Search results

1 – 10 of over 3000
Article
Publication date: 8 January 2024

Marcellin Makpotche, Kais Bouslah and Bouchra M’Zali

This study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation.

Abstract

Purpose

This study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation.

Design/methodology/approach

The study is based on a sample of 3,896 firms from 2002 to 2021, covering 45 countries worldwide. The authors adopt Tobin’s Q model to conceptualize the relationship between corporate governance and investment in green research and development (R&D). The authors argue that agency costs and financial market frictions affect corporate investment and are fundamental factors in R&D activities. By limiting agency conflicts, effective governance favors efficiency, facilitates access to external financing and encourages green innovation. The authors analyzed the causal effect by using the system-generalized method of moments (system-GMM).

Findings

The results reveal that the better the corporate governance, the more the firm invests in green R&D. A 1%-point increase in the corporate governance ratings leads to an increase in green R&D expenses to the total asset ratio of about 0.77 percentage points. In addition, an increase in the score of each dimension (strategy, management and shareholder) of corporate governance results in an increase in the probability of green product innovation. Finally, green innovation is positively related to firm environmental performance, including emission reduction and resource use efficiency.

Practical implications

The findings provide implications to support managers and policymakers on how to improve sustainability through corporate governance. Governance mechanisms will help resolve agency problems and, in turn, encourage green innovation.

Social implications

Understanding the impact of corporate governance on green innovation may help firms combat climate change, a crucial societal concern. The present study helps achieve one of the precious UN’s sustainable development goals: Goal 13 on climate action.

Originality/value

This study goes beyond previous research by adopting Tobin’s Q model to examine the relationship between corporate governance and green R&D investment. Overall, the results suggest that effective corporate governance is necessary for environmental efficiency.

Details

Review of Accounting and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 15 January 2020

Omar Al Farooque, Wonlop Buachoom and Lan Sun

This study aims to investigate the effects of corporate board and audit committee characteristics and ownership structures on market-based financial performance of listed firms in

4328

Abstract

Purpose

This study aims to investigate the effects of corporate board and audit committee characteristics and ownership structures on market-based financial performance of listed firms in Thailand.

Design/methodology/approach

It applies system GMM (generalized method of moments) as the baseline estimator approach, and ordinary least squares and fixed effects for robustness checks on a sample of 452 firms listed on the Thai Stock Exchange for the period 2000-2016.

Findings

Relying mainly on the system GMM estimator, the empirical results indicate some emerging trends in the Thai economy. Contrary to expectations for an emerging market and prior research findings, ownership structures, particularly ownership concentration and family ownership, appear to have no significant influence on market-based firm performance, while managerial ownership exerts a positive effect on performance. Moreover, as expected, board structure variables such as board independence; size; meeting and dual role; and audit committee meeting show significant explanatory power on market-based firm performance in Thai firms.

Practical implications

These findings are important for policymakers in constructing an appropriate set of governance mechanisms in an emerging market context, and for corporate entities and investors in shaping their understanding of corporate governance in the Thai institutional context.

Originality/value

Unlike previous literature on the Thai market, this study is the first to use the more advanced econometric method known as system GMM estimator for addressing causality/endogeneity issues in governance–performance relationships. The findings indicate new trends in the explanatory power of ownership structure variables on market-based firm performance in Thai-listed firms.

Details

Pacific Accounting Review, vol. 32 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 15 January 2018

Ahmed Mohamed Dahir, Fauziah Binti Mahat and Noor Azman Bin Ali

The purpose of this paper is to examine the effects of funding liquidity risk and liquidity risk on the bank risk-taking.

1951

Abstract

Purpose

The purpose of this paper is to examine the effects of funding liquidity risk and liquidity risk on the bank risk-taking.

Design/methodology/approach

This study employs a system generalized method of moments (GMM) estimation technique and a sample of 57 banks operating in BRICS countries over the period from 2006 to 2015.

Findings

The results reveal that liquidity risk has a significant and negative effect on the bank risk-taking, indicating that a decrease in liquidity risk contributes to higher bank risk-taking. The study also reveals that funding liquidity risk has the substantial impact on bank risk-taking, suggesting lower funding liquidity risk results in higher bank risk-taking. These results are consistent with prior assumptions.

Research limitations/implications

The implications of this study highlight the fact that liquidity risk is a risk factor which drives the potential bank default, of which banks tend to take more risks when higher funding liquidity exists.

Practical implications

This study offers a number of valuable implications for the policy makers as well as practitioners. The policy makers should take into account better liquidity risk management framework aimed at preventing banks from taking excessive risks. Bank executives must pay more attention on how banks could hold more liquid securities and cash. Less risk-taking reduces higher borrowing costs undermining earnings through imposing taxes on corporate.

Originality/value

This work uncovered that liquidity risk per se is an important and previously unidentified risk factor, specifically its effects on bank risk-taking and contributes to the view in support of holding more liquid securities than the past.

Details

International Journal of Emerging Markets, vol. 13 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 10 November 2014

Gabriel Caldas Montes and Gabriel Gonçalves do Vale Monteiro

The purpose of this paper is to analyze the influence of prudential regulation and monetary policies on the supply of credit as well as the influence of such policies on the…

Abstract

Purpose

The purpose of this paper is to analyze the influence of prudential regulation and monetary policies on the supply of credit as well as the influence of such policies on the aggregate investment through the credit channel in Brazil.

Design/methodology/approach

The empirical analysis is based on estimates through ordinary least squares (OLS), generalized method of moments (GMM), system of equations through GMM (system-GMM), and impulse response functions through vector autoregressive (VAR).

Findings

The results suggest that monetary policies and prudential regulation affect aggregate investment through the bank lending channel. With regards to elasticities, the findings indicate that the credit is very sensitive to variations in economic activity and, in turn, prudential regulation presents a stronger influence on credit than the basic interest rate and the reserve requirement rate. Moreover, the estimates suggest that aggregate investment is more sensitive to entrepreneurs’ expectations and credit supply.

Practical implications

Aiming to reduce systemic risk in the economy, capital requirements may be increased in order to induce banks to a lower risk exposure by reducing the supply of loans. However, while this instrument strengthens the banking system, it can also lead the banking system to become less sensitive to monetary policy shocks, and also discourage aggregate demand through the influence that the credit exerts on investments. As a consequence, prudential regulation is an important tool because it acts on the balance between economic growth and low risk exposure of banks.

Originality/value

The paper provides useful insights to academicians, economists and policymakers who are interested in understanding the effects of monetary policies and prudential regulation on aggregate investment through the credit channel in an emerging economy under inflation targeting. Moreover, the paper develops a theoretical model in order to show the influence of different monetary policies, as well as the influence of prudential regulation on the supply of credit.

Details

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

Keywords

Article
Publication date: 11 January 2013

Manoj Subhash Kamat and Manasvi M. Kamat

This study aims to find whether the Indian private corporate sector follow stable cash dividend policies, whether dividends smoothen earnings, estimate the implicit target…

Abstract

Purpose

This study aims to find whether the Indian private corporate sector follow stable cash dividend policies, whether dividends smoothen earnings, estimate the implicit target dividend ratio, and examine the determinants along with speed of adjustment of dividends towards a long run target ratio.

Design/methodology/approach

The study uses the instrumental variable (IV) approach for dynamic panel data for 1971‐2010 periods controlling for economic reforms. The GMMin‐levels model, GMMin‐first‐differences and GMMinsystems are alternatively estimated to include other lag structures.

Findings

In the post‐reform period lower dividends are consistent with rapid growth in the economic environment and the tendency to smoothen dividends has considerably decreased over time. The estimated model suggests dividends substitute for less opportunity for internal growth and increased general likening to relatively retain their earnings and finance their growth, unlike the past.

Research limitations/implications

Limitation to capture substitution, ownership and self selection effects stems up from data as the Annual Studies RBI does not include such variables, does not capture qualitative data and disallows identification of the firm.

Practical implications

The paper documents long run trends and inter‐temporal dividend patterns controlling economic reforms for a relatively larger number of public limited firms nearing four decades for an emerging economy.

Originality/value

This is a first attempt to take a holistic view of dividend using rich set of unexplored dynamic panel data on Indian firms controlling for reforms using contemporary econometric models and analyzes issues relating determinants, smoothening and stability of the corporate dividend structure.

Details

Journal of Asia Business Studies, vol. 7 no. 1
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 19 May 2022

Swathi Markakkaran and Perumal Sridharan

This paper aims to empirically analyze the impact of export diversification on gross domestic product (GDP) per capita growth.

Abstract

Purpose

This paper aims to empirically analyze the impact of export diversification on gross domestic product (GDP) per capita growth.

Design/methodology/approach

Using system generalized method of moments (GMM), a nonlinear model in a dynamic panel data growth framework for 101 countries between 1995 and 2019 was estimated.

Findings

Results evidenced that export concentration, measured by the Herfindahl–Hirschman Index (HHI), is negatively associated with GDP per capita growth after controlling for the effects of other explanatory variables. Further, the squared term of HHI used in the model to measure the nonlinear relationship between export concentration and economic growth indicated that the low-income and lower-middle-income countries benefited from export diversification. At the same time, high-income and upper-middle-income countries perform well with their export specialization. The results of the robustness check validate the findings of nonlinear estimation.

Research limitations/implications

The findings recommend that low-income and lower-middle-income countries diversify their export basket to improve economic growth by generating stable export earnings. Similarly, high-income and upper-middle-income countries should focus on measures to close the product lines which no longer belong to their factor endowments and rebalance their export basket.

Originality/value

This study contributes to the existing literature by using the system GMM method, which is most appropriate for a dynamic panel data growth framework with up-to-date data. Further, this study segregates a large panel into 43 concentrated and 58 diversified countries to test the robustness of the empirical results.

Article
Publication date: 30 August 2021

Mohammed Ayoub Ledhem and Mohammed Mekidiche

This paper aims to empirically explore the nexus between Islamic finance and economic growth across Southeast Asia based on the perception of the endogenous growth model.

807

Abstract

Purpose

This paper aims to empirically explore the nexus between Islamic finance and economic growth across Southeast Asia based on the perception of the endogenous growth model.

Design/methodology/approach

This paper applied the dynamic panel one-step system GMM as an optimum estimation approach to study the influence of Islamic finance on economic growth in Southeast Asia from 2013Q4 to 2019Q4. This paper used total Islamic financing as the major exogenous explanatory factor inside the endogenous growth model, whereas the gross domestic product was used as the measurement of economic growth. The sample consisted of all complete Islamic banks operating in Southeast Asia (Malaysia, Brunei Darussalam and Indonesia).

Findings

The findings demonstrated that Islamic finance is promoting economic growth in Southeast Asia, which reflects the weighty role of Islamic finance as an energetic contributor to economic growth.

Practical implications

This paper would enrich the literature by studying the nexus between Islamic finance and economic growth in Southeast Asia based on the perception of endogenous growth model, as the results of this paper assist as an attendant for financial scholars, decision-makers and policymakers to expand Islamic finance globally as an alternative funding source for the best involvement to economic growth.

Originality/value

Despite the existing studies on the nexus between Islamic finance and economic growth, this paper is the first that explores empirically the nexus between Islamic finance and economic growth in Southeast Asia based on the theoretical background of the endogenous growth model to obtain solid information on this nexus.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 8
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 25 November 2020

Durmuş Çağrı Yıldırım and Hilal Akinci

In this study, the relationship between female labour force participation rate and economic growth is investigated in middle-income countries. The study covers the period of…

Abstract

Purpose

In this study, the relationship between female labour force participation rate and economic growth is investigated in middle-income countries. The study covers the period of 2001–2016 by employing a dynamic panel approach. Pooled Ordinary Least Square and Fixed Effects model estimations are calculated as a decision criterion to select proper GMM Method. The outcomes indicate that the proper estimation technique, which is a System-GMM model, evidences the U Feminisation Theory for the middle-income countries while controlling all other factors.

Design/methodology/approach

The novelty of this study is that the research not only employs both difference and system generalised method of moments (GMM) estimators but also includes main explanatory variables such as education, fertility, and total labour force rate. The study provides an opportunity to review the U-shape nexus between the female labour force and economic growth while controlling education, fertility and total labour participation rate.

Findings

The estimation implies that middle-income countries support a U-shaped relationship. The fertility rate does not impact on the female labour force, and education and total labour force level have a positive influence on women's participation in the labour market.

Research limitations/implications

This study used data that include the period of 2001–2016 for middle-income countries. So, further studies can use different periods of data or different countries.

Practical implications

The authors emphasise the importance of economic growth for female labour force for middle-income countries. Thus, a country intending to increase female labour force should also focus on its economic growth. As the study points out, middle-income countries staying under the minimum threshold, $4698.15 (per capita), should priorities their economic improvement policies to reach their female labour force participation goal. Those countries also should be prepared for a female labour force participation declining phase until they reach the turning point income level.

Social implications

Furthermore, education is one of the critical determinants that have an impact on FLFPR. The equal opportunity for both genders to engage in education should be considered as a policy. If females do not have an equal chance to enrolment in education, it may influence the policy of increasing female labour force adversely. Fertility rate appears no more statistically significant in our study. Moreover, today, there are some countries they practise equality between genders by providing equally extended parental leave, which may be a promising policy for gender equality in the labour force and may worth a try.

Originality/value

Some previous studies may suffer model mistakes due to lack of consideration the endogeneity problem and bias issue of the results as suggested by Tam (2011). Moreover, previous studies tend to choose either studying U-feminisation as excluding other variables or studying determinants of female labour force participation rate as excluding U-feminisation theory. There is not any panel data study acknowledging both concepts by using recent data to the best knowledge of the authors. Thus, the novelty of this study is that the research not only employs both difference and system generalised method of moments (GMM) estimators but also includes main explanatory variables such as education, fertility, and total labour force rate. The study provides an opportunity to review the U-shape nexus between the female labour force and economic growth while controlling education, fertility and total labour participation rate.

Details

Journal of Economic Studies, vol. 48 no. 8
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 27 July 2012

Yong Tan and Christos Floros

The purpose of this paper is to evaluate the determinants of bank performance in China. In particular, the paper examines the effects of stock market volatility, competition and…

6353

Abstract

Purpose

The purpose of this paper is to evaluate the determinants of bank performance in China. In particular, the paper examines the effects of stock market volatility, competition and ownership on bank performance in China.

Design/methodology/approach

The sample comprises a total of 11 banks (four state‐owned and seven joint‐stock commercial banks) listed in the Chinese Stock Exchanges. The period under consideration extends from 2003‐2009. The generalized methods of moments (GMM) difference and system estimators are applied.

Findings

Empirical results show that high level of stock market volatility can translate into higher return on equity (ROE) and excess return on equity (EROE). Rather than leading to improved profitability, the labour productivity has a negative impact on economic value added (EVA). Ownership does not have any effect on the profitability of Chinese banking industry. The bank profitability in terms of ROE and EROE is lower in the banking industry with higher competition. When using the GMM with ROE‐COC and ROE, the paper finds that high taxation has a negative impact on both state‐owned and joint‐stock banks, while the capital level is negatively related to joint‐stock commercial banks. With regards to the other two performance indicators (EVA and NIM), the result suggests that higher cost efficiency and labour productivity improve the performance of both state‐owned and joint‐stock commercial banks. Large volume of non‐traditional activity is the explanation of poor performance of state‐owned commercial banks, while higher credit risk, lower taxation and the mature banking industry are helpful in improving the performance of joint‐stock commercial banks.

Research limitations/implications

Further research should examine other methods (e.g. the Rosse‐Panzar H statistic) to calculate the bank competition in China, and other determinants of bank performance in Asian countries and compare them with these results.

Social implications

The current study has relevant policy implications. First, in order to increase the profit earned from the traditional loan‐deposit services, the Chinese banks should make loans to the high risk projects or companies, and control the expenses including both the operating and personnel expenses. Furthermore, the government and bank regulatory authority should make policy such as inject capital to SOCBs and write‐off NPLs for them to reduce the degree of competition in order to make banks have better performance.

Originality/value

Particular emphasis is given on the investigation into the effects of stock market volatility, competition and ownership on bank performance in China while controlling for the most comprehensive bank‐specific, industry specific and macroeconomic variables.

Details

Studies in Economics and Finance, vol. 29 no. 3
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 13 August 2021

Fanyu Chen, Siong Hook Law, Zi Wen Vivien Wong and W.N.W Azman-Saini

This study aims to examine the effects of institutions on private investment (PI) using panel data analysis, where the sample countries consist of 100 countries around the world…

Abstract

Purpose

This study aims to examine the effects of institutions on private investment (PI) using panel data analysis, where the sample countries consist of 100 countries around the world and the time period is covering from 2007 to 2016. The system generalized method of moments (GMM) estimator, introduced by Arellano and Bond (1991) and further developed by Blundell and Bond (1998) is used to analyze the data sets.

Design/methodology/approach

This study uses the panel data approach to estimate the empirical model due to the panel nature of the data. In particular, due to the presence of lagged dependent variables and the ability to capture individual country-specific effects, the system GMM estimator, introduced by Arellano and Bond (1991) and further developed by Blundell and Bond (1998), is adopted to analyze the roles of institutions in PI. The system GMM is developed specifically to solve the problems of weak instruments and persistency (Blundell and Bond, 1998). Jointly, they suggest to adopt additional moment conditions where lagged difference of the dependent variable is orthogonal to the level form of the disturbances. The system GMM estimator is able to combine the moment conditions for the different models, as well as the level model, thereby (is capable of) generate consistent and efficient parameters. Due to the dynamic nature of the data, this study uses one-step and two-step system GMM to investigate the roles of institutions in PI.

Findings

The empirical results based on the two-step system GMM demonstrate that the quality of institutions plays an important role in stimulating PI. The finding is reinforced by the analysis of the institutional sub-components’ effects on PI.

Originality/value

This study is unique as its measurement of institutions is multi-dimensional (including law and order, rules and regulation, government stability, bureaucratic quality, control of corruption, socio-economic condition, etc.), and hence are more comprehensive. Second, it is different than the previous studies as its sample of countries includes both democracies and non-democracies, as well as both developed and non-developed economies in which policy implications are widely acceptable. Third, this study contributes to the policymakers especially those in the debt-ridden economies where governments are budget-tightening (limited capacity for public investment), as to which practical direction should be focused on so as to attract PI and eventually sustainable growth can take place.

Details

Studies in Economics and Finance, vol. 39 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

1 – 10 of over 3000