Search results
1 – 10 of over 24000Misbah 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 the…
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
Keywords
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…
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
Keywords
Sirajo Aliyu, Ahmed Rufai Mohammad and Norazlina Abd. Wahab
This study aims to empirically investigate the impact of political instability on the banking stability of the dual banking system in the Middle East and North African (MENA…
Abstract
Purpose
This study aims to empirically investigate the impact of political instability on the banking stability of the dual banking system in the Middle East and North African (MENA) countries.
Design/methodology/approach
The study measures banking stability with probability of default (PD) and Zscore by employing the generalised method of moment (GMM) between 2007 and 2021 on the dual banking system in the region. The authors further estimate short-long-run situations coupled with a robustness test using a generalised least square (GLS) model.
Findings
The authors' findings indicate that institutional factors of political stability, crisis period, high-crisis countries, law and order and macroeconomic indicators influence the two types of banking stability in the region. The authors found the consistency of the factors explaining stability in the region in both short-and long-run situations. Consequently, the study also reveals the adverse effects of crisis periods and high-crisis countries on banking stability.
Practical implications
The results of this study explicitly identify the critical need for sustaining political stability and abiding by laws and order to achieve dual banking stability in the region. Therefore, policymakers may consider allowing the region's banks to operate beyond retail banking since diversification enhances banking stability.
Originality/value
The authors' study balances by employing dual stability measurement in predicting the impact of political instability, law and order and other indicators on the MENA region's two banking models. This study uncovers the effect of the global crisis period on banking stability and high-crisis countries in the region and verifies the models' robustness.
Details
Keywords
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.
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
Keywords
Daniela-Georgeta Beju, Maria-Lenuta Ciupac-Ulici and Vasile Paul Bresfelean
This paper aims to investigate the impact of political stability on corruption by drawing upon a sample encompassing both developed and developing European and Asian countries.
Abstract
Purpose
This paper aims to investigate the impact of political stability on corruption by drawing upon a sample encompassing both developed and developing European and Asian countries.
Design/methodology/approach
The dataset, sourced from the Refinitiv database, spans from July 2014 to May 2022. Panel data techniques, specifically pooled estimation and dynamic panel data [generalized method of moments (GMM)] are employed. The analysis encompasses both fixed and random effects models to capture country-specific cross-sectional effects. To validate our findings, we perform a robustness test by including in the investigation four control variables, namely poverty, type of governance, economic freedom and inflation. To test heterogeneity, the dataset is further divided into two distinct subsamples based on the countries’ locations.
Findings
Empirical findings substantiate that political stability (viewed as the risk of government destabilization) has a positive and significant impact on corruption in all analyzed samples of European and Asian countries, though some differences are observed in various subsamples. When we take into account the control variables, these analysis results are robust.
Research limitations/implications
This research provided a panel data analysis with GMM, while other empirical methodologies could also be used, like the difference-in-difference approach. However, our results should be validated by extending the time and the sample to a worldwide sample and using alternative measures of corruption and political stability. Moreover, our focus was on a linear and unidirectional relationship between the considered variables, but it would be interesting to test in our further research a non-linear and bidirectional correlation between them. Furthermore, we have introduced in the robustness test only four economic variables, but to consolidate our findings, we plan to include socioeconomic and demographic variables in future studies.
Practical implications
These outcomes imply that authorities should be aware of the necessity of implementing anti-corruption policies designed to establish effective agencies and enforcement structures for combating systemic corruption, to improve the political environment and the quality of institutions and to apply coherent economic strategies to accelerate economic growth because higher political stability and sustainable development determine a decrease in levels of corruption.
Social implications
At the microeconomic level, the survival of organizations may be in danger from new types of corruption and money laundering. Therefore, in order to prevent financial harm, the top businesses worldwide should respond to instances of corruption through strengthened supervisory procedures. This calls for the creation of a mechanism inside the code of conduct where correct reporting of suspected situations of corruption would have a prompt procedure to be notified of. To avoid corruption in operational procedures, national plans and policies should be developed by government officials, executives and legislators on a national level, as well as by senior management and the board of directors on an organizational level. This might lower organizations' extra corruption-related expenses, assure economic growth and improve global welfare.
Originality/value
A novel feature of our research resides in its broad examination of a sizable sample of European and Asian countries regarding the nexus between corruption and political stability. The paper also investigates a less explored topic in economic literature, namely the impact of political stability on corruption. Furthermore, the study depicts policy recommendations, outlining effective and reasonable measures aimed at improving the political landscape and combating corruption.
Details
Keywords
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 and even…
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
Keywords
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
Keywords
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 effectiveness in a…
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
Keywords
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 this…
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
Keywords
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 Pacific…
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