Dumitrescu-Hurlin Panel Causality Test Research Articles

The Nexus between Liquidity and Credit Risks and Their Impact on Bank Stability

This study examines the nexus between liquidity and credit risks and their impact on bank stability in Nigeria. In order to achieve the research objectives, this study utilizes secondary data, which covers 12 Nigerian banks from 2010 to 2021. The Generalized Method of Moment (GMM) was estimated using the Arellano and Bond estimation technique. The results revealed that credit and liquidity risks negatively and significantly impacted bank stability individually and jointly in Nigeria. Furthermore, we deduced a positive correlation between credit and liquidity risks, with the correlation result statistically significant. Further investigation using the Pairwise Dumitrescu-Hurlin Panel Causality Tests indicated a one-way (uni-directional) causality from liquidity to credit risk. Further analysis showed that other internal bank-related indicators significantly impact bank performance. Bank Size, Equity, and Capital Adequacy positively and significantly impact bank performance. Likewise, macroeconomic indicators such as economic growth positively and significantly impact bank performance. In contrast, the inflation rate has a negative but insignificant impact on bank stability in Nigeria. Based on the findings, the study recommends joint management of credit and liquidity risks since a rise in liquidity risk will increase credit risk, resulting in bank instability. Thus, the results support bank regulation emphasizing the reduction of credit and liquidity risks in the banking sector since credit and liquidity risks have an attendant adverse effect on bank stability. The study will help bank managers balance liquidity, profit maximization, and risk minimization.

Exploring the N‐shaped EKC in the top tourist destinations. Empirical evidence from cross‐country analysis

AbstractTourism, energy consumption, economic growth, and financial development (FD) have serious consequences on environmental quality, which have gained attention of researchers. This research study attempts to highlight the impact of these variables on carbon dioxide (CO2) emissions in the Asian top‐four tourism countries, namely, Thailand, Singapore, Malaysia and Hong Kong. To achieve these objectives, the study applied Fully Modified Ordinary Least Squares (FMOLS) econometric technique to estimate the long‐run relationship, using annual data. Moreover, the study also applied the Dumitrescu–Hurlin panel causality test to identify the direction of the causality. The findings of the study show that energy consumption and trade openness have a negative impact on CO2 emissions. Moreover, tourism and FDI affect carbon emissions positively. Moreover, the study also validated the N‐shaped environmental Kuznets curve in these countries, indicating that economic growth positively influences carbon emissions in the early stages. However, in the middle stage, economic growth positively affects CO2 emissions, while in the later stage, it affects positively. Further, a unidirectional causality has been found from trade, economic growth and tourist arrivals to FD. Furthermore, based on empirical findings, the study suggests various policy implications for the government of the top‐four Asian tourist countries.

Mitigation pathways towards climate change: Modelling the impact of climatological factors on wheat production in top six regions of China

Northern and Southern regions are the two major wheat production belts of China. Agro–climatic resources have changed significantly in recent years, threatening staple food production in these regions. As a result, it is critical to investigate the long–term effect of climate change and agri–inputs on wheat production in China's top six wheat producing provinces (Hebei, Shandong, Henan, Jiangsu, Anhui, and Hubei) from 1995 to 2020. The estimated long-run results from the FGLS, DOLS, and D–K estimators revealed that climatic factors, specifically temperature, had a negative impact on wheat production, while precipitation had a positive impact. The findings also revealed that agrochemical inputs, such as fertilizer, increases wheat production, whereas pesticide use decreases wheat production significantly. The results from the Dumitrescu–Hurlin panel causality test showed a bidirectional causality between rainfall, fertilizer use, and cultivated area with wheat production, while a unidirectional causality association is running from labor force to wheat production. The current study provides several critical policy recommendations for China's sustainable food production through green agricultural practices and robust climate mitigation strategies.

Do natural resources impact economic growth: An investigation of P5 + 1 countries under sustainable management

Natural resources represent the base of our living and the entire economic activity. Their depletion is a major challenge for the economic development of both developed and developing economies. Their efficient use is an indispensable requirement and must be the aim of the public policies designed by the authorities worldwide. In this research, we have investigated the impact of the natural resources rent on the economic growth in some major wealthy economies of the world (P5 + 1 countries namely: US, UK, France, China, Russia, and Germany). We have applied a quantile-on-quantile regression to analyse this impact on different quantiles and a cross-sectional autoregressive distributed lag (CS-ARDL) approach for the panel of these six countries. The Dumitrescu-Hurlin panel causality test was also used to check the causality between natural resource rents and economic growth in these countries. Results show a negative relationship between natural resources rent and economic growth for the panel but a different impact on quantiles in each country. Only for China and the US, a positive effect can be noticed for both lower and higher quantiles of natural resources and economic growth. The Dumitrescu-Hurlin causality test shows that natural resources can predict economic growth only in China, the U.S., and the panel. In contrast, no causality was found for the other four countries included in the panel. We suggest that nations invest in wind and solar projects, use biofuels and nuclear energy, introduce a temporary profit tax to protect consumers from escalating energy prices, and increase energy efficiency in buildings and industry. Businesses would benefit from a regulatory framework that is uniform and exhaustive, as well as easier to traverse and more receptive to innovation and creativity. Public-private partnership investments in innovation, innovation incentives, and environmental sector opportunities may foster long-term economic growth.

The dynamic impact of renewable energy consumption, trade, and financial development on carbon emissions in low-, middle-, and high-income countries

The present study confronts potential theoretical argument of dynamic and non-linear relationship between [Formula: see text] emissions, renewable energy consumption, trade, and financial development by using quantile regression that accounts for the role of development in explaining the stated nexus. The results show that renewable energy consumption reduces [Formula: see text] emissions in the short run in low-, middle-, and high-income countries. [Formula: see text] emissions plumet as country open up for trade and expand financial services for their people. It is found that trade openness and financial development decrease [Formula: see text] emissions at upper quantile in low-income countries. In the middle-income countries, the findings are not much different as reported in case of low-income countries. In the high-income countries, renewable energy consumption and trade openness lead to decrease in [Formula: see text] emissions at all income quantiles. The Dumitrescu-Hurlin (D-H) panel causality test draws a sturdy support of bi-directional causation between renewable energy and [Formula: see text] emissions in low-income countries. Based on this analysis, some important policy implications can be drawn. First, in advanced countries, restrictions on renewable energy do not have significant effect on environmental condition. However, in low-income countries, adoption of renewable energy can significantly reduce [Formula: see text] emissions. Second, low-income countries may combat rise in [Formula: see text] emissions by introducing new technologies in exploiting trade potentials that are necessary to acquire resources to adopt clean energy. Third, energy policies should be framed based on the stage of development of a country, share of renewable energy in its total energy mix, and environmental condition of the country.

Toward a sustainable development in sub-Saharan Africa: do economic complexity and renewable energy improve environmental quality?

Emission reduction has become more crucial for environmental sustainability in light of the growing concerns about climate change. Many studies have identified that structural change and clean energy technologies improve environmental quality. However, there is an absence of empirics that focus on the sub-Saharan Africa (SSA) context, which shifted the structure of their economies from the agriculture sector towards sophisticated manufacturing activities that affect the environment. Hence, this study aims to investigate the impacts of economic complexity and renewable energy consumption on carbon emissions in 41 SSA countries between 1999 and 2018. The study adopts contemporary heterogeneous panel approaches to overcome heterogeneity and cross-sectional dependence issues that usually arise in panel data estimates. The empirical findings of the pooled mean group (PMG) cointegration analysis indicate that renewable energy consumption alleviates environmental pollution in the long run and short run. In contrast, economic complexity improves environmental quality in the long run but not in the short run. On the other hand, economic growth contributes adversely to environmental degradation in the long run and short run. The study indicates that urbanization worsens environmental pollution in the long run. In addition, the outcomes of the Dumitrescu-Hurlin panel causality test indicate a unidirectional causal path from carbon emissions to renewable energy consumption. The causality results also suggest that carbon emission has bidirectional causation with economic complexity, economic growth, and urbanization. Therefore, the study recommends that SSA countries change their economic structure towards knowledge-intensive production and adopt policies that encourage investment in renewable energy infrastructures by subsidizing the initiatives to achieve clean energy technologies.

Impact of Economic Growth, Energy use and Research and Development Expenditure on Carbon Emissions: An Analysis of 29 OECD Countries

This study attempts to investigate the impact of economic growth, energy use and research and development expenditure on carbon dioxide emissions for a panel of 29 Organisation for Economic Development and Cooperation (OECD) countries over 1995-2019. We employ two sets of econometric techniques.The first set of estimation techniques assumes cross sectional independence in the panel (also known as the first generation tests). The first generation tests include the panel unit root tests- Levin et al ( LLC), Im et al (IPS) ADF-Fisher and PP-Fisher unit root tests, Pedroni (1999) and Kao cointegration tests and the Fully Modified Ordinary Least Square (FMOLS) for computing output elasticities. The second set of econometric tests are performed after checking for cross sectional dependence using the second generation tests. These include Pesaran CD test, Breusch Pagan CD test, to establish cross sectional dependence followed by Cross-sectional augmented Im-Pesaran-Shin (CIPS) panel unit root test developed by Pesaran (2007)to test for panel stationarity followed by the error correction based panel cointegration test proposed by Westerlund and Edgerton (2007) with bootstrap. Augmented Mean Group (AMG) is performed to estimate output elasticities while Dumitrescu-Hurlin (DH) Panel Causality tests is done to ascertain causality between variables We obtain the same results for the effect of GDP and energy use on carbon emissions from the two strategies but conflicting results for the impact of research and development spending on carbon emissions, although there is evidence of stronger cointegration under the first generation tests. Based on findings from the two approaches, we conclude that with a rise in GDP, carbon emissions fall in OECD but increase with a rise in energy use. Aggregate research and development expenditure has a positive effect on carbon emissions under cross sectional independence but a neutral effect when estimated using cross-sectional dependence tests giving inconclusive results.

The impact of natural resources, economic growth, savings, and current account balance on financial sector development: Theory and empirical evidence

The development of the financial sector is one of the main macroeconomic goals for developing countries as well as developed ones. The literature focusing on the determinants of financial sector development presents very diverse and inconsistent results. Therefore, the main aim of the study is to empirically investigate the long run and causal linkages between natural resources, economic growth, savings, current account balance and financial sector development for 33 developing countries. The study applies the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) and Dumitrescu-Hurlin panel causality tests, which are among the new panel data techniques. The results reveal that natural resources, economic growth, savings, current account balance and financial sector development are cointegrated. Natural resources, economic growth and current account balance negatively affect financial development while savings stimulate financial development. It is found that there exists a bi-directional causality between all the explanatory variables and financial development. Theoretical and policy implications are discussed within the perspective of macroeconomics and financial sustainability for developing countries.

Impact of Education on Economic Growth: Evidence from SAARC Countries

The primary objective of this paper is to examine the influence of education on SAARC members' economic growth to estimate panel data periods from 1990 to2019, the current study employed panel unit root such as ADF Fisher Chi-square, LLC and IP&SW and for long-run and short-run co-integration applied PMG approach, Kao (1999) co-integration, and Dumitrescu-Hurlin Panel Causality test. Primary School Enrollment (PSE), Secondary School Enrollment (SSE), and Tertiary School Enrollment (TSE) have a constructive and significant influence on GDPPC growth in the long term but have a negligible outcome in short run. In all three models, negative noteworthy value of ECM suggests junction from the short term to long-run equilibrium. Moreover, there is a unidirectional causal association running from PSE, SSE, and TSE to GDPPC. This study concluded that the government should place a greater emphasis on education to stimulate economic growth.

Innovation, financial risk and natural resources for sustainable development: Fresh evidence from BRICS economies

The nexus between sustainable development, total natural resource rents (TNRR), technological innovation (ATI) and financial risk index (FRI) has been studied in this research. The objective of this study is to investigate this impact on the BRICS economies while employing the panel data from 1990 to 2020. The study utilized slope heterogeneity, cross-sectional dependency and cross-sectional augmented Im, Pesaran and Shin unit root tests to suggest an accurate method of regression. The study added its findings by utilizing a method of moment quantile regression, and found that TNRR and FRI are negatively related to the sustainable development. At the same time, its impact decreases with the increase in each quarter-based quantiles. Whereas, ATI is positively associated with sustainable development, the results also revealed that its impact decreases with the increase in each quarter-based quantile. Furthermore, the simple quantile regression and Dumitrescu-Hurlin Panel Causality Test were used as a robust method. Where, the simple quantile regression revealed that TNRR and FRI negatively affect sustainable development in BRICS countries while ATI has positive impact on sustainable development. According to this study, the BRICS economies will benefit from less TNRR dependence in two ways: first, as fossil fuel prices decline, money can be redirected to more environmentally friendly activities like renewable energy production, green technological advancement, and renewable energy research and development. Second, when fossil fuel use declines, especially in the industrial sector, growing use of renewable energy sources may lead to lower overall natural resource rents. Third, the BRICS nations' development process will be greatly accelerated and strengthened as a result of the greatest impact of the decrease in FRI.

Causality test among foreign direct investment, trade openness and economic growth: recent evidence from BRICS and MINT countries

This study attempts to find new evidence of causality between foreign direct investment, trade openness, and economic growth for BRICS and MINT countries between 1990-2021 using the Dumitrescu-Hurlin panel causality test. We first check whether there is a cross-sectional dependence between the countries using different cross-sectional dependence tests. After we find out there is cross-sectional dependence, we perform the CIPS unit root test. All variables are stationary at their first differences, so we applied the Dumitrescu-Hurlin panel causality test. There is bi-directional causality between trade openness and economic growth only for MINT countries. For BRICS, we found unidirectional relationships between economic growth and foreign direct investment and trade openness to economic growth. There is a unidirectional relationship from trade openness to foreign direct investment for both country groups.

Economic Globalization in Asean Countries: A Panel Cointegration Analysis

Economic globalization refers to the increasing interdependence of world economies due to the growing scale of cross-border trade of commodities and services, the flow of international capital and the vast and rapid spread of technologies. The process of economic globalization in improving the economy takes time. ASEAN consists of ten countries and each has different behaviors. The development of economic globalization and the speed in increasing economic openness for each ASEAN country is different, hence the need to analyze the relationship between time and across countries using panel data. Therefore, this study aims to analyse further the effect of economic globalization on ASEAN GDP in the short and long term. It uses ICT, economic freedom, and economic openness (trade openness and financial openness) as proxies of economic globalization. The analysis method is a panel cointegration analysis and Dumitrescu-Hurlin panel causality test. The result shows that GDP growth is significantly influenced by ICT, financial openness, and economic freedom in the long term. This study reveals that economic freedom affects GDP growth positively in the long term. Conversely, ICT and financial openness have drawbacks in the long run. Meanwhile, only ICT and trade openness significantly influence GDP growth in the short term. Finally, this study reveals that economic globalization has different impacts on the economy in the short and long term.

Empirical analysis into the nexus between energy consumption, economic growth, and natural resources in D-8 bloc: evidence from panel causality analysis.

THe importance of the impact of natural resources on economic growth is an important issue with a long history in the energy and environment literature. It is seen that the studies conducted in this field are generally shaped by the "resource curse hypothesis," a hypothesis that highlights the trade-off between economic growth and resource abundance in the growth literature. However, the extant literature have presented inconclusive results. This study aims to examine the direction of causality between capital, energy use, energy imports, exchange rate, natural resources, and per capita income in countries that are rich in natural resources and consist of developing countries (D-8). In this context, first of all, the existence of CD test was determined, and then the stationarity of the variables was determined with the CADF unit root test. Then, whether the slope coefficients of the variables were homogeneous or not, it was decided that they were heterogeneous. Finally, the direction of causality between the variables was examined with the Dumitrescu-Hurlin panel causality test applied to heterogeneous panels. The empirical analysis results show a unidirectional causal relationship from capital to GDP per capita and from GDP per capita to energy use. In addition, while a two-way causality relationship was determined between the exchange rate and GDP per capita, no causal relationship was found between energy imports, natural resources, and per capita income. These results have macroeconomic implications and spillover effects on the energy mix of D-8 economies. In addition, no causal relationship was found between natural resources and GDP per capita in this country group and within the scope of the analysis period. Policy recommendations are highlighted in the conclusion.

The dynamic impact of energy productivity and economic growth on environmental sustainability in South European countries

In the wake of global warming, the world is in an ecological state of disarray. Consequently, governments across the globe are committing to achieving low temperatures with a target of 1.5 °C, of which South European countries play a key role. This study aims to examine the effects of energy productivity (EP), economic growth (GDP), and globalization (GLO) on CO2 emissions of Cyprus, Spain, Portugal, Italy, Greece, and Malta (Southern European countries). The study covers the time from 1990 to 2018. Unlike earlier studies, the current analysis considers EP a significant factor in determining CO2 emissions in Southern European countries. Southern European countries primarily represent a group of emerging economies, but it is relatively ignored in empirical environment literature. This study is the first to reveal a newly second-generation connection among EP, GDP, GLO, and CO2 emissions in the Southern European countries by using the novel method of panel cointegration of Westerlund cointegration, Pedroni cointegration, augmented mean group (AMG), common correlated effects mean group (CCEMG), and followed by Dumitrescu–Hurlin causality tests. The empirical results suggest that the variables' effects are cointegrated, and EP reduces CO2 emissions while GDP, and GLO increase CO2 emissions in the South European countries. Furthermore, findings from the Dumitrescu Hurlin panel causality test suggest that any reductions in EP would have a positive impact on the extent of carbon emissions. On the basis of these empirical findings, this study suggests that policy administrators of the South European countries should consider the energy efficiency impact among the variables in setting their environmental, growth, and energy policies.

Nexus between Renewable Energy, Credit Gap Risk, Financial Development and R&D Expenditure: Panel ARDL Approach

In the study, we investigate the relationships between renewable energy consumption sub-indicators of G-8 countries and financial development, credit gap risk, and R&D expenditure from 1996 to 2018. The relationships among the variables in the study are analyzed by employing the Panel ARDL method and the Dumitrescu–Hurlin panel causality test. The cointegration relationships between the variables have been analyzed using the bounds test approach, and an unrestricted error correction model has been established. Contrary to previous studies in the renewable energy literature, this study employed the variable of credit gap risk. Therefore, we believe that this study will fill the gap in the literature and attract the attention of researchers and policymakers. The results indicate that increases in total demand for renewable energy positively affect the financial development of countries. Moreover, R&D expenditures increase as the demand for hydro energy and solar energy increases. This result indicates that wind power consumption has a short-term impact on R&D expenditure, and such an impact ceases to exist in the long run. According to the empirical research findings, the rise in demand for renewable energy may be a factor mitigating the credit gap risk of countries. In other words, the credit gap risk, which is considered a leading indicator of systemic banking crises, can be mitigated by the rise in the demand for renewable energy.

A regional analysis of the urbanization-energy-economy-emissions nexus in China: based on the environmental Kuznets curve hypothesis

ABSTRACT The process of urbanization has accelerated in the recent decades, bringing with it an enormous impact on climate change. This paper examines the relationships between urbanization, energy consumption, and economic growth on carbon dioxide emissions in regions of China during the 1997–2019 period. Additionally, the environmental Kuznets curve (EKC) hypothesis is also examined. The cross-sectional dependence test indicates that no cross-sectional dependence is present in the panel data, and six unit root tests show that all variables are integrated on the order of one, I(1). Results of all cointegration tests provide evidence for a long-term equilibrium in the selected time series data. The fully modified ordinary least squares (FMOLS) and the augmented mean group (AMG) estimator indicate that the EKC hypothesis is valid in all regions except Western China. Given its abundant renewable resources, this region can vigorously develop renewable energy and energy storage technology. Moreover, energy consumption can lead to emissions increasing, while it is not certain that urbanization leads to emissions decreasing. Clean technologies for energy and intensive development of urban area should be emphasized. Finally, the results of pairwise Dumitrescu-Hurlin (DH) Panel causality test between each pair of variables are complicated and mixed in different regions.

Sağlık Harcamalarının Medikal Ürün İhracatı Üzerindeki Etkisi: E7 Ülkeleri Örneği

It was aimed to analyze the impact of health expenditures on medical product exports in E7 countries (Turkey, China, India, Russia, Indonesia, Brazil and Mexico) in the developing countries group in the paper. In this context, it was first performed the MADF unit root test to test the stationarity of the series in the study covering the period 2000-2017. Then it was performed the Swamy S test to determine the homogeneity and heterogeneity of the series. Finally, it was applied the Dumitrescu-Hurlin Panel causality test to determine the causality relationship between the series. As a result of the findings, it was determined that the series were stationary and heterogeneous in the first difference and that there was a bidirectional causality relationship between the two variables. In other words, both health expenditures affected medical product exports and medical product exports affected health expenditures. In this perspective, when countries' health expenditures increase, medical product exports also increase, and when medical product exports increase, health expenditures also increase.

BRICS-T Ülkelerinde Ekonomik Büyüme Üzerinde Yenilenebilir Enerji Tüketiminin Etkisi

In this study, it is aimed to investigate the effect of renewable energy consumption on economic growth in BRICS countries and Turkey. In this context, panel data analysis in the form of coefficient estimates and causality analysis was applied using annual data for the period 1990-2018. Within the scope of the determinants of economic growth, besides the renewable energy consumption variable which forms the basis of the study, the variables of capital accumulation, population, trade openness, foreign direct investments and non-renewable energy consumption are also used. According to the coefficient estimation results made with the fixed effects model, it has been determined that the increase in renewable energy consumption has negative and significant effects on economic growth. On the other hand, it has been determined that the increase in non-renewable energy consumption has a positive effect. In addition, it is among the findings that the increase in capital accumulation has a positive effect on economic growth and the increase in trade openness has a negative effect. Finally, Dumitrescu-Hurlin (2012) panel causality test results revealed that there is a unidirectional causality relationship from renewable energy consumption to economic growth. Accordingly, it was seen that the growth hypothesis was valid among the variables.

CAUSALİTY RELATİONSHİP BETWEEN INFLATİON AND INCOME DİSTRİBUTİON: A STUDY ON DEVELOPİNG OECD COUNTRİES

Gelir eşitsizliği insanların gündelik hayatını önemli ölçüde sosyo-ekonomik açıdan etkilemektedir. Bu nedenle, hangi faktörlerin gelir dağılımını etkilediğini bilmek, söz konusu eşitsizliği gidermek anlamında önem taşımaktadır. Literatürde gelir dağılımını etkileyen başlıca faktör olarak enflasyon oranları gösterilmektedir. Bu çalışmada gelişmekte olan 8 OECD ülkesinin 2007-2019 dönemini kapsayan yıllık verilerini kullanarak enflasyon ve gelir dağılımı arasındaki nedensellik ilişkisi Dumitrescu-Hurlin panel nedensellik testi ile araştırılmıştır. Sonuç olarak ele alınan ülke grubu için hem enflasyon oranlarından gelir dağılımına doğru hem de gelir dağılımından enflasyon oranlarına doğru herhangi bir nedensellik ilişkisine rastlanmamıştır. Diğer bir ifade ile analize dâhil edilen ülkelerde enflasyon oranları gelir eşitsizliğinin sebebi olmadığı gibi gelir eşitsizliği de enflasyonun sebebi değildir.

Does globalization augment environmental degradation through the channel energy and FDI? Evidence from BRI initiatives

From 2000 through 2020, this study examines the impacts of FDI, economic development, and globalization on E.D. in a sample of Belt and Road Initiative (BRI) nations. Data for the inquiry is gathered using a variety of tests, including the Westerlund cointegration test, the Dynamic seemingly unrelated regression (DSUR) long-run panel estimate approach, and the Dumitrescu-Hurlin panel causality test. Panel unit root tests reveal which variables are hidden where and after initial difference and long-run association documents have been processed using conventional and error-correcting methods. DSUR discovered a positive relationship between long-term energy use and environmental degradation, implying that greater energy consumption and total output would exacerbate the current condition of environmental degradation. Foreign direct investment (FDI), financial expansion, and globalization benefit the global economy more than harm the environment. Aside from the unidirectional impacts of financial development, globalization, and economic expansion on environmental degradation, directional causality studies demonstrate the presence of a feedback hypothesis that helps to explain these causal relationships. This research demonstrates the need for Belt and Road (B.R.) energy measures to improve energy efficiency.