Dynamic Panel Analysis Research Articles

Analysis of Relationship between Economic Growth and Energy Consumption in Developed Countries

This study examined the relationship between economic growth and energy consumption in the period 1986–2015 for 15 selected developed countries. In this study, in which the dynamic panel analysis method was used, cross-section dependence and homogeneity tests were taken into account. Accordingly, unit root and cointegration tests were decided. According to the cointegration test results, it has been determined that there is a long-term relationship between economic growth and energy consumption. The results obtained from the Dumitrescu-Hurlin causality test analysis show that there is a bidirectional causality relationship. As a result of the analysis, it has been concluded that economic growth and energy consumption are the causes of each other for the period of 1986–2015 in 15 selected developed countries.JEL Classification:O40, O13, C23. Doi: 10.28991/HEF-2022-03-01-06 Full Text: PDF

Economic Complexity and Sustainable Growth in Developing Countries

Most developing countries in this study are middle to low-income countries that have a relatively low economic complexity. This study aims to analyze the effect of the economic complexity on economic growth in 86 developing countries in 2010-2019. The method used is the Generalized Method of Moments (GMM) to capture dynamic panel analysis. The estimation results using the System GMM show that economic complexity has a positive effect on economic growth in developing countries. Increasing economic complexity encourages a structural transformation through high value-added economic sectors' creation to produce more complex products for earning a higher income. Human capital does not have a significant effect on economic growth because developing countries have relatively low-quality workers both in terms of education and health. The human capital development and government spending on the health sector are necessary to accelerate sustainable economic growth.

Analysis of Debt Financing and Financial Performance of Listed Manufacturing and Allied Firms: Unbalanced Panel Approach

Globally, the manufacturing industry is a crucial engine for sustaining economic growth and development. The sector’s contribution to Kenya’s economy has stagnated at around 10% of the gross domestic product (GDP), contributing an average of 10% from 1964-1973 and rose marginally to 13.6% from 1990-2007 and has been averaging below 10% in recent years. It however dropped to 8.4% in 2017. The renewed effort to revive the sector through the National Government Big 4 Agenda is expected to grow its contribution to GDP to 15% by 2022. Financing structure is imperative to maximize the company’s profitability and improve its competitiveness ability to realizing the National Government Medium Term Development Agenda. This study applied dynamic unbalanced panel analysis techniques using Secondary data for 10year period (2010 - 2019) with the study population comprising of 9 listed firms and hence census technique was adopted resulting to 86 observations. Document analysis guide was used to gather quantitative data from the firms’ financial statements. Focus was on debt financing. Pearson correlation was used to show the strength and direction of association among the variables. Short term debt financing was negatively and significantly correlated to Tobin Q; (r = -0.4790) and negatively correlated with LnEVA (r = -0.5032) giving negative and significant effect on performance as shown by the regression weights estimated by GMM. Long term debt ratio (LTDR) has a fairly moderate and positive correlation with Tobin Q (r = 0.4388). It is also strongly correlated with LnEVA ( r = 0.6570). The regression coefficients were also positive and significant for both performance proxies. The study recommended that the managers of MAFs need to minimize use of short time financing sources and concentrate on recovering cash flow quickly to minimize need for short term financing. Long term financing sources improve performance and need to be enhanced. Additionally, the government need to reduce the cost of borrowing Future studies can consider a balanced panel analysis and other panel data econometric techniques. Keywords: Short term debt ratio, Long term debt ratio, Manufacturing and allied firms, performance DOI: 10.7176/RJFA/13-3-04 Publication date: February 28 th 2022

Deposit insurance, banking stability and banking indicators

The deposit insurance system is a form of banking regulation that protects depositors and provides stability in the banking system. It is an important part of the financial safety net, especially in times of economic turmoil, as it provides explicit depositor protection and prevents a ‘bank run’. However, there are some negative effects on banking stability associated with the increase in bank risk, i.e., moral hazard, adverse selection and the principal-agent problem. The functioning of the deposit insurance system depends on its determinants, but also on the characteristics of the national banking system, supervision, legal and cultural framework and the general development of the country. Considering that the banking systems in EU and especially in comparison to Southeast European countries are very different, the aim of this paper is to study the impact of the deposit insurance system on bank stability depending on the characteristics of banks. Bank stability is analysed using bank risk variables: z-score and ratio of non-performing loans to total loans. By applying a dynamic panel analysis using the GMM Arellano–Bond (AB) estimator to a sample of EU countries and selected Southeast European countries, we provide further evidence on the deposit insurance system over the period from 2005 to 2014. The results provide evidence that large and systemically important banks behave in a riskier way, distorting the purpose of the deposit insurance scheme and jeopardising the safety of banking systems.

Indonesian Coal Exports: Dynamic Panel Analysis Approach

Coal is a mineral fuel commodity considered important as a source ofenergy and is traded among countries. Indonesia is one of the largest coal producing countries in the world. This study aimed to analyse the relationship between the net export volume, GDP per capita of destination countries, real exchange rate, and Indonesian coal export prices. The existence of a causal relationship between exports and economic growth shows that there is a relationship between net exports and future economic growth. Economic growth is an increase in people's per capita income without paying attention to changes in the economic structure.The study uses panel data of 5 biggest coal trading partner countries of Indonesia during the period 2015-2019, by using the dynamic panel analysis method, where a dependent variable is not only determined by the value of independent variables at the research period, but is also determined by the value of previous period. The dynamic panel method is characterized by the lag of the dependent variable which is correlated with the residual among the independent variables. The dynamic panel data regression method can be used to determine the short-term effect,and the long-term effect as well.Based on the estimation results of the Generalized Method of Moment (GMM) Arellano Bond, in the study period the exchange rate and export prices had a significant negative effect on the volume of Indonesian coal exports. GDP per capita has no significant effect on the volume of Indonesia's coal exports.Furthermore, the short-term elasticity approach for the exchange rate is -0.029159 and for the long term is 0.3616521. These results indicate that the calculation of the short-term and long-term elasticity of the exchange rate (ER) is inelastic and negative with different magnitudes. In addition, it explains that in the short term an increase in the exchange rate of 1 percent will reduce net exports in the short term by 2.9 percent.

The influence of Eurosceptic challenger parties on mainstream party behaviour: Is oppositional behaviour contagious?

Previous research has looked at how Eurosceptic challenger parties can cause mainstream parties to change their policy positions and bring about adjustments to their programmes. We explore whether this contagion effect extends to the parliamentary behaviour of mainstream parties in European Union (EU) affairs. The empirical analysis is based on a large-scale study of 6215 statements made by national parliamentarians in the European Affairs Committee of Sweden between 1995 and 2016. A dynamic panel analysis of the data shows that the oppositional behaviour of Eurosceptic challenger parties has a significant impact on the opposition statements made in EU affairs by mainstream parties. These findings have important implications for the general understanding of factors that drive national EU opposition.

What Does Dynamic Panel Analysis Tell Us About Life Satisfaction?

Static fixed effects estimation of life satisfaction often gives rise to serial correlation in the residuals, indicating omitted dynamics. Rather than correcting the standard errors, “to make them robust,” this study explores dynamic panel analysis to incorporate the otherwise omitted dynamics into the estimation of life satisfaction models. The analysis utilizes the System General Method of Moments approach to dynamic analysis. The results indicate that overall life satisfaction is largely (though not wholly) contemporaneous; correspondingly, the persistence of satisfaction from previous periods is limited. This finding is robust to a variety of different specification choices. Accordingly, the issue of omitted dynamics in a life satisfaction context is a minor one. This use of dynamic panel analysis, therefore, offers support for the ongoing use of static models (like fixed effects), even though they omit dynamics. Given the highlighted challenges of dynamic panel analysis, static fixed effects analyses will often be preferred.

Unequal opportunity and growth in India: A dynamic panel analysis by using survey data

This study analyses the lack of robust conclusions about the association between inequality and economic growth. On the basis of ex-ante concept of inequality of opportunity, the parametric measure of unequal opportunity is used by partitioning the total sample in to 16 mutually exclusive circumstance groups. Theil's T index of monthly per capita consumption expenditure in household survey conducted by the NSSO in different rounds since the early 1980s is used to measure overall inequality and unequal opportunity. The relative index of inequality of opportunity is used as explanatory variable in the growth regression equation. To find out the direction of causality, we also estimate inequality equation by taking growth as an explanatory variable in presence of some control variables. Empirical findings of this study suggest that overall inequality and inequality of opportunity have negative effects on subsequent growth, while initial growth has no significant effect overall inequality and has a significant positive effect on inequality of opportunity.

Institutional threshold in the nexus between financial openness and TFP in Africa: A dynamic panel analysis

The challenge of “growth without development” in most developing countries particularly in the African region has brought to fore the discussion of the effects of macroeconomic policies on the key determinants of growth, namely Total Factor Productivity (TFP). This study investigated the threshold or sustainable level of institutional development necessary for financial openness to stimulate TFP growth by employing a Dynamic Panel Threshold Model (DPTM) for the panel of 28 selected African countries from 1996 to 2019. The findings showed that there exists a threshold or sustainable level of institutional development (4.73 out of 10-points scale) which African countries must attain to reap the full benefits of financial openness in terms of TFP growth because the quality of institutions in most African countries are pervasively weak and poorly developed to checkmate excesses, corruptions and political interferences in the financial markets. Therefore, the study recommended that there should be a deliberate attempt by relevant authorities to block all inherent loopholes in the institutional settings of African countries which give room for shady dealings in the financial markets, to ensure institutional environments (political, legal, regulatory, and economic institutions) are healthy enough to absorb the negative influence or the risks associated with financial openness that may hinder growth and development in the long-run by hindering TFP growth. • Interconnectedness of the world economy has moved financial openness to the limelight of academic discourse. • TFP describes the variable that accounts for change in output that does not depend on factor inputs such as labour and capital. • Financial openness is the integration of the financial activities and transactions into global financial markets. • Benefits of financial openness cannot be internalized to improve TFP without good quality institutions. • Threshold or sustainable level of institutional development in Africa. • Dynamic Panel Threshold Model (DPTM) proposed by Seo and Shin (2016) and used by Seo et al. (2019)

Impacts of co-ethnic networks and socioeconomic factors on immigrants’ residence choice in Tokyo: A dynamic spatial panel analysis

Impacts of co-ethnic networks and socioeconomic factors on immigrants’ residence choice in Tokyo: A dynamic spatial panel analysis

Entrepreneurial activity and economic growth: A dynamic data panel analysis of European countries

Entrepreneurial activity and economic growth: A dynamic data panel analysis of European countries

Empirijsko modelovanje stope popunjenosti kapaciteta hotela dinamičkim panel podacima

The previous research studies used mainly the occupancy rate as one of the key indicators of hotel performance. As the hotel occupancy rate varies both throughout the year and for different types of hotels, the use of panel data is more appropriate and more comprehensive compared to the cross-sectional data or time series, which have so far been most commonly used in similar research. Also, the previous research did not take into account the great heterogeneity among the analyzed hotels, nor the correlation of the occupancy rate in relation to its past values. By using the generalized method of moments within the dynamic panel data model, it is possible to take both properties into account. The analyzed data pertain to the hotel industry of Spain. Specifically, the given panel data include a sample of 49 hotels observed over a period of 12 years. The application of dynamic panel analysis shows that the values of hotel occupancy rate are influenced by the values of hotel occupancy rate with a lag one, as well as the values of total marketing expenses with a lag one. It was further determined that the values of incentive management fees, as well as the average daily rate and the consumer price index also have an impact on the observed variable. We are convinced that the presented analysis results will be of significant benefit to hotel managers.

Relationship Dynamics of Sustainable Development Goals on Poverty and Inequality in sub-Saharan Africa: Beyond the Covid-19 Pandemic

The study examined the relationship dynamics of sustainable development goals on poverty and inequality in sub-Saharan Africa: beyond the COVID-19 pandemic. Monthly data were sourced from World Bank Sustainable Development Goals Data Bank, Africa SDG index from 2015 (m01) to 2020 (m12). Both static and dynamic panel analysis techniques were employed in estimating the interrelationship among the seventeen SDGs and cases of COVID-19. The study presents mixed results as it revealed the SDGs having both and either positive or negative short run or long run relationship with poverty, inequality and COVID-19. By implication, some SDGs presents a short-term relationship while some SDGs presents a long-term relationship. In another scenario, some SDGs presents both short term and long-term relationship towards the achievement of No poverty and reducing inequality on or before year 2030. The study therefore recommends that policy should be put in place in sub-Saharan Africa so as to differentiate the SDGs having short term goals from SDGs having long term goals and from the SDGs having both short term and long-term goals towards the achievement of No Poverty and reducing Inequality on or before year 2030.

Institutional Quality and Economic Performance in the Southern African Development Community (SADC) Region: A Dynamic Panel Analysis

The quality of institutions has increasingly become a key determinant of economic performance. This confirms a paradigm shift from the conventional macroeconomic determinants to governance as the crucial determining factor of economic performance, particularly in developing countries where economic growth is stagnant or moving at a meagre rate. With the aid of macroeconomic and governance data, this paper reports on an empirical analysis performed to quantify the impact of institutional quality on economic performance in Southern African economies over the period 2009-2019 by employing Generalized Method of Moments (GMM) technique with fixed effects. The empirical results indicate a negative and statistically significant coefficient for the governance index, inflation, and natural resources towards GDP growth. In contrast, trade openness, financial development, and domestic investment have positive and statistically significant coefficients. Based on the composite governance index, these results suggest that a weak institutional environment that aggravates corruption levels causes instability while also stimulating rent-seeking behaviour, which ultimately stifles economic performance in the region. Therefore, to attain inclusive and sustainable economic growth rates, the regional authorities should strengthen the law and enforce the rules.

Determinants of the effective tax burden of companies in the Telecommunications activities in the Republic of Croatia

Abstract The aim of this paper is to identify the determinants of the effective tax burden of companies in the activity division Telecommunication in the Republic of Croatia. The research covers the time interval from 2008 to 2017. Dynamic panel analysis was used to conduct the research. Microeconomic data were obtained from the databases of the Financial Agency, and macroeconomic data from the Central Bureau of Statistics. The results indicate that the effective tax burden of companies in the activity division Telecommunication is affected by the effective tax burden from the previous period, company size, leverage, inventory intensity, profitability and economic cycle. While capital and labour intensity didn`t prove statistically significant. The main limitations of the research lie in the impossibility of generalizing the stated results to all companies from the observed activity, using only one evaluation model, and being a cabinet-type research, without confirmation of the results obtained by companies. The research received several scientific contributions: this is the first study of the determinants of the effective tax burden conducted in the Republic of Croatia; the research covers an entire activity whit different companies sizes, and not as in most previous research, which mainly include only large companies listed on the stock exchange; unlike previous studies that used a balanced sample, and in most cases static panel models, this study used an unbalanced sample and a dynamic panel model.

Reversing the Bamboo Network: Chinese capital, geopolitics, and institutions in Southeast Asia

ABSTRACT This study applies a comparative political economy approach to institutional theory by considering institutional convergence and geopolitics as determinants of Chinese outward foreign direct investment (OFDI). Using country-level data for a sample of Asian countries, including Bamboo Network countries or countries with prominent overseas Chinese business networks in Southeast Asia, and other countries identified in the Varieties of Capitalism literature, the dynamic panel analysis from 2007 to 2019 finds that Chinese OFDI is significantly positively affected by the interaction between greater formal institutional distance from China and a similar state-backed institutional configuration. Conversely, active territorial disputes with China and formal arbitral proceedings against this country have significant and negative effects. This study finds that Chinese OFDI in general and specifically the reversal of the Bamboo Network, or the flowing back of Chinese capital into Southeast Asian economies that initially invested in China’s rise and integration into the global economy, are conditioned upon geopolitical tensions and convergence in terms of institutional configuration but not institutional distance.

The contribution of trade openness to health outcomes in sub-Saharan African countries: A dynamic panel analysis

This study examines the contribution of trade openness to health outcomes (measured in terms of under-five mortality and life expectancy) in 33 sub-Saharan African countries using a two-step system Generalized Methods of Moments (GMM) estimator over the year 2000–2016, while controlling for endogeneity of variables (i.e. omitted variables bias and reverse causality). The findings show that, trade openness and measles vaccination reduces under-five mortality in the region. The findings reveal that, trade openness, income (GDP per capita), and health financing (total public and private health expenditure) all contribute to a longer life expectancy. Overall, it was found that trade openness is statistically significant and contributes to health improvement (i.e. under-five mortality and life expectancy). This implies that the health sector in sub-Saharan African countries is not at risk as a result of increased trade. However, the study recommends easing and increasing trade to allow governments to obtain more financial resources to improve the welfare of their people, to include health professionals in future trade negotiations and agreements for public health benefits, and take steps to remove import duties on health related products. These findings have significant implications for sub-Saharan Africa, as well as other developing countries.

Carbon Dioxide Emissions: A Dynamic Panel Analysis of Energy Intensive Industries in Egypt

Most energy intensive industries are high carbon dioxide (CO2) emitters. As CO2 emissions show large discrepancies between regions, it is important to test for spatial dependence when estimating emissions. The present study thus examines spatial dependence of CO2 emissions for the twenty-seven governorates of Egypt over the period 2007-2016. Determinants of CO2 emissions include road network density, investments in fixed assets, the structure of economic activity, the share of females, and the various levels of education in the regions’ respective population. Incorporating the spatial dimension, as well as using female and educational levels amongst the determinants, are contributions to research done on CO2 emissions in Egypt. Estimation results indicate that CO2 emissions across governorates are spatially-random rather than spatially-dependent. The study therefore uses a generalized method of moments (GMM) dynamic panel model. The lag of CO2 emissions per capita, net fixed capital formation, share of illiterates in the working age population, and the share of services in economic activity are significant and have positive effects (increasing emissions). The share of females in working age population, and the share of agriculture in economic activity are significant and have negative effects (diminishing emissions). Policy implications based on the study results are given.

The impact of Ease of Doing Business on economic growth: a dynamic panel analysis for African countries

The impact of Ease of Doing Business on economic growth: a dynamic panel analysis for African countries

Board Diversity and Financial Performance of the Nigerian Listed Firms: A Dynamic Panel Analysis

The effect of board diversity on organisational performance has continued to be given attention by policymakers, non-governmental agencies, and academic communities. It has been established that boardroom diversity enhances the corporate boards’ monitoring capacity and mitigates the agency costs, which positively influences the firms’ performance. Despite the advantages of constituting diverse boards, the corporate governance framework guiding the operations of such firms does not contain any specific requirement on board diversity. Hence, empirical studies need to stress more on the relevance of boardroom diversity to firms’ value in the Nigerian context. Therefore, this paper examines the effect of board diversity on financial performance of the Nigerian listed firms. The study utilised the balanced panel data of 70 firms for a period of 8 years (2012 to 2019) using a two-step system generalised method of moments (GMM) framework. This study indicates a positive and significant relationship of board gender diversity (BGD) and Foreign directors (FD), with financial performance. However, the effect of CEO financial expertise on the firms’ return on assets (ROA), return on equity (ROE), and return on sales (ROS) appear positive but insignificant. Consequently, the Nigerian listed firms should attach more value to constitute a smaller board size with a considerable number of female and foreign directors to maximise their performance.