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Open Access
Article
Publication date: 23 May 2023

Alexandre Teixeira Dias, Henrique Cordeiro Martins, Valdeci Ferreira Santos, Pedro Verga Matos and Greiciele Macedo Morais

This research aims to identify the optimal configuration of investment which leads firms to their best competitive positions, considering the degree of concentration in the market.

Abstract

Purpose

This research aims to identify the optimal configuration of investment which leads firms to their best competitive positions, considering the degree of concentration in the market.

Design/methodology/approach

The methodology was quantitative and based on secondary data with samples of 124, 106 and 90 firms from competitive environment classified as perfect competition, monopolistic competition and oligopoly, respectively. Proposed models' parameters were estimated by means of genetic algorithms.

Findings

Adjustments on firm's investment are contingent on the degree of competition they face. Results are in line with existing academic research affirmation that the purpose of investments is to create and exploit opportunities for positive economic rents and that investments allow firms to protect from rivals' competitive actions and reinforce the need for investment decision makers to consider the environment in which the firm is competing, when defining the amount of investment that must be done to achieve and maintain a favorable competitive advantage position.

Originality/value

This research brings two main original contributions. The first one is the identification of the optimal amount of capital and R&D investments which leads firms to their best competitive positions, contingent to the degree of concentration of the competitive environment in which they operate, and the size of the firm. The second one is related to the use of genetic algorithms to estimate optimization models that considers the three competitive environments studied (perfect competition, monopolistic competition and oligopoly) and the investment variables in the linear and quadratic forms.

Details

European Journal of Management and Business Economics, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2444-8451

Keywords

Article
Publication date: 9 October 2023

James Ntiamoah Doku and Gladys A.A. Nabieu

This study provides a bibliometric analysis of bank efficiency and competition over the past years (from 1993 to 2022) to (1) discover the past and current state of knowledge on…

Abstract

Purpose

This study provides a bibliometric analysis of bank efficiency and competition over the past years (from 1993 to 2022) to (1) discover the past and current state of knowledge on bank competition and efficiency, (2) identify leading and authoritative journals and scholars who made significant contributions to the distribution of knowledge and impact, (3) identify nations that made a significant contribution and impact to the literature and (4) identify the structure of collaboration that exists between scholars in the areas of bank competition and efficiency and key thematic areas.

Design/methodology/approach

A total number of 868 documents made up of articles, reviews, book chapters, book and conference papers from the Scopus database were gathered. This study used a bibliometric analytic approach.

Findings

The number of documents on bank competitiveness and efficiency has increased significantly, as have their total publications, citations and national output. Additionally, the most esteemed and prestigious academic journals of eminent academics who have had a significant impact on the dissemination of knowledge on bank efficiency and competition literature champion papers on banking efficiency and competition. In terms of citation performance and collaborative efforts, the United States tops the developed countries, led by China, which is also the most productive. Additionally, single-country publications predominate in the literature, with China ranking first among the top five countries with corresponding authors. While the Lerner index, H-statistic, concentration index and market power were used to measure bank competitive behaviour, the data envelopment analysis approach predominates efficiency estimation techniques that are linked to cost, profit or revenue, scale, technical and productivity indexes.

Originality/value

This study is one of the first to offer bibliometric evidence of both bank competition and efficiency. It also offers proof of the distribution of knowledge and intellectual structure of the concepts and concerns in bank competition and efficiency.

Details

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

Keywords

Article
Publication date: 12 December 2023

Bhavya Srivastava, Shveta Singh and Sonali Jain

The present study assesses the commercial bank profit efficiency and its relationship to banking sector competition in a rapidly growing emerging economy, India from 2009 to 2019…

Abstract

Purpose

The present study assesses the commercial bank profit efficiency and its relationship to banking sector competition in a rapidly growing emerging economy, India from 2009 to 2019 using stochastic frontier analysis (SFA).

Design/methodology/approach

Lerner indices, conventional and efficiency-adjusted, quantify competition. Two SFA models are employed to calculate alternative profit efficiency (inefficiency) scores: the two-step time-decay approach proposed by Battese and Coelli (1992) and the recently developed single-step pairwise difference estimator (PDE) by Belotti and Ilardi (2018). In the first step of the BC92 framework, profit inefficiency is calculated, and in the second step, Tobit and Fractional Regression Model (FRM) are utilized to evaluate profit inefficiency correlates. PDE concurrently solves the frontier and inefficiency equations using the maximum likelihood process.

Findings

The results suggest that foreign banks are less profit efficient than domestic equivalents, supporting the “home-field advantage” hypothesis in India. Further, increasing competition drives bank managers to make riskier lending and investment choices, decreasing bank profit efficiency. However, this effect varies depending on bank ownership and size.

Originality/value

Literature on the competition bank efficiency link is conspicuously scant, with a focus on technical and cost efficiency. Less is known regarding the influence of competition on bank profit efficiency. The article is one of the first to examine commercial bank profit efficiency and its relationship to banking sector competition. Additionally, the study work represents one of the first applications of the FRM presented by Papke and Wooldridge (1996) and the PDE provided by Belotti and Ilardi (2018).

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 4 December 2023

Yanyan Zheng, Peng Liu, Yingxue Zhao and Zhichao Zhang

This paper examines how the level of low-carbon awareness (LCA) affects the remanufacturing strategy in a supply chain with an original equipment manufacturer (OEM) and an…

Abstract

Purpose

This paper examines how the level of low-carbon awareness (LCA) affects the remanufacturing strategy in a supply chain with an original equipment manufacturer (OEM) and an independent remanufacturer (IR) competing with each other.

Design/methodology/approach

Game theory and operations optimization.

Findings

The studies analytically characterize the threshold levels of the LCA in response to which the OEM and the IR will change their remanufacturing strategies from no remanufacturing to partial remanufacturing and then to full remanufacturing. In addition, the studies reveal that as compared with the OEM, the IR has more flexibility in terms of the market entry to remanufacturing with the level of LCA increasing. With the extended studies, it is exhibited that the above findings are robust to a good extent.

Originality/value

It can provide decision support for remanufacturing enterprises.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 27 March 2023

António Manuel Cunha, Ana Pinto Borges and Miguel Ferreira

This study aims to study the sensitivity of nonlisted real estate investment companies’ accounting earnings to house prices. This study evaluates whether house price changes…

Abstract

Purpose

This study aims to study the sensitivity of nonlisted real estate investment companies’ accounting earnings to house prices. This study evaluates whether house price changes determined these companies’ return on equity (ROE) or if other factors influenced the industry’s profitability beyond house price growth.

Design/methodology/approach

The authors collected a ten-year sample with the aggregate ROE of Portugal’s real estate investment companies, split by regions, and data on house prices and the per capita gross domestic product as a control variable. The authors ran a national-level time series with the canonical cointegrating regression estimator, which is robust to a small sample size; the authors also performed a regression on regional-level panel data with the common correlated effects mean group estimator, thus allowing slope coefficient heterogeneity and controlling for cross-sectional dependence. The authors also ran ordinary least squares regressions as a means of comparison.

Findings

This study found that an increase in the house price is not translated into an increase in the aggregate ROE. The results are robust with a reduced survivorship-biased sample, meaning that even the best-succeeded real estate investment companies do not have their accounting ROE dependent on house price growth.

Research limitations/implications

The sample size is small and specific to one country. This paper did not study the housing market structure to verify whether it operates under monopolistic competition, which could further explain the attained results.

Practical implications

Policy decision-makers should know that there are no excess profits in the real estate investment companies’ industry because of house price growth that could be subject to windfall taxes.

Originality/value

To the best of the authors’ knowledge, the connections between house prices and real estate investment companies’ accounting earnings have never been studied.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 25 July 2023

Ming Gao and Fanchao Zhuo

Based on the research of free trade agreements on alleviating service trade policy heterogeneity and its impact on manufacturing exports, this article aims to not only provide a…

Abstract

Purpose

Based on the research of free trade agreements on alleviating service trade policy heterogeneity and its impact on manufacturing exports, this article aims to not only provide a basis for China's strategy of promoting regional economic integration, but also provide a policy reference for the manufacturing industry to expand the export market space.

Design/methodology/approach

This study uses the two principles of “answering” and “scoring” to quantify the indicators of service trade policy heterogeneity to test the relationship between heterogeneity of service trade policy, free trade agreement and manufacturing export.

Findings

According to empirical study, the export of Chinese manufacturing firms is severely hampered by the variety of service trade regulations, and the bigger the enterprise, the more hampered it is. In comparison to communications, transport and commerce, the financial industry's policy heterogeneity has a greater negative impact on certain industries. The major methods used to reduce the impact of service trade policy heterogeneity on manufacturing exports are product price increases and product quantity reductions. Also, by reducing the heterogeneity of service trade regulations and fostering industrial exports, the free trade agreement that China has signed can be quite successful. The open commitment in the area of national treatment, however, can reduce policy heterogeneity and advance manufacturing.

Originality/value

In the area of market access, the effect of export is superior to the open promise. Thus, in order to effectively support the stabilization of international trade, China should actively encourage the negotiation and signing of higher-quality and mutually beneficial free trade agreements.

Details

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

Keywords

Article
Publication date: 5 February 2024

Karlo Marques Junior

This paper seeks to explore the sensitivity of these parameters and their impact on fiscal policy outcomes. We use the existing literature to establish possible ranges for each…

18

Abstract

Purpose

This paper seeks to explore the sensitivity of these parameters and their impact on fiscal policy outcomes. We use the existing literature to establish possible ranges for each parameter, and we examine how changes within these ranges can alter the outcomes of fiscal policy. In this way, we aim to highlight the importance of these parameters in the formulation and evaluation of fiscal policy.

Design/methodology/approach

The role of fiscal policy, its effects and multipliers continues to be a subject of intense debate in macroeconomics. Despite adopting a New Keynesian approach within a macroeconomic model, the reactions of macroeconomic variables to fiscal shocks can vary across different contexts and theoretical frameworks. This paper aims to investigate these diverse reactions by conducting a sensitivity analysis of parameters. Specifically, the study examines how key variables respond to fiscal shocks under different parameter settings. By analyzing the behavioral dynamics of these variables, this research contributes to the ongoing discussion on fiscal policy. The findings offer valuable insights to enrich the understanding of the complex relationship between fiscal shocks and macroeconomic outcomes, thus facilitating informed policy debates.

Findings

This paper aims to investigate key elements of New Keynesian Dynamic Stochastic General Equilibrium (DSGE) models. The focus is on the calibration of parameters and their impact on macroeconomic variables, such as output and inflation. The study also examines how different parameter settings affect the response of monetary policy to fiscal measures. In conclusion, this study has relied on theoretical exploration and a comprehensive review of existing literature. The parameters and their relationships have been analyzed within a robust theoretical framework, offering valuable insights for further research on how these factors influence model forecasts and inform policy recommendations derived from New Keynesian DSGE models. Moving forward, it is recommended that future work includes empirical analyses to test the reliability and effectiveness of parameter calibrations in real-world conditions. This will contribute to enhancing the accuracy and relevance of DSGE models for economic policy decision-making.

Originality/value

This study is motivated by the aim to provide a deeper understanding of the roles macroeconomic model parameters play concerning responses to expansionary fiscal policies and the subsequent reactions of monetary authorities. Comprehensive reviews that encompass this breadth of relationships within a single text are rare in the literature, making this work a valuable contribution to stimulating discussions on macroeconomic policies.

Details

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

Keywords

Article
Publication date: 26 December 2023

Hai Le and Phuong Nguyen

This study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open…

Abstract

Purpose

This study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open economy New Keynesian dynamic stochastic general equilibrium (DSGE) model. The model encompasses several essential characteristics, including incomplete financial markets, incomplete exchange rate pass-through, deviations from the law of one price and a banking sector. The authors consider generalized Taylor rules, in which policymakers adjust policy rates in response to output, inflation, credit growth and exchange rate fluctuations. The marginal likelihoods are then employed to investigate whether the central bank responds to fluctuations in the exchange rate and credit growth.

Design/methodology/approach

This study constructs a small open economy DSGE model and then estimates the model using Bayesian methods.

Findings

The authors demonstrate that the monetary authority does target exchange rates, whereas there is no evidence in favor of incorporating credit growth into the policy rules. These findings survive various robustness checks. Furthermore, the authors demonstrate that domestic shocks contribute significantly to domestic business cycles. Although the terms of trade shock plays a minor role in business cycles, it explains the most significant proportion of exchange rate fluctuations, followed by the country risk premium shock.

Originality/value

This study is the first attempt at exploring the relevance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand.

Details

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

Keywords

Article
Publication date: 9 October 2023

Puneet Kumar Arora and Jaydeep Mukherjee

This study aims to add to the growing literature on the trade–finance nexus by exploring the interplay between a country's level of financial development, the external finance…

Abstract

Purpose

This study aims to add to the growing literature on the trade–finance nexus by exploring the interplay between a country's level of financial development, the external finance dependence of firms and their exporting decisions.

Design/methodology/approach

The study first develops a theoretical model to motivate the idea that a firm's liquidity (financial) position and its home country's level of financial development act as substitute factors in its export market entry decisions. It then empirically tests whether an improvement in a country's financial development level enhances the number of entrants in the foreign markets and boosts the exports of incumbent exporters using firm-level data of manufacturing firms in India for the period 1993–2020.

Findings

Empirical results suggest that a higher level of financial development helps increase the exporting probability of firms that rely more on external finance for their operations. Further, the study finds that the sunk costs-induced hysteresis effect plays a major role in firms' exporting decisions and financial factors don't play a significant role in the exporting activities of incumbent exporters.

Practical implications

The findings suggest that a well-developed financial market is necessary to help more and more firms initiate their foreign market operations. The results underscore that trade-liberalisation measures alone may not increase India's exports and the government must complement them with financial sector reforms.

Originality/value

Studies highlighting the role of financial sector development in helping financially-constrained Indian firms overcome the entry barriers associated with exporting are extremely limited. This study contributes to this nascent literature by conducting an empirical investigation on an extensive database of Indian manufacturing firms. Moreover, in contrast to the previous firm-level studies in this area, this empirical analysis uses the actual values of external finance raised by the firms as a critical factor in determining their extensive and intensive margin of exports instead of the usual balance sheet variables such as liquidity and leverage.

Details

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

Keywords

Article
Publication date: 4 May 2023

Jian Chen, Di Zhao, Yan-Nan Yu and Si-Yuan Wang

The authors empirically examined the theoretically recognized industrial linkages between manufacturing and services from the trade perspective. In particular, they confirmed the…

Abstract

Purpose

The authors empirically examined the theoretically recognized industrial linkages between manufacturing and services from the trade perspective. In particular, they confirmed the trade effect of manufacturing on services, given that global value chain fragmentation pervades and splits manufacturing and services segments separately in developed and developing countries.

Design/methodology/approach

Based on observations of 47 countries with manufacturing and service trade data from 1990 to 2020 and with gravity model specification, the authors primarily used the Poisson pseudo-maximum likelihood (PPML) estimation with multiple levels of fixed effects. Considering that many zero values are included in the dependent variable and potential endogeneity, other methods such as Tobit regression, Heckman estimation and two-stage least squares estimation (2SLS) are used. Subsample estimation also supplemented the empirical research.

Findings

The results showed that manufacturing trade is a stepping-stone rather than an obstacle to service trade. This finding exhibited significant robustness under different model specifications, instrumental variable estimation and subsample checks. Moreover, in contrast to the north–north country ties, manufacturing trade between northern and southern countries has played a prominent stepping-stone role; meanwhile, manufacturing trade among core–peripheral countries has a considerably more significant impact than the outcomes of core–core and peripheral–peripheral countries.

Originality/value

The authors provided direct clarification and revealed that trade in manufacturing remains the demand basis for service trade. As trade in manufacturing and services are typical phenomena of transnational production linkages, the authors suggested exploring the underlying role of global value chain (GVC) fragmentation and the offset and even barrier effect of biased institutional arrangements on GVC fragmentation.

Details

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

Keywords

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