Search results

This paper investigates the main drivers of foreign direct investment (FDI) inflows for a balanced panel of 11 Middle East and North Africa (MENA) economies over the 1995–2017 annual period. The author postulates that the impacts of the main pull (growth) and push (global financial conditions, GFC) factors may not be invariant to endogenously estimated thresholds for structural domestic conditions (SDCs) including trade and capital account openness, financial development, human capital (HC) and natural resource endowments.

The author investigates whether the main SDC provide endogenous thresholds for the impacts of basic pull and push factors on FDI inflows for the MENA sample by employing panel fixed effects threshold procedure of Hansen (1999). As a robustness check, the author also present the results of the dynamic panel data two-step system generalized method of moments (GMM) estimation, which explicitly consider the potential endogeneity of SDC along with main pull factor for the evolution of FDI inflows.

Growth, GFC and SDC are important drivers of FDI inflows. The impacts of SDC tend to be higher in countries with higher financial depth, openness to international trade and finance and lower natural resource and HC endowments. The sensitivities of FDI inflows to GFC are substantially higher in the countries which are more open to international trade and capital flows and higher levels of financial depth. FDI inflows are found to be pro-cyclical and this pro-cyclicality tends to be much higher for the episodes exceeding the SDC thresholds.

Improving SDC including higher openness to international trade and finance and financial development may be effective in encouraging FDI inflows. The findings support an argument that, better SDC are crucially important not only for attracting FDI but also achieving the growth benefits of FDI inflows. Therefore, improving SDC appears to be an important growth-oriented policy agenda for emerging market and developing economies (EMDEs) including MENA.

The impacts of the main push and pull factors on FDI (and capital) inflows may be nonlinear. The literature often tackles the nonlinearity issue either by some interaction specifications or imposing exogenous thresholds. The literature, however, is yet to comprehensively investigate whether the main SDC provide endogenous thresholds for the impacts of basic pull and push factors. The author aims to contribute to the literature by estimating endogenous SDC threshold levels for the impacts of the main determinants of FDI flows for MENA.

This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers.

The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions.

The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets.

This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

To provide a systematic analysis of the contrasts, imbalances and suggestions for corrective action in the present globalized economic system and monetary and financial order in the framework of a conference organized by Webster University, Geneva (Switzerland) dealing with the outlook for international order.

The paper is divided into two parts. The first provides an overview of the general characteristics of the globalized economy, of the interdependence of national and international orders and policy making and the issue of investments, technology transfer and global business. The second part contains a more detailed analysis of the international monetary and financial order, including the evolving role of the International Monetary Fund (IMF). While the paper provides a rigorous analysis of the institutional and policy issues, the analysis and the conclusions are accessible also to the non‐specialized reader.

The paper focuses on the inconsistencies and asymmetries in the working of the international economic and monetary order and of the policies of the principal international organizations with respect to different groups of countries, and in particular the advanced, developed countries, on the one hand, and the developing countries, on the other hand. The corrective measures suggested by the author are in the interests of both groups of countries and thus of the system as a whole.

The paper provides suggestions for improvements in the economic and monetary order of a globalised world on the basis of systematic policy analysis, anchored in economic theory, rather than political rhetoric.

Market links (and price discovery) between financial assets and lead–lag relationships are topics of interest for financial economists, financial managers and analysts. The lead–lag relationship analysis should consider both short and long-term investors. From a portfolio diversification perspective, the first type of investor is generally more interested in determining the co-movement of financial assets at higher frequencies, which are short-run fluctuations, while the latter concentrates on the relationship at lower frequencies, or long-run fluctuations. The paper aims to discuss these issues.

For this study, a technique was employed known as the wavelet approach, which has recently been imported to finance from engineering sciences to study the co-movement dynamics between global sukuk and bond markets. Data cover the period from January 2010 to December 2015.

The results indicate that: there is no unidirectional causality from developed market bond indices to Malaysia and Dow Jones indices, which is promising for fixed-income investors of a developed market; and in relation to emerging markets, the Malaysian sukuk market has a bidirectional causality with Indonesia, Malaysia, India and South Korea bond indices but not China bond indices, while in terms of the Dow Jones sukuk index, there is no unidirectional causality between the listed emerging markets and the sukuk index except Indonesia’s market during the sample period.

This analysis provides evidence regarding the timely and appropriate measure of correlation changes and the behaviour of sukuk and bond indices globally, which is beneficial to the management of sukuk and bond portfolios.

The evidence hitherto unexplored, which was produced by the application of a wavelet cross-correlation amongst the selected sukuk and bond indices, provides robust and useful information for international financial analysts as well as long and short-term investors.

The real estate market has evolved significantly over the past 10 years and has experienced rapid growth throughout the world in its various forms. Many emerging countries witnessed the significant growth in their commercial real estate markets that became a stable sector of their economies. These countries, after developing a reliable commercial real estate base within their economies subsequently developed real estate financial markets. The growth of the real estate investment trusts, REITs, markets in many countries within the past decade helped attract global capital that facilitated additional investments in local real estate developments. Significantly, this period of time may have witnessed a higher degree of integration of real estate with the broader financial markets due in large part to the securitization of mortgages. Yet the general real estate market was also impacted in many parts of the world with rising prices and subsequent price collapses. This section focuses on the various areas of the global real estate market and the changes that it has encountered as examined by researchers of real estate. This chapter also examines the recent trends in global real estate markets and explores how these changes have affected the broader investment community.

First, the purpose of this study is to examine the relationship between foreign-currency debt and firms' financing constraints for India, the second-largest emerging market economy after China. Second, this study provides insights into how firms' financing constraints evolve prior to, during and after foreign currency borrowing. Third, it demonstrates the extent to which banks' ownership status and firms' characteristics influence the relationship between foreign currency borrowing and firms' financing constraints.

This study uses detailed balance sheet data for 2,512 nonfinancial listed firms in India for the 1996–2016 period to provide new evidence on the relationship between foreign currency borrowing and firms' financing constraints. This study uses a well-known measure of firms' financing constraints, the sensitivity of investment to internal cash flows (Fazzari et al., 1988, 2000; Hubbard, 1999; Love, 2003).

Financing constraints tend to be higher for firms with foreign currency debt exposure compared to other firms. Financing constraints are higher prior to new foreign currency borrowing (FCB), but decrease subsequently. Firms that have relationships with privately owned banks or foreign banks have higher financing constraints when undertaking new FCB than those with exclusive relationships with government-owned banks. Financing constraints for firms with FCB are higher during domestic credit booms than other periods. Nonmanufacturing firms and those with lower than median export revenues and higher than median tangible assets experience greater financing constraints compared to other firms when they undertake FCB.

The findings of this study suggest that although firms which borrow in foreign currencies are initially more financially constrained than other firms, the foreign currency borrowing reduces their financing constraints. The findings on how global and domestic macroeconomic conditions and firm-specific characteristics influence the relationship between financing constraints and foreign currency borrowing can provide directions for policy to better leverage the benefits of international financial integration.