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Article
Publication date: 8 October 2018

Muhammad Ali Nasir and Jamie Morgan

The purpose of this paper is to explore the period of uncertainty created by the referendum. The focus is the UK real effective exchange rate (REER). The authors set out…

Abstract

Purpose

The purpose of this paper is to explore the period of uncertainty created by the referendum. The focus is the UK real effective exchange rate (REER). The authors set out to measure the additional impact of the uncertainty surrounding the referendum. The authors distinguish this from the longer trend value of Sterling.

Design/methodology/approach

The study applies a reduced form exchange rate model, first introduced by Edwards (1994), and makes use of Bank of England daily data for the period November 2015–July 2016.

Findings

The results indicate a sharp depreciation of Sterling with reference to its long-term trend. The authors set out some of the possible context which may account for fluctuations during the referendum campaigning period. This can be distinguished from other longer-term factors likely to be previously responsible for trend depreciation, and also from the further sharp depreciation effects triggered by the referendum outcome. The principal finding is that during the week of the referendum, up to the declaration of the result, exchange rate depreciation deviated from the long-run trend by approximately 3.5 per cent, but the actual immediate effect on the exchange rate was an 8 per cent depreciation. Over the period from the announcement of the referendum, the exchange rate fluctuated markedly around its trend and one can also identify a larger effect based on the “wrong-footing” of markets at the point when the outcome was announced.

Research limitations/implications

The research has important implications, as one might further infer that this marks a step change in attitudes to Sterling as Brexit became a real issue rather than a notional concern. One can thus consider the exchange rate as both symptom of and indicator for determinations of the underlying economic strength or weakness of the economy. In essence, it has acted as a litmus test.

Practical implications

The research has important practical implications in understanding the dynamics of the exchange rate market and the role of uncertainty in its dynamics.

Social implications

The study has important social implications as the changes to exchange rates are a perennial cause for concern. Exchange rates sit as one among many problems for the contemporary UK economy. Brexit has resulted in a significant subsequent depreciation of Sterling. Inter alia, though the immediate effect of Brexit on growth was muted due to unexpected sustained consumer spending, throughout the latter half of 2016 and the first two quarters of 2017, business investment slowed, the rate of deficit reduction slowed (but without any concomitant meaningfully rise in government investment in infrastructure, etc.) and both main measures of inflation began to rise.

Originality/value

The study contributes to the existing body of knowledge by exploring the period of uncertainty created by the referendum and its implications for the UK REER. The study differentiates and reflects on the weakness of Sterling due to the weak external position of UK’s economy and the further role played by the uncertainty surrounding Brexit. In this sense, it important contribution to theory as well as practice.

Details

Journal of Economic Studies, vol. 45 no. 5
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 14 May 2018

Muhammad Ali Nasir and Justine Simpson

The purpose of this paper is to analyse the implications of exchange rate depreciation for inflation targeting and trade balance of UK in the context of the Brexit epoch.

Abstract

Purpose

The purpose of this paper is to analyse the implications of exchange rate depreciation for inflation targeting and trade balance of UK in the context of the Brexit epoch.

Design/methodology/approach

The study employed a time-varying structural vector auto-regression (TVSVAR) model framework in which the sources of time variation were both the coefficients and variance-covariance matrix of the innovations on the data from January 1989 to September 2016.

Findings

The findings suggest that the depreciation of the Stirling has significant effects on inflation and trade balance in UK in context of Brexit epoch. It also showed that such a depreciation can be helpful in the improvement of external balance as well as steering the inflation to its statutory target. Despite, the inflation targeting, there is strong evidence of a pass-through.

Research limitations/implications

Research has profound implications in terms of the sharp depreciation of GBP associated with the Brexit outcome. The study is very topical and could be very interesting to the readership of JES as well as wider audience. The study has limitations in a context that the significance of the results and association of the under analysis entities is contingent on the future trade relationships and Channel between UK and EU. Therefore, although there is a lot of uncertainty about the future of Britain trade relationships, this study provides guidance on the importance of exchange rate channel if the similar trade arrangements prevails in the post-Brexit era.

Practical implications

The research has profound practical implications, using a TVSVAR model in which the relationship among the entities varies over time; it has shown the importance of exchange rate in terms of external balance and inflation targeting. Hence, it has appeal for the practitioners as well as academics.

Social implications

The research has great social implications. The Brexit is the biggest political and economic event of this era for UK and EU. There are big questions about the relationship between UK and EU in the post-Brexit epoch as well as questions about the future of the European integration. In this context, this study has shown that how the exchange rate could play an important role for the UK economy when its contemporary trade channels prevail. Concomitantly, it has social implications particularly for the European society.

Originality/value

The research is an original piece of work. It has contributed to the debate on the exchange rate deprecation, external balance and inflation targeting in context of the Brexit associated sharp depreciation of Stirling. It has used a framework, i.e. TVSVAR, which also have unique features in terms of testing the associations among under analysis entities against time.

Details

Journal of Economic Studies, vol. 45 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 4 May 2020

Paul S. Jones and Muhammad Ali Nasir

This purpose of the study is to examine the labour supply decisions with respect to earnings and considers whether we are willing or indeed able to work less. The authors…

Abstract

Purpose

This purpose of the study is to examine the labour supply decisions with respect to earnings and considers whether we are willing or indeed able to work less. The authors specifically focus on the three points of time, i.e. beginning of the sample, pre and post Global Financial Crisis.

Design/methodology/approach

The study regression analysis by utilises microdata from the UK Labour Force Survey (LFS) regarding individual hours worked in three separate survey periods: 1994q2, 2007q2 and 2015q2

Findings

The results suggest that we are far from income-satiated. The elasticity of hours worked with respect to earnings is stubbornly inelastic and for some demographic cohorts positive, implying the desire to work more. The authors find that job flexibility matters in facilitating reduced hours of work, but that jobs are not becoming more flexible. The authors also do see a secular reduction in hours worked, accompanied by a shift to working later in life, but these appear to be down to factors other than higher wages.

Research limitations/implications

The study has important research implications in terms of understanding the dynamics of the labour market on the whole and in the pre and post global financial crisis periods.

Practical implications

The research has profound policy implication in terms of labour and employment policy.

Social implications

There are important social implications, particularly in terms of household labour supply decisions and substitution between work and leisure.

Originality/value

The study has significant element of originality in terms of understanding the changing dynamics of labour market. This is the first study which has investigated the labour market in the light of empirical evidence and in the various time periods.

Details

Journal of Economic Studies, vol. 48 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 5 August 2019

Muhammad Ali Nasir and Karen Jackson

In the context of debate on competitive devaluation and trade imbalances, the purpose of this paper is to investigate the role of exchange rate misalignment as a…

Abstract

Purpose

In the context of debate on competitive devaluation and trade imbalances, the purpose of this paper is to investigate the role of exchange rate misalignment as a determinant of trade imbalances in selected major trade surplus (Germany, China, Japan, Russia and KSA) and major trade deficit countries (USA, UK, France, India and Turkey).

Design/methodology/approach

The authors used a structural vector auto-regressive model on data from ten countries with the highest trade deficit and surplus. The period of analysis is from 2000 Q1 to 2016 Q1.

Findings

The key findings suggest that although exchange rate misalignment from equilibrium may have some implications for the current account balance for surplus and deficit countries, the effects observed were rather very mild and transitory. There was a heterogeneity in the response of the current account position to exchange rate misalignment in each country, concomitantly; the exchange rate misalignment shall not be seen as the sole responsible factor in the debate on global trade imbalances.

Research limitations/implications

The research has profound implications in terms of exploring the notion of competitive devaluation and exchange rate misalignment as a cause of major global trade imbalances.

Practical implications

This study has important practical implications for the trade policy of major economies in the world. These are twofold. First, this study has analysed and reported on the degree of misalignment of exchange from its equilibrium values in the major trade surplus and deficit countries. Second, it has investigated the implications of any misalignment for the trade balance or respective economies.

Social implications

There are important social implications as the notion of competitive devaluation and exchange rate–trade balance nexus has been heavily politicised. This study provides an empirical insight and an answer to these claims which have social and political implications.

Originality/value

There is a significant element of originality and contribution to the existing body of knowledge on the subject. In the context of debate on competitive devaluation this is the first study which has investigated whether the exchange rate has been misaligned from its equilibrium values (competitive devaluation) and whether there is some nexus between the real exchange rate misalignment and trade imbalances in under-analysis economies.

Details

Journal of Economic Studies, vol. 46 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 2 November 2015

Muhammad Ali Nasir, Mushtaq Ahmad, Ferhan Ahmad and Junjie Wu

The purpose of this paper is to provide a different context for considering issues of financial stability and instability, with reference to economic growth and price…

Abstract

Purpose

The purpose of this paper is to provide a different context for considering issues of financial stability and instability, with reference to economic growth and price stability in particular.

Design/methodology/approach

This paper pursued an empirical exploration of six pillars of financial stability, based on a data set for the UK extending from 1985 (Q1) to 2008 (Q2), through the construction of a vector error correction model, including an impulse response function analysis.

Findings

The findings show a strong association between the financial and economic stability even in a non-crisis regime. This includes, for example, a strong association exists between the stock market and the real economy; exchange rate appreciation may not provide for long-term real economic growth; inflation does not contribute to real economic growth, both the sensitivity of the economy to yields and a significant lag in transitional effects from financial markets to the real sector; a positive role of credit creation within a non-crisis regime; exchange rate appreciation affects purchasing power; and potential points of linkage between sovereign debt activity and general price levels.

Research limitations/implications

The findings should be considered in the context of a concept of the economy as fundamentally dynamic and subject to complex cumulative processes.

Practical implications

The findings indicate there is a role for state oversight and intervention within a non-crisis regime based on the complexity of possible interactions that may undermine financial and price stability, with consequences for their association with economic growth.

Originality/value

The study provides a new perspective for considering issues of financial stability and instability.

Details

Journal of Financial Economic Policy, vol. 7 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

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Book part
Publication date: 19 December 2016

Norafni @ Farlina binti Rahim

Islamic finance and Halal product sectors are thriving successfully. This chapter is a general review of the perception of Asian consumers on Islamic finance and Halal…

Abstract

Purpose

Islamic finance and Halal product sectors are thriving successfully. This chapter is a general review of the perception of Asian consumers on Islamic finance and Halal sectors in the global Halal economy.

Methodology/approach

The first section will briefly describe the Halal concept in both Islamic finance and Halal industries, and the growth of both sectors in Asian countries. The second part highlights the review of Asian consumers’ perception towards Islamic finance products and Halal products.

Findings

The review found that the consumers’ perception towards the Islamic finance products and Halal products is distinctive. This is due to the diversity of Asian countries in terms of geography, religion, culture, ethnic, school of thoughts (madzahib), income per capita and government’s involvement.

Originality/value

The third part of the chapter concentrates on planning towards Halal marketing, which involves the move and future challenges in different layers of industries to gear up and strengthen the Halal economy.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

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Article
Publication date: 31 December 2020

Irfan Saleem, Mujtaba Nasir Ali Khan, Rashedul Hasan and Muhammad Ashfaq

Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices…

Abstract

Purpose

Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices and apply innovative management control.

Design/methodology/approach

The authors used a panel of 2,538 public companies listed with the New York Stock Exchange to explain the impact of corporate governance deviance on firm’s performance. The authors relied on unique governance variables extracted from the Bloomberg database to develop the governance deviance index.

Findings

Study unveils that deviance from governance practices influences firm’s performance. Consequently, it can be said that the firms which use innovative governance mechanisms, usually stay ahead of the market by leading the governance trends. The findings also generalise the firm’s entrepreneurial identity and organisational ecology perspectives.

Research limitations/implications

Research implies that the firm’s entrepreneurial identity demands innovative managerial control. This study is focused on the US financial market, but in future, researchers could revalidate the deviance index. Scholars can also use mixed methods to test the need for innovative governance mechanisms in emerging markets.

Practical implications

The firms should focus on innovative governance practices not only to safeguard the firm’s entrepreneurial identity but also to pursue the growth objectives. Such innovative mechanisms and managerial controls are helpful to deal with industrial transformations to satisfy key stakeholders.

Originality/value

The study contributed to governance and management control research by sharing insights and catering the potential endogeneity problem faced to measure corporate governance measures. The study also proposes an alternative testing tool to measure governance deviance to add methodological uniqueness and reduce knowledge gap.

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

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Abstract

Details

Principles and Fundamentals of Islamic Management
Type: Book
ISBN: 978-1-78769-674-7

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Article
Publication date: 27 September 2019

Noorul Azwin Binti Md Nasir, Muhammad Jahangir Ali and Kamran Ahmed

This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors…

Abstract

Purpose

This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors investigate whether financial statement fraud firms improve their governance mechanisms compared to non-fraud firms subsequent to the fraud year.

Design/methodology/approach

The authors use hand-collected data comprising 76 financial statement fraud and 76 non-fraud firms over a period of eight years from 2001 to 2008.

Findings

Using a univariate and logistic regression model, the results demonstrate a significant positive relationship between the proportion of Malay directors on the board and the financial statement fraud. The authors also find that fraud firms significantly increase the proportion of independent directors on their boards, increase the frequency of board and audit committee meetings and reduce duality subsequent to the detection of financial statement fraud compared to the non-fraud firms.

Originality/value

The findings of the study are useful to policy-makers, regulators, firms and investors.

Details

Accounting Research Journal, vol. 32 no. 3
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 1 October 2018

Noorul Azwin binti Md Nasir, Muhammad Jahangir Ali, Rushdi M.R. Razzaque and Kamran Ahmed

We examine whether the fraud firms are engaged in real earnings management and accrual earnings management prior to the fraud year in the Malaysian context.

Abstract

Purpose

We examine whether the fraud firms are engaged in real earnings management and accrual earnings management prior to the fraud year in the Malaysian context.

Design/methodology/approach

Our sample comprises of 65 financial statement fraud and 65 non-fraud firms over a period of eight years from 2001 to 2008.

Findings

Using the abnormal cash flow from operations (CFO) and abnormal production costs as the proxies for real earnings management, we find that financial statement fraud firms engage in manipulating production costs during preceding two years of the fraud event. However, our results show that financial fraud firms engage in manipulating CFO prior to the fraud event. Additionally, we find that financial statement fraud firms prefer to manipulate earnings using accruals relative to real earnings prior to the fraud year.

Originality/value

Our results demonstrate that real earnings management is more aggressive in financial statement fraud firms compared to the non-fraud firms in the four years prior to fraud.

Details

International Journal of Accounting & Information Management, vol. 26 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

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