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Article
Publication date: 10 October 2016

Madhu Sehrawat and A.K. Giri

The purpose of this paper is to examine the relationship between financial development and rural-urban income inequality (INQ) in South Asian Association for Regional…

Abstract

Purpose

The purpose of this paper is to examine the relationship between financial development and rural-urban income inequality (INQ) in South Asian Association for Regional Cooperation (SAARC) countries using panel data from 1986-2012.

Design/methodology/approach

The stationarity properties are checked by the LLC and IPS panel unit root tests. The paper applied the Pedroni’s panel co-integration test to examine the existence of the long-run relationship and coefficients of co-integration are examined by fully modified ordinary least squares. The short-term and long-run causality is examined by panel Granger causality.

Findings

The results of Pedroni co-integration test indicate that there exists a long-run relationship among the variables. The findings suggest that financial development increases rural-urban inequality whereas trade openness reduces rural-urban inequality. The empirical results of panel Granger causality indicate evidence of short-run causality confirms that economic growth and financial development causes rural-urban INQ.

Research limitations/implications

The present study recommends for appropriate economic and financial reforms focusing on financial inclusion to reduce rural-urban INQ in SAARC countries. Financial policies geared toward agriculture and rural population should be adopted to reduce the prevailing rural-urban INQ in SAARC region.

Originality/value

Till date, there is hardly any study exploring the causal relationship between financial development and rural-urban INQ for SAARC countries by using panel co-integration and causality techniques. So the contribution of the paper is to fill these research gaps in the literature.

Details

International Journal of Social Economics, vol. 43 no. 10
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 16 November 2015

Mansor H. Ibrahim and Syed Aun R. Rizvi

The purpose of this paper is to analyse the implication of trade on carbon emissions in a panel of eight highly trading Southeast and East Asian countries, namely, China…

Abstract

Purpose

The purpose of this paper is to analyse the implication of trade on carbon emissions in a panel of eight highly trading Southeast and East Asian countries, namely, China, Indonesia, South Korea, Malaysia, Hong Kong, The Philippines, Singapore and Thailand.

Design/methodology/approach

The analysis relies on the standard quadratic environmental Kuznets curve (EKC) extended to include energy consumption and international trade. A battery of panel unit root and co-integration tests is applied to establish the variables’ stochastic properties and their long-run relations. Then, the specified EKC is estimated using the panel dynamic ordinary least square (OLS) estimation technique.

Findings

The panel co-integration statistics verifies the validity of the extended EKC for the countries under study. Estimation of the long-run EKC via the dynamic OLS estimation method reveals the environmentally degrading effects of trade in these countries, especially in ASEAN and plus South Korea and Hong Kong.

Practical implications

These countries are heavily dependent on trade for their development processes, and as such, their impacts on CO2 emissions would be highly relevant for assessing their trade policies, along the line of the gain-from-trade hypothesis, the race-to-the-bottom hypothesis and the pollution-safe-haven hypothesis.

Originality/value

The analysis adds to existing literature by focusing on the highly trading nations of Southeast and East Asian countries. The results suggest that reassessment of trade policies in these countries is much needed and it must go beyond the sole pursuit of economic development via trade.

Details

International Journal of Climate Change Strategies and Management, vol. 7 no. 4
Type: Research Article
ISSN: 1756-8692

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Article
Publication date: 11 April 2016

Madhu Sehrawat and A K Giri

The purpose of this paper is to examine the contribution of financial development to poverty reduction in 11 South Asian developing countries using panel data set over the…

Abstract

Purpose

The purpose of this paper is to examine the contribution of financial development to poverty reduction in 11 South Asian developing countries using panel data set over the time period 1990-2012.

Design/methodology/approach

The stationarity properties are checked by using Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests. The paper applied the Pedroni’s panel co-integration test to examine the existence of long-run relationship. The coefficients of co-integration are examined by fully modified OLS (FMOLS) and the causal link is checked by panel causality test.

Findings

The empirical results of Pedroni co-integration test confirm a long-run relationship between financial development and poverty reduction in South Asian developing economies. The findings of FMOLS method confirm a strong and positive relationship between financial development, trade openness, inflation and poverty reduction. Results of panel causality test indicate that there is a unidirectional causality running from financial development to poverty reduction variable.

Research limitations/implications

The present study recommends appropriate economic and financial reforms focussing on financial inclusion to reduce poverty in selected South Asian economies.

Originality/value

This paper is the first of its kind to empirically examine the causal relationship between financial sector development and poverty reduction in South Asian economies using modern econometric techniques.

Details

International Journal of Social Economics, vol. 43 no. 4
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 19 September 2016

Madhu Sehrawat and A.K. Giri

The purpose of this paper is to investigate the possible co-integration and the direction of causality between financial development and economic growth in South-Asian…

Abstract

Purpose

The purpose of this paper is to investigate the possible co-integration and the direction of causality between financial development and economic growth in South-Asian Association for Regional Cooperation (SAARC) countries using annual data from 1994 to 2013.

Design/methodology/approach

The Carrion-i-Silvestre et al. (2005) stationarity test with structural breaks is used to check the stationarity. The Westerlund (2006) panel co-integration test is employed to examine the long-run relationship among the variables. To carry out tests on the co-integrating vectors, fully modified ordinary least squares (FMOLS) and PDOLS techniques are used and panel Granger causality test is used to examine the direction of the causality.

Findings

The Westerlund (2006) panel co-integration test confirms the existence of the long-run relationship between financial development and economic growth for SAARC countries. The coefficients of FMOLS and DOLS indicate that index of financial development (IFD) and trade openness supports economic growth in SAARC region. In the short-run, there is unidirectional causality running from IFD to economic growth.

Research limitations/implications

In the view of these findings it is recommended that countries in the region should adopt policies geared toward financial sector development to attain high economic growth.

Originality/value

To the best of the author’s knowledge, no studies have looked into SAARC countries to study the relationship between financial development and economic growth, this study is the first of its kind.

Details

International Journal of Emerging Markets, vol. 11 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 6 March 2017

Madhu Sehrawat and A.K. Giri

The purpose of this paper is to investigate the relationship between financial development indicators and human capital for Asian countries using the annual data from 1984-2013.

Abstract

Purpose

The purpose of this paper is to investigate the relationship between financial development indicators and human capital for Asian countries using the annual data from 1984-2013.

Design/methodology/approach

The stationarity of the variables are checked by Levin-Lin-Chu, Im-Pesaran-Shin, Fisher-type augmented Dickey-Fuller and Philips-Perron panel unit-root tests. The Pedroni’s and Kao’s panel co-integration approaches are employed to examine the long-run relationship among the variables. To estimate the coefficients of co-integrating vectors, both panel dynamic ordinary least squares (PDOLS) and fully modified ordinary least squares (FMOLS) techniques are used. The short-term and long-run causality is examined by panel granger causality.

Findings

The Pedroni’s and Kao’s co-integration approaches support the existence of the long-run relationship among the indicators of financial development, economic growth and human capital. The PDOLS and FMOLS estimators revealed that both financial development indicators and economic growth variable act as an important driver for the increase in human capital. The results of panel granger causality indicate that causality runs from indicators of financial development, economic growth and public spending on education to human capital.

Originality/value

There is hardly any study that examine the impact of financial development indicators and economic growth on human capital in Asian economies, therefore the present study fill the research gap in the literature.

Details

International Journal of Social Economics, vol. 44 no. 3
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 April 2008

A. Bezuidenhout, C. Mlambo and W.D. Hamman

In financial analysis, forecasting often involves regressing one time series variable on another. However, to ensure that the models are correctly specified, one needs to…

Abstract

In financial analysis, forecasting often involves regressing one time series variable on another. However, to ensure that the models are correctly specified, one needs to first test for stationarity, co‐integration and causality. In testing for causality, the variables should be stationary. If non‐stationary, one can estimate the model in difference form, unless the variables are co‐integrated. This article determines whether cash flow and earnings variables are stationary, and which variable causes the other, using econometric analysis. In most cases, cash flow variables are found to cause earnings variables. This is so when the models are estimated in levels. However, when estimated in first differences, the causal relationship tends to be reversed such that earnings cause cash flows. Further study is recommended, whereby panel data could be used to improve the power of the tests.

Details

Meditari Accountancy Research, vol. 16 no. 1
Type: Research Article
ISSN: 1022-2529

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Article
Publication date: 22 July 2019

Narayan Sethi, Bikash Ranjan Mishra and Padmaja Bhujabal

The purpose of this paper is to empirically investigate whether market size and its growth rate, along with financial development indicators, affect human capital in…

Abstract

Purpose

The purpose of this paper is to empirically investigate whether market size and its growth rate, along with financial development indicators, affect human capital in selected south Asian economies over the time period from 1984 to 2015.

Design/methodology/approach

The stationarity of the variables are checked by LLC, IPS, ADF and Phillips–Perron panel unit-root tests. Pedroni’s and Kao’s panel co-integration approaches are employed to examine the long-run relationship among the variables. To estimate the coefficients of co-integrating vectors, both PDOLS and FMOLS techniques are used. The short-term and long-run causalities are examined by panel granger causality.

Findings

From the empirical results, the authors found that both the market size and financial development play an important role in the development of human capital in the selected south Asian economies. It is evident that a large market size and faster degree of financial development in the selected countries result in better human capital formation.

Originality/value

There are a number of studies on the impact of financial development indicators on human capital and economic growth, but there is hardly any study that considers market size and its growth rate along with financial development indicators with human capital in the context of south Asian economies. The study fills this research gap.

Details

International Journal of Social Economics, vol. 46 no. 7
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 2 October 2017

Varun Chotia and N.V.M. Rao

The purpose of this paper is to investigate the relationship between infrastructure development, rural–urban income inequality and poverty for BRICS economies.

Abstract

Purpose

The purpose of this paper is to investigate the relationship between infrastructure development, rural–urban income inequality and poverty for BRICS economies.

Design/methodology/approach

Pedroni’s panel co-integration test and panel dynamic ordinary least squares (PDOLS) have been used to carry out the analysis.

Findings

The empirical findings confirm a long-run relationship among infrastructure development, poverty and rural–urban inequality. The PDOLS results suggest that both infrastructure development and economic growth lead to poverty reduction in BRICS. However, rural–urban income inequality aggravates poverty in these nations. The paper advocates for adopting policies aimed at strengthening infrastructure and achieving economic growth to reduce the current levels of poverty prevailing in the BRICS nations.

Originality/value

Significant limitations exist in the literature in terms of not clearly defining the nature of relationship and interlinkages between infrastructure development, poverty and inequality, with regard to the BRICS nations. The available studies mainly focus on the relationship between infrastructure and growth, with the universal agreement being that these two are positively related. However, it is still not right to assume that economic growth attributable to infrastructure development will, therefore, subsequently lead to a reduction in inequality. This forms the basis for this study, that is, to critically examine the relationship between infrastructure development, inequality and poverty for BRICS nations.

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Article
Publication date: 12 October 2018

Madhu Sehrawat and A.K. Giri

Using time series data for the period 1982-2016, this study aims to explore the effect of globalization, institutional quality on economic performance for Indian economy…

Abstract

Purpose

Using time series data for the period 1982-2016, this study aims to explore the effect of globalization, institutional quality on economic performance for Indian economy by endogenizing financial development.

Design/methodology/approach

The stationarity properties of the variables are tested by Saikkonen and Lütkepohl unit root test, and the co-integration test proposed by Bayer–Hanck (2013) is used to check the long- and short-run relationship among the variables. The robustness is established by autoregressive distributed lag approach (ARDL), and the Granger causality test is used to assess the causal relationship among the variables.

Findings

The empirical findings indicate the existence of the co-integrating relationship among the variables, and the ARDL estimates reveal that both globalization and institutional quality act as important key drivers for India’s economic performance. However, the institutional quality does not affect the short-run economic growth.

Research limitations/implications

The study finds that institutional quality and globalization index are crucial to accelerate economic performance. Therefore, policy efforts should be focused on the improvement of these indicators by offering protection of property rights, reduction in government corruption, reducing political instability, price stability and stable macroeconomic environment. This study recommends that policy should be geared toward development of financial sector, promotion of financial integration, which will create the environment for the efficient allocation of credit.

Originality/value

This study provides empirical support for the proposition that both globalization and institutional quality matter for India’s emerging economic growth by taking account of the structural break.

Details

Journal of Financial Economic Policy, vol. 11 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 10 June 2021

Oluyemi Theophilus Adeosun and Isaac Idris Gbadamosi

The purpose of this paper is to investigate the impact or contribution of non-oil sectors on economic growth (GDP/capita) of some selected African countries using panel

Abstract

Purpose

The purpose of this paper is to investigate the impact or contribution of non-oil sectors on economic growth (GDP/capita) of some selected African countries using panel data analysis.

Design/methodology/approach

The paper focused on secondary data for the period 1991–2019 for macro parameters, including agriculture, industry, export and service, and GDP/capita received from World Development Indicators (WDI). Panel unit root tests like Levin, Lin and Chu test and Im, Pesaran and Shin test, Johansen co-integration test, Granger causality test and an error correction model were also applied to the data for analysis.

Findings

The study reveals no causality from agriculture to economic growth, which implies most of the African countries (used in this study) have neglected agriculture as a source of economic growth. The industry independent variable was of no effect on these countries’ economic growth, whereas the findings reveal that industry has causality on economic growth. Economic growth has no causality on the industry, which means the industry is not contributing to economic growth. The study also shows no causality from export and service to economic growth, but a causality runs from economic growth to export and service.

Originality/value

The paper examines the contribution of the non-oil sectors to economic growth in selected African countries.

Details

World Journal of Science, Technology and Sustainable Development, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-5945

Keywords

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