study before assessed the impact of clean energy on financial development.

Article
Publication date: 1 September 2022

Sanjay Gupta, Nidhi Walia, Simarjeet Singh and Swati Gupta

This comprehensive study aims to take a punctilious approach intended to present qualitative and quantitative knowledge on the emerging concept of noise trading and identify the…

Abstract

Purpose

This comprehensive study aims to take a punctilious approach intended to present qualitative and quantitative knowledge on the emerging concept of noise trading and identify the emerging themes associated with noise trading.

Design/methodology/approach

This study combines bibliometric and content analysis to review 350 publications from top-ranked journals published from 1986 to 2020.

Findings

The bibliometric and content analysis identified three major themes: the impact of noise traders on the functioning of the stock market, traits of noise traders and different proxies used to measure the impact of noise trading.

Research limitations/implications

This study undertakes research papers related to the field of finance, published in peer-reviewed journals and that too in the English language.

Practical implications

This study shall accommodate rational traders, portfolio consultants and other investors to gain deeper insights into the functioning of noise traders. This will further help them to formulate their trading/investment strategies accordingly.

Originality/value

The successful combination of the bibliometric and content analysis revealed major gaps in the literature and provided future research directions.

Details

Qualitative Research in Financial Markets, vol. 15 no. 1
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 31 August 2021

Rakesh Kumar Verma and Rohit Bansal

This paper aims to identify various macroeconomic variables that affect the stock market performance of developed and emerging economies. It also investigates the effect of these…

3093

Abstract

Purpose

This paper aims to identify various macroeconomic variables that affect the stock market performance of developed and emerging economies. It also investigates the effect of these factors on the stock markets of both economies. The impact of these variables on broad market indices and sectoral indices is investigated and compared too.

Design/methodology/approach

The publications for the study were retrieved from databases such as Emerald Insight, EBSCO, ScienceDirect and JSTOR using the keywords “Macroeconomic variables” and “Stock market” or “Stock market performance.” The result demonstrated a growing corpus of scholarly work in the domain of stock market. The study was carried out separately for each macroeconomic indicator. Given a large number of articles under consideration, the authors began by reading the titles and abstracts of all publications to identify those that were relevant. The papers are evaluated in Excel and the articles for review range from 1972 to 2021.

Findings

The authors found that gross domestic product (GDP), FDI (Foreign Direct Investment) and FII (Foreign Institutional Investment) have a positive effect on both emerging and developed economies’ stock market while gold price has a negative effect. Interest rates had a negative impact on both economies except for a few developing countries. The relationship with oil prices was positive for oil exporting countries while negative for oil importing countries. Inflation, money supply and GDP are the macroeconomic variables that have the same effect on sectoral indices as they do on broad market indices. The impact was sector-specific for the remaining variables.

Research limitations/implications

This paper gives an overview of relation and effect covering variety of macroeconomic variables and stock market indices. Still, there is a scope for further research to analyze the effect on thematic, strategy and sectoral indices. A longer time horizon with new variables, such as bank deposit growth rate, nonperforming assets of banks, consumer confidence index and investor sentiment, can be studied using high-frequency data. This research may help stakeholders adopt and manage their policies during a crisis or economic slump.

Practical implications

This study will assist investors, researchers and educators in the fields of economics and finance in understanding how macroeconomic factors affect the stock market. Furthermore, this study can guide in portfolio diversification strategy across multiple sectors by examining the impact of macroeconomic factors specific to sectoral indices. This paper provides insight into society and researchers since it integrates a number of macroeconomic variables and their interaction with the stock market. It may also help pension funds and mutual fund firms to hedge their funds and allocate equity portfolios.

Originality/value

With respect to India, this study looked at new macroeconomic variables and sectors. It contrasted the impact of these variables in developed and developing economies. The effect of broad and sectoral stock indexes was also investigated and compared. The authors examined how these variables responded during crisis and economic downturns by using articles from a longer time frame. This research also looked into how changing the frequency of data for the variables altered stock performance. This paper emphasized the need for more research into thematic, strategy and broad market indices, such as small-cap and mid-cap indices.

Details

International Journal of Emerging Markets, vol. 16 no. 7
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 21 February 2020

Oyakhilome Ibhagui

The threshold regression framework is used to examine the effect of foreign direct investment on growth in Sub-Saharan Africa (SSA). The growth literature is awash with divergent…

Abstract

Purpose

The threshold regression framework is used to examine the effect of foreign direct investment on growth in Sub-Saharan Africa (SSA). The growth literature is awash with divergent evidence on the role of foreign direct investment (FDI) on economic growth. Although the FDI–growth nexus has been studied in diverse ways, very few studies have examined the relationship within the framework of threshold analysis. Furthermore, even where this framework has been adopted, none of the previous studies has comprehensively examined the FDI–growth nexus in the broader SSA. In this paper, within the standard panel and threshold regression framework, the problem of determining the growth impact of FDI is revisited.

Design/methodology/approach

Six variables are used as thresholds – inflation, initial income, population growth, trade openness, financial market development and human capital, and the analysis is based on a large panel data set that comprises 45 SSA countries for the years 1985–2013.

Findings

The results of this study show that the direct impact of FDI on growth is largely ambiguous and inconsistent. However, under the threshold analysis, it is evident that FDI accelerates economic growth when SSA countries have achieved certain threshold levels of inflation, population growth and financial markets development. This evidence is largely invariant qualitatively and is robust to different empirical specifications. FDI enhances growth in SSA when inflation and private sector credit are below their threshold levels while human capital and population growth are above their threshold levels.

Originality/value

The contribution of this paper is twofold. First, the paper streamlines the threshold analysis of FDI–growth nexus to focus on countries in SSA – previous studies on FDI-growth nexus in SSA are country-specific and time series–based (see Tshepo, 2014; Raheem and Oyınlola, 2013 and Bende-Nabende, 2002). This paper provides a panel analysis and considers a broader set of up to 45 SSA countries. Such a broad set of SSA countries had never been considered in the literature. Second, the paper expands on available threshold variables to include two new important macroeconomic variables, population growth and inflation which, though are important absorptive capacities but, until now, had not been used as thresholds in the FDI–growth literature. The rationale for including these variables as thresholds stems from the evidence of an empirical relationship between population growth and economic growth, see Darrat and Al-Yousif (1999), and between inflation and economic growth, see Kremer et al. (2013).

Details

Journal of Economic Studies, vol. 47 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

1 – 10 of 10