BRICS Economies Research Articles

Green innovation's impact on corporate financing: New insights from BRICS economies

Enterprises are increasingly adopting green innovation strategies to reduce their environmental footprint and enhance their competitive positioning. However, how this shift towards sustainability influences corporate financing is less known in the literature. Therefore, this study aims to investigate the impact of green innovation on corporate financing in BRICS countries. Using data from 2010 to 2022 and system GMM for analysis, it finds that green innovation positively influences corporate financing. This highlights the growing importance of sustainable practices in shaping financial decisions. The study adds to the literature on the link between environmental sustainability and corporate finance, emphasizing sustainability's role in corporate financial strategies.

Can International Business Perspective Measure Sustainable Development of BRICS Countries? A Panel Data Analysis

The level of international business is highly dependent on the numerous macroeconomic and sustainable development factors that play their respective roles in defining a developing nation's economic progress. While examining the long-term growth of an economy, the consistency of the performance of the various elements in terms of their sustainability is a crucial matter to investigate. Moreover, it is known that the sustainable development of an economy is strongly associated with environmental impacts. Finally, the focus on new development patterns must be the highest concern for emerging economies. Considering this, the current study speculates on the relationship between foreign direct investment and the interaction effect of carbon emissions and poverty with control variables such as per capita income and education in BRICS economies. It concentrates on panel data ranging from 1993 to 2019 to explore the association among the said variables. It identifies the unique and definite macroeconomic parameters that are crucial for encouraging foreign direct investment in different countries. Applying the Panel Auto Regressive Distributed Lag Model, the study finds a positive interaction effect between carbon emissions and poverty that focuses on improving foreign direct investment in the long run. In the short run, an increase in per capita income always proves that BRICS will demonstrate less dependence on FDI net flows. The study also concentrates on the unit root measurement of the data by applying Panel Unit Root Test. Finally, to check the direction of causality, Pairwise Dumitrescu Hurlin Panel Causality Tests have been performed. The most recent update from these countries demonstrates that the strategy for achieving future sustainable economic growth is clear and swift. Hence, it emphasises the requirement of separate and exclusive policy-making to promote long-term sustainable economic growth in BRICS.

Assessing Country Risk in the Stock Market and Economic Growth Nexus: Fresh Insights from Bootstrap Panel Causality

Investigating the nexus between the stock market and the real economy is vital, as financial markets can play a critical role in economic growth. However, the country's risk factors (political, economic and financial) influence economic growth and financial markets’ nexus. This study examines the role of stock market development and country risk (political, economic and financial) on economic growth, and the moderating influence of country risk in the stock market and economic growth nexus in BRICS economies (except Russia) over the period of 2000 to 2020. The study employed various latest econometrics techniques, including Covariate Augmented Dickey-Fuller (CADF) for identifying unit root problem, Westerlund (2007) test for examining long-run relationship, Cross-sectional auto-distributive lag (CS-ARDL) for estimating long-run relationship, and finally, Konya (2006) for identifying the causal relationship among the variables. The study explored that financial risk, economic risk and political risk is negatively associated with economic growth. However, stock market does not play a significant role in economic growth in this case. The study highlighted a bi-directional causality between economic growth and stock market development. The study also suggests a unidirectional causality from political, economic and financial risk towards economic growth. Finally, the study suggests some policy recommendations based on the empirical results.

Nexus between financialization of agricultural products and food security amid financial crisis: empirical insights from BRICS

PurposeThe study endeavors to explore whether the financialization of agricultural commodities, traditionally viewed as a catalyst for price volatility, has any repercussions on food security in BRICS economies.Design/methodology/approachThe empirical analysis employs the examination of three agricultural commodities, namely wheat, maize and soybean. Utilizing data from the Chicago Board of Trade on futures trading for these commodities, we focus on parameters such as annual trading volume, annual open interest contracts and the ratio of annual trading volume to annual open interest contracts. The study spans the period 2000–2021, encompassing pre- and post-financial crisis analyses and specifically explores the BRICS countries namely the Brazil, Russia, India, China and South Africa. To scrutinize the connections between financialization indicators and food security measures, the analysis employs econometric techniques such as panel data regression analysis and a moderating effects model.FindingsThe results indicate that the financialization of agricultural products contributes to the heightened food price volatility and has adverse effects on food security in emerging economies. Furthermore, the study reveals that the impact of the financialization of agricultural commodities on food security was more pronounced in emerging nations after the global financial crisis of 2008 compared to the pre-crisis period.Research limitations/implicationsThis paper seeks to draw increased attention to the financialization of agricultural commodities by presenting empirical evidence of its potential impact on food security in BRICS economies. The findings serve as a valuable guide for policymakers, offering insights to help them safeguard the security and availability of the world’s food supply.Originality/valueVery few studies have explored the effect of financialization of agricultural commodities on food security covering a sample of developing economies, with sample period from 2000 to 2021, especially at the individual agriculture commodity level. Understanding the evolving effects of financialization is further improved by comparing pre and post-financial crisis times.

Exchange rates and trade balance dynamics: a quantile regression analysis

ABSTRACT This paper investigates how trade balances respond to fluctuations in exchange rates among the industrialized G10 and emerging BRICS countries, applying a nonlinear quantile regression methodology. By examining the entire conditional quantile process, we reveal diverse impacts of exchange rate dynamics on trade balances across its distribution. Specifically, our analysis highlights distinct effects: advanced economies experience short-term J-curve effects, while emerging markets display price and quantity effects. Furthermore, our study emphasizes the importance of differentiating between bilateral and effective exchange rates. We observe that effective exchange rates do not offer superior insights compared to bilateral rates, particularly evident in BRICS economies due to the dominance of the US dollar in global trade denomination. Our findings underscore crucial policy implications. Reducing reliance on the US dollar emerges as a pivotal strategy, particularly for developing nations. Conversely, for advanced economies, recognizing and leveraging the indirect yet substantial impact of exchange rates, specifically J-curve effects, could offer strategic advantages within policymaking.

Does economic policy uncertainty impedes financial inclusion in BRICS economies: the mediating role of quality of governance

Does economic policy uncertainty impedes financial inclusion in BRICS economies: the mediating role of quality of governance

Economic performance and carbon emissions: revisiting the role of tourism and energy efficiency for BRICS economies

AbstractIncreased demands for infrastructure, water, electricity, and different natural assets have triggered land erosion, climate change, and pollution increase and deterioration in biodiversity. The purpose of this research is to look at how economic performance, tourism, renewable energy, and energy efficiency affect carbon emissions in the emerging economies of BRICS during 1990–2021. Using panel estimation approaches, the empirical outcomes validate the longer-run equilibrium connection between the components of the model. Using a nonparametric estimator, the study found that economic performance is the significant driver of higher emissions levels in the sample countries. In contrast, tourism, energy efficiency, and renewable energy substantially reduce emissions levels and improve environmental sustainability. The estimated results have been found robust, and the feedback effect is found valid between repressors and carbon emissions. This study further suggests that investment in research and development, improvement in energy-efficient tools and equipment utilization, and enhanced renewable energy output are the key policy efforts for ensuring environmental sustainability.

Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

AbstractThis study investigates the relationship between corporate social responsibility disclosure (CSRD) and the cost of financing for firms in emerging economies. Results show that CSRD initially reduces the cost of equity financing but increases equity costs beyond a certain threshold. Firms should weigh the trade‐offs of signal cost and benefits when choosing financing strategies. Moreover, investors in the debt market perceive a higher level of board independence as less risky, which consequently has a negative impact on the relationship between CSRD and the cost of debt. Thus, companies should streamline their CSR disclosures to reduce their cost of capital.

Does agriculture, forests, and energy consumption foster the carbon emissions and ecological footprint? fresh evidence from BRICS economies

Does agriculture, forests, and energy consumption foster the carbon emissions and ecological footprint? fresh evidence from BRICS economies

Mineral resource volatility and green growth: The role of technological development, environmental policy stringency, and trade openness

While natural resources significantly contribute to global socio-economic development, the unresolved question of their volatility's role in decoupling economic growth and carbon emissions persists. Previous empirical studies have underscored both positive and negative impacts of natural resource exploration on economic growth and the environment. This study addresses the knowledge gap by employing a linear non-linear panel ARDL framework to investigate the correlation between natural re source volatility and sustainable development in the BRICS economies. Our key findings reveal that natural resource volatility adversely impacts green growth within the linear model in both the short and long run. Conversely, in the non-linear model, an increase in natural resource volatility negatively influences green growth, whereas a decrease encourages green growth, albeit only in the long run. Moreover, we found that technological development, stringent environmental policies, and trade openness are conducive to green growth. These results underscore the necessity for managing natural resource volatility to foster sustainable development, particularly in emerging BRICS economies.

Too little or too much? The curvilinear relationship between corporate social responsibility disclosure and investment efficiency in BRICS economies

AbstractThis research article investigates the complex relationship between corporate social responsibility disclosure (CSRD) and investment efficiency in the BRICS economies (Brazil, Russia, India, China, and South Africa). Through the lens of signaling theory, the study examines how CSRD serves as a signal to stakeholders and influences firms' investment decisions. A comprehensive dataset spanning 9240 firm‐year observations from 2011 to 2021 is analyzed to derive insights. The study reveals a multifaceted association between CSRD and investment efficiency. Initially, CSRD is found to increase signal costs, resulting in higher investment inefficiency. However, this effect is observed only up to a certain threshold. Beyond this point, CSRD starts reducing investment inefficiency, primarily due to improved signal benefits and perceived value. Additionally, the study introduces CSR assurance as a crucial moderator that influences the complex interplay between CSRD and investment efficiency. In summary, this research offers valuable insights into the strategic role of CSRD in BRICS economies, highlighting the significance of signal dynamics and the moderating impact of CSR assurance. Such insights can guide businesses and policymakers in these economies as they navigate the intricate landscape of CSR disclosure and its implications for efficient resource allocation.

Consumer sentiments across G7 and BRICS economies: Are they related?

This paper utilizes fractional integration and cointegration techniques to investigate the stochastic properties of the bilateral linkages between the Consumer Sentiment Index (CSI) of eight developed economies, Australia, Canada, France, Germany, Italy, Japan, the UK and the US and five emerging economies comprising Brazil, Russia, India, China and South Africa, for the time period from 15th January 2010 to 15th July 2019. The univariate results support fractional integration with mean reverting behaviour, with many of the series displaying orders of integration in the interval (0, 1), which connotes that shocks to consumer sentiment have significant long-lasting though reverting effects. From the covariate results and testing for cointegration, we found evidence of cointegration for Australia versus Italy, and France versus Italy. For the BRICS, the only evidence of fractional cointegration is found between Russia and India. Some policy implications of the results obtained are also mentioned at the end of the article.

Fintech, natural resource rents, renewable energy consumption and environmental quality: A perspective of green economic recovery from BRICS economies

The concerns related to environmental problems result in new technological and financial trends. In this context, fintech has come up as a substitute which happens to strike a balance economic growth and environmental sustainability that is particularly aimed by government, international communities and organizations. Furthermore, natural resource-abundant economies experience adverse environmental issues that would further necessitate the economies to find out the credible solution. Thus, against the backdrop, we explore the linear (symmetric) and non-linear (asymmetric) associations among variables such as consumption of renewable energies (CRE), natural resource rents (NRR), environmental policy implication (EPI), and Financials technologies (FTech) from the perspective of BRICS economies. Over the period from 2016 to 2023, the study applies CS-ARDL and NARDL models to explore the possible linearity and non-linearity of associations. We find that Fintech and NRR enhance economic recovery but deteriorate the environmental quality. However, strict environmental policy implications reduce economic growth and enhance climate quality. Finally, consumption of renewable energies contributes to higher economic growth and better environmental quality.

What role do emission trading schemes, energy innovation, and technology transfer play in sustainable recovery? A perspective from BRICS economies

To ensure long-run sustainability, it is imperative to achieve the goal of zero-carbon emissions without compromising economic growth. Identifying whether BRICS economies, which are an attractive set of countries due to their rapid economic growth and high emissions, can shift towards sustainability with the support of policy measures, is a question which needs to be addressed. This article investigates the impact of emission trading schemes, energy innovation, technology transfer, population growth, and inflation on the economic performance of BRICS economies (2001–2020). The outcomes of the CS-ARDL and PMG estimators reveal that carbon taxes, carbon finance, energy innovation, technology transfer, population growth, and inflation have positive effects on economic performance. In light of the evidence, policy insights are recommended to achieve a win–win situation for economic and environmental performance.

Do Capital Adequacy Ratios of the Banking System Affect the Taxation Performance: Novel Evidence from BRICS Nations

The empirical studies on the potential interconnection between tax and financial growth have gathered a great deal of attention from scholars and policymakers. However, the impact of regulatory capital on taxation performance has been ignored. In this context, the study aims to provide new discussion by assessing the linkage between capital adequacy and taxation revenues in the case of Brazil, Russia, India, China, and South Africa (BRICS) economies. We aim to find out the impact of capital adequacy ratios on the taxation performance of BRICS countries. We hypothesize that a stronger banking system is positively associated with higher taxation performance. A sound banking and financial system promotes economic development and growth, also resulting in the firms’ profitability and ultimately increasing the government’s tax revenues. Using the advanced quantile panel technique of the Methods of Moments Quantile Method (MM-QR), the study showed that capital adequacy positively influences taxation sustainability in the BRICS economies. Besides, the findings illustrated that economic growth positively increases taxation revenues in the BRICS economies. The study suggests that regulatory capital policies can positively influence financial stability by mitigating bank risk-taking incentives and offering a buffer against losses. Hence, an increase in capital adequacy will promote financial stability, which in turn leads to increased taxation revenues. However, higher capital adequacy may increase the franchise value of core banks’ activities, which in turn allows banks to attract new investments and funds that can be used for investment in risky market-based activities. Based on the empirical analysis, the study concludes that policymakers should focus more on capital regulation and sustainable taxation revenues.

Exploring the impact of social capital, institutional quality and political stability on environmental sustainability: New insights from NARDL-PMG

The social aspect of sustainable development is often considered the least strong component, particularly in terms of its analytical and theoretical foundations. Although there has been a recent increase in focus on social sustainability, the relationship between the environmental aspect and social capital is still not well understood. This research seeks to explore initial concepts on frameworks for analyzing the interface between environmental and social capital. However, to demonstrated the core connection of social capital, institutional quality, income and renewable energy consumption with sustainability level (CO2 emissions) in the BRICS economies from 1996 to 2021. Specifically, this study uses advanced techniques such as Non-ARDL, Pooled Mean Group, the Augmented Mean Group and Common Correlated Effect Mean Group. However, under the linear outcomes, social capital, law & order, government stability, political stability and income decline the emissions levels. However, renewable energy consumption shows the positive association with rising emissions in BRICS countries. Interestingly, under the non-linear form, study outcomes describe social capital, and law & order contribute to environmental quality, while government & political stability spur the level of emissions in the long-run. Also, this study provides some core implications to meet the desired sustainability level.

Impact of National Culture on Stock Markets’ Returns and Volatility: Evidence from BRICS-P

This study aims to investigate how national cultures affect stock market returns across the BRICS economies and Pakistan. The conceptual framework is how national cultures affect stock return and volatility with six dimensions (PDI, UAI, MAS, LTO, IDV, and IVR) and two control variables, the exchange rate and interest rate. The data samples are extracted from Six BRICS’P nations, including Brazil, Russia, India, China, South Africa, and Pakistan for the period from January 1, 2011, through December 31, 2021. Regression analysis using panel data was utilized in this study to examine the effects of the major factors both individually and collectively. The results of panel data analysis indicate that National culture has little effect on returns from all six countries. Furthermore, only MAS has a negative substantial impact on return in the national culture dimension. Volatility is adversely affected by national culture. National cultures affect stock market volatility and returns globally, but because it analyses long-term data and Hofstede’s culture modifies the data over the years.

The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

Brics Fdi Policies: An Empirical Analysis of Foreign Direct Investment of India with Brics Economies in Covid-19

Brics Fdi Policies: An Empirical Analysis of Foreign Direct Investment of India with Brics Economies in Covid-19

Specifying The Study Of Trade And Convergence Of Brics Economies In Post Pandemic Era

This conference paper examines how trade, income distribution, and convergence among the BRICS countries have been affected by the formation of the BRICS economies. Trade and convergence rate relationships have been examined using intra-trade organization, panel unit roots testing, and single difference technique. An estimated convergence meter between the major trading partners of the BRICS countries and themselves has been calculated in the post-COVID-19 trade openness era. The investigation's conclusions demonstrated that the BRICS countries came closer together over the investigation's duration. However, no evidence of a connection to the formation of the post-BRICS economic union appears to exist. The post-trade reform examination of the BRICS countries produced different results with respect to trade and convergence. The panel unit roots test results also show that, with the exception of the Indian economy and import-based groups, conditional convergence is visible in the BRICS alliance and all export-based groups. Additionally, flawless convergence has been confirmed in every BRICS nation. The paper so suggests that the BRICS countries should participate in competitive trade and investment activities in the post-pandemic globalization era.