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Article
Publication date: 2 May 2022

Misbah Javid, Khurram Ejaz Chandia, Qamar Uz Zaman and Waheed Akhter

The paper aims to test the effect of liquidity creation on profitability and stability with the moderating role of political instability and its level of implication on…

Abstract

Purpose

The paper aims to test the effect of liquidity creation on profitability and stability with the moderating role of political instability and its level of implication on the overall banking sector of Pakistan.

Design/methodology/approach

This study uses the panel data estimation technique, including fixed- and random-effect model, by taking sample data of 28 banks of Pakistan that are providing their services from 2006 to 2019. Moreover, this study uses the Genreralized Method of Moments (GMM) estimation technique to check the robustness of the results.

Findings

The empirical outcomes of this study found a negative relationship of liquidity creation with profitability meanwhile positive relation with banking stability. However, this study shows a negative relation of political instability with liquidity creation, profitability and stability of overall banks of Pakistan.

Practical implications

The findings of this paper recommended the vital role of liquidity creation in the profitability and stability of banks, especially in the decision-making process of the investors and bank managers, and how it is affected strongly in the presence of an unstable political situation. These findings may be helpful for policymakers to devise appropriate policies to maintain a fair field between state authority and financial institutions and also assist in formulating strategies to strengthen the banking sector of Pakistan to avoid financial turmoil in the future.

Originality/value

As per the knowledge of the authors, this study is the first contribution to examine the moderating effect of political instability on liquidity creation, profitability and stability of the overall banking sector of Pakistan.

Details

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

Keywords

Open Access
Article
Publication date: 4 October 2019

Enaam Abdullah Mohamed

The study aims to deal with three theoretical approaches to answer the research question: Does political reform in rentier States (Kuwait as a model) lead to political

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Abstract

Purpose

The study aims to deal with three theoretical approaches to answer the research question: Does political reform in rentier States (Kuwait as a model) lead to political stability? The first approach: Following the steps of political reform in rentier States leads eventually to political stability. The second approach: Political stability in rentier States does not necessarily lead to political reform. The third approach: In rentier States, the decisive factor in interpreting the correlation between political reform and political stability requires explaining other intermediary factors.

Design/methodology/approach

David Easton’s input-output model: Easton defined the political system as the interactions related to the authoritarian allocation of values in society, that is, the distribution of resources by decisions adopted by individuals, and provided a framework for analysis of the political system in which it sees an integrated circuit of a dynamic nature that starts with inputs and outputs feedback, input and output. Inputs refer to the effects of the environment on the system. Outputs are the effects of the system on the environment, which are the decisions and policies taken by the system to meet the demands. Reverse feedback is the flow of information to the system about the results of its actions, the results of its decisions and policies. Generate new inputs in the form of a demand or support, and the system’s feedback feeds a kind of movement.

Findings

It can be said that the future of the rentier state is particularly dangerous in the Arab countries where the problem today is the sharp drop in oil prices, which requires the need to enter into the stage of major transformations and work to bring about fundamental changes and enter into radical constitutional, economic, political and social reforms before turning them from the state rent to countries that lack political stability.

Research limitations/implications

The aim of this research is to present a theoretical study of political reform. The study began to consolidate the concept of political reform, which was and still is the goal of many political and social reform leaders and movements, in addition to being a major topic in political theories. Reform can be carried out by violence and by peaceful change. In any case, reform remains a humanitarian need that cannot be ignored or avoided, because the alternative is worsening and deteriorating political and social conditions.

Practical implications

The Arab Spring revolutions set many challenges for the Arab countries. These countries had to start political reforms. The State of Kuwait was one of the most important rentier countries that, after the Arab Spring revolutions, was concerned with ensuring that individuals and groups exercised their political rights through political participation in decision-making. It guarantees the human existence of society and protects it through the law and its legislation, and grants rights and freedoms and does not oppose it.

Social implications

Political reforms lead to accommodating the demands of the opposition, increasing the political participation of citizens, activating the political role of women, activating the role of civil society and increasing political mobility.

Originality/value

The importance of the research paper is to emphasize the term rentier state and confirm the importance of reform in rentier countries and the paper asks whether the expansion of political rights, citizenship and participation will lead to stability or instability in these countries.

Details

Journal of Humanities and Applied Social Sciences, vol. 2 no. 2
Type: Research Article
ISSN: 2632-279X

Keywords

Article
Publication date: 15 February 2013

Adam E. Nir and Bhojraj Sharma Kafle

The purpose of this paper is to provide a preliminary analysis to evaluate the implications of political stability for educational quality, evident in the survival rate measure.

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Abstract

Purpose

The purpose of this paper is to provide a preliminary analysis to evaluate the implications of political stability for educational quality, evident in the survival rate measure.

Design/methodology/approach

Secondary analyses were conducted for data drawn from the Political Risk Service Report, the World Bank Report, the United Nations Report and the OECD Report, using a sample comprising 47 countries, 26 politically stable and 21 politically unstable during a ten‐year period of time (1998‐2008).

Findings

The study reveals that political stability plays a major role in explaining the survival rate in education when used as a single predictor or, when introduced in the analysis with the GDP per capita. Following previously reported findings suggesting causal relations between high economic growth and regime stability, the authors’ analyses show that as far as educational quality is concerned, political stability plays a far more significant role compared to countries’ economic circumstances evident in the GDP per capita.

Originality/value

These initial findings suggest that economic conditions create an essential infrastructure which in itself is not sufficient. Political stability which fosters continuity seems to be essential to enable professional considerations to dominate educational processes and allow educators to conduct pedagogical programs from start to finish.

Details

International Journal of Educational Management, vol. 27 no. 2
Type: Research Article
ISSN: 0951-354X

Keywords

Article
Publication date: 20 March 2020

Zhengzhou Zhang and Didier Caluwaerts

In spite of unprecedented levels of social, economic and political development, Chinese politics is characterized by increasingly salient social contradictions, conflicts…

Abstract

Purpose

In spite of unprecedented levels of social, economic and political development, Chinese politics is characterized by increasingly salient social contradictions, conflicts and even protests. As for the various measures taken by all levels of governments to maintain social stability in changing times, the effect is not obvious, and all kinds of social conflicts are still on the rise. The purpose of this paper is to find out the relationship between political elites and social conflicts and give advice on the adjustment of the governance mode of social conflicts in current China.

Design/methodology/approach

This paper attempts to conduct a detailed analysis of the case of Tang Hui re-education through labour to explore how social conflicts arise, upgrade and dissolve within the intention of political elites to maintain social stability in current China.

Findings

Political elites who are subject to the pressure of maintaining social stability cannot rely on public interests and civil rights as the full justification for their actions. Above all, they must place social stability first. In this sense, political elites are constructing the network of maintaining social stability and shaping social protests. Social elites use the media or the internet platform to exert public opinion influence and try to push social protests to final solutions. In this way, social elites deconstruct political elites’ network of maintaining social stability. However, the forces that enable social conflicts and protests to be resolved remain to be the network of maintaining social stability itself.

Originality/value

The case of Tang Hui re-education through labour is believed to have hastened the abolition of the system of re-education through labour. As it completely interprets the whole process of the generation, evolution and resolution of social conflicts in current China, this typical case can be considered as an ideal lens through which we can see the unique relationship between political elites and social conflicts, as well as the governance mode of social conflicts in current China.

Details

Social Transformations in Chinese Societies, vol. 16 no. 1
Type: Research Article
ISSN: 1871-2673

Keywords

Article
Publication date: 24 January 2020

Tesfaye Taddese Lemma, Ayalew Lulseged, Mthokozisi Mlilo and Minga Negash

This study aims to examine the impact of political stability and political rights on firm-level earnings (both accrual-based and real) management.

Abstract

Purpose

This study aims to examine the impact of political stability and political rights on firm-level earnings (both accrual-based and real) management.

Design/methodology/approach

The authors develop models that link political stability, political rights, and the interplay between the two and earnings (both accrual-based and real) management. The authors analyze 63,872 firm-year observations of publicly listed, non-financial, firms drawn from 39 countries, for the period 1995 to 2016.

Findings

The authors find that political stability (political rights) attenuates (accentuates) accrual-based earnings management; political rights (political stability) accentuates (have no effect on) real earnings management; and the association between political rights and real earnings management is more pronounced in countries with better political stability.

Practical implications

The findings imply that users of financial statements should take cognizance of a country’s ambient political environment in assessing the potential for earnings management by firms.

Originality/value

No prior research examined the role of political forces in shaping firm-level earnings management behavior in a cross-country setting.

Details

Accounting Research Journal, vol. 33 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 3 October 2016

Iman Harymawan and John Nowland

The purpose of this study is to investigate how the earnings quality of politically connected firms is affected by changes in political stability and government…

3491

Abstract

Purpose

The purpose of this study is to investigate how the earnings quality of politically connected firms is affected by changes in political stability and government effectiveness in a developing country.

Design/methodology/approach

This study uses a sample of 2,073 firm-year observations from 349 firms listed on the Indonesian Stock Exchange from 2003 to 2012 to examine how political stability and government effectiveness affect the earnings quality of politically connected firms, relative to non-politically connected firms. A two-stage model is used to address self-selection issues in the choice of firms to establish political connections.

Findings

This study finds that increased government effectiveness reduces the benefits of political connections, requiring politically connected firms to be more responsive to market pressures and resulting in higher earnings quality. However, increased political stability enhances the certainty of benefits from political connections, reducing the need for politically connected firms to respond to market pressures and resulting in lower earnings quality.

Research limitations/implications

For policymakers, these results indicate that different dimensions of political and economic development can affect the incentives of firms with political connections in different ways.

Originality/value

This study finds that the earnings quality of politically connected firms increases as government effectiveness improves, but it decreases as the political environment becomes more stable.

Details

International Journal of Accounting & Information Management, vol. 24 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 7 October 2013

Nabamita Dutta, Russell S. Sobel and Sanjukta Roy

Previous literature has clearly demonstrated the need for sound government policies or “institutions” to promote and support entrepreneurship in a country. The purpose of…

1054

Abstract

Purpose

Previous literature has clearly demonstrated the need for sound government policies or “institutions” to promote and support entrepreneurship in a country. The purpose of this paper is to explore the role of one such institution – political stability – in boosting entrepreneurial endeavors. A politically stable nation will have lower risk and transaction/contracting costs, and higher levels of government transparency, predictability, and accountability. Thus, the paper should expect that with greater political stability there should be a greater degree of entrepreneurial activity.

Design/methodology/approach

Using dynamic panel estimators (System GMM estimators) and considering multiple proxies of political risk, our results confirm this hypothesis. Such estimators handle challenges associated with panel data efficiently.

Findings

The paper's results show that greater political stability for a country does indeed lead to an increased rate of entrepreneurship and wealth creation.

Originality/value

Entrepreneurship is critical to the process of economic growth and development. To prosper, countries must unleash the creative talents of their citizens through the decentralized process of formal private sector entrepreneurship. New legal businesses create jobs, opportunities, wealth, and goods and services that make a nation grow. Sadly in many nations, this process is stifled and poverty is the result. While previous research has examined which types of specific policies matter for promoting entrepreneurship, the paper considers the different question of how the stability of political institutions impacts the rate of entrepreneurship.

Details

Journal of Entrepreneurship and Public Policy, vol. 2 no. 2
Type: Research Article
ISSN: 2045-2101

Keywords

Book part
Publication date: 13 May 2019

Rajamanickam Srinivasan

Feng found that political institutions (operationalized in terms of political repression, political instability and policy uncertainty) do matter for economic growth by…

Abstract

Feng found that political institutions (operationalized in terms of political repression, political instability and policy uncertainty) do matter for economic growth by constraining individuals’ decisions in their marketplace (Feng, 2003, p. 296). Political stability is also an important element among the World Governance Indicators developed by Kaufmann et al. as part of the World Bank project to assess good governance in 1996. Economic well-being is also dependent on political stability and consistency in governance policy. Loss of economic and political confidence is therefore accepted as a factor affecting economic well-being of a society. How far these hypotheses are supported or negated by evidence from Northeast region of India that has witnessed insurgency for six decades now is the object of enquiry in this chapter. Alongside pure economic indicators such as Gross State Domestic Product (GSDP) and FDI, this article looks at the play of political factors like stability of governments in the representative democratic paradigm sanctioned by the Constitution of India in the Northeastern states of India during the decade 2006–2016.

Details

The Impact of Global Terrorism on Economic and Political Development
Type: Book
ISBN: 978-1-78769-919-9

Keywords

Article
Publication date: 2 May 2017

Mamunur Rashid, Xuan Hui Looi and Shao Jye Wong

Competitiveness is vital to attracting FDI into a country, which has led us to investigate the determinants of FDI in the top 15 most competitive countries in the Asia…

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Abstract

Purpose

Competitiveness is vital to attracting FDI into a country, which has led us to investigate the determinants of FDI in the top 15 most competitive countries in the Asia Pacific region.

Design/methodology/approach

We have analysed political stability alongside other commonly studied determinants of FDI. We have employed a panel data fixed-effect model on a 14-year sample data (2000-2013) involving the top 15 most competitive Asia Pacific countries. The Global Competitiveness Index was taken as the yardstick to identify these countries. We have used fixed effect, GMM-system, and Panel ARDL tests for robust results.

Findings

The GDP, trade openness and political stability positively influenced FDI inflows while inflation rate negatively impacted FDI inflows in the selected countries. Political stability was the most influential variable in the presence of other indicators. GDP, openness, and political stability exhibit significant long-run relationship with FDI inflows.

Research limitations/implications

To increase FDI flows, regulators should focus on building the image of the country, and possibly the region, by ensuring stable economic and political environment, maintaining macroeconomic stability through bi- and multi-lateral arrangements with neighbouring countries.

Originality/value

Regional relationships with neighbouring countries can be considered as the building blocks for attracting FDIs. These relationships can be strengthened based on liberal trade policies, openness in capital control, and cooperation in terms of political actions. One such recent issue in regional political cooperation include actions to reduce terrorism and corruption that help boost the confidence of the investors.

Details

Journal of Financial Economic Policy, vol. 9 no. 02
Type: Research Article
ISSN: 1757-6385

Keywords

Open Access
Article
Publication date: 25 May 2022

Fisayo Fagbemi and Adeyemi Fajingbesi

This study investigates the extent to which, and in what ways and capacities, the incidence of adverse economic conditions burdening the masses, on the macro-level…

Abstract

Purpose

This study investigates the extent to which, and in what ways and capacities, the incidence of adverse economic conditions burdening the masses, on the macro-level, increases the propensity for the generation of political instability/violence.

Design/methodology/approach

Drawing on data from a cross-section of 25 Sub-Saharan African (SSA) countries for the period 2005–2019, fixed effects (FE) and generalized method of moments (GMM) estimations are used to determine the nature and significance of the independent variable (economic condition), complemented by three control variables, on the dependent WGI-defined variable political stability scored on the basis of a continuum from −2.5 (most unstable) to +2.5 (most stable). For the link between political instability and socioeconomic conditions, the study employs a construct derived from frustration-aggression and relative deprivation theory.

Findings

The study links socioeconomic adversity to political instability in the context of SSA. In addition, larger populated countries exhibit a greater propensity to political instability than smaller populated countries. In contrast, foreign direct investment (FDI) appears to have no real effect, positive or negative, on political stability.

Practical implications

Poor living conditions seem to be strongly associated with a high risk of political violence in SSA. To buoy socioeconomic status, poverty alleviation needs be elevated into a key initiative in the decision-making agenda, at all levels of governance, with real targeted strides achieved in terms of enhancement of the standard of living of the masses. In addition, policies that control population need to be inaugurated hand-in-hand with welfare measures and a more equitable balancing of the distribution of resources in the society.

Originality/value

Given the high regional incidence of civil strife and violence, combined with a dearth of research of an empirical nature on political risk in SSA, this study provides a largely ignored and useful context on SSA apart from studies on the incidence of violence that consider the developing countries as a monolithic whole.

Details

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

Keywords

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