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Article
Publication date: 31 July 2018

Oyakhilome Wallace Ibhagui

The purpose of this paper is to empirically analyse how different exchange rate regimes affect the links between monetary fundamentals and exchange rates in Sub-Saharan Africa.

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Abstract

Purpose

The purpose of this paper is to empirically analyse how different exchange rate regimes affect the links between monetary fundamentals and exchange rates in Sub-Saharan Africa.

Design/methodology/approach

Using the Pedroni method for panel cointegration, mean group and pooled mean group and the panel vector autoregressive technique, this study empirically investigates whether monetary fundamentals impact exchange rates similarly in both regimes. Thus, the author acquires needed and credible empirical data.

Findings

The result suggests that the impact is dissimilar. In the floating regime, an increase in relative money supply and relative real output depreciates and appreciates the nominal exchange rate in the long run whereas in the non-floating regime, the evidence is mixed. Thus, exchange rates bear a theoretically consistent relationship with monetary fundamentals across SSA countries with floating regimes but fails under non-floating regimes. This provides evidence that regime choice is important if the relationship between monetary fundamentals and exchange rates in SSA are to be theoretically consistent.

Originality/value

This study empirically incorporates the dissimilarities in exchange rate regimes in a panel framework and study the links between exchange rates and monetary fundamentals. The focus on how exchange rate regimes might alter the equilibrium relationships between exchange rates and monetary fundamentals in SSA is a pioneering experiment.

Details

China Finance Review International, vol. 9 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Book part
Publication date: 23 October 2017

Mariangela Bonasia and Rosaria Rita Canale

The aim of this chapter is to show the limits of the European policy model and to support the existence, through straightforward empirical analysis, of an inverse…

Abstract

The aim of this chapter is to show the limits of the European policy model and to support the existence, through straightforward empirical analysis, of an inverse relationship both in the short run and in the long run between trust in institutions and unemployment. The empirical methodology relies on dynamic panel data techniques allowing measuring in a single equation both the long-run relationship and the short-run speed of adjustment among variables. This connection appears to be valid both in the Eurozone considered as a whole and in particular in peripheral countries, where the macroeconomic dynamics have been, under this respect, much more divergent from the average. This outcome allows proofing that to consolidate the European process of integration in the long run, institutions should have as main objective not only inflation but especially unemployment.

Details

Economic Imbalances and Institutional Changes to the Euro and the European Union
Type: Book
ISBN: 978-1-78714-510-8

Keywords

Article
Publication date: 28 July 2020

Van Bon Nguyen

The paper attempts to empirically examine the difference in the foreign direct investment (FDI) – private investment relationship between developed and developing…

Abstract

Purpose

The paper attempts to empirically examine the difference in the foreign direct investment (FDI) – private investment relationship between developed and developing countries over the period 2000–2013.

Design/methodology/approach

The paper uses the two-step GMM Arellano-Bond estimators (both system and difference) for a group of 25 developed countries and a group of 72 developing ones. Then, the PMG estimator is employed to check the robustness of estimates.

Findings

First, there is a clear difference in the FDI – private investment relationship between developed countries and developing ones. Second, governance environment, economic growth and trade openness stimulate private investment. Third, the effect of tax revenue on private investment in developed countries is completely opposite to that in developing ones.

Originality/value

The paper is the first to provide empirical evidence to confirm the dependence of FDI – private investment relationship on governance environment. In fact, contrary to the view (arguments) in Morrissey and Udomkerdmongkol (2012), the paper indicates that FDI crowds out private investment in developed countries (good governance environment), but crowds in developing countries (poor governance environment).

Details

Journal of Economic Studies, vol. 48 no. 4
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 29 May 2018

Yusnidah Ibrahim and Jimoh Olajide Raji

This paper aims to examine the influence of key macroeconomic factors on the inward and outward acquisition activities of six ASEAN (ASEAN: Association of Southeast Asian…

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Abstract

Purpose

This paper aims to examine the influence of key macroeconomic factors on the inward and outward acquisition activities of six ASEAN (ASEAN: Association of Southeast Asian Nations) countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, over the 1996-2015 period.

Design/methodology/approach

The study uses alternative panel data methods, including pooled mean group, mean group and dynamic fixed-effect estimators.

Findings

The results indicate that gross domestic product (GDP), interest rate, exchange rate, money supply and inflation rate are the most important macroeconomic factors explaining the trends of cross-border mergers and acquisition outflows of the ASEAN-6 countries. Specifically, GDP, money supply and inflation rate have significant positive relationships with acquisition outflows, while interest rate and exchange rate exert significant negative influence. On the other hand, the authors find four significant macroeconomic factors explaining the trends of the inward acquisitions. Essentially, GDP, money supply and inflation rate have significant positive impacts on inward acquisitions, while the impact of exchange rate is negatively significant.

Research limitations/implications

Unavailability of data limits this study to pool six sample countries from ASEAN, instead of ten representative member countries.

Practical implications

The results of this study can signal to firms or investors, involving in cross-border mergers and acquisitions, where to direct foreign resources flows. Moreover, having the knowledge about the relative levels of market size and other macroeconomic factors in both home and host countries can be of great importance for investment decision. Therefore, policymakers of ASEAN countries should make appropriate macroeconomic policies that can stimulate inward and outward acquisitions.

Originality/value

The main contribution of this paper is that it is the first to present the analysis of macroeconomic influences on the trends of inward and outward merger and acquisition activities in six ASEAN countries.

Details

Studies in Economics and Finance, vol. 35 no. 2
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 12 June 2019

Chandan Sharma

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Abstract

Purpose

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Design/methodology/approach

The monthly panel data used for analysis are at a disaggregated level, which cover around 100 products, encompassing all merchandize sectors for the period spanning from 2012:12 to 2017:11. To measure the exchange rate volatility, the authors use real as well as nominal exchange rate concepts and predict the volatility of exchange rate using the autoregressive conditional heteroscedastic-based model. They use pooled mean group, mean group and common correlated effects mean group estimator that is suitable for the objectives and data frequency.

Findings

The empirical analysis indicates both short- and long-term negative effects of exchange rate variations on exporting. Specifically, in the long run, real exchange rate as well as nominal exchange rate volatility has significant effects on export performance, yet, the effects of uncertainty of nominal exchange rate is much severe and intense. In the short run, it is the nominal exchange rate uncertainty that hurts exports from India. Nevertheless, the short-run effect is much lesser than the long-run, supporting the argument that the short-term exchange rate risk can be hedged, at least partially, through financial instruments; however, uncertainty of the long-term horizon cannot be hedged easily and cost-effectively.

Practical implications

Reducing uncertainty and attaining stability in exchange rate and price level should be an important policy objective in developing countries such as India to achieve higher export growth, both in the short and long run.

Originality/value

Unlike previous studies, this paper tests the relationship using micro-level data and uses advanced econometric techniques that are likely to provide more precise information regarding the association between exchange rate volatility and trade flows.

Details

Journal of Financial Economic Policy, vol. 12 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 28 June 2022

Seemab Ahmad, Dilawar Khan and Ihtisham ul Haq

The widening income gap between rich and poor has gained worldwide recognition in recent decades. This income gap between rich and poor is defined as the extent of income…

Abstract

Purpose

The widening income gap between rich and poor has gained worldwide recognition in recent decades. This income gap between rich and poor is defined as the extent of income unevenly distributed in a host country. This study provides an empirical view of the association between information and communication technology and the widening of the income gap.

Design/methodology/approach

The study used panel data from 2005 to 2019. To detect unit root issues, Levin and Lin (LL) and Im, Pesaran and Shin (IPS) tests were first employed. The pooled mean group and mean group estimators were employed to investigate the short and long -term impact of information and communication technology and other control factors on reducing the gap between rich and poor in South Asia.

Findings

The results showed that the Pooled mean group's findings are more efficient and consistent as compared to mean group estimators. The results of the paper showed that the greater penetration of information and communication technologies in the economy negatively and significantly affects income inequality. Moreover, the information and communication technology, foreign remittances and foreign direct investment (FDI) significantly reduce the gap between rich and poor in the long run.

Practical implications

At last, the findings of the study serve as an excellent roadmap for policymakers seeking to address the issue of growing income inequality in the South Asian regions and worldwide.

Originality/value

Based on the findings of this study, South Asia can reduce the gap between rich and poor by investing more in the information and communication technology sector.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2021-0638

Details

International Journal of Social Economics, vol. 49 no. 11
Type: Research Article
ISSN: 0306-8293

Keywords

Open Access
Article
Publication date: 15 June 2021

Amna Zardoub

Globalization occupies a central research activity and remains an increasingly controversial phenomenon in economics. This phenomenon corresponds to a subject that can be…

1031

Abstract

Purpose

Globalization occupies a central research activity and remains an increasingly controversial phenomenon in economics. This phenomenon corresponds to a subject that can be criticized through its impact on national economies. On the other hand, the world economy is evolving in a liberalized environment in which foreign direct investment plays a fundamental role in the economic development of each country. The advent of financial flows – foreign direct investment, remittances and official development assistance – can be a key factor in the development of the economy. The purpose of this study is to analyze the effect of financial flows on economic growth in developing countries. Empirically, different approaches have been used. As part of this study, an attempt was made to use a combined autoregressive distributed lag (ARDL) panel approach to study the short-term and long-run effects of financial flows on economic growth. The results indicate ambiguous effects. Economically, the effect of financial flows on economic growth depends on the investor’s expectations.

Design/methodology/approach

To study the short-run and long-run effects of financial flows on economic growth, this paper considers an empirical approach based on the panel ARDL. This model makes it possible to distinguish between the short-run effect and the long-run one. This type of model is based on three estimators, namely, mean group, pooled mean group (PMG) and dynamic fixed effect.

Findings

Results confirm the existence of a long-run relationship because the adjustment coefficient (error correction parameter) is negative and statistically significant. This paper finds that the PMG estimator is more consistent and more efficient. In the short-run, foreign direct investment do negatively affect economic growth, the effect is no significant in the long-run. On the other hand, the effect of remittances on economic growth is significant in the short-run. However, it is no significant in the long-run. Finally, the results suggest that the effect of official development assistance on economic growth is insignificant; both in the long-run and in the short-run.

Originality/value

To study the interaction between financial flows and economic growth, some empirical methodology are used such as the dynamic panel data and the autoregressive vector (VAR) model. In this study, we apply the panel ARDL model to analyze the short-run and the long-run effect for each financial flow on economic growth. The objective is to study the heterogeneity on dynamic adjustment in the short-term and long-term.

Details

PSU Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2399-1747

Keywords

Article
Publication date: 18 October 2021

Syed Mehmood Raza Shah, Yan Lu, Qiang Fu, Muhammad Ishfaq and Ghulam Abbas

Shadow banking has been evolving rapidly in China, with banks actively using wealth management products (WMPs) to evade regulatory restrictions. These products are the…

Abstract

Purpose

Shadow banking has been evolving rapidly in China, with banks actively using wealth management products (WMPs) to evade regulatory restrictions. These products are the largest constituent of China's shadow banking sector. A large number of these products are off-balance-sheet and considered a substitute for bank deposits. China's banking sector, especially the small and medium-sized banks (SMBs), uses these products to avoid regulatory restrictions and sustainability risk in the deposit market.

Design/methodology/approach

This study empirically examined how banks in China, specifically SMBs, utilize these products on a short and long-run basis to manage and control their deposit levels. This study utilized a quarterly panel dataset from 2010 to 2019 for the top 30 Chinese banks, by first implementing a Panel ARDL-PMG model. For cross-sectional dependence, this study further executed a cross-sectional augmented autoregressive distributive lag model (CS-ARDL).

Findings

Under regulations avoidance theory, the findings revealed that WMPs and deposits have a stable long-run substitute relationship. Furthermore, the WMP–Deposit substitute relationship was only significant and consistent for SMBs, but not for large four banks. The findings further revealed that the WMP–Deposit substitute relationship existed, even after the removal of the deposit rate limit imposed by the People's Bank of China (PBOC) to control the deposit rates.

Research limitations/implications

The individual bank-issued WMPs' amount data is not available in any database. Therefore, this study utilized the number of WMPs as a proxy for China's banking sector's exposure to the wealth management business.

Practical implications

This research helps policymakers to understand the Deposit–WMP relationship from the off-balance-sheet perspective. During the various stages of interest rate liberalization, banks were given more control to establish their deposit and loan interest rates. However, the deposit rates are still way below the WMP returns, making WMPs more competitive. This research suggests that policymakers should formulate a more balanced strategy regarding deposit rates and WMPs returns.

Originality/value

This study contributes to the existing literature on China's shadow banking by concentrating on the WMPs. This research represents one of the few studies that analyze regulatory arbitrage in terms of the WMP–Deposit relationship. Moreover, the implementation of CS-ARDL panel data models and multiple data sources makes this study's findings more reliable and significant.

Details

International Journal of Bank Marketing, vol. 40 no. 1
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 12 October 2020

Tolulope Osinubi and Simplice Asongu

This study examines the effect of globalization on female economic participation (FEP) in MINT (Mexico, Indonesia, Nigeria and Turkey) and BRICS (Brazil, Russia, India…

Abstract

Purpose

This study examines the effect of globalization on female economic participation (FEP) in MINT (Mexico, Indonesia, Nigeria and Turkey) and BRICS (Brazil, Russia, India, China and South Africa) countries between 2004 and 2018.

Design/methodology/approach

Four measures of globalization are employed and sourced from KOF globalization index, 2018, while the female labour force participation rate is a proxy for FEP. The empirical evidence is based on the Pooled Mean Group (PMG) estimator.

Findings

The findings of the PMG estimator from the Panel ARDL method reveal that political and overall globalization in MINT and BRICS countries have a positive impact on FEP, whereas social globalization exerts a negative impact on FEP in the long-run. It is observed that economic globalization has no long-run effect on FEP. Contrarily, all the measures of globalization reflect no short-run effect on FEP. This supports the argument that globalization has no immediate effect on FEP. Thus, it is recommended that both MINT and BRICS countries should find a way of improving the process of globalization generally to empower women to be involved in economic activities.

Originality/value

This study complements the extant literature by focusing on how globalization dynamics influence FEP in the MINT and BRICS countries.

Details

Journal of Economic Studies, vol. 48 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 20 January 2022

Nur A'mirah Mohd Yaziz, A.A. Azlina, Nor Ermawati Hussain and Roshanim Koris

The current study examined the impact of population ageing on environmental quality in 17 late-demographic dividend (LDD) countries.

Abstract

Purpose

The current study examined the impact of population ageing on environmental quality in 17 late-demographic dividend (LDD) countries.

Design/methodology/approach

The panel autoregressive distributed lag (ARDL) model using pooled mean group (PMG) estimator based on the environmental Kuznets curve (EKC) hypothesis was used to analyse data for the period 1990–2018.

Findings

The empirical results demonstrated that in the long run, carbon dioxide (CO2) emissions decrease with population ageing. The prevailing findings also indicated no sufficient evidence of EKC hypothesis validity and electricity consumption, which is the primary driving force of CO2 emissions in LDD countries.

Originality/value

Unlike prior works, this paper is among the first to discuss environmental quality due to the current demographic transition towards ageing among LDD countries. Based on the results, population ageing reduces the environmental deterioration. The identification of possible ageing impact is vital to combat the climate change in order for countries to achieve sustainability, better economy and quality environment.

Details

International Journal of Social Economics, vol. 49 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

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