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1 – 9 of 9Ola Al Sayed, Noha Sami Omar and Abdelmoneam Khaled
This paper aims to discuss the main characteristics of the Middle East North Africa (MENA) region's capital inflows volatility. It also examines the effect of institutional…
Abstract
Purpose
This paper aims to discuss the main characteristics of the Middle East North Africa (MENA) region's capital inflows volatility. It also examines the effect of institutional quality and information availability on capital inflows volatility in selected MENA countries (Bahrain, Egypt, Israel, Jordan, Kuwait, Libya, Morocco, Oman, Saudi Arabia and Tunisia) in the period 1996–2017.
Design/methodology/approach
The study's assessments are based on the International Country Risk Guide (ICRG) and globalization indices. It also employs an updated data set of balance of payments indicators released by the International Monetary Fund. Moreover, the study uses econometric panel modeling of random effect model, with Driscoll-Kraay robust standard error, to analyze the relationship between capital inflows volatility, institutional quality and information availability.
Findings
The paper finds that both institutional quality and information availability are in an inverse relationship with the total capital inflows volatility in the MENA region. However, the findings vary across the different components of total capital inflows. For example, the volatility of foreign direct investment (FDI) declines, like total capital flows, as the two factors improve. However, the volatility of foreign portfolio investment (FPI) is negatively related to institutional quality but does not have any significant relationship with information availability. While the volatility of foreign other investments (FOI) decreases with the availability of information, but does not have any significant relationship with institutional quality.
Originality/value
This paper expands the limited literature regarding the determinants of capital inflows volatility. Furthermore, it is the first study that investigates the effect of institutional quality and information availability on capital inflows volatility in the MENA region.
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Seyed Reza Zeytoonnejad Mousavian, Seyyed Mehdi Mirdamadi, Seyed Jamal Farajallah Hosseini and Maryam Omidi NajafAbadi
Foreign Direct Investment (FDI) is an important means of boosting the agricultural sectors of developing economies. The first necessary step to formulate effective public policies…
Abstract
Purpose
Foreign Direct Investment (FDI) is an important means of boosting the agricultural sectors of developing economies. The first necessary step to formulate effective public policies to encourage agricultural FDI inflow to a host country is to develop a comprehensive understanding of the main determinants of FDI inflow to the agricultural sector, which is the main objective of the present study.
Design/methodology/approach
In view of this, we take a comprehensive approach to exploring the macroeconomic and institutional determinants of FDI inflow to the agricultural sector by examining a large panel data set on agricultural FDI inflows of 37 countries, investigating both groups of developed and developing countries, incorporating a large list of potentially relevant macroeconomic and institutional variables, and applying panel-data econometric models and estimation structures, including pooled, fixed-effects and random-effects regression models.
Findings
The general pattern of our findings implies that the degree of openness of an economy has a negative effect on FDI inflows to agricultural sectors, suggesting that the higher the degree of openness in an economy, the lower the level of agricultural protection against foreign trade and imports, and thus the less incentive for FDI to inflow to the agricultural sector of the economy. Additionally, our results show that economic growth (as an indicator of the rate of market-size growth in the host economy) and per-capita real GDP (as an indicator of the standard of living in the host country) are both positively related to FDI inflows to agricultural sectors. Our other results suggest that agricultural FDI tends to flow more to developing countries in general and more to those with higher standards of living and income levels in particular.
Originality/value
FDI inflow has not received much attention with respect to the identification of its main determinants in the context of agricultural sectors. Additionally, there are very few panel-data studies on the determinants of FDI, and even more surprisingly, there are no such studies on the main determinants of FDI inflow to the agricultural sector. We have taken a comprehensive approach by studying FDI inflow variations across countries as well as over time.
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Alam Asadov, Ikhtiyorjon Turaboev and Ramazan Yildirim
Despite its potential as an emerging market for Islamic financial services, Uzbekistan has lagged in legislative support. This study aims to evaluate the feasibility of…
Abstract
Purpose
Despite its potential as an emerging market for Islamic financial services, Uzbekistan has lagged in legislative support. This study aims to evaluate the feasibility of introducing an Islamic capital market (ICM) in Uzbekistan, preceding a broader industry establishment.
Design/methodology/approach
The authors begin by assessing Islamic finance literacy and the potential demand for ICMs in Uzbekistan. The authors then scrutinize Uzbekistan’s capital market legislation and its readiness. This analysis uses primary data, including surveys and interviews, and secondary data from literature and financial legislation.
Findings
This study highlights a significant demand for ICMs, despite low Islamic finance awareness in Uzbekistan. Presently, Uzbekistan’s capital market development is lacking, with regulations not yet suitable for ICMs. As a result, legal and operational enhancements are needed.
Practical implications
The authors provide essential policy recommendations for authorities and practitioners to facilitate the effective launch of ICMs and enhance Uzbekistan’s capital market stature.
Originality/value
To the best of the authors’ knowledge, this is the first study offering an in-depth analysis of the potential and feasibility of ICMs in Uzbekistan.
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Amit Rohilla, Neeta Tripathi and Varun Bhandari
In a first of its kind, this paper tries to explore the long-run relationship between investors' sentiment and selected industries' returns over the period January 2010 to…
Abstract
Purpose
In a first of its kind, this paper tries to explore the long-run relationship between investors' sentiment and selected industries' returns over the period January 2010 to December 2021.
Design/methodology/approach
The paper uses 23 market and macroeconomic proxies to measure investor sentiment. Principal component analysis has been used to create sentiment sub-indices that represent investor sentiment. The autoregressive distributed lag (ARDL) model and other sophisticated econometric techniques such as the unit root test, the cumulative sum (CUSUM) stability test, regression, etc. have been used to achieve the objectives of the study.
Findings
The authors find that there is a significant relationship between sentiment sub-indices and industries' returns over the period of study. Market and economic variables, market ratios, advance-decline ratio, high-low index, price-to-book value ratio and liquidity in the economy are some of the significant sub-indices explaining industries' returns.
Research limitations/implications
The study has relevant implications for retail investors, policy-makers and other decision-makers in the Indian stock market. Results are helpful for the investor in improving their decision-making and identifying those sentiment sub-indices and the variables therein that are relevant in explaining the return of a particular industry.
Originality/value
The study contributes to the existing literature by exploring the relationship between sentiment and industries' returns in the Indian stock market and by identifying relevant sentiment sub-indices. Also, the study supports the investors' irrationality, which arises due to a plethora of behavioral biases as enshrined in classical finance.
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Pankaj Sinha and Sandeep Vodwal
The subprime crisis (SPC) (2007–2008) has severely affected the economies across the globe. The Indian economy was also troubled because the SPC led to a sharp reduction in…
Abstract
Purpose
The subprime crisis (SPC) (2007–2008) has severely affected the economies across the globe. The Indian economy was also troubled because the SPC led to a sharp reduction in foreign trade and investment, a rise in the exchange rate volatility and disproportionate foreign-currency reserves. The present paper analyzes the financing pattern of Indian listed companies during the SPC. This study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.
Design/methodology/approach
The study uses fixed effect model autoregressive of order 1 (FEM AR (1)) and system generalised method of moments (GMM) methodology on a sample data of 1,032 Indian non-financial listed companies on the Bombay Stock Exchange (BSE) for the period 1999 to 2019 to analyze the financing pattern during the crisis.
Findings
The study finds that the Indian firms opted for de-leveraging, shortening the maturity of debt and short-term borrowing. This significant decline in the leverage and maturity of debt indicates that the companies in India generally followed the “rat race” model of the financing mix in the crisis. After the crisis, the firms have re-leveraged and expanded the maturity of debt up to 90%. This considerable expansion in leverage and maturity implies that the Indian firms are exposed to the “rollover risk.” This re-leverage risk is asymmetrically distributed for manufacturing and services firms. Manufacturing firms are found to be more exposed to this risk. Furthermore, tangibility, free cash flows and the liquidity available within the firms are the compelling elements of the financing decision during the crisis.
Research limitations/implications
The study has not included the private firms and unorganized sectors in India. Moreover, the study has not analyzed disasters such as the Asian liquidity crisis, the information technology (IT) bubble crisis, the euro bond crisis and coronavirus disease 2019 (COVID-19) pandemic.
Practical implications
The study finds that Indian firms are exposed to higher risk during the financial crisis and this risk is further aggravated by the rollover risk. Therefore, investors and creditors should consider these additional risks in the financial decisions and take more precautions. The study suggests that the regulators should make necessary adjustments in lending policy, corporate restructuring and tax policy to deal with the menace of a financial crisis.
Social implications
Indian firms should avoid following the rate race financing model.
Originality/value
This study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.
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V. Veeravel, Pradiptarathi Panda and A. Balakrishnan
The present study aims to verify whether there is a positive (negative) role being played by the institutional investors on the loss-making companies' performance.
Abstract
Purpose
The present study aims to verify whether there is a positive (negative) role being played by the institutional investors on the loss-making companies' performance.
Design/methodology/approach
The authors employ panel data regression and two-step system generalised method of moments (SYS-GMM) to test the above objective.
Findings
The empirical results clearly show that no positive relation is found between institutional investors and loss-making companies' performance.
Research limitations/implications
The findings of the study might have significant implications for firms to improve the firms' operational performance [return on assets (ROA)]. Also, the firm's financial performance [return on equity (ROE)] could be improved by increasing profitability which will reflect in the share prices of the firms whereby the performance can build the investors' confidence over the firm. Market performance (Tobin's Q) could be increased by providing more attractive offers and discounts to customers to capture the business opportunities available in the market.
Practical implications
The overall findings might have for reaching implications in the manufacturing sector with regard to allowing (disallowing) institutional investors.
Social implications
The results of the study may help both companies and institutional investors.
Originality/value
This is the maiden attempt to study whether loss-making companies could be positively (negatively) impacted by the arrival of sophisticated institutional investors [foreign institutional investors (FIIs) and domestic institutional investors (DIIs)]. Further, this study is largely different from previous studies in terms of using new variables which are related to firm characteristics and valuation multiples. Further, seeing if the institutional investors tend to enhance the firm performance is curious.
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Muhammad Yasir and A. Özlem Önder
This study aims to investigate herding spillover in BRIC (Brazil, Russia, India and China) countries and Turkey under different regimes by using a time-varying approach.
Abstract
Purpose
This study aims to investigate herding spillover in BRIC (Brazil, Russia, India and China) countries and Turkey under different regimes by using a time-varying approach.
Design/methodology/approach
The authors used the structural change model of Bai and Perron (1998).
Findings
The results indicate that there is an evidence of herding behaviour in the Chinese stock market in two different regimes. These regimes cover the recent global financial crisis and the period of Hong Kong protests. We also report the evidence of herding behaviour in the Turkish stock market in the regime covering the COVID-19 period. Findings of herding spillover show that there is a two-way herding among Russia and China during crises and high volatile regimes. Similarly, there exists a cross-country herding among Brazil and India during crisis regimes. Also, there is herding spillover from Turkey to Russia, China and Brazil during the global financial crisis, post-European debt crisis and COVID-19 periods respectively. Furthermore, it is also evident that there is a herding spillover from Russia and China to India during the period covering COVID-19.
Originality/value
To the best of the authors' knowledge, this is the first study that uses structural change approach to identify herding behaviour spillovers from the US stock market to BRIC countries and Turkey and to investigate the cross-country herding behaviour among BRIC countries and Turkey.
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Mohd Azrai Azman, Zulkiflee Abdul-Samad, Boon L. Lee, Martin Skitmore, Darmicka Rajendra and Nor Nazihah Chuweni
Total factor productivity (TFP) change is an important driver of long-run economic growth in the construction sector. However, examining TFP alone is insufficient to identify the…
Abstract
Purpose
Total factor productivity (TFP) change is an important driver of long-run economic growth in the construction sector. However, examining TFP alone is insufficient to identify the cause of TFP changes. Therefore, this paper employs the infrequently used Geometric Young Index (GYI) and stochastic frontier analysis (SFA) to measure and decompose the TFP Index (TFPI) at the firm-level from 2009 to 2018 based on Malaysian construction firms' data.
Design/methodology/approach
To improve the TFPI estimation, normally unobserved environmental variables were included in the GYI-TFPI model. These are the physical operation of the firm (inland versus marine operation) and regional locality (West Malaysia versus East Malaysia). Consequently, the complete components of TFPI (i.e. technological, environmental, managerial, and statistical noise) can be accurately decomposed.
Findings
The results reveal that TFP change is affected by technological stagnation and improvements in technical efficiency but a decline in scale-mix efficiency. Moreover, the effect of environmental efficiency on TFP is most profound. In this case, being a marine construction firm and operating in East Malaysia can reduce TFPI by up to 38%. The result, therefore, indicates the need for progressive policies to improve long-term productivity.
Practical implications
Monitoring and evaluating productivity change allows an informed decision to be made by managers/policy makers to improve firms' competitiveness. Incentives and policies to improve innovation, competition, training, removing unnecessary taxes and regulation on outputs (inputs) could enhance the technological, technical and scale-mix of resources. Furthermore, improving public infrastructure, particularly in East Malaysia could improve regionality locality in relation to the environmental index.
Originality/value
This study contributes to knowledge by demonstrating how TFP components can be completely modelled using an aggregator index with good axiomatic properties and SFA. In addition, this paper is the first to apply and include the GYI and environmental variables in modelling construction productivity, which is of crucial importance in formulating appropriate policies.
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