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Article
Publication date: 5 May 2020

Syed Hasanat Shah, Hafsa Hasnat and Delpachitra Sarath

Pakistan suffered with the menace of terrorism for long and become a front line state in the “War on Terror”. Terrorism shattered Pakistan economy and rendered her…

Abstract

Purpose

Pakistan suffered with the menace of terrorism for long and become a front line state in the “War on Terror”. Terrorism shattered Pakistan economy and rendered her external sector vulnerable to instability and uncertainties.

Design/methodology/approach

Therefore, using system generalized method of moment (GMM), this paper investigates the impact of foreign direct investment (FDI) on exports, imports and trade deficit in the face of unabated terrorism in Pakistan.

Findings

The findings of the paper suggest that as terrorism in Pakistan increased, FDI contribution to Pakistan exports decreased while FDI contribution to Pakistan imports significantly increased. Terrorism also disrupted the chain of local production and increased Pakistan reliance on imports. Thus terrorism widened Pakistan trade deficit of Pakistan and expose Pakistan to external imbalances.

Originality/value

Despite rise in organized acts of terrorism and its adverse impact on various departments of economy, hardly any study bothers to check its impact on trade and investment nexus. This is the first study of its nature that looks deep down to understand how terrorism affects the relation of major economic variables.

Details

Journal of Economic Studies, vol. 47 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 14 November 2016

Yen Hoang Bui, Delpachitra Sarath and Abdullahi D. Ahmed

The purpose of this paper is to measure efficiency of superannuation funds using data envelopment analysis (DEA), using data related to financial performance of…

Abstract

Purpose

The purpose of this paper is to measure efficiency of superannuation funds using data envelopment analysis (DEA), using data related to financial performance of superannuation funds. The sample comprises 183 superannuation funds covering approximately 79 per cent of the 231 largest Australian Prudential Regulation Authority (APRA)-regulated funds in 2012. The research covers a period of seven years from 2005 to 2012. The results indicate that most Australian superannuation funds are inefficient relative to the benchmark efficiency frontier based on efficient funds. The findings emphasise the importance of improving the efficiency of Australian superannuation funds by reducing overall fund expenses to narrow the gap in performance between efficient and inefficient funds.

Design/methodology/approach

This study aims to contribute to policy, theory and practice in several dimensions. Member protection and the efficiency of the superannuation system are topical issues (Donald, 2009). Despite its importance from a regulatory point of view, efficiency has only been discussed in relation to operational issues such as managing agency relationships, fees and charges, investment return or economies of scale. The relative efficiency of the Australian superannuation system from an economic productivity perspective has rarely been examined, except for a study by Njie (2006), where the Malmquist productivity DEA technique was used to measure the efficiency of Australia’s retirement income system.

Findings

Most inefficient funds had very low efficiency scores and were fell into the lower quintiles such as Quintiles 4 (scored 0.200-0.399) and 5 (scored 0.001-0.199). Consequently, input reduction targets were significantly higher for these two quintiles. Similarly, input reduction targets were high under the period DEA estimates. In order to be comparatively efficient, Quintile 4 funds were required to reduce total expenses by 75 per cent (−0.754) and volatility of return by 80 per cent (−0.801). Similarly, Quintile 5 funds needed to reduce total expenses by, on average, 83 per cent (−0.824) and volatility of return by 89 per cent (−0.894).

Research limitations/implications

As in other empirical research, this study also depended heavily on the data collected from the secondary sources such as APRA database and other financial reports. The issues of measurement errors in data sources such as APRA database are well documented (see, e.g. Cummins, 2012). This issue needs the attention of future research on the efficiency of superannuation funds.

Practical implications

The findings on individual year DEA estimates indicate that most funds were inefficient due to high expenses. Therefore, mandatory disclosure of fees and charges in a comparable manner may be necessary to justify fee payments and to address transparency and accountability issues, which are critical issues identified by the Cooper Review and the academic literature (Australian Government, 2014; Cooper et al., 2010; Gallery and Gallery, 2006).

Social implications

The issue of Australian superannuation funds concentrating the majority of fund assets in highly volatile investment vehicles such as the share markets has been in the spotlight in the aftermath of the global financial crisis. There have been proposals to better diversify superannuation assets in other asset classes (Cooper et al., 2010).

Originality/value

This study contributes to the current literature on superannuation funds by investigating efficiency. As efficiency studies using DEA have not been conducted on the Australian superannuation industry, this study also contributes to the academic literature on DEA and its extensive applications to various economic sectors. Efficiency scores using DEA, ranking, trends and shifts in the efficiency frontiers could be obtained for Australian superannuation funds on an on-going or annual basis.

Details

Journal of Economic Studies, vol. 43 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 12 October 2015

Delpachitra Sarath and Dai Van Pham

– The purpose of this paper is to theoretically and empirically examine the lending behavior of Vietnamese banks.

Abstract

Purpose

The purpose of this paper is to theoretically and empirically examine the lending behavior of Vietnamese banks.

Design/methodology/approach

A firm-banking model was established, considering risk-taking behavior and the regulatory environment. Based on the theoretical model, a simultaneous equation system was specified that considered loan growth and deposit growth as endogenous variables to empirically investigate lending behavior in Vietnam’s banking sector. Two-stage least square estimators were employed using a micro-level panel data set comprising 39 Vietnamese commercial banks.

Findings

The empirical results demonstrate the divergence in the lending behavior of private and state-owned banks. The regressions results support the predictions of the theoretical model on the positive effect of economic growth and the negative effect of the government bond rate on bank lending. The results also suggest that deposit growth and liquidity constraint significantly influence loan supply in private banks, while equity growth is the determinant of lending behavior in state-owned banks. Nevertheless, the banks’ non-performing loan rate, which proxies for the expected default probability of loans, is found to not significantly affect loan supply.

Research limitations/implications

Despite the efforts to capture the idiosyncratic characteristics of the Vietnamese banking system, this study does not fully take into account distinctive nature of the Vietnamese banking system.

Practical implications

The paper suggests implications for the government monetary policy.

Originality/value

The contribution of this paper is twofold. First, it introduces a firm-banking theoretical model that allows banks offering different lending rates and modeled under different aspects of modern banking such as risk-taking behavior and regulatory environment. Second, it is a very first study empirically investigating the lending behavior of Vietnamese banks.

Details

Journal of Economic Studies, vol. 42 no. 5
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 11 April 2008

Sarath Delpachitra

Aim of this paper is to set some cost benchmarks for the cost of processing an insurance application and processing a claim.

Abstract

Purpose

Aim of this paper is to set some cost benchmarks for the cost of processing an insurance application and processing a claim.

Design/methodology/approach

Activity‐based costing (ABC) model. The ABC model was applied to a unified business process and set the benchmarks for the cost of processing an application and a claim.

Findings

The average cost per application is approximately AUD221 and the cost of processing a claim is AUD260. The cost of support functions is higher in the case of application processing and back office direct costs are higher in the case of claim processing.

Research limitations/implications

The success of benchmarking exercises depends on the cooperation of the benchmarking partners. Furthermore, the benchmarks can be more accurate when ABC is applied to the business processes. Most insurance providers are yet to adopt the ABC model.

Originality/value

This paper introduces the breakdown of the processing costs for general insurance. The breakdown is given on the basis of direct and indirect costs as well as front office, back office and support function costs. To the best of author's knowledge this is the first application of process benchmarking to the insurance industry.

Details

Benchmarking: An International Journal, vol. 15 no. 2
Type: Research Article
ISSN: 1463-5771

Keywords

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Article
Publication date: 1 October 2002

Sarath Delpachitra and Diana Beal

Benchmarking techniques evolved from Xerox’s pioneering visit to Japan in the late 1970s. However, the application of the benchmarking concept to the banking industry did…

Abstract

Benchmarking techniques evolved from Xerox’s pioneering visit to Japan in the late 1970s. However, the application of the benchmarking concept to the banking industry did not take place until the late 1990s. Process benchmarking, in particular, is a tool that helps FIs to cut costs, improve productivity and integrate business processes. Although process benchmarking involves divulging what may be considered as sensitive or confidential information, forming de facto benchmarking partnerships with competitors allows participating institutions to compare cost and output advantages and disadvantages, when performing key processes involved in lending operations. This paper presents an application of process benchmarking to lending operations across Australia to highlight differences in costs involved in seemingly identical value chains.

Details

Benchmarking: An International Journal, vol. 9 no. 4
Type: Research Article
ISSN: 1463-5771

Keywords

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