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1 – 10 of over 9000Purpose: 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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This study finds evidence that a stock return is inversely correlated with downside risk, confirming a pattern of risk-aversion behavior. Evidence from testing a stock return's…
Abstract
This study finds evidence that a stock return is inversely correlated with downside risk, confirming a pattern of risk-aversion behavior. Evidence from testing a stock return's response to a change in economic policy uncertainty indicates a significantly negative effect in the Chinese stock market; this conclusion holds true for testing the impacts of changes in fiscal and monetary policy uncertainties. However, the data produce a mixed effect for the change in fiscal policy uncertainty. The evidence produced from examining the geopolitical effect on the stock market strongly supports the presence of an adverse effect on stock market performance.
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Deniz Erer and Elif Erer
Introduction: Uncertainty plays an important role on economic stability and macroeconomic variables. Economic agents postpone decisions about investment and consumption in periods…
Abstract
Introduction: Uncertainty plays an important role on economic stability and macroeconomic variables. Economic agents postpone decisions about investment and consumption in periods in which uncertainty is high. This situation affects economic growth negatively. Recently, uncertainty has focused on policy uncertainty. At this point, economic policy uncertainty (EPU) comes to the forefront. EPU is defined as conception that economic agents do not forecast consequences of economic policies adopted by policy makers and future economic policies. In terms of developing countries, statements presented by policy makers in the United States especially may appear as a source of uncertainty in developing economies.
Aim: Therefore, the aim of this study is to analyze the effects of US EPU on macroeconomic variables for Turkey and Brazil, Russia, India, China and South Africa for periods in which global risk perception is low and high.
Method: The authors used monthly data from January 1998 to December 2018. For this purpose, the authors used Threshold VAR. VIX index takes in consideration as global risk perception. The authors used US EPU index proposed by Baker’s vd. (2016) in order to measure EPU in the United States. Besides, the authors used macroeconomic variables such as industrial production index, inflation and exchange rate.
Findings: As is seen from the results of the analysis, for Turkey’s economy the macroeconomic variables significantly and strongly respond to the changes in the EPU index during the periods in which global risk perception is low; nonetheless, the so-called responses weaken due to the adopted policy of “wait and watch” by investors during the periods in which global risk perception is high.
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Leese L. Mendy, Sheng-Yung Yang and Wei-Zhong Shi
This chapter examines the impact of economic policy uncertainty (EPU) on bank profitability, using a sample of US banks from 2001 to 2016. We find a robust negative relationship…
Abstract
This chapter examines the impact of economic policy uncertainty (EPU) on bank profitability, using a sample of US banks from 2001 to 2016. We find a robust negative relationship between the aggregate level of policy uncertainty and bank profitability. The channel analysis shows that policy uncertainty can significantly reduce loan growth and increase the nonperforming loan ratio. More importantly, we find critical evidence that bank capital can improve the impact of policy uncertainty on the bank's economic performance and operation. Overall, this chapter has an important policy implication: policymakers can reduce the adverse effect of policy uncertainty on the banking industry through measures to stabilize bank capital adequacy.
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Aishanee Sinha and Taniya Ghosh
This chapter examines the impact of uncertainty about economic policy on the foreign direct investment (FDI) inflows in India. Uncertainty over domestic and international economic…
Abstract
This chapter examines the impact of uncertainty about economic policy on the foreign direct investment (FDI) inflows in India. Uncertainty over domestic and international economic policy adversely affects the international flow of goods, services, and investment. FDI is one of the most stable type of capital flows. FDI is considered to be more sensitive to policy uncertainty because higher fixed costs are involved in FDI than other types of capital flows. The authors estimate the impact of economic policy uncertainty on FDI inflows in the short and long run for India. The results of this study show that the policy uncertainty has a higher impact on FDI inflows in the long run than in the short run. It is known that FDI and GDP growth are positively related. Thus to attract more FDI inflows it is desirable to have predictable policies.
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This chapter examines changes in US monetary policy uncertainty (ΔMPU) and fiscal policy uncertainty (ΔFPU) on stock returns while controlling for downside risk, lagged dividend…
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This chapter examines changes in US monetary policy uncertainty (ΔMPU) and fiscal policy uncertainty (ΔFPU) on stock returns while controlling for downside risk, lagged dividend yield, and time series patterns. Testing G7 markets consistently shows that both ΔMPU and ΔFPU have significant negative impacts on stock returns. Evidence shows that any downside risk, ΔMPU or ΔFPU in US market will soon be transmitted to G6 industrial markets and the impacts are extended to two months. These risk and uncertainty premiums should be priced in the stocks of the major industrial markets.
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This chapter analyzes how the macro-environment determines corporate dividend decisions. First, political factors including political uncertainty, economic policy uncertainty…
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This chapter analyzes how the macro-environment determines corporate dividend decisions. First, political factors including political uncertainty, economic policy uncertainty, political corruption, and democracy may have two opposite effects on dividend decisions. For example, firms learn democratic practices to improve their corporate governance, but dividend policy may be the outcome of strong corporate governance or the substitute for poor corporate governance. Second, firms in countries of high national income, low inflation, and highly developed stock markets tend to pay more dividends. A monetary restriction (expansion) reduces (increases) dividend payments, as economic shocks like financial crises and the COVID-19 may negatively affect corporate dividend policy through higher external financial constraint, economic uncertainty, and agency costs. On the other hand, they may positively influence corporate dividend policy through agency costs of debt, shareholders' bird-in-hand motive, substitution of weak corporate governance, and signaling motive. Third, social factors including national culture, religion, and language affect dividend decisions since they govern both managers' and shareholders' views and behaviors. Fourth, firms tend to reduce their dividends when they face stronger pressure to reduce pollution, produce environment-friendly products, or follow a green policy. Finally, firms have high levels of dividends when shareholders are strongly protected by laws. However, firms tend to pay more dividends in countries of weak creditor rights since dividend payments are a substitute for poor legal protection of creditors. Furthermore, corporate dividend policy changes when tax laws change the comparative tax rates on dividends and capital gains.
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Ujjal Protim Dutta, Lipika Kankaria and Partha Pratim Sengupta
The US–China conflicts surrounding the imposition of tariffs have caused a stir in the global markets. Various attempts have been made to understand the rationale and causes as…
Abstract
The US–China conflicts surrounding the imposition of tariffs have caused a stir in the global markets. Various attempts have been made to understand the rationale and causes as well as its impact on the various aspects of the international market. There are many unanswered questions pertaining to China’s emergence as a global superpower and the possible threats that it poses to the Western dominated market. Based on this background, the chapter is an attempt to investigate the impacts of the Economic Policy Uncertainty (EPU) of the United States and China on three most important global markets, namely, crude oil, credit market, and commodity market. To attain the objectives of the chapter, the study has utilized Vector Auto Regressive model and has analyzed the results. The study concludes that China’s EPU has lesser impact on the global market as compared to the US EPU. On the basis of the results obtained, few policy implications have been proposed.
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