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The paper investigates the dynamic relationship among the stock markets of South Asian Association of Regional Cooperation (SAARC) countries during the COVID-19 pandemic.
Abstract
Purpose
The paper investigates the dynamic relationship among the stock markets of South Asian Association of Regional Cooperation (SAARC) countries during the COVID-19 pandemic.
Design/methodology/approach
Daily time-series data of four SAARC countries: India, Bangladesh, Pakistan, and Sri Lanka, from February 13th, 2013 to March 31st, 2021 are used. The study considers stock prices prior to the blowout of COVID-19 and during the onset of the pandemic. The novel estimation procedure of the autoregressive distributed lag model is used while the results are also confirmed by post-estimation techniques.
Findings
The study confirms that the COVID-19 contagion has adversely influenced the stock returns of SAARC countries. The findings signify that the pattern of cointegration has significantly different regularities in the pattern of causality in the long run and short run during the COVID-19 crisis. Overall, the study revealed that the COVID-19 pandemic has weakened the dynamic connection among the stock markets of SAARC countries.
Practical implications
To dampen uncertainties generated by the COVID-19 pandemic, the authorities and central banks should be equipped with efficient strategies and guidelines to cope with the crisis created by the pandemic. Further, governments should focus on assuaging the panic faced by investors and enhancing the confidence of domestic as well as foreign investors. Further, the weakened integration of financial markets during the crisis offers opportunities for speculative and arbitrage gains for investors.
Originality/value
The research work is an innovative effort to analyze the impression led by COVID-19 on the SAARC stock markets integration.
The present study aims to examine the moderating impact of governance quality on the tourism poverty nexus using a panel of six South Asian Association for Regional Cooperation…
Abstract
Purpose
The present study aims to examine the moderating impact of governance quality on the tourism poverty nexus using a panel of six South Asian Association for Regional Cooperation (SAARC) countries during the period 2002 to 2019.
Design/methodology/approach
For the soundness of the results, fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) econometric models were applied to determine the long-run relationship.
Findings
The findings confirmed the positive and significant impact of tourism development (international tourism arrival) and governance quality (effectiveness of governmental services) on poverty (per capita household consumption) reduction. Interestingly results confirm that governance quality and tourism development have complementary impacts on poverty reduction.
Originality/value
The present study has twofold contributions; First, despite the high potential of SAARC tourism, research remains limited in studies examining the role of tourism and governance quality on poverty reduction within the SAARC region. As a result, the present paper presents critical insights into the impact of tourism inflow and governance quality on poverty reduction in South Asian countries. Second, to the best of the author's knowledge, this is the first attempt to conduct an econometric analysis to examine the role of governance quality on the relationship between tourism inflow and poverty reduction in SAARC countries.
This study aims to explore the determinants of public debt in selected South Asian Association for Regional Cooperation (SAARC) countries for 19 years, from 2001 to 2019.
Abstract
Purpose
This study aims to explore the determinants of public debt in selected South Asian Association for Regional Cooperation (SAARC) countries for 19 years, from 2001 to 2019.
Design/methodology/approach
Using ordinary fixed and random effect models, the authors examine the role of internal and external factors in determining the composition of public debt. Furthermore, for robustness, they compare the results with two-stage least square (2SLS) regression estimates after considering the problem of endogeneity, overidentification, under-identification and weak instruments.
Findings
The findings show that among the selected macroeconomic variables, inflation, exchange rate and broad money have significant negative effects on the debt-GDP ratio. In contrast, military spending, corruption and interest rates appear to positively influence the same as per 2SLS results. From the policymaking perspective, SAARC countries should focus more on reducing military spending and make a concerted effort to augment investments in productive projects. Further, with strong fiscal consolidation and institutional quality, it is important to mitigate the frequent occurrence of corruption conundrums in emerging economies for the development of a transparent economic system.
Originality/value
The study is distinct from previous studies in two ways. First, to the best of the authors’ knowledge, there are no studies focusing on SAARC countries in the context of public debt. Second, the study expands the existing literature on public debt by taking into account both external and internal debts to decipher the within-country and cross-country determinants of debt accumulation. More specifically, this model considers accountability and transparency in the public sector, cross-border security challenges and benefits of globalization by including explanatory variables such as corruption, military expenditure spending and capital inflows.
Details
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Niva Kalita and Reshma Kumari Tiwari
The purpose of this study is to investigate the association between three corporate governance (CG) idiosyncrasies, namely audit committee characteristics, external audit quality…
Abstract
Purpose
The purpose of this study is to investigate the association between three corporate governance (CG) idiosyncrasies, namely audit committee characteristics, external audit quality (AQ), board diversity and firm performance (FP) in the South Asian Association for Regional Cooperation (SAARC) nations.
Design/methodology/approach
The study used a sample of 200 listed nonfinancial firms in the SAARC nations from 2012 to 2021. The System Generalized Method of Moment model was applied to the data consisting of 2000 firm-year observations. The Generalized Estimating Equation population-averaged model was also employed for added robustness. The study employed Tobin's Q as the measure of FP.
Findings
The findings revealed that amongst the CG variables tested, external AQ exhibited a significantly positive relationship with Tobin's Q. Significant negative influences on FP have been demonstrated by the variables of audit committee meeting and board's independence. Furthermore, gender diversity, CEO duality, audit committee strength and independence failed to record any significant association.
Originality/value
This study is one of the first to investigate the association between CG idiosyncrasies and FP in the SAARC nations. The study findings have important implications for policymakers and regulators in the region.
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Keywords
Anushka Verma, Arun Kumar Giri and Byomakesh Debata
The main purpose of this paper is to analyze the role of information and communication technology (ICT) diffusion in women empowerment and in fostering the process of achieving…
Abstract
Purpose
The main purpose of this paper is to analyze the role of information and communication technology (ICT) diffusion in women empowerment and in fostering the process of achieving the Sustainable Development Goals (SDGs) in South Asian Association for Regional Cooperation (SAARC) countries using panel data from 2005 to 2020.
Design/methodology/approach
An ICT diffusion index was constructed using principal component analysis (PCA). Further, the study uses econometric techniques robust to cross-sectional dependence (CSD) which include Pesaran's CSD tests, second-generation unit root test, Pedroni, Kao, Westerlund cointegration test, FMOLS, DCCE, Driscoll–Kraay (DK) regression, and D&H causality tests.
Findings
ICT diffusion and economic growth have a significant and favorable impact on women's empowerment. However, fertility rates and trade openness harm women's empowerment. In addition, the causality test results depict a bidirectional causal relationship between ICT and women empowerment and between growth and women empowerment. In addition, unidirectional causality is detected between education and women's empowerment. Overall, the findings indicate that expanding ICT and bridging the digital divide, particularly among women, can be effective in achieving empowerment-related SDGs.
Originality/value
To date, there are hardly any studies in SAARC context that empirically evaluate the link between ICT, women empowerment, and the issue of sustainability in a unified framework. Therefore, this study is unique in terms of conceptualization and methodological robustness in this context. The study will benefit policymakers and regulatory bodies to formulate appropriate policies to empower women and thereby attain the SDGs by 2030.
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Shanza Maryam Khan and Shahzad Akhtar
The study investigates the impact of competition and concentration on bank risk-taking behavior and stability in the South Asian Association for Regional Cooperation (SAARC…
Abstract
Purpose
The study investigates the impact of competition and concentration on bank risk-taking behavior and stability in the South Asian Association for Regional Cooperation (SAARC) region.
Design/methodology/approach
Data from 100 banks from 2013 to 2021 was analyzed using dynamic and static measures by using dynamic system GMM.
Findings
Results showed that higher competition reduces stability, while concentration in the banking sector produces stability and reduces risk-taking behavior. The findings suggest that regulatory agencies should take different actions based on the degree of banking market concentration to enhance banking sector stability in the SAARC area.
Practical implications
The research helps regulators and decision-makers establish capital requirements at levels that would prevent banks from increasing their risk-taking in order to boost profits and, therefore, reduces hazardous practices that might increase the risk.
Originality/value
The research helps establish capital requirements to prevent banks from increasing risk-taking to boost profits and avoid hazardous practices that could increase nonperforming loans and bank failure risks.
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Keywords
The paper presents the facts on the policy challenges and opportunities in the way forward of trade and economic co-operation in South Asia amid the coronavirus disease 2019…
Abstract
Purpose
The paper presents the facts on the policy challenges and opportunities in the way forward of trade and economic co-operation in South Asia amid the coronavirus disease 2019, which comes to be the least economically integrated region worldwide. Due to tense geopolitics in South Asia, trade is heavily biased toward extra-regional markets despite of existing regional trade agreements (TAs) in the region.
Design/methodology/approach
Having tested the stationarity of data with structural break, the paper uses intra-regional trade in addition to other domestic economic variables as exogenous regressors in autoregressive distributed lag multivariate framework, hence raising the quality of statistical inference.
Findings
This paper highlights that intra-regional trade significantly affects the economic welfare as measured by Gross Domestic Product per capita of the people from the region, hence raising the need for higher regional trade openness. If trade barriers are overcome, all the South Asian countries will gain through effective implementation of regional TAs.
Research limitations/implications
The study relies on the multivariate technique with regional trade share as the main exogenous variable. In addition, the regulatory and economic conditions of all countries are different which also tends to affect the mutual degree of trade relations.
Practical implications
Over the economic reasons, the manmade barriers owing to political differences are the root cause for the low intra-regional trade. Amid the pandemic, South Asian courtiers have the high time to leverage the bilateral trade for mutual benefits. India being the largest economy can play a decisive role in pushing forward the regional trade bloc – South Asian Association for Regional Cooperation (SAARC) – for achieving its objective through multilateral engagements in a wider perspective.
Originality/value
The present study makes pioneer efforts to examine the dynamic linkages between regional trade and economic growth. The results provide new insight into the dynamics of benefits driven by trade interdependency.
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Keywords
Anindita Bhattacharjee, Neeru Sidana, Richa Goel, Anagha Shukre and Tilottama Singh
The study will add to the current discourse on the Israel-Hamas conflict by examining the impact of the war on the stock markets of trading partners. Stock market returns…
Abstract
Purpose
The study will add to the current discourse on the Israel-Hamas conflict by examining the impact of the war on the stock markets of trading partners. Stock market returns inevitably rise as globalization keeps integrating financial markets and economies around the world. Thus, the impact of war is assessed across a range of indicators that are similar in some way, such as geographic location, political climate or economic standing. Thus, the goal of this study is to investigate how the Israel-Hamas war affects trading partner countries' stock performance.
Design/methodology/approach
Event study methodology is applied using Morgan Stanley Capital Index (MSCI) as a benchmark index. The influence of the Israel-Hamas war on the world's major stock markets is evaluated using a market model. The study takes into account Israel and its 23 trading partners. To capture the locational asymmetry in the outcome, the countries are further categorized according to their geographic locations. The official declaration of war came on October 7, 2023, a non-trading day. Consequently, October 9, 2023, is designated as the event day in this study. The data was gathered between January 1, 2023, and December 31, 2023, with an estimation period of 140 days taken into account to minimize bias.
Findings
Asymmetric response is shown among the nations due to their economic standing, geographic proximity and trading links with Israel. While Austria, Greece, Egypt, Palestine and Israel had the greatest negative effects, Argentina, Japan and Chile saw significant beneficial effects. The remaining nations had little effect. The market quickly adjusted itself, eliminating anomalous returns.
Research limitations/implications
Taking into account the topic's criticality, the current work has certain limits. The study has used the daily data to limit its reach to the stock market exclusively. In the future, academics can combine high-frequency stock market data with data from other macroeconomic variables, such as currency or different commodities markets, to further their research. Furthermore, a cross-national comparison of the impact in terms of direction and intensity regarding developing global groups such as I2U2, LEVANT, BRICS, MIKTA, SCO, NATO, SAARC and OECD can provide a more comprehensive understanding in this context. To gain insight into the durability and adaptation of financial systems over time, longitudinal studies could be conducted to monitor the long-term effects of geopolitical crises on the stock markets of trading partner countries.
Practical implications
By better managing investment portfolios and evaluating potential risks associated with trading partners involved in such conflicts, investors and businesses can lessen the impact of geopolitical tensions on stock market performance. These results contribute to our understanding of how geopolitical conflicts affect stock markets.
Originality/value
This research provides an extensive analysis of the global impact of Israel-Hamas tensions on stock market volatility by taking into account trading partners. This allows for the investigation of how various market structures and economic systems react to geopolitical turmoil. The present study is one of the first attempts to look into how disturbances in one region might affect continents to better understand the dynamics of global trade and economic interdependencies.
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Mohd Nadeem Bhat and Firdos Ikram
This study aims to explore the interplay between CO2 emissions, financial development (FD) and foreign direct investment (FDI) in Asia-Pacific and Oceania. It also aims to…
Abstract
Purpose
This study aims to explore the interplay between CO2 emissions, financial development (FD) and foreign direct investment (FDI) in Asia-Pacific and Oceania. It also aims to understand short- and long-term impacts, emphasizing the role of FDI, FD and FD’s moderating effect on the FDI–CO2 relationship.
Design/methodology/approach
Using a 21-year panel data set (2000–2020) from 44 countries, the study employs the pooled mean group-autoregressive distributed lag (PMG-ARDL) model supplemented by the Dumitrescu–Hurlin panel causality test. This method assesses the complex dynamics and offers a robust analysis of short- and long-term effects in the Asia-Pacific and Oceanian context.
Findings
Long-term results indicate that FDI coupled with FD and FD’s moderating effect on FDI significantly contributes to CO2 emissions. Short-term relationships are more complex and lack statistical significance. FD positively moderates the FDI–CO2 relationship in the long run.
Practical implications
For investors, policymakers and stakeholders in Asia-Pacific and Oceania, the study highlights the importance of considering environmental impacts in investment decisions. The insights into the role of FDI and FD help craft policies and strategies for environmental sustainability.
Social implications
Socially, this research emphasizes the necessity of a balanced approach to economic development, considering the potential long-term environmental consequences. Policymakers and stakeholders may use these findings to guide discussions and actions to achieve sustainable and socially responsible development in this dynamic region.
Originality/value
The findings contribute original insights into the essential relationships among FDI, FD and CO2 emissions in a diverse region like Asia-Pacific, enhancing the understanding of environmental implications in regions experiencing rapid economic growth.
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Vandana Arya, Ravinder Verma and Vijender Pal Saini
The study examines the association between trade (exports and imports), foreign direct investment (FDI) and economic growth in the Bay of Bengal Initiative for Multi-Sectoral…
Abstract
Purpose
The study examines the association between trade (exports and imports), foreign direct investment (FDI) and economic growth in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) countries using data from 1991 to 2019.
Design/methodology/approach
Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests were applied to check the stationary of the data while the Johansen cointegration test and Vector Error Correction Model (VECM) was used to analyze long-run and short-run relationships.
Findings
The results indicate a long-run relationship between trade, FDI and economic growth in all selected countries except Bhutan. Additionally, a bidirectional causality exists between gross domestic product (GDP) and FDI in India, Bangladesh, Myanmar, Nepal, Bhutan and Sri Lanka, while unidirectional causality from GDP to FDI is observed in Thailand. Moreover, a one-way causality from exports to GDP exists in Bangladesh, Nepal, Bhutan, Sri Lanka and Myanmar, whereas a bidirectional relationship exists in India and Thailand.
Practical implications
This paper will be highly beneficial for regulators and policymakers in the designated economies, aiding in the formulation of FDI and trade policies that promote economic progress and development.
Originality/value
Most previous studies examining the relationship between macroeconomic variables have focused on developed nations. This study is the first to explore the relationship between trade (exports and imports), FDI and economic growth in the BIMSTEC countries.
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