Search results

This article aims to investigate how institutional characteristics affect the level of financial development of economies collectively and compare between developed and undeveloped economies.

A dynamic panel with 131 countries, including developed and developing ones, was utilized; the estimators of the generalized method of moments system (GMM system) model were selected because they have econometric characteristics more suitable for analysis, providing superior statistical precision compared to traditional linear estimation methods.

The results from the full panel suggest that concrete and well-defined institutions are important for financial development, confirming previous research, with a more limited scope than the present work.

Limitations of this research include the availability of data for all countries worldwide, which would make the research broader and more complete.

A panel of countries was used, divided into developed and developing countries, to analyze the impact of institutional variables on the financial development of these countries, which is one of the differentiators of this work. Another differentiator of this research is the presentation of estimates in six different configurations, with emphasis on the GMM system model in one and two steps, allowing for comparison between results.

This paper investigates the two-way relationship between foreign direct investment (FDI) inflows and higher education across 36 Organisation for Economic Co-operation and Development (OECD) countries for 1998–2019 periods. To demonstrate this relationship, the authors take into account the total number of graduates as well as the number of graduates from different fields. Accordingly, the authors gathered graduates in four groups which are education, social sciences, technical sciences (tech) and health. In addition to investigating two-way relationship between FDI and graduates, the authors also examined the contribution of primary and secondary level education to FDI.

The authors use two models to investigate the bidirectional relationship between FDI inflows and graduates from four fields. In the first model, the dependent variable is FDI inflows, and in the second model, graduates from each field are the dependent variable. To investigate the dual relationship, the authors employ ordinary least squares (OLS) and two-step system generalized method of moments (GMM) developed by Arellano Bover (1995) and Blundell Bond (1998).

For the first model, the results show that secondary level and higher education have a positive impact on FDI. In terms of graduates by fields, it is seen that education and health graduates contributed the most to FDI. For the second model in which the authors analysed the effect of FDI on total graduates and graduates from different fields, the authors find that FDI positively affects the number of graduates from all fields, and the strongest effect is on graduates from the social science field.

Based on the results, the authors can say that well-educated people promote FDI inflows to OECD countries, and FDI is also a driving force in raising highly educated people. So, the authors think that the results will help design higher education policies in accordance with FDI and higher education connection.

To the best of the authors’ knowledge, this paper is the first to examine the impact of FDI inflows on graduates by fields and also to investigate the impact of graduates by fields on FDI.

This study aims to determine how Basel III capital requirements affect the stability of Islamic banks globally during the global financial crisis and the COVID-19 pandemic.

The secondary data for all Islamic banks worldwide from 2004 to 2021 is obtained from the FitchConnect database. The main technique was a two-step generalized method of moment (GMM) system, and the data were tested using pooled ordinary least squares, fixed effects and difference GMM models for robustness checks.

Regression results support the moral hazard hypothesis based on evidence that both the total capital ratio and the Tier 1 capital ratio have a statistically significant positive impact on the stability of Islamic banks globally. Furthermore, neither the global financial crisis of 2008–2009 nor COVID-19 (2020–2021) significantly impacted the stability of Islamic banks worldwide. The results are robust across alternative measures of stability, capital buffers, dummy variables and estimation techniques. According to the descriptive statistics, the number of Islamic banks that disclose their regulatory capital ratios to the public has increased over the study period, and the mean of total capital and Tier 1 ratios are considerably greater than what is required by Basel II and Basel III.

Bankers, regulators and policymakers should benefit from the evidence on capital and risk management in Islamic banking according to Basel Committee on Banking Supervision (BCBS) and Islamic financial services board (IFSB) international standards in various jurisdictions.

This research builds on earlier studies that were both beneficial and instructive by exploring the relationship between BCBS and IFSB capital guidelines and the trustworthiness of Islamic banks in greater depth. This study uses numerous capital ratios, buffers and stability measures to provide an international context for research on Islamic banking. In addition, the database is up-to-date to include information about the COVID-19 pandemic aftereffects in the year 2021. This study also introduces the Basel membership of Islamic banks to provide context for countries still at the Basel II stage or are yet to begin implementing the Basel III international standard.

This study serves two objectives; first, it examined the impact of ownership structure and board characteristics on firm value; second, the moderating effects of board gender diversity (women appearance on board) and board ethnic diversity (Chinese, Indian, and Foreign ethnicities) have been examined on the relationship between ownership structure, board characteristics, and firm value.

The dynamic model, system generalized method of moments (S-GMM hereafter), is employed to control potential dynamic endogeneity, reverse causality, simultaneity and unobserved heterogeneity persistent in corporate governance-performance relationships during 2006–2017 of 483 Malaysian listed companies.

Findings pertaining to objective one reveal that there is a weak linkage between ownership structure and firm value, whereas board characteristics significantly affect firm performance based on resource dependence theory. While considering the results of objective two, there is mixed evidence of moderating impact of board gender and ethnic diversity on ownership structure, board characteristics and performance nexus.

The findings of the study are practically significant for regulatory bodies, namely, Bursa Malaysia, Securities Commission (SC) Malaysia, and policymakers to develop guidelines for ownership structure variables. Moreover, Malaysian firms need to disperse their concentrated ownership structure for enhanced firm value. In addition, board characteristics significantly affect firm performance in Malaysian listed companies.

The paper contributes to multiple aspects: first, it examined the impact of ownership structure and board characteristics on firm performance. Second, the moderating effect of board gender and board ethnic diversity contributes to research significant and valuable for the researchers and practitioners. Finally, the study employed S-GMM, controlling for dynamic endogeneity considered a main econometric problem for CG-performance relationships.

This study highlights the influence of non-financial sustainability reporting and firm reputation (FR) on the China Stock Exchange. The study is based on the components of sustainability reporting that influence FR.

A simple ordinary least squares (OLS) regression model is initially run to test the hypotheses. Advanced econometric methods are used to detect the presence of heteroskedasticity. The study utilizes fixed-effect, two-stage least squares (2SLS) and two-step generalized method of moments (GMM) regression models to address endogeneity issues.

Findings suggest that NFSR has a negative influence on FR. Conversely, environmental, social and governance (ESG) sustainability reporting exhibited positive associations with a FR in fixed-effect, 2SLS and GMM results.

This study has limitations, and data collection is restricted to the period from January 2018 to June 2023, limiting the scope of findings due to data constraints. Brand equity measurement is considered only one aspect of a company's activities, and other methods can also be considered for measuring brand equity. Another limitation is a standardized method for measuring NFSR. While this study used the Arianpoor and Salehi (2021) model to measure sustainability reporting in the Chinese market, future research could explore different methods.

The findings of this study have important practical implications for corporate management, highlighting reputation challenges and the strategic importance of sustainability. Managers are encouraged to use NFSR strategically to enhance their reputation and corporate strategy.

The social implications highlight ownership and regulatory structures, promoting enhanced sustainability reporting in China's business culture. This insight informs policymakers, businesses and stakeholders regarding the importance of sustainability reporting, guiding decisions on corporate reputation and sustainability regulations.

The research indicates the importance of context-specific sustainability reporting for enhancing reputation. It provides insights into sustainability's impact on a company's reputation, promoting responsible practices for a sustainable global economy. To the best of the authors' knowledge, this is the first research that utilizes the NFSR frameworks and a sample of firms in China to discuss sustainability reporting with different guidelines.

This study examined how economic freedom and its related components, such as open markets, regulatory efficiency, rule of law and the size of government, affect bank risk behavior, focusing on the Japanese context.

The study employs a two-step GMM framework on the annual data of Japanese banks ranging from 2005 to 2020 to empirically test the hypotheses. Furthermore, we also use the ordinary least square method to ensure the robustness of our mainline findings.

The finding suggests that economic freedom increases the banks' risk-taking, thus making them fragile. The results also highlight that out of the four main subcomponents of economic freedom, regulatory efficiency and government size increase bank risk-taking, while the rule of law and open markets decrease banks' risk-taking. Additionally, we examine how the banks' specific characteristics affect the results by creating a subsample based on capitalization and liquidity ratios. Overall, the results are consistent with the baseline findings. Moreover, the results are robust to alternative proxy measures of risk.

The study's findings have several implications for regulators and policymakers. The results suggest that regulators and policymakers should reconsider their strategies for economic freedom to ensure that they promote stability in the banking system and reduce banks' risk-taking inclinations.

Although previous studies have examined the impact of economic freedom on bank stability and risk-taking, this study is the first to do so in the Japanese context, contributing to the literature by providing new insights and empirical evidence.

The study seeks to evaluate the effect of capital adequacy and competition on the liquidity creation of Kenyan commercial banks.

Unbalanced panel data from 36 Kenyan commercial banks with licenses from 2001 to 2020 is used in the study. The generalized method of moments (GMM), a two-step system, is employed in the investigation. To increase the robustness and prevent erroneous findings, serial correlation tests and instrumental validity analyses are used. The methodology developed by Berger and Bouwman (2009) is used to estimate the commercial banks' levels of liquidity creation.

The study supports the financial fragility-crowding out hypothesis by finding a significant negative effect of capital adequacy on the liquidity creation of commercial banks. The research also identifies a significant inverse relationship between competition and liquidity creation, depicting competition's value-destroying effect.

A trade-off exists between capital adequacy and liquidity creation, which must be carefully evaluated as changes in capital requirements are considered. The value-destroying effect of competition on liquidity creation presents a case for policy geared toward consolidating banks' operations through possible mergers and acquisitions.

To the best of the authors' knowledge, this is the first study to empirically offer evidence concurrently on the effect of competition and capital adequacy on the liquidity creation of commercial banks in a developing economy such as Kenya. Additionally, the authors employ a novel measure of competition at the firm level.

The purpose of this paper is to study the spillover effects of foreign direct investment (FDI) on skilled–unskilled wage inequality in the Indian manufacturing industries.

The authors show theoretically with a model of spillover that if foreign firms (receiving FDI) have a negative spillover effect on domestic firms (not receiving FDI), then the level of capital and skilled workers in the domestic firms falls down. Consequently, the authors conduct an empirical analysis by using system GMM estimation technique on the firm-level data of the Indian organised manufacturing sector.

The authors show that wage inequality worsens when there is negative spillover effects like competition spillover or skill spillover effect of FDI in India.

To the best of the authors’ knowledge, this is the first attempt to measure the various spillover effects of FDI on the wage inequality in the Indian manufacturing industries by using firm-level data.

This study aims to investigate two issues: (1) a nexus between climate-related financial policies (CRFP) and global value chains (GVC) and (2) the government’s policies to help countries enhance the efficient use of CRFP in improving a country’s likelihood to participate in GVC.

To investigate the connection between GVC and CRFP, the authors incorporate that backward participation is measured using foreign value-added, while domestic value-added is used to measure forward participation, quantified as proportions of gross exports. The study analyses yield significant insights across a span of 20 developing countries and 26 developed countries over the period from 2010 to 2020.

Regarding the first issue, the authors affirm the presence of a linear link between GVC and CRFP, implying that involvement in CRFP is advantageous for both backward and forward participation. Furthermore, the authors identify long-term GVC and CRFP cointegration and confirm its long-term effects. Notably, the expression of a linear relationship between GVC and CRFP appears to be stronger in developing countries.

The study findings, together with previous research, highlight the importance of financial policies relating to climate change (CRFP) in the context of economic growth. Climate change’s consequences for financial stability and GVC highlight the importance of expanded policymakers and industry participation in tackling environmental concerns.

Regarding the second issue, the study findings suggest critical policy implications for authorities by highlighting the importance of financial stability and expanded policymakers in promoting countries' participation in GVC.

This paper investigates the link between GVC performance and CRFP, offering three significant advances to previous research. Moreover, as a rigorous analytical method, this study adopts a typical error model with panel correction that accounts for cross-sectional dependency and stationarity.

In this study, as part of an attempt to foster sustainable development, the aim is directed at understanding the perspectives of domestic economic, financial and political risks in tourism development. On the other hand, the role of other agents of sustainable development: innovation, infrastructure, health and primary education and global crisis in tourism development, was illustrated.

To achieve this objective, the current study explored the (system) SYS-Generalized Method of Moments (GMM) technique for a panel of selected 73 economies over the period 2006–2017. This GMM approached is not undertaken without first establishing the stationarity (a preliminary test) of the employed dataset by utilizing the relevant unit root techniques.

First, the study found that minimizing risks from economic, financial and political aspects is significant and vital to the attractiveness of the tourism destinations and the eventual development of the tourism sector. Second, the study presents innovation or technological readiness and health and primary education as agents of sustainable development through the growth of international tourism arrivals while global crisis is significantly detrimental to tourism inflow.

Overall, the study presents the contribution of tourism as a pathway to sustainable development from unique dimensions. Investigating a large panel (of 73 countries) is a unique approach. In addition, considering the economic vulnerability of the panel countries from the aspects of risk arising from economic, financial and political aspects is another interesting dimension to the novelty of the study. Thus, this study offers relevant policies for tourism stakeholders.