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1 – 10 of over 61000Purpose: This chapter looks specifically at the sources of economic policy uncertainty in Nigeria, and discusses their impact on the Nigerian economy while drawing implications…
Abstract
Purpose: This chapter looks specifically at the sources of economic policy uncertainty in Nigeria, and discusses their impact on the Nigerian economy while drawing implications for Africa. It identifies factors that transmit uncertainty in economic policy in Nigeria and draw implications for other African countries.
Methodology: This chapter uses a literature survey methodology to identify the sources of economic policy uncertainty in Nigeria.
Findings: The identified sources of economic policy uncertainty in Nigeria are: the frequent changes in central bank policy, unexpected changes in government policy, political interference, unexpected fall in global oil price, recession, and unethical practices.
Implications: The implication of the study is that rising economic policy uncertainty in Nigeria can have a significant effect on the Nigerian economy and for connected African countries.
Originality: Previous studies have not examined the sources of economic policy uncertainty in Nigeria.
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The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the…
Abstract
Purpose
The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the economic policy uncertainty during the recent pandemic has garnered the attention of policymakers to investigate its consequences on different sectors of the economy.
Design/methodology/approach
In this quest, the present study uses system generalized method of moments and other econometric tools to examine the influence of economic policy uncertainty on the Indian banking sector, covering the time frame from 2000 to 2022. In addition, the current study also investigates the mediating role of regulation and supervision in the nexus of economic policy uncertainty and the Indian banking sector stability.
Findings
The empirical outcome reveals that economic policy uncertainty negatively influences banking stability. However, when economic policy uncertainty interacts with stringent banking regulations, private monitoring and supervisions, it assists in diversifying the negative impact of economic policy uncertainty on the Indian banking sector stability.
Originality/value
To the best of the author’s knowledge, the study is an original work and provides robust estimates that will assist policymakers in understanding the influence of policy uncertainty on the banking stability. Moreover, the study also helps in understanding the role of supervision and regulation in mitigating the negative consequences of policy uncertainty on the banking stability.
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Yusuf Bala Zaria and Jasman Tuyon
Apart from providing theoretical clarity, the present research aims to validate empirically that the EPU will be adversely affecting these key macroeconomic variables and that…
Abstract
Purpose
Apart from providing theoretical clarity, the present research aims to validate empirically that the EPU will be adversely affecting these key macroeconomic variables and that managing EPU matters for economic policymaking in Nigeria.
Design/methodology/approach
A dynamic autoregressive distributed lag regression model is employed to analyse the relationship from 1990 to 2020. Based on the theory of multiplier effect, the analysis could examine the positive and negative changes in policy uncertainty, as well as the reliability in macroeconomic activities such as unemployment, infrastructure development and foreign direct investment inflows.
Findings
The findings revealed EPU is cointegrated with the key economic variables in focus. Further, the negative impact of EPU on corporate investment in FDI and positive impact of EPU on unemployment confirm for both short and long-run. However, the impact of EPU on government investment in infrastructure development is found to be positive which does not confirm the expected hypothesis.
Practical implications
Dynamic relationship between policy uncertainty and macroeconomic activities in Nigeria seems to exist. Taking risky decisions has impact and causing a high unemployment rate, poor infrastructural development and lower foreign direct investment inflows in the country.
Originality/value
Policy uncertainty in Nigeria is determining. Despite that, very little research found that rising uncertainty issues may significantly affect unemployment, investment in infrastructure and foreign direct investment inflows adversely. Therefore, policy uncertainty is an open space for economic activities to thrive in Nigeria, especially unemployment.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0555
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Mengfei Zhu and Yitao Tao
This study investigates the impact of economic policy uncertainty on corporation innovation in innovative cities. The study sheds light on different results from the previous…
Abstract
Purpose
This study investigates the impact of economic policy uncertainty on corporation innovation in innovative cities. The study sheds light on different results from the previous literature by testing the moderator effects of entrepreneurial risk appetite on such impact.
Design/methodology/approach
A static panel estimator is applied to a Chinese sample of 416 firm-year observations from 2010 to 2019. This paper uses regression model to test the impact of uncertainty on enterprise innovation in innovative cities, and to test the regulatory role of entrepreneurial risk appetite. For a series of robustness analysis conducted by the author to deal with endogeneity, the results are robust.
Findings
The author finds reliable evidence that the economic policy uncertainty can promote corporations to invest more in R&D in innovative cities. In addition, the role of the entrepreneurial initiative is significant, and there is a positive moderating effect of entrepreneurial risk appetite between policy uncertainty and corporation innovation.
Research limitations/implications
From a practical point of view, this study examines the impact of economic policy uncertainty on corporation innovation in innovative cities for the first time. It emphasizes the role of entrepreneurial risk-taking in the development of corporation innovation in Shenzhen, an innovative city. This research is of great significance to the formulation of government policies and the innovative choice of entrepreneurs. In addition, the research shows that the entrepreneurial risk appetite in innovative cities can have a positive impact on enterprise innovation. Therefore, when formulating policies, the government should take the subjective factors of entrepreneurs into account and support enterprises with innovation potential. The evidence of this study also helps entrepreneurs make innovative decisions and enhance their confidence in enterprise development.
Originality/value
By studying the impact of economic policy uncertainty on enterprise innovation under the regulation of enterprise risk appetite, this study shows the subjective and positive role of entrepreneurs in risk grasp in innovative cities for the first time. In addition, it fills the gap of the impact of policy uncertainty on innovative urban enterprises. In fact, although it is traditionally believed that economic policy uncertainty has a negative impact on enterprise innovation, the sensitive findings of this study reveal completely different results from previous studies.
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This paper aims to discuss financial reporting under economic policy uncertainty.
Abstract
Purpose
This paper aims to discuss financial reporting under economic policy uncertainty.
Design/methodology/approach
The paper uses discourse analysis to examine financial reporting under economic policy uncertainty.
Findings
The paper identifies the link between economic policy uncertainty and financial reporting, in terms of earnings management and fair value accounting. It argues that high economic policy uncertainty will transmit fewer new information to firms which can motivate managers to influence accounting numbers in the direction of the desired financial reporting outcome.
Originality/value
The relationship between economic policy uncertainty and financial reporting has not been studied. This paper is one of the first papers to relate economic policy uncertainty to financial reporting behavior.
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The purpose of this study is to examine the role of board networks in promoting stock liquidity when there is high economic policy uncertainty using a sample of Brazilian firms…
Abstract
Purpose
The purpose of this study is to examine the role of board networks in promoting stock liquidity when there is high economic policy uncertainty using a sample of Brazilian firms from 2002 to 2015.
Design/methodology/approach
The study employs the ordinary least squares estimation method with standard errors clustered at the firm level for preliminary analysis, besides the study employs the two-step GMM dynamic estimation method to deal with potential endogeneity issues.
Findings
First, the findings show that economic policy uncertainty disproportionately contributes to stock illiquidity and the impact is mainly prominent for high risky companies, small firms and firms in competitive industries. Second, the author provides evidence that board networks promote stock liquidity more via the information channel when economic policy uncertainty is very high.
Practical implications
Given the adverse effects of economic policy uncertainty on stock liquidity, governments need to swiftly communicate and implement policies that affect the capital market to avoid the drying up of liquidity, which is exacerbated by communication or implementation lags. Also, there is a need for the regulators to continuously encourage the inclusion of independent directors in boards, which helps to increase board monitoring capacity and the firms' ability to respond to changes in the external environment.
Originality/value
Unlike other studies that focus on the adverse effects of economic policy uncertainty on firm outcomes, the novel contribution is that the author uncovers the role of board networks in mitigating the negative effects of economic policy uncertainty on stock liquidity.
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Abobaker Al.Al. Hadood and Farid Irani
This paper considers the role of economic sentiment and economic policy uncertainty (both domestic and European) in explaining the changes in the contemporaneous and future travel…
Abstract
Purpose
This paper considers the role of economic sentiment and economic policy uncertainty (both domestic and European) in explaining the changes in the contemporaneous and future travel and leisure stock index returns in top European Union (EU) tourism destinations, namely, in France, Germany, Spain and the UK.
Design/methodology/approach
The authors conducted the ordinary least square (OLS) regression estimations to investigate the impact of changes in economic sentiment and economic policy uncertainty on travel and leisure stock returns. Furthermore, the authors used predictive regressions to determine whether economic sentiment and economic policy uncertainty are useful predictors over the short- or medium-term for travel and leisure stock returns.
Findings
Empirical results revealed that, in France and Spain, the changes in regional economic sentiments predominantly and positively affected travel and leisure stock index returns. Also, results indicated that changes in European economic sentiment have a strong positive effect on the future travel and leisure stock returns in Spain and the UK over the short run, while in France, changes in European economic policy uncertainty have a weak negative effect on the future travel and leisure stock returns over the medium-term.
Research limitations/implications
This paper provides valuable practical implications for investors who trade travel and leisure stocks. Traders can use economic sentiment and economic policy uncertainty to establish arbitrageur strategies.
Originality/value
This study is the first to examine the effects of economic sentiment and economic policy uncertainty (both domestic and European) on contemporaneous and future travel and leisure stock returns in a top European tourism destination.
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Shuzhen Zhu, Xiaofei Wu, Zhen He and Yining He
The purpose of this paper is to construct a frequency-domain framework to study the asymmetric spillover effects of international economic policy uncertainty on China’s stock…
Abstract
Purpose
The purpose of this paper is to construct a frequency-domain framework to study the asymmetric spillover effects of international economic policy uncertainty on China’s stock market industry indexes.
Design/methodology/approach
This paper follows the time domain spillover model, asymmetric spillover model and frequency domain spillover model, which not only studies the degree of spillover in time domain but also studies the persistence of spillover effect in frequency domain.
Findings
It is found that China’s economic policy uncertainty plays a dominant role in the spillover effect on the stock market, while the global and US economic policy uncertainty is relatively weak. By decomposing realized volatility into quantified asymmetric risks of “good” volatility and “bad” volatility, it is concluded that economic policy uncertainty has a greater impact on stock downside risk than upside risk. For different time periods, the sensitivity of long-term and short-term spillover economic policy impact is different. Among them, asymmetric high-frequency spillover in the stock market is more easily observed, which provides certain reference significance for the stability of the financial market.
Originality/value
The originality aims at extending the traditional research paradigm of “time domain” to the research perspective of “frequency domain.” This study uses the more advanced models to analyze various factors from the static and dynamic levels, with a view to obtain reliable and robust research conclusions.
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Ozgur Ozdemir, Wenjia Han and Michael Dalbor
The purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room…
Abstract
Purpose
The purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room demand (occupancy). Second, the study attempts to explain why occupancy drops when the perceived economic uncertainty is high by studying the mediating effect of consumer sentiment in the relationship between economic policy uncertainty and hotel demand.
Design/methodology/approach
This quantitative study uses secondary data – US economic policy uncertainty (EPU) index, University of Michigan's index of consumer sentiment (ICS), and property-level hotel operating data from three states of the US – California, Florida and New York. Data were analyzed using random effect regression and structural equation modeling. Robustness tests were conducted to enhance the reliability of the research findings.
Findings
Random-effects regression analysis reveals that policy-related economic uncertainty has a negative and lead-lag effect on hotel occupancy, average daily rate and revenue per available room (RevPAR). Structural equation modeling results show that the relationship between economic policy uncertainty and hotel occupancy is significantly mediated by consumer sentiment. Robustness test results support the findings from the main analysis.
Practical implications
This study offers valuable implications for the hotel professionals in regard to anticipating the economic impact of policy-related uncertainty on hotel industry and understanding how consumer sentiment affects demand at such crises times. Moreover, the study suggests potential course of actions to deal with declining room demand at times of uncertainty.
Originality/value
This empirical study explores how economic policy uncertainty affects hotel performance at the property level and explains the mediating effect of consumer sentiment on hotel room demand. The study provides a first-hand evidence of how consumer sentiment relates to the perception of economic uncertainty and leads to decline in consumer demand. In that regard, findings of the study have valuable implications for hospitality industry practitioners and relevant policymakers.
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Gabriel Caldas Montes and Fabiana da Silva Leite Nogueira
This study estimates the effects of political uncertainty and economic policy uncertainty on business confidence. Moreover, it also examines business confidence as a transmission…
Abstract
Purpose
This study estimates the effects of political uncertainty and economic policy uncertainty on business confidence. Moreover, it also examines business confidence as a transmission channel of political uncertainty and economic policy uncertainty to investment.
Design/methodology/approach
The study addresses the Brazilian case from May 2004 to December 2017. Brazil experienced situations of political instability and public distrust in government and its policies, which reflected on the economic environment. The study uses two business confidence indicators that capture entrepreneurs' sentiment in relation to their business and the economy. All models are estimated using ordinary least squares and generalized method of moments.
Findings
The estimates reveal that increases in both political uncertainty and economic policy uncertainty reduce business confidence. The findings also indicate that business confidence acts as a transmission mechanism, i.e. uncertainties affect investments through business confidence.
Practical implications
The findings point to the following practical implications related to the existence of uncertainties in the Brazilian economy: different institutional difficulties and government indecisions have blurred the political scene and caused political uncertainties. In addition, the same aspects that blurred the political scene also caused uncertainties in relation to economic policy that undermined business confidence, and affected investment.
Originality/value
There is a vast literature on business confidence, as well as studies addressing the relationship between business confidence and investment. This study differs from other studies as follows: in addition to the political uncertainty, it also analyzes the effect of economic policy uncertainty on business confidence; it uses different measures to capture political instability, and it analyzes whether business confidence acts as a transmission channel of both uncertainties to investments.
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