Dynamic Panel Data Analysis Research Articles

The effect of internal migration on regional growth in Italy: a dynamic spatial panel data analysis

This study assesses the effect of internal migration on regional growth in Italy at the NUTS-3 level over the period 2002-2019. The composition of the internal migration flows of the working-age population in Italy during the sample period appears substantially heterogeneous in nationality and labor skills. The analysis considers this heterogeneity, estimating various specifications of the dynamic spatial model and controlling for the endogeneity of migration variables through a control function approach. e evidence suggests that the internal migration of Italian citizens has a positive direct and spillover impact on regional growth, slowing down the convergence process. On the contrary, there is no evidence of a significant effect of internal migration of foreign citizens. Taking the skill composition of internal movements of Italian citizens into account, the adverse impact on convergence is magnified, thus corroborating the skill-selective hypothesis. Finally, the diverging impact of internal migration increases with the distance of migration flows.

The Dynamics Model of Cross-Regional to Enhance Economic Growth: New Empirical Evidence from Indonesia

Abstract Economic growth growth is crucial to improve community welfare in the long term. Although Indonesia’s economic growth is on an upward trend, Indonesia must remain vigilant in its relationship with the global world due to the rapidly changing and highly uncertain dynamics. Indonesia’s economic growth is also inseparable from the influence of various provinces’ economic growth, which varies due to the economic dynamics between regions. These dynamics can influence the region’s contribution to national economic growth. Therefore, identifying the important role of the determining factors of economic growth and appropriate policies in dealing with economic dynamics between regions is crucial because sustainable economic growth is also essential for improving community welfare. This study examines the determinants of Indonesia’s economic growth from a regional economic perspective, using a Dynamic Panel Data analysis model with three estimation models. The first model focuses on the primary variables of technological progress, population, and investment. The second model adds the human capital variable, while the third model further incorporates the variables of open economy, economic structure changes, and income inequality. The study utilizes data from the Indonesian Central Statistics Agency, covering 27 provinces from 2015 to 2022. The results indicate that increased technological progress, population, investment, human resources, economic openness, and economic structure changes can increase economic growth, while inequality of income harms economic growth. This research has implications that in creating determinant conditions for conducive economic growth, it needs to be carried out evenly in all provinces in Indonesia.

Taking ESG strategies for achieving profits: a dynamic panel data analysis

PurposeThe goal is to investigate the relationship between financial performance and environmental, social and governance (ESG) indicators and disclosures for a sample of Latin American firms.Design/methodology/approachDynamic panel data regressions are used to analyze a sample of 114 companies listed on the Latin American Integrated Market, MILA (Chile, Colombia, Mexico and Peru) for the period 2011–2020. The Altman Z-score and Piotroski F-score are used as indicators of the probability of default and comprehensive financial strength. Models are developed in which the relationship between economic value added (EVA) and Jensen’s alpha are evaluated against firms’ ESG practices.FindingsA direct relationship between ESG strategies and financial performance was found. Better practices and transparency in ESG are related to lower probability of bankruptcy, greater financial strength, greater EVA and superior risk-adjusted returns.Research limitations/implicationsESG data were obtained from the Bloomberg system based on a methodology that may differ from other sources. The sample covers four Latin American countries and large corporations. Independent variables were selected for their perceived validity, given their frequent use in previous studies.Practical implicationsEvidence for company management regarding the importance of strengthening ESG practices and reporting should be part of their balanced scorecards. For investors, the results support the importance of evaluating ESG practices in asset selection.Originality/valueThe present study is the first research to present empirical evidence on the relationship between ESG scores and disclosures for MILA countries, using a comprehensive set of financial performance indicators (Altman Z-scores, Piotroski F-scores, EVA and Jensen’s alpha).

Killing two birds with one stone: gender diversity, information disclosures and financial distress

Purpose The escalating instances of financial distress (FD) in corporate houses across the globe, call for immediate attention from policymakers, practitioners and academics equally. This study aims to examine how board gender diversity (GD) and information disclosures (ID) interact with each other to drive FD. Design/methodology/approach The authors apply dynamic panel data analysis on a sample of 255 Indian-listed firms from 2016 to 2023 to arrive at the econometric results. Findings The main findings indicate that while ID exacerbates distress, GD reduces it. In addition, GD also interacts with ID to curtail the adverse effects of disclosures on FD. Therefore, GD acts like a stone that kills two birds simultaneously, first by reducing the distress directly and second by limiting the negative effects of disclosures on distress. Originality/value This study extends the understanding of the implications of GD and complements existing research by investigating its direct and indirect impact on FD. It builds on the analysis to propose that GD can foster resilience against adverse FD situations. The findings should apply to other emerging nations after careful consideration of country-specific factors.

Does Islamic Mutual Fund Bear Higher Risk than Conventional Mutual Funds? An Empirical Analysis from Bangladesh

This study aims to identify whether Islamic mutual funds bear higher risk exposure than conventional mutual funds due to implementing their shariah screening criteria to select assets on the portfolio. For this purpose, monthly closing price data of Islamic and conventional funds operated in Bangladesh are collected from January 2016 to August 2023. A total of 2320 observations of each risk measure (e.g., standard deviation, semi-standard deviation, semi-standard deviation, and beta) are computed using a 12-month rolling window method to compare risk exposure between Islamic and conventional funds using univariable and multivariate analysis. The univariate analysis is conducted by performing an independent samples t-test, which confirms that overall, Islamic funds bear lower risk exposure than conventional funds. In multivariate analysis, the Feasible Generalized Least Square (FGLS) method, a dynamic panel data analysis model, is applied where the effects of macroeconomic variables such as deposit rate, GDP growth rate, exports, imports, broad money, and remittances are controlled. The results of the multivariate analysis also confirm that Islamic mutual fund risk exposure is lower than that of conventional mutual funds. This study will be helpful for practitioners and institutional investors in decision-making.

Capital structure and performance nexus: Insights from fixed-effects and quantile analysis

The research utilizes a comprehensive dataset from MENA-listed companies, capturing data from 2013 to 2022 to scrutinize the influence of capital structure (CapSt) level on corporate performance across 11 distinct countries. This study analyzed 6870 firm-year observations using a quantitative research method through static and dynamic panel data analysis. The primary analysis reveals a positive correlation between the CapSt ratio and company performance using fixed effects (FE) techniques. Hence, the preliminary results were re-examined and affirmed using a two-step system generalized method of moment (GMM) estimator to address potential endogeneity concerns. This finding aligns with most studies conducted in advanced countries, indicating a positive correlation between CapSt and corporate performance. Furthermore, it is also consistent with some research conducted in less-developed markets. This research argues that, in the MENA region, the advantages of debt, such as tax saving, may outweigh the potential financial distress cost. Furthermore, it offers insights into the monitoring role of CapSt in MENA-listed companies. We strengthen our research results by employing various methodologies and using alternative measures of accounting performance and controlling size, notably panel quantile regression analysis.

Impact of Investment and Labor Participation on Energy Consumption: A Panel Analysis on Selected OIC Countries

A country's economy cannot be separated from economic activity and energy consumption. A country's economic activity increases in proportion to its income. Furthermore, countries will respond to increased economic activity by changing their energy use. This research aims to assess how much extra energy is being utilized by economic activity to maintain the current environment. The results of the analysis show that the gross fixed capital creation variable has a major impact on the energy consumption of OIC countries. The labor force participation of individuals aged 15 to 24 also has a significant effect on energy use. Energy consumption can therefore be increased by raising investment and labor force participation. An annual data series (2010–2015) is used in this investigation. Panel data is the term for the sort of data that is utilized. Further research subjects can do dynamic panel data (countries) analysis by including factors not included in the research mode.

THE RELATIONSHIP BETWEEN TAX REVENUES AND DEMOCRACY: AN APPLICATION ON EMERGING AND DEVELOPING COUNTRIES

States collect taxes as one-way revenues based on their sovereign power to provide public goods and services. However, over time, taxes have evolved from being based solely on the pure sovereign power of the states to an authority arising from the power of representation. In this context, the connection between taxation and democracy has become one of the critical discussion topics in the fiscal sociology literature. Since the 13th century, the expeditions guiding economic and political reform movements, coupled with rebellions against non-representative taxation, have played a fundamental role in shaping concepts such as representation and taxation in the evolution of the modern public financial structures. In parallel with the theoretical discussions, a broad empirical literature examining the connection between democracy and taxation has emerged due to attempts to measure the typology of political regimes in a country. Empirical findings indicate a positive relationship between democratization and taxation in advanced economies; however, this connection is ambiguous for emerging and developing countries. This study takes this gap in the literature into account and examines the effects of democratization, urbanization, and institutional quality indicators on tax revenues for 41 emerging and developing countries in the 2000-2018 period with dynamic panel data analysis techniques. Our findings indicate that democratization and the increasing share of urban population in total population have a positive impact on tax revenues in the context of emerging and developing countries.

The determinants of banks' capital structure in SAARC economies

The capital structure determinants for South Asian banks are required to be exposed. This investigation attempts to address the existing gap by examining the capital structure determinants for the South Asian Association for Regional Cooperation (SAARC) countries. To accomplish the main objective, the Panel Data of 52 banks is collected from the four main regional economies for the period starting from 2012 to 2022. The methodology is based on the estimation of constructed models by executing Static Panel Data analysis and Dynamic Panel Data analysis via the Generalized Method of Moments (GMM). The investigation discovered that tangibility, growth, profitability and non-performing loans have positive significant influences, whereas, liquidity and gross domestic products have negative significant impacts on the regional banks' capital structure. Also, the significant lagged variable and the presence of adjustment speed suggest the implementation of the Dynamic Trade-Off theory in the SAARC countries' banking sectors. The findings will help regulatory bodies develop a harmonization policy to enhance financial integration among SAARC economies via adopting identified capital structure determinants.

Research on safe-haven currencies under global uncertainty —A new perception based on the East Asian market

The backdrop of this research is the high global uncertainty that has amplified the demand for safe-haven assets, particularly in the East Asian market. This paper redefines the concept of a “safe-haven” currency to align with contemporary geopolitical and trade policy uncertainties, diverging from the traditional volatility index (VIX) risk measure. We investigate the risk aversion properties of East Asian currencies under these nonmarket risks using dynamic heterogeneous panel data analysis and robustness checks with double machine learning. Empirical results reveal that no East Asian currency qualifies as a safe haven under geopolitical risk and trade policy uncertainty. However, the Japanese yen (JPY) maintains its status under the VIX indicator. This study highlights the insufficiency of traditional safe havens like the JPY and underscores the importance of considering nonmarket risks, challenging the effectiveness of traditional investment strategies amid modern geopolitical and policy uncertainties. The findings suggest that investors should prioritize nonmarket risks and call for reform in the global monetary system to enhance currency resilience. The novel methodological approach to evaluating safe-haven currencies addresses the need for diversified currency portfolios to mitigate nonmarket risks.

The Effect of Efficiency and Cost Changes in Labor Factor on Physical Capital Investments: Dynamic Panel Data Analysis

The Effect of Efficiency and Cost Changes in Labor Factor on Physical Capital Investments: Dynamic Panel Data Analysis

Pandemic‐induced uncertainty and tourism demand: Evidence on the moderator effect of democratic institutions

AbstractThis paper explores the mitigating effect of democratic institutions in the nexus of tourism and pandemic‐induced uncertainty in 24 Organisation for Economic Co‐operation and Development (OECD) countries. Utilizing dynamic panel data analysis in the modeling process, the findings reveal that increased pandemic‐related uncertainty in the target market negatively affects the tourism demand. However, the presence of democratic institutions in the destination country positively affects the tourism demand. Finally, democratic institutions help mitigate the negative effects of pandemic uncertainty on tourism demand. The research highlights that a democratic destination can provide a more favorable environment for tourism development amid pandemic uncertainty.

The Role of Carbon Emissions on Inward Foreign Direct Investment: A Nonlinear Dynamic Panel Data Analysis

An increase in carbon emissions (CO2) may increase inward foreign direct investment (FDI) in developing countries since they are seen as pollution havens because of lax environmental regulations (pollution haven hypothesis). Developed countries may also attract FDI since stringent environment regulations in these countries working to reduce emissions might be more attractive to foreign investors concerned with their repute from a green perspective. A rise in CO2 emissions in developed countries therefore deters inward FDI (green haven hypothesis). The existing empirical studies investigate the empirical validity of these hypotheses by focusing on the impacts of environmental policies and regulations on FDI and have yet to produce conclusive results. We examined the effect of CO2 emissions on FDI and provide a more accurate and novel way of investigating the empirical validity of the pollution haven hypothesis against the green haven hypothesis. Specifically, we examined the non-linear effects of CO2 emissions on inward FDI in a sample of 124 countries over the period 1997–2022. The results indicate that CO2 emissions have an inverted-U-shaped relationship with FDI, confirming our hypotheses that higher CO2 emissions in countries with lax environmental standards attract FDI while environmental degradation in countries with stringent environmental standards deter FDI.

Aggregate Demand and Demand Leakages in a Post-Keynesian Investment Function: A Dynamic Panel Data Analysis for Developed and Developing Countries

ABSTRACT We investigate how multiple components of the profit rate differently impact the investment decisions of developed and developing countries in the medium and long run. First, we propose a modification of Bleckers’ (2016) accelerator model, mainly by decomposing the profit variable and incorporating the New Developmentalism theory of access to demand. Second, we use the ICIO tables of OECD and other sources to create a database with 59 countries from 2000 to 2018 and test our hypothesis using the dynamic GMM methodology. Results suggest that demand growth — the accelerator component — is an important determinant of investment in all countries regardless of their development stage. However, while increasing access to demand in both the domestic and foreign markets has shown to be crucial for investment decisions of developing countries, raising the labor share has a pronounced importance on investment decisions in developed countries.

The Role of Foreign Direct Investment Inflows on Labour Force Participation Rate of Women: A Dynamic Panel Data Analysis

The Role of Foreign Direct Investment Inflows on Labour Force Participation Rate of Women: A Dynamic Panel Data Analysis

Dynamic panel data analysis of the impact of governance on bank capital structure in Indonesia

The banking industry plays a crucial role in driving the Indonesian economy. Therefore, any financial upheaval within this sector would have a significant influence on the overall economy. Hence, this study examines the capital composition of banking institutions in Indonesia to assess the financial soundness of the banks. A bank’s susceptibility to default will adversely affect client confidence in the bank. This study investigates the influence of governance attributes, such as board size, board meeting frequency, risk committee presence, institutional ownership, and independent committee existence, on the capital structure of Indonesian banks. 31 samples were intentionally chosen using purposeful sampling. Data estimation was performed using a two-step Arellano-Bond Generalized Method of Moments (GMM) estimator. The findings suggest that the bank risk committee, institutional ownership, and independent committee exert a notable and favorable influence on the capital structure of banks in Indonesia. Nevertheless, the size of the board and the frequency of board meetings do not exert a substantial impact. The size of the board and the use of leverage have no substantial impact. Developing efficient corporate governance procedures is essential for ensuring the bank’s financial stability. This involves maximizing the effectiveness of the risk committee, institutional ownership, and independent committee. AcknowledgmentThis paper is funded by PPM-PTM Grants of the Ministry of Education, Culture, Research and Technology of 2023 (03/SP2H/RT-MONO/LL4/2023).

External debt and economic growth in selected African economies: A heterogeneous dynamic panel data analysis

The nexus between external debt and economic growth of Ghana, Kenya, Morocco, Nigeria, Rwanda, Tunisia and Zimbabwe from 1981 to 2021 was examined in this study. For analysis, the Pooled Mean Group Heterogeneous Dynamic Panel Data Approach and the Toda Yamamoto Granger causality tests technique were deployed. The results indicated that external debt had a negative effect on economic growth. Moreover, debt service exerted a positive impact on economic growth. The findings of the causality tests showed that there is no causal link between external debt and economic growth. Furthermore, no causal link was established between debt service and economic growth. As a result, the study suggests that the capacity of these economies in terms of revenue generation and debt servicing should be reinforced by their governments through the channelling of external debt into long-term productive investments for the realization of positive economic growth. Moreover, the policies on debt servicing in these economies should be sustained since it is yielding the desired results. Furthermore, thoroughly assessed projects of high significance should be the only yardstick for the contraction of foreign loans in these economies. Also, the policy objectives of external debt, debt service and economic growth can be pursued separately from one another in this group of economies in Africa.

THE EFFECT OF INFRASTRUCTURE DEVELOPMENT ON ECONOMIC GROWTH IN ASEAN COUNTRIES: DYNAMIC PANEL DATA ANALYSIS

This article examines the impact of infrastructure development on economic growth in ASEAN countries using dynamic panel data analysis. The research is motivated by the significant economic transformation in the Southeast Asian region, largely driven by infrastructure development, which has improved connectivity, efficiency, productivity, job creation, and sustainable growth. The analysis considers various sectors including transportation, energy, and communication, and incorporates factors such as education, health, and access to infrastructure. Using the Generalized Method of Moments (GMM) and data from the World Bank from 2002 to 2022, this study investigates the extent to which infrastructure investment contributes to economic growth. The results show a positive and significant relationship between infrastructure development and economic growth, emphasizing the need for policymakers to prioritize infrastructure investment along with institutional reforms to achieve sustainable and inclusive growth. The findings underscore the critical role of infrastructure in improving economic performance and the importance of quality institutions in maximizing the benefits of infrastructure capital in ASEAN countries

Middle-Aged and Older Adult Employment and the Perceived Risk of Running Out of Money During COVID-19: A Dynamic Panel Data Analysis.

The coronavirus disease of 2019 (COVID-19) adversely affected the health of middle-aged and older adults and altered their economic outlook. Several national polls revealed older adults felt stress about money and many reported difficulties in paying expenses during 2021. Although such descriptive reports have raised awareness, peer-reviewed studies utilizing panel data can offer additional insight. As such, the purpose of this study was to contribute to this growing literature by examining the demographic, economic, and health factors associated with employment and the perceived risk of running out of money for middle-aged and older adults during the pandemic. This study utilized the April-May 2020, April-May 2021, and March 2022 waves of the Understanding America Study. Next, a dynamic panel data model was formulated to account for reverse causality and unobserved heterogeneity with a sample of 2,302 adults between the ages of 50 and 74. Employment (-2.77, p < .05) was negatively associated with the perceived risk of running out of money. Male, higher education levels, currently married, and health insurance status also exhibited a negative association. Meanwhile, a positive association was found for non-White (6.79, p < .01). Financial well-being is an important consideration in later life and what role employment played during the COVID-19 pandemic is a worthwhile examination. A better understanding of which factors may be associated with the perceived risk of running out of money during the pandemic can be useful when devising policies which address financial security for middle-aged and older adults.

Does Female on Board Affect M&amp;A Participating Firms’ Performance? Empirical Evidence from India Using Dynamic Panel Data Analysis

The aim of this research is to examine the impact of gender diversity and female leadership position on the firm performance of Indian listed firms participating in mergers and acquisitions (M&amp;A) activities. Available research has focused on a small sample of firms and considered ‘gender diversity’ as the only variable. Bearing this in mind, this study focusses on the leadership positions females hold on corporate board along with gender diversity affecting the firm performance measures for the sample of M&amp;A participating firms, as M&amp;As lead to major restructuring of the board. The ‘gender diversity’ is measured with the number of females present on corporate board as directors, ‘leadership position’ is measured with females holding the position either as Chief Executive Officer (CEO) or Chairperson on the board. The study employs panel data set for Indian non-financial National Stock Exchange listed M&amp;A participating firms for the period 2013–2020. Using a system of GMM dynamic panel estimates, the study analyses the relationship between gender diversity and females’ varied leadership position on the firm performance measures, that is, return on asset, Tobin’s q. The findings reveal that there is a positive association between gender diversity and firm performance measures. Females holding the top leadership positions as either CEO or Chairperson on the board positively impact the firm performance measures. This study adds to the existing literature on gender diversity at the board level and M&amp;A literature in the Indian context. JEL Codes: G 3, G 34, J 16