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The purpose of this paper is to examine the impact of the Yemen War on banking services (deposits and loans) at the aggregate and at the level of conventional and Islamic banks in GCC countries. The author also tests hypotheses of direct and indirect impacts of the Yemen War on bank services.

The sample comprises a total of 70 banks (45 conventional and 25 Islamic banks) over the period 2000–2018. The static and dynamic panel generalized methods of moments (GMM) estimation techniques are applied.

Empirical results indicate that the Yemen War has a significant negative direct impact on deposits and loans of GCC banks. The results lend support for the direct channel hypothesis, but not for the indirect channel hypothesis. The negative direct impact is most prominent on banks in GCC countries that are directly involved in the Yemen War, although the war has an asymmetric effect on conventional and Islamic banks, the former being more vulnerable. The overall conclusion is that the Yemen War exerts an asymmetric impact on the GCC region, across both banks and countries.

These results are a warning to policymakers to be cautious when formulating a strategy for macroeconomic stability.

It is widely recognized that the Yemen War has a significant impact on the economies of the GCC countries. However, the possible impact of the war on GCC bank services has not so far been subjected to robust empirical analysis. This paper therefore seeks to fill this gap by providing an in-depth quantitative analysis of this impact. It distinguishes between direct and indirect channels through which the Yemen War may affect bank services. It is also the first to examine the asymmetric impact of the Yemen War on the GCC region, across both banks (Islamic and conventional banks) and countries (whether or not involved in the war). The study uses both static panel and dynamic panel GMM estimation techniques to analyze the data.

This paper aims to examine and compare the impact of foreign direct investment (FDI) inflows on bank deposits in aggregate as well as at the level of conventional and Islamic banks in Middle East and North Africa (MENA) countries. The study also tests hypotheses of direct and indirect impacts of FDI flow and FDI stock on bank deposits.

Static and dynamic panel generalized methods of moments (GMM) estimation techniques are applied to analyze a large data set of 491 commercial banks (422 conventional banks and 69 Islamic banks) across 18 MENA countries between 1993 and 2017 (12,275 year observations).

Empirical results indicate that inflowing FDI flow and FDI stock have a significant negative direct impact on deposits of MENA banks. The results lend support for the direct channel hypothesis for the effect of FDI on bank deposits and find no evidence in support of the indirect channel hypothesis. FDI inflows affect bank deposits directly via increased FDI-related excessive competition in the banking market. Deposits from conventional banks appear to be more affected than those from Islamic banks. The variation may due to the fact that Islamic banks have fewer multinational corporations (MNC) customers than conventional banks and therefore are less sensitive to fluctuations in FDI.

From this analysis, this study concludes that foreign investments have a higher productivity than local investments in MENA region. Attracting more FDI is aimed at increasing overall national productivity through competition. However, governments would be wise to enact such a policy to maximize benefits and minimize potential harm to local industry. Furthermore, FDI policy should encourage small to medium-size banks and firms (SMEs)’ participation and linkage with multinational banks and MNCs, while upgrading research and development institutions and innovation activities to help SMEs to benefit from potential spillovers from foreign presence in the industry. In addition, the linkage and connection between SMEs and foreign firms should be strengthened and promoted by government policy.

This study is the first of its kind to examine the effect of FDI inflows on bank deposits. It also provides an in-depth quantitative analysis of the impact of FDI flow and FDI stock, separately, on bank deposits for both conventional and Islamic banks. It distinguishes between direct and indirect channels through which FDI inflows may affect bank deposits. The study analyzes 25 years of panel data for 491 banks (12,275 year observations) and uses both static and dynamic panel GMM estimation techniques to analyze the data.

The purpose of this paper is to examine the determinants of capital structure using a dataset of firms in Malaysia.

This paper carries out a panel data analysis of 8,270 observations from 827 listed non-financial firms on the Malaysia stock market over the period 2008–2017. To estimate the model and analyse the data collected from the DataStream and World Bank databases, the authors use static panel estimation techniques as well as two-step difference and system dynamic GMM estimator.

The results show that profitability, growth opportunity, tax-shield, liquidity and cash flow volatility have a negative and significant impact on debt measures. However, the effects of collateral, non-debt tax and earnings volatility on measures of debt are positive and significant. In addition, firm size, firm age, inflation rate and interest rate are important determinants of the present value of debt. The results also show a significant inverse U-shaped relationship between the firm's age and its capital structure. In general, the results support the proposition advocated by the pecking order and trade-off theories.

The results of this study necessitate formulation of various policy measures that can counter the effects of debt on firms.

The present study is among the earliest to use both the book and market value measures of capital structure. It also uses three proxies for each: total debt, long-term debt and short-term debt. It incorporates earning volatility and cash flow volatility as new independent variables in the model. These variables have not previously been used together with both book and market value measures of capital structure. The study also examines the non-monotonic relationship between firm's age and capital structure using a quadratic regression method. It applies both static panel techniques and dynamic GMM estimation techniques to analyse the data.

This paper investigates and compares the impact of foreign direct investment (FDI) inflows (flow and stock) on bank off-balance sheet (OBS) activities in aggregate as well as at the level of conventional and Islamic banks in GCC countries. It also tests hypotheses of direct and indirect impacts of FDI flow and FDI stock on OBS activities.

This paper uses both static and dynamic panel generalized methods of moments (GMM) estimation techniques to analyze the data of 70 GCC banks (45 conventional and 25 Islamic banks) over the period 1995–2017.

Empirical results indicate that FDI flow and FDI stock have a significant negative direct impact on OBS activities of GCC banks. The results lend support for the direct channel hypothesis for the effect of FDI on OBS activities and find no evidence in support of the indirect channel hypothesis. OBS activities from conventional banks appear to be more affected than those from Islamic banks.

The results of this study are expected to trigger appropriate policy response from the central banks of the respective GCC countries as well as their governments.

It is widely recognized that FDI inflows are of great importance to the economic development of emerging and developing countries. However, their impact on bank OBS activities has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI flow and FDI stock separately, on bank OBS activities for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI flow and FDI stock may affect OBS activities for banks as a whole and both conventional and Islamic banks separately. It also uses both static and dynamic panel GMM estimation techniques to analyze the data.

The purpose of this paper is to investigate and compare the impact of FDI inflows on bank loans in aggregate as well as at the level of conventional and Islamic banks in GCC countries. The paper also tests hypotheses of direct and indirect impacts of FDI inflow and FDI stock on bank loans.

The sample comprises a total of 70 banks (45 conventional and 25 Islamic banks). The period under consideration is 1995–2017. Static panel and dynamic panel GMM estimation techniques are applied.

Empirical results indicate that inflowing FDI and FDI stock have a significant negative direct impact on loans of GCC banks. The results lend support to the direct channel hypothesis for the effect of FDI on bank loans and find no evidence in support of the indirect channel hypothesis. FDI inflows affect bank loans directly via increased FDI-related liquidity, business activity or excessive competition in the banking market; they are not channeled through macro variables. Loans from conventional banks appear to be more affected than those from Islamic banks.

Given the attractiveness of the GCC economies to foreign investment, the potential volatility of investment-induced instability to the financial system in these economies should be on the radar of the central banks. Attracting more FDI is expected to increase overall national productivity through competition. However, government would be wise to enact a policy to maximize benefits and minimize potential harm to local industry. In addition, to achieve the goal of the new economic model, in turning the GCC economies into high-income and knowledge-driven economies by 2030, enhancement of efficiency and the quality of the workforce will contribute to creating productivity-driven economies.

It is widely recognized that FDI inflows are of great importance to the financial performance development of emerging and developing countries. However, their impact on bank loans has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI inflow and FDI stock, separately, on bank loans for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI inflows may affect bank loans. The study uses both static and dynamic panel GMM estimation techniques to analyze the data.

The purpose of this paper is to examine the effect of bank specific, financial structure and macroeconomic factors on the shareholder value of banks in GCC economies during 2000–2017.

To estimate the model and analyze the data collected from the BankScope and World Bank World Development Indicator database, the author uses static panel estimation techniques as well as two-step difference and system dynamic generalized method of moments estimator.

The results show that banks that are highly dependent on non-traditional activities have higher shareholder value. Higher opportunity cost, capitalization and demand deposits result in a better bank shareholder value. Furthermore, banks with higher loan exposure and growth have better shareholder value. Non-performing loans and market risk have insignificant effects on bank shareholder value. However, GCC banks suffer from diseconomies of scale and scope. The author also finds that banks located in countries with high inflation rates, high rates of interest or in financially developed economies offer better shareholder value. High credit to the private sector reduces the bank shareholder value. The paper also provides evidence that the impact of financial turmoil on the shareholder value of the GCC banking sector is negative and significant and has severely weakened the GCC banking system.

The results of this study necessitate formulation of various policy measures that can counter the effects of shareholder value of banks.

The present study is among the first to address the influence of financial turmoil on bank shareholder value. It also studies new variables, such as demand deposits, non-performing loans, loan growth, non-interest revenue and off-balance sheet activities, which have not been examined in relation to bank shareholder value. It also applies both static techniques and dynamic panel estimation techniques to analyze the data. The analysis is carried out at the aggregate level as well as at the national level and also provides several robustness analyses using various model specifications.

This chapter attempts to investigate and analyze the worldwide long-run dynamics among foreign direct investment (FDI) inflow, international trade, and economic growth empirically in the era of globalization. Impact of FDI on economic performances has been a burning topic during the current age. Different theoretical studies viewed both positive and negative impacts of inflow of foreign capital in terms of FDI. We empirically test the relationships among FDI and trade, gross domestic product by using the data for top 20 FDI-hosting countries sourced from UNCTAD in a dynamic panel frame over the period of 1991–2016. The stochastic properties are looked into by carrying out panel data unit root tests developed by Levin, Lin, and Chu (2002) and Im, Pesaran, and Shin (2003). We carry out the generalized method of moments estimates. Empirical findings suggest that inflows of FDI significantly promote economic growth in selected economies.

The purpose of this paper is to examine the relationship between corporate governance (CG) and microfinance institution (MFI) performance, using a dynamic panel generalised method of moments (GMM) estimator to mitigate the serious issues with endogeneity.

Inconsistent findings and a general lack of empirical results for the microfinance industry leave an unclear message regarding the impacts of CG on MFI performance, especially in emerging economies. The authors use GMM estimation techniques to examine whether CG has an influence on MFI performance.

This study confirms that the MFIs’ contemporaneous performance and CG characteristics are statistically significantly positively linked with their past performance. This study finds statistically significant governance effects on MFI performance, including the presence of international directors and/or donor representatives on the board, client representatives on the board, percentage of non-executive directors and the quality of the national governance system.

These findings provide some insights for policy-makers and practitioners to develop suitable policies and guidelines to streamline MFIs’ operations in emerging countries. Moreover, national and international investors and donors may use these finding as a benchmark for their investment and funding decisions.

This paper is the first to estimate the CG and performance relationship of MFIs in a dynamic framework by applying the GMM estimation method. This approach improves upon traditional estimation methods by controlling the likely sources of endogeneity. Further, this paper examines whether quality of national-level governance characteristics is related to performance measures of profitability and outreach of MFIs.

While the relationship between military expenditure and economic growth during the Cold War period is well-researched, relatively less is known on the issue for the post-Cold War era. Equally how the relationship varies with respect to exposure to conflict is also not fully examined. Therefore, the purpose of this paper is to investigate the causal impact of military expenditure on growth in the presence of internal and external threats for the period 1990-2013 using data from 70 developing countries.

The main estimates are based on the generalized method of moments (GMM) regression model. But for comparison purposes, the authors also report estimates using fixed and random effects as well as pooled cross-section regressions. The regression specification accounts for non-linear effect of military expenditure allowing for interaction with conflict variable (where distinction is made between external and internal conflict).

The analysis indicates that methods as well as model specification matter in studying the effect of military spending on growth. Full sample estimates based on GMM, fixed, and random effects models suggest a negative and statistically significant effect of military expenditure. However, fixed effects estimate becomes insignificant for low-income countries. The effect of military spending is also insignificant in the cross-sectional OLS model if conflict is not considered. When the regression model additionally controls for conflict, the effect of military spending conditional upon (internal) conflict exposure is significant and positive. No such effect is present conditional upon external threat.

One important limitation of the analysis is the small sample size – the authors had to restrict analysis to 70 low and middle-income countries for which the authors could construct post-Cold War panel data on military expenditure along with information on armed conflict exposure (the later from the Uppsala Conflict Data Program, 2015).

To the best of the author’s knowledge, this is the first paper to examine the joint impact of military expenditure and conflict on economic growth in post-Cold War period in a sample of developing countries. Moreover, an attempt is made to review and revisit the large Cold War literature where studies vary considerably in terms findings. A key reason for this is the somewhat ad hoc choice of econometric methods – most rely on cross-section data and rarely conduct sensitivity analysis. The authors instead rely on panel data estimates but also report results based on naïve models for comparison purposes.

The purpose of this paper is to investigate the determinants of portfolio equity flows to the Sub-Saharan African (SSA) region over the period 1996-2010.

The study uses a sample of 14 SSA countries to estimate the baseline regression through employing the system generalized methods of moment dynamic panel estimation framework. To check the robustness of the estimation results, the study further analyses the data set using the random effects-generalized least squares (EGLS) estimator. The Random effects-generalized least squares estimator is also referred to a the Estimated Generalized least Squares (EGLS) estimator.

The paper finds a significant positive relationship between financial development and portfolio equity flows. Furthermore, while the study surprisingly finds trade openness to have a significant negative relationship, political stability is found to have a significant positive relationship with portfolio equity. To check for the robustness of these results, the authors further analyse the data set using the random EGLS estimator. The result of the EGLS estimator confirms that there is a robust positive relationship between financial development and portfolio equity flows to SSA. However, the results suggest that neither trade openness nor political stability is a robust determinant of portfolio equity flows to the sub-region.

Policy measures should aim at enhancing financial sector development, political stability and rule of law. A transparent judicial system that enhances rule of law and deepens democratic governance in countries in the sub-region is critical, but even more critical is deepening the financial sector, given the important role financial development plays in portfolio equity flows as suggested by the findings. A range of measures and appropriate policy responses are therefore needed for countries that have to manage macroeconomic and financial stability risks to deepen the financial sector.

Most studies on private capital flows to SSA have focussed on foreign direct investment flows with no or scanty evidence on the drivers of portfolio equity flows. This study fills this gap in the literature.