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Open Access
Article
Publication date: 17 November 2023

Temitope Abraham Ajayi

This study aims to investigate the effects of mineral rents, conflict and population growth on countries' growth, with a specific interest in 13 selected economies in Sub-Saharan…

Abstract

Purpose

This study aims to investigate the effects of mineral rents, conflict and population growth on countries' growth, with a specific interest in 13 selected economies in Sub-Saharan Africa.

Design/methodology/approach

This paper uses a combination of research methods: the pooled ordinary least squares (OLS), the fixed effect and the system generalized method of moment (GMM). The consistent estimator (system GMM), which provides the paper's empirical findings, remedies the inherent endogeneity bias in the model formulation. The utilized panel dataset for the study spans from 1980 to 2022.

Findings

The study suggests that mineral rents positively affect countries' growth by about 0.407 percentage points in the short run. The study further demonstrates the long-run negative impacts of population growth rates and prevalence of civil war on economic growth. The empirical work of the study reveals that an increase in the number of international borders within the group promotes mineral conflicts, which impedes economic growth. Evidence from the specification tests performed in the study confirmed the validity of the empirical results.

Social implications

Mineral rents, if well managed and conditioned on good institutions, are a blessing to an economy, contrary to the assumptions that mineral resources are a curse. The utilization of mineral rents in Sub-Saharan Africa for economic growth depends on several factors, notably the level of mineral conflicts, population growth rates, institutional factors and the ability to contain civil war, among others.

Originality/value

This study is the first attempt in the post-coronavirus disease 2019 (COVID-19) era to revisit the investigation of the impacts of mineral rents, conflict and population growth rates on the countries' growth while controlling for the potential implications of the qualities of institutions. One of the significant contributions of the study is the identification of high population growth rates as one of the primary drivers of mineral conflicts that impede economic growth in the states with enormous mineral deposits in Sub-Saharan Africa. The crucial inference drawn from the study is that mineral rents positively impact countries' growth, even with inherent institutional challenges, although the results could be better with good institutions.

Details

Journal of Economics and Development, vol. 26 no. 1
Type: Research Article
ISSN: 1859-0020

Keywords

Open Access
Article
Publication date: 29 April 2021

Naznin Sultana Chaity and K.M. Zahidul Islam

The purpose of the study is to determine the relationship between bank efficiency in terms of corporate governance guidelines and the extent of practice of earnings management…

3787

Abstract

Purpose

The purpose of the study is to determine the relationship between bank efficiency in terms of corporate governance guidelines and the extent of practice of earnings management (EM).

Design/methodology/approach

Archival data of listed private commercial banks of Dhaka Stock Exchange over the period of 2007–2016 relating to corporate governance and earnings management are collected and analyzed using parametric and non-parametric methods (efficiency analysis) and applying panel regression analysis.

Findings

The same distribution pattern and have low degree of the correlation (0.248) among them. It is found that private commercial banks of Bangladesh, on average, display efficiency level of 80.84%. The average value of discretionary loan loss provision (i.e. measure of earnings management) is 0.4249 and this indicates the presence of earnings management. The relation between earnings management and efficiency score in both cases of two-step system generalized methods of moments (GMMs) and difference GMM are found to be negative. The negative coefficients (−0.7969 and −0.57) indicate that as the efficiency increases, the practice of earnings management by the private commercial bank reduces. By estimating efficiency based on corporate governance guidelines and detecting the existence of EM, the major contribution of the study is establishing the relationship between bank efficiency based on compliance with corporate governance guidelines and managerial practice of earnings management in Bangladesh. Empirical results of the study have also established the fact that the more efficient the management of the banks are, the less likely it will practice earnings management under the compliance of corporate governance guidelines in Bangladesh.

Research limitations/implications

This research study has some limitations. Only conventional banks are considered for the study, with the exception of Islamic banks. Comparison between conventional banks and Islamic banks could have been done.

Practical implications

Based on the literature study, the effectiveness of corporate governance aligns with decreasing agency conflict, protection of shareholders' interests and restrain management from self-serving activities (i.e. practice of earnings management). The empirical results of the study established these facts. Regulators should give more emphasis on effective implementation of good governance.

Originality/value

To the best of the authors' knowledge, this may be the first to empirically determine the relationship between efficiency estimation based on corporate governance and earnings management in case of listed commercial banks of Bangladesh.

Open Access
Article
Publication date: 14 December 2020

Mohammed Ayoub Ledhem

This paper aims to investigate empirically whether Sukuk financing is boosting the economic growth in Southeast Asia within the framework of the endogenous growth model.

5008

Abstract

Purpose

This paper aims to investigate empirically whether Sukuk financing is boosting the economic growth in Southeast Asia within the framework of the endogenous growth model.

Design/methodology/approach

This paper applied dynamic panel one-step system generalized method of moments as an optimal estimation approach to investigate the impact of Sukuk financing on economic growth in Southeast Asia spanning from 2013Q4–2019Q3. Sukuk financing was proxied by the total issued Sukuk holdings, while economic growth was proxied by gross domestic product. The sample covered all full-fledged Islamic financial institutions in the most developed Sukuk financial markets countries in Southeast Asia (Malaysia, Indonesia and Brunei).

Findings

The findings demonstrated that Sukuk financing is boosting economic growth in Southeast Asia, which reflects the significant role of the Islamic financial markets of Sukuk as a vital contributor to economic growth.

Practical implications

This paper would fill the literature by investigating the link between Sukuk financing and economic growth in Southeast Asia within the framework of the endogenous growth model, as the outcome of this paper serves as a guide for financial researchers, decision-makers and policymakers to improve the Sukuk market globally as an alternative financing source for the best contribution to economic growth.

Originality/value

This paper is the first that investigates empirically the link between Sukuk financing and economic growth in Southeast Asia with a new theoretical context of the endogenous growth model to gain robust information about this link.

Details

PSU Research Review, vol. 6 no. 3
Type: Research Article
ISSN: 2399-1747

Keywords

Open Access
Article
Publication date: 30 April 2018

Nguyen Khanh Doanh and Yoon Heo

This study investigates the patterns and determinants of Korea’s horizontal intra-industry trade by employing a dynamic panel data analysis. The main findings of the study are as…

Abstract

This study investigates the patterns and determinants of Korea’s horizontal intra-industry trade by employing a dynamic panel data analysis. The main findings of the study are as follows. An increase in the market size of both trading partners is associated with a higher level of horizontal intra-industry trade. Dissimilar economic sizes and per capita incomes have a negative effect on trade in horizontally differentiated products. Geographical distance and trade imbalance serve as obstacles to horizontal intra-industry trade. These findings have policy implications for reconsidering the orientation of promoting trade. Inclusive economic growth in the region, taking advantage of neighboring nations and making efforts to reduce trade imbalances between trading economies, can accelerate further trade expansion through horizontal intra-industry trade.

Details

Journal of International Logistics and Trade, vol. 16 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Open Access
Article
Publication date: 31 July 2020

Mohammed Ayoub Ledhem and Mohammed Mekidiche

The purpose of this paper is to investigate the link between the financial performance of Islamic finance and economic growth in all of Malaysia, Indonesia, Brunei, Turkey and…

18647

Abstract

Purpose

The purpose of this paper is to investigate the link between the financial performance of Islamic finance and economic growth in all of Malaysia, Indonesia, Brunei, Turkey and Saudi Arabia within the endogenous growth model framework.

Design/methodology/approach

This study applied dynamic panel system GMM to estimate the impact of the financial performance of Islamic finance on economic growth using quarterly data (2014:1-2018:4). CAMELS system parameters were employed as variables of the financial performance of Islamic finance and gross domestic product (GDP) as a proxy of economic growth. The sample contained all Islamic banks working in the five countries.

Findings

The findings demonstrated that the only significant factor of the financial performance of Islamic finance, which affects the endogenous economic growth, is profitability through return on equity (ROE). The experimental findings also indicated the necessity of stimulating other financial performance factors of Islamic finance to achieve a significant contribution to economic growth.

Practical implications

The analysis in this paper would fill the literature gap by investigating the link between financial performance of Islamic finance and economic growth, as this study serves as a guide for the academians, researchers and decision-makers who want to achieve economic growth through stimulating Islamic finance in the banking sector. However, this study may well be extended to investigate the link between the financial performance of Islamic finance and economic growth over the Z-score model as another measure for the financial performance of Islamic finance.

Originality/value

This paper is the first that investigates the link between financial performance of Islamic finance and economic growth empirically using CAMELS parameters within the endogenous growth model to provide robust information about this link based on a sample of the top pioneer Islamic finance countries.

Details

Islamic Economic Studies, vol. 28 no. 1
Type: Research Article
ISSN: 1319-1616

Keywords

Open Access
Article
Publication date: 11 May 2023

Md. Tofael Hossain Majumder, Israt Jahan Ruma and Aklima Akter

This paper attempts to evaluate the impact of intellectual capital on bank performance in Bangladesh.

1158

Abstract

Purpose

This paper attempts to evaluate the impact of intellectual capital on bank performance in Bangladesh.

Design/methodology/approach

The authors analyze an unbalanced longitudinal data of 32 banks, which cover 318 observations of bank-year from 2010 to 2019. The study employs a dynamic panel model with the two-step system generalized methods of moments (SGMM).

Findings

The results show that bank performance is significantly positively affected by the intellectual capital (IC) in Bangladesh. In addition, the findings show that capital employed efficiency (CEE) is an essential determinant of bank performance rather than structural capital efficiency (SCE) and human capital efficiency (HCE) for the Bangladeshi banking sector.

Originality/value

This work is unique as no one has explored the impact of intellectual capital on Bangladesh's bank performance. The findings suggest that business owners, managers and policymakers who want to improve the efficiency of their organizations should spend continuously on IC and expand their investment into CEE, which includes both financial and physical resources, in order to obtain better bank performance.

Details

LBS Journal of Management & Research, vol. 21 no. 2
Type: Research Article
ISSN: 0972-8031

Keywords

Open Access
Article
Publication date: 22 December 2023

Eric B. Yiadom, Valentine Tay, Courage E.K. Sefe, Vivian Aku Gbade and Olivia Osei-Manu

The performance of financial markets is significantly influenced by the political environment during general elections. This study investigates the effect of general elections on…

Abstract

Purpose

The performance of financial markets is significantly influenced by the political environment during general elections. This study investigates the effect of general elections on stock market performance in selected African markets.

Design/methodology/approach

Prior studies have been inconsistent in determining whether electioneering events negatively or positively influence stock market performance. The study utilized panel data set with annual observations from 1990 to 2020. The generalized method of moments (GMM) is employed to investigate the effect of electioneering and change in government on key stock market performance indicators, including stock market capitalization, stock market turnover ratio and the value of stock traded.

Findings

The study finds that electioneering activities generally have a positive impact on the performance of the stock market, whereas a change in government has a negative impact. As a result, the study recommends that stakeholders of the stock market remain vigilant and actively monitor electioneering events to devise and implement effective policies aimed at mitigating political risks during general elections. By adopting these measures, investor confidence can be significantly enhanced, fostering a more robust and secure investment environment.

Originality/value

The study investigates a neglected section of the literature by highlighting not only the effect of elections on stock market indicators but also possible change in government during elections.

Details

Journal of Humanities and Applied Social Sciences, vol. 6 no. 1
Type: Research Article
ISSN: 2632-279X

Keywords

Open Access
Article
Publication date: 27 October 2021

Mohammad Jashim Uddin, Md. Tofael Hossain Majumder, Aklima Akter and Rabaya Zaman

This paper aims to explore the effects of bank diversification (i.e. diversification of income and diversification of assets) on Bangladeshi banks’ profitability.

2450

Abstract

Purpose

This paper aims to explore the effects of bank diversification (i.e. diversification of income and diversification of assets) on Bangladeshi banks’ profitability.

Design/methodology/approach

Using a dynamic panel data model with system generalized methods of moments, the authors examine an unbalanced panel data from 32 banks spanning 318 bank-year observations from 2007 to 2016.

Findings

The findings indicate a significant positive association of income diversification and asset diversification on bank profitability. Therefore, the results show that banks can generate profit from diversification of income and diversification of assets.

Originality/value

One of the rare attempts to investigate the relationship between diversification and profitability in Bangladesh’s banking sector is this report. The authors anticipate the results to have major consequences for Bangladeshi bank regulators and other related economies.

Details

Vilakshan - XIMB Journal of Management, vol. 19 no. 2
Type: Research Article
ISSN: 0973-1954

Keywords

Open Access
Article
Publication date: 29 March 2022

Bahati Sanga and Meshach Aziakpono

This paper investigates the impact of institutional factors on financial deepening and its implications on bank credit in Africa.

1947

Abstract

Purpose

This paper investigates the impact of institutional factors on financial deepening and its implications on bank credit in Africa.

Design/methodology/approach

The paper employs different panel econometric models to examine the heterogeneity of 50 African countries from 2000 to 2019. The estimators include panel corrected standard errors, system generalized method of moments, quantile and threshold regressions.

Findings

The results show that rule of law, regulatory quality, government effectiveness, voice and accountability, control of corruption and political stability significantly influence financial deepening in Africa. However, government effectiveness has a higher effect on middle- and high-income countries, while other indicators have a high impact on low-income countries. All institutional indicators have stronger effects, almost double, at higher financial depth levels than for countries with lower levels. Government effectiveness and regulatory quality impact financial deepening more for countries with strong institutions than weak ones. Thus, the relationship between institutional qualities and credit provided by banks is non-monotonic.

Practical implications

The findings suggest that strengthening appropriate institutional factors based on country heterogeneity may effectively stimulate debt financing in Africa, the primary source of financing for small and medium-sized enterprises and entrepreneurs.

Originality/value

The novelty of this paper is that previous studies did not sufficiently scrutinize the heterogeneity of the structure of African economies – i.e. differences in institution, credit and income levels.

Details

Journal of Business and Socio-economic Development, vol. 3 no. 2
Type: Research Article
ISSN: 2635-1374

Keywords

Open Access
Article
Publication date: 2 June 2022

Ruzita Abdul-Rahim, Adilah Abd Wahab and Mohammad Hudaib

Drawing upon underinvestment theory and clientele effect hypothesis, this paper aims to examine the effects of foreign currency (forex) exposure and Shari’ah-compliant status on…

1966

Abstract

Purpose

Drawing upon underinvestment theory and clientele effect hypothesis, this paper aims to examine the effects of foreign currency (forex) exposure and Shari’ah-compliant status on firms’ financial hedging strategy.

Design/methodology/approach

Based on data of 250 nonfinancial firms listed on Bursa Malaysia from 2010 to 2018 (2,250 firm-year observations), the authors test the impact of forex exposure based on a vector of foreign-denominated cash flows (FCF) indicators and firms’ Sharīʿah-compliant status on two proxies of financial hedging decisions, namely, the ratio of the notional value of currency derivatives to total assets and a binomial measure of hedging status. The hedging decision models are estimated using panel logistic regression and system generalized method of moments.

Findings

The results indicate significant positive effects of the forex exposure indicators on firms’ propensity to hedge. However, the impact of forex exposure is most prevalent via total FCF. The results also reveal significant positive effects of Sharīʿah-compliant status on firms’ propensity to hedge but its negative impacts on the value of currency derivatives they use. The results suggest that Sharīʿah-compliant firms refrain from engaging in currency derivatives to avoid riba’ and subsequently subdue the clientele effect. However, when the forex exposure reaches higher levels, engagement in currency derivatives becomes a matter of tentative necessity (dharurat).

Research limitations/implications

This study relies exclusively on the disclosure of foreign currency risk and management data in the annual reports of listed companies. Consequently, this limits the sample size to only those nonfinancial listed companies with complete data for the study period. Also, since none of the companies reports using Sharīʿah-compliant derivatives, the authors thus assume that they use derivative instruments that tolerate “riba.”

Practical implications

Given the significance of forex exposure on hedging decisions, the accounting profession must strictly adopt FRS 7 and FRS 139 for all listed firms to avoid market scrutiny and sustain their clientele. The results also call for the Islamic market regulators to include mandatory disclosure of conventional currency derivatives in screening firms for clearly prohibited activities to help enhance the credibility of its Islamic financial market.

Originality/value

Due to difficulty accessing relevant cash flow data, the study is among the few studies that measure forex exposure using FCF and test more proxy indicators. This study is perhaps the first to examine the Shari’ah perspective on currency derivatives in corporate forex risk management.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 16 no. 2
Type: Research Article
ISSN: 1753-8394

Keywords

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