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1 – 10 of 12Izabela Pruchnicka-Grabias, Iwona Piekunko-Mantiuk and Scott W. Hegerty
The Polish economy has undergone major challenges and changes over the past few decades. The country's trade flows, in particular, have become more firmly tied to the country’s…
Abstract
Purpose
The Polish economy has undergone major challenges and changes over the past few decades. The country's trade flows, in particular, have become more firmly tied to the country’s Western neighbors as they have grown in volume. This study examines Poland's trade balances in ten Standard International Trade Classification (SITC) sectors versus the United States of America, first testing for and isolating structural breaks in each time series. These breaks are then included in a set of the cointegration models to examine their macroeconomic determinants.
Design/methodology/approach
Linear and nonlinear and nonlinear autoregressive distributed lag models, both with and without dummies corresponding to structural breaks, are estimated.
Findings
One key finding is that incorporating these breaks reduces the significance of the real exchange rate in the model, supporting the hypothesis that this variable already incorporates important information. It also results in weaker evidence for cointegration of all variables in certain sectors.
Research limitations/implications
This study looks only at one pair of countries, without any third-country effects.
Originality/value
An important country pair's trade relations is examined; in addition, the real exchange rate is shown to incorporate economic information that results in structural changes in the economy. The paper extends the existing literature by conducting an analysis of Poland's trade balances with the USA, which have not been studied in such a context so far. A strong point is a broad methodology that lets compare the results the authors obtained with different kinds of models, both linear and nonlinear ones, with and without structural breaks.
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Mohsen Bahmani‐Oskooee and Scott W. Hegerty
Since the introduction of the concepts of the J†and Sâ€curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and…
Abstract
Purpose
Since the introduction of the concepts of the J†and Sâ€curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and to offer direction for future research.
Design/methodology/approach
This is a review paper. As such, no method is employed here. Rather, the methodologies used by others to test the J†and Sâ€curves are explained and reviewed.
Findings
No new findings are offered since this is a review paper.
Practical implications
The J†and Sâ€curves show whether currency depreciation worsens the trade balance first before improving it. Since the majority of studies are countryâ€specific, policymakers could benefit by learning whether currency depreciation will be effective in improving the trade balance.
Originality/value
This is a literature review paper and its originality is in terms of collecting the literature together and presenting it in one single paper.
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Mohsen Bahmani, Hanafiah Harvey and Scott W. Hegerty
The Marshallâ€Lerner (Mâ€L) condition, which stipulates that a devaluation or depreciation of its currency will improve a country's trade balance only if the sum of the absolute…
Abstract
Purpose
The Marshallâ€Lerner (Mâ€L) condition, which stipulates that a devaluation or depreciation of its currency will improve a country's trade balance only if the sum of the absolute values of a country's import and export price elasticities are greater than one, is a fundamental tenet of international economics. The purpose of this study is to survey the literature that has tested the Mâ€L condition, examining in particular whether previous studies' results are statistically significant. The authors then conduct their own estimation of 29 countries' trade elasticities, over the past few decades.
Design/methodology/approach
While mostly a review paper, the paper also applies statistical techniques in two ways. First, the authors use tâ€tests on previouslyâ€published statistical results to see if the sums of their elasticities are significantly greater than one. The authors also apply the recently developed ARDL cointegration method, which has a number of attractive statistical properties, to estimate 29 countries' longâ€run import and export elasticities and test the Mâ€L condition using recent data.
Findings
The authors reâ€estimation using previous studies' coefficients and standard errors shows that, although the point estimates in many studies suggest that the Mâ€L condition is met, it really is not met in half of the cases. This lack of evidence is confirmed with the authors' own empirical tests.
Research limitations/implications
Not only does this paper collect the relevant literature in a way that will assist future researchers on the topic, these findings suggest that support for the Mâ€L condition is much weaker that commonly thought. This therefore makes an important contribution to thinking regarding the potential benefits of devaluation, and to economic theory in general.
Practical implications
Policymakers who hope to improve their countries' competitive position could benefit from learning that this policy is indeed less effective than might be supposed. This could lead to the implementation of more effective economic policies.
Originality/value
As a literature review, the originality of this paper is that it collects relevant studies into one single paper. The statistical analyses allow the reader to reâ€interpret these studies' findings in a new light.
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Mohsen Bahmani‐Oskooee and Scott W. Hegerty
Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were…
Abstract
Purpose
Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were overlooked by McKenzie, set the stage for this review. Many of the recent studies have been empirical in nature and these deserve specific attention. Thus, this paper aims to survey and review all of the studies by paying attention to the attributes outlined in the text.
Design/methodology/approach
This paper examines the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.
Findings
The increase in exchangeâ€rate volatility since 1973 has had indeterminate effects on international export and import flows. Although it can be assumed that an increase in risk may lead to a reduction in economic activity, the theoretical literature provides justifications for positive or insignificant effects as well. Similar results have been found in empirical tests. While modeling techniques have evolved over time to incorporate new developments in econometric analysis, no single measure of exchangeâ€rate volatility has dominated the literature.
Originality/value
An argument put forward by the opponents of the floating exchange rates is that such rates introduce uncertainty into the foreign exchange market, which could deter trade flows. However, a theoretical argument is put forward by some to show that uncertainty could also boost trade flows if traders increase their trade volume to offset any decrease in future revenue due to exchange rate volatility. The empirical literature reviewed in this paper supports both views.
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Saba Qureshi, Muhammad Aftab and Scott Hegerty
The foreign exchange market plays a crucial role in defining the overall health of an economy. In these times of globalization and (in some ways) deglobalization, these markets…
Abstract
Purpose
The foreign exchange market plays a crucial role in defining the overall health of an economy. In these times of globalization and (in some ways) deglobalization, these markets are highly vulnerable to external shocks. In this line of research, this study investigates exchange-market vulnerability among the BRICS economies by considering the co-movements among variables and contagion among markets.
Design/methodology/approach
This study uses DCC-IGARCH and Wavelet approaches to examine interdependence and contagion among the foreign exchange markets of the BRICS countries. The prior approach gives exposure to correlations over time, while the latter approach is suitable to provide insight regarding correlations over different frequency and time domains.
Findings
These results show evidence of meaningful co-movements in the vulnerability of the BRICS economies' foreign exchange markets during periods of market instability. The authors observe that interdependence significantly increased after 2008 and is prominent in the short run, particularly up to the scale of 1.5Â years. In addition, there is evidence of persistent integration across the short and medium run. Furthermore, the findings indicate recurrent patterns of co-movements and the presence of contagion.
Originality/value
Given the high degree of economic integration among the BRICS economies, there is relatively little literature on how each member country's foreign exchange vulnerability can affect others. This research fills this gap, by applying appropriate econometric techniques and using a newly created measure of exchange market vulnerability that is unit consistent—such that it combines observed change in exchange rates with the change that is prevented through central bank intervention in a common unit, rather than by combining percentages with dollar-denominated values. This research provides important implications for investors and policymakers.
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Mohsen Bahmani-Oskooee, Scott Hegerty and Ruixin Zhang
Recent years have seen a rapid expansion of studies that examine the effects of exchange-rate risk on bilateral exports and imports for specific industries. Since the underlying…
Abstract
Purpose
Recent years have seen a rapid expansion of studies that examine the effects of exchange-rate risk on bilateral exports and imports for specific industries. Since the underlying theory is ambiguous, each case must be studied individually. This paper considers British trade with China, for 47 types of product, over the period from 1978 to 2010. Consistent with the underlying theory, cointegration analysis shows that most industries register no effect due to volatility in the long run, while some trade flows are reduced and a handful are even increased. An analysis of industry characteristics suggests that while the type of good might play little role on an industry's specific results, a product's trade share does. This is the case for UK imports of Chinese goods, perhaps because large Chinese exporters are able to successfully hedge against exchange-rate risk. The paper aims to discuss these issues.
Design/methodology/approach
The method is based on bounds testing approach to cointegration and error-correction modeling.
Findings
The paper arrives at two key conclusions. First, as has been shown previously for other country pairs, most industries demonstrate no long-run response to exchange-rate volatility. A fraction of industries are affected, and most of these effects are negative.
Research limitations/implications
This research pertains to the case of industry trade between the UK and China only.
Practical implications
The paper identifies industries that are affected by exchange rate uncertainty.
Originality/value
No study has looked at the impact of exchange rate uncertainty on the trade flows between China and the UK at commodity level.
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This study introduces the concept of financial advice deserts (FADs), including financial advice received from personal financial advisors (PFAs) and Certified Financial Plannersâ„…
Abstract
Purpose
This study introduces the concept of financial advice deserts (FADs), including financial advice received from personal financial advisors (PFAs) and Certified Financial Planners™ (CFP professionals) and investigates the association between living in these FAD states and the retirement planning activities of individuals.
Design/methodology/approach
This study uses merged data gathered from multiple sources including (1) available state-level information on CFP professionals from the CFP board website, (2) state-level information on PFAs from the US Bureau of Labor Statistics and (3) individual levels of retirement planning behavior and other personal characteristics from the 2018 FINRA National Financial Capability Study. Using web data extraction tools and logistic regression analyses, this study examines the association between a series of individual retirement planning activities and living in the FAD states.
Findings
The study found that living in the FAD states was negatively associated with both having retirement accounts and contributing regularly to retirement accounts. Overall, the findings of this study underscore the need for providing greater access to financial advice and improving financial literacy among financially marginalized populations who are residing in FAD states in the United States of America.
Originality/value
This study makes unique contributions to the literature by raising the issue of geographic inequality in terms of access to financial advice and introducing the innovative notion of FADs. The findings provide fresh insights into the understanding of retirement planning and preparedness from the perspective of state-level inequality of financial advice through PFAs and CFP professionals, thereby expanding the previous knowledge that emphasizes only individual- and household-level differences. Significant implications for public policies and practitioners are also discussed.
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Sophia T. Anong and Aditi Routh
This study examines the relationship between prepaid debit card use and the intention to open a bank account within twelve months. The Transtheoretical Model (TTM) of Behavior…
Abstract
Purpose
This study examines the relationship between prepaid debit card use and the intention to open a bank account within twelve months. The Transtheoretical Model (TTM) of Behavior Change helped to conceptualize one's stage in the process of changing from unbanked status if desired. The Theory of Planned Behavior (TPB) provided a framework to examine factors that influence banking intention. Prepaid debit card use is considered a social norm as it is a popular alternative to banking, and these accounts have increasingly mimicked bank account features in recent years.
Design/methodology/approach
Three in-depth focus group interviews with low-income respondents were first conducted in 2012, which revealed a prolific use of prepaid debit cards. Most participants had previous banking history, and despite negative experiences, some requested information about banking terms and “free” banking. These themes and previous studies informed a TPB-based biprobit model, which was estimated using data of an unbanked sample from 2013, 2015 and 2017 waves of the US Survey of Unbanked and Underbanked Households.
Findings
Though there was banking interest in the focus groups, no significant empirical association was found between recent prepaid debit card use and banking intention. Going deeper with another sample, we found that current cardholders were equally likely to have become recently banked or to be long-term unbanked but less likely to be long-term banked. Also, factors such as a more recent relationship with banks, use of other alternative financial services for transactions and credit, smartphone ownership, and trust increase banking intention.
Research limitations/implications
The main limitation of the study is the cross-section quantitative data. Future research may track banking status over time, particularly as financial technology (fintech) evolves with alternatives that may influence banks and customers to adapt.
Practical implications
To compete with “leapfrog” fintech banking alternatives, bank managers should consider utilizing customer segmentation to target “at-risk” customers and former customers with products and terms tailored to meet their banking needs. Banks can also tailor digital products to capture markets in banking desserts through mobile phones.
Originality/value
This mixed-methods study is unique in that it builds on insights from earlier in-depth interviews with real unbanked groups to examine a trend in prepaid debit card use and the impact on banking interest.
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Frank Baafi, Abraham Ansong, Kennedy Etse Dogbey and Nicodemus Osei Owusu
This study explores the role of transformational leadership, transactional leadership and resource supply in enhancing innovative work behaviour using the mediation model.
Abstract
Purpose
This study explores the role of transformational leadership, transactional leadership and resource supply in enhancing innovative work behaviour using the mediation model.
Design/methodology/approach
Survey data was gathered from 314 local government staff from the six metropolitan assemblies in Ghana. Structural equation modelling was used for the analysis.
Findings
The results suggest that transformational and transactional leadership behaviours provided an impetus for innovative behaviours. Also, resource supply was found to mediate the relationship between transformational leadership behaviours and innovative work behaviour.
Practical implications
Public managers can improve the innovative behaviour of public servants by providing resources for innovation, setting up proper reward structures, communicating vision clearly and clarifying performance expectations.
Originality/value
This is the first study to investigate innovative work behaviour within the Ghanaian local government sector and the context of a developing country in Africa. The study extends the literature on innovative work behaviour by exploring the role of leadership and resource supply.
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