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This paper aimed to investigate the determinants of loans and advances from commercial banks in the case of Ethiopian private commercial banks.

The study randomly selected seven commercial banks to represent the population stratified on their asset, deposit and paid-up capital amounts. The study utilized an unbalanced panel data model as each bank started operation at a different period of time and considered the period 1995–2016 for secondary details.

The findings showed that the deposit size, credit risk, portfolio investment, average lending rate, real gross domestic product (GDP) and inflation rate had significant and optimistic effects on the lending and advancement of private commercial banks. On the contrary, liquidity ratio had significant and negative effects on private commercial bank loans and advances. Finally, the study forwarded a feasible recommendation for concerned organs to focus on deposit size, credit risk, portfolio investment, average lending rate, real GDP, inflation rate and liquidity ratio. The results of this study will help banking industry policymakers and planners understand how to minimize inflation and unemployment by improving development and sustainable economic growth.

The findings of this study can also affect the general attitudes of a society by increasing knowledge and improve the quality of life for the general public.

This paper appraises the effects of monetary policy on trade in value-added (TiVA) using a panel of 38 developing countries spanning the period 1990 to 2019. Specifically, the authors subsequently summon the theory of trade in intermediate products within the New Keynesian framework for open economies that comprises price rigidity to verify this relationship and thereon control for robustness by correcting for endogeneity and unbalanced panel effect.

The authors mobilize the within estimator corrected for cross sectional dependence as well as the two-stage-least squares fixed effect estimator which corrects for endogeneity. For robustness, the authors also use the Hausman–Taylor estimator to control for endogeneity and random effects in annualized data and the least squares dummy variable corrected estimator.

Results suggest that the monetary policy instruments such as inflationary gaps and anticipatory inflationary outcomes significantly affect TiVA in developing countries only in the short term with no long-term effect. In addition to contributing to the scanty empirical literature, the authors provide relevant insights on monetary policy tools that can be mobilized in fashioning a global value chain penetration and upgrading strategies.

The authors convoke the theory of trade in intermediate products casted into the New Keynesian framework comprising price rigidity to verify the relationship between TiVA and monetary policy (b) verify for robustness by correcting for endogeneity and unbalanced panel effect.

Natural disasters can undermine decades of development and threaten hundreds of lives. Previous research studies highlighted that natural disasters can cripple economic growth of one or many countries. The purpose of this paper is to ask the usefulness of natural disasters governance for macroeconomic performance and countries’ resilience. For that, this research emphasizes on the effects of natural disasters economic damages on the macroeconomic performance.

The used technique is the unbalanced panel data model which allows testing a big cross-section of population despite when one temporal observation for an individual is unavailable. The methodology focuses on testing the effect of natural disasters’ economic damages upon the main macroeconomic aggregates. For the study relevance, various tests were carried out by taking into account the different levels of development. So, two groups have been studied: developing countries (LDCs group) and developed countries (DCs group).

Findings point up that the effects of natural disasters’ economic damages differ from aggregate to another. In spite of the differences according to the development levels, effects are more serious for developing countries.

The originality of paper is justified by the lack of empirical studies that have questioned the links between natural disasters, macroeconomic performance and countries’ resilience. Furthermore, this study can be distinguished by the analysis of the effects for various aggregates at once and, in the same time, by allowing the comparison of these impacts by level of development.

In large parts of the world, income inequality has been rising in recent decades. Other regions have experienced declining trends in income inequality. This raises the question of which mechanisms underlie contrasting observed trends in income inequality around the globe. To address this research question in an empirical analysis at the aggregate level, we examine a global sample of 73 countries between 1981 and 2010, studying a broad set of drivers to investigate their interaction and influence on income inequality. Within this broad approach, we are interested in the heterogeneity of income inequality determinants across world regions and along the income distribution. Our findings indicate the existence of a small set of systematic drivers across the global sample of countries. Declining labour income shares and increasing imports from high-income countries significantly contribute to increasing income inequality, while taxation and imports from low-income countries exert countervailing effects. Our study reveals the region-specific impacts of technological change, financial globalisation, domestic financial deepening and public social spending. Most importantly, we do not find systematic evidence of education’s equalising effect across high- and low-income countries. Our results are largely robust to changing the underlying sources of income Ginis, but looking at different segments of income distribution reveals heterogeneous effects.

The purpose of this paper is to examine whether audit quality influence real earnings management activities using a sample of UK listed firms that have strong incentives to manage earnings upward through meeting past year’s earnings as a benchmark in the post-adoption period of International Financial Reporting Standards (IFRS).

The authors use a sample of 4,774 firm-year observations of UK listed firms during the period 2005–2018. Univariate and multivariate analyses have been conducted to test the association after controlling for firm characteristics and institutional variables.

The study reports that the presence of Big 4 auditors is significantly and positively related with greater levels of sales and discretionary expenses manipulation. Though the authors do not find any conclusive evidence on production costs manipulation, the aggregated measure of real earnings management shows a significant positive association with the presence of Big 4 auditors.

The study implies that managers who have incentives to manage earnings upward around the UK firms take advantage of the accounting flexibility in defining policies while reducing information asymmetry among the investors to signal better future performance. The approach to detect earnings manipulation as described in the auditing standards fails to limit the managerial use of real activities due to limited scope and unclear guidance. Thus, due to the significant impact on public policies, the results should, therefore, be of interest to the regulators and standard setters.

To the best of the authors’ knowledge, this is the first study that examines the association between audit quality and real earnings management for the UK all-purpose operational firms in sampled data that just meet past year’s earnings as a benchmark in the post-IFRS period.

The purpose of this study is to explore the determinants of investment decisions of Estonian farms after the transition to market economy and accession to the European Union (EU), in the period 2006–2019.

The paper employs Estonian Farm Accountancy Data Network (FADN) individual farm-level data from the period 2006–2019, and standard and augmented accelerator investment models. Generalised methods of moments (GMM) and bias-corrected least-squares dummy variables (LSDVC) regressions were used to estimate parameters of these models.

In the considered period, farm investments were positively affected by sales growth, investment subsidies and the cash flow. Decomposition of cash flow into volatile, market income related part, and more stable, farm subsidies related part indicated that investments do not depend on market income part of cash flow. Instead, the stable part of the cash flow (farm subsidies) had a significant and positive effect on investments. This suggests that credit rationing could be present in the EU agriculture, and it depends on the farm subsidies not market income of farms.

Despite the wealth of literature on the investment behaviour of farmers, this article is the first attempt to decompose farm cash flow into stable (farm subsidies) and volatile (market income) parts to explain the role of subsidies as a part of cash flow in credit rationing.

The purpose of this paper is to investigate the determinants of Islam banks (IBs) liquidity.

In this paper, the author uses a generalized least square fixed effect model on an unbalanced panel data set of all IBs operating in the Organization of Islamic Cooperation countries over the period 1989-2008.

The estimation results show that all the determinants have statistically significant relationships with IBs’ liquidity but with different signs. On the one hand, foreign ownership, credit risk, profitability, inflation rate, monetary policy and deposit insurance negatively affected IBs liquidity. On the other hand, capital ratio, size gross domestic product growth and concentration have a positive nexus with IBs’ liquidity.

According to the best of the author’s knowledge, this is the first empirical study to investigate the determinants of IBs liquidity using cross-country data with a large sample of IBs (110 banks) and over a long period (19 years). Also, the paper included variables that had not been discussed on the previous studies, which used cross-country data, such as efficiency, deposit insurance, monetary policy, concentration and market capitalization.

The purpose of this paper is to identify the factors that affect the Canadian credit unions' financial performance which play an important role in providing financial services to the agriculture sector.

We surveyed the literature to identify different performance metrics of credit unions and a set of possible factors that might affect their performance. We collected data related to different dependent and independent variables from financial statements and balance sheets of 189 credit unions and from general websites like Statistics Canada and Bank of Canada. Then, we imputed the missing data and developed fixed effect and random effect panel data regression models. First, we used return on asset as the main dependent variable. Afterwards, we used six performance metrics to check the robustness of our models.

From an initial list of 16 possible factors that might affect the financial performance of a credit union, we were able to narrow the factors down to the nine most significant ones. It was observed that credit unions in the prairies were more likely to perform well financially as compared to other provinces. Membership size, the size of a credit union in terms of total assets, capital adequacy ratio, market penetration, diversification of income, inflation rate and provincial GDP and interest rates were significant. The cross-sectional analysis performed confirmed the findings of the fixed effect panel data models.

This study has a limitation concerning the number of years included into the time series analysis. Only ten years worth of data were available.

Results provide credit union management, service providers for credit unions and market analysts with a current understanding of how different internal and external factors might affect return on assets, return on equity, delinquency, cash ratio, efficiency ratio, asset growth and loan growth. Our models can be used to predict financial performance of credit unions based on the defined significant variables.

Although there is a wide body of literature that studies performance of banks, not many studies focus on credit unions. Moreover, the existing studies are based on credit unions in United States or Europe, and literature on Canadian credit unions is scarce. The data collected covered 189 Canadian credit unions. To our knowledge this is the first study that looks at the various internal, external and regulatory factors together that affect the credit unions in various jurisdictions of Canada.

This paper aims to assess whether official development assistance (ODA) or foreign aid has been effective in reducing extreme poverty; test whether the type and source of aid matter; and examine whether political or economic freedom enhances aid effectiveness in developing countries.

The study uses recent dynamic panel estimation techniques (system generalised method of moments), including those methods which deal with endogeneity by controlling for simultaneity and unobserved heterogeneity.

The main findings of the study are: firstly, foreign aid does have a statistically significant poverty reduction effect and the results are consistent across all the three extreme poverty proxies. Secondly, the disaggregation of aid by source and type shows that total aid, grant and bilateral aid are more likely to reduce poverty. Thirdly, political freedom might not be an effective channel through which aid impacts extreme poverty, but aid is more effective in an environment where there is respect for freedom of enterprise.

As with most cross-country aid–growth–poverty dynamic panel data studies, the challenges of establishing robust causality and accounting for the unobserved country-specific heterogeneity remain apparent. However, given the data availability constraints, generalised method of moments is, to the best of the authors’ knowledge, the most robust empirical strategy when T < N. Future research could explore possibilities of individual country analysis, disaggregating countries by income and also examining the direction of causality between foreign aid, poverty and democracy.

The policy implications are that the development partners should continue to focus on poverty reduction as the main objective for ODA; aid allocation should be focused on channels which have more poverty-reduction effect, such as per capita income and economic freedom; and aid recipient countries should also focus on reducing inequality.

The main social implications from this study is that it is possible to reduce poverty through ODA. Second, to enhance the effectiveness of foreign aid, ODA allocation should be focussed on channels, which have more poverty-reduction effect, and the host countries should have economic freedom.

This paper makes a further contribution to the aid effectiveness literature, especially the channels through which foreign aid affects poverty.