Feasible Generalized Least Squares Research Articles

Institutional Efficiency And Financial Performance Of Insurance Companies In Nigeria

This study investigated the impact of institutional efficiency on the financial performance of insurance companies in Nigeria covering the period from 2011 to 2022. The study employed an ex-post facto research design, the estimation techniques utilized were feasible generalized least squares (FGLS) on a sample of five insurance companies were taken. The key variables used in the analysis included net profit margin (NPM) as dependent variable and claims processing efficiency (CPE), risk management effectiveness (RME), and regulatory compliance (RC) as independent variables. The findings displayed that claims processing efficiency (β =0.185, p > 0.05) had positive but no significant effect with net profit margin, risk management effectiveness rate (β =105.910, p > 0.05) is positive but not significantly influencing in net profit margin, regulatory compliance also have negative but does not significantly impact net profit margin of the selected insurance companies in Nigeria at 1% level (β =-12.504, p >  0.05). The study thus recommended, among others, that policy maker should encourage insurance companies to adopt measures that enhance institutional efficiency, such as investing in technology, improving risk management practices, and enhancing customer service.

Does the CEO’s entrenchment affect the financial communication quality? Empirical evidence from France

Research Question: What is the impact of the CEO’s entrenchment on the financial communication quality in the French context? otivation: In fact, it is important to study the different characteristics of the CEO, which can facilitate the entrenchment and their effect on the quality of financial communication in the French context. Idea: The purpose of this paper is to investigate the impact of the CEO’s entrenchment on the financial communication quality examined by the discretionary accruals. Data: Our sample is made up of 335 companies listed on the CAC All Tradable index for the period from 2011 to 2020. However, we have excluded some financial companies due to their atypical behavior in financial reporting, firms with insufficient annual reports and firms with insufficient data about the CEO’s entrenchment. Therefore, the final number of firms used in this study was 151 over ten years, producing a total of 1510 firm-year observations. Tools: Our regressions will be estimated by the feasible generalized least squares (FGLS) method. Findings: Using the discretionary accruals, as a proxy for the earnings management, we obtained results from the Kothari et al. (2005) model, which indicates that there is a significant positive relationship between the CEO’s duality, ownership and the quality of financial communication, while there is no significant relationship between the CEO’s turnover and the financial communication quality. Contribution: This research is a contribution to the literature by demonstrating how the CEOs' entrenchment enables them to manipulate the accounting results to improve their financial situation.

The impact of green FDI on environmental quality in less developed countries: A case study of load capacity factor based on PCSE and FGLS techniques

This paper examines the effect of green foreign direct investment (GFDI) on environmental quality (EQ) in 34 less-developed countries (LDCs) from 2003 to 2021. We analyze balanced panel data using Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE). Our findings reveal several vital insights: (1) GFDI helps improve EQ. (2) Environmental costs associated with economic growth are negative. (3) Trade openness positively influences EQ. (4) EQ is enhanced by institutional quality, energy use, and population expansion in the chosen countries. (5) The existence of a U-shaped curve was established. This is valuable to the relatively scanty literature on GFDI, especially in LDCs. To the best of our awareness, this study simultaneously employs the Load Capacity Factor (LCF) and Total Value of Announced Greenfield projects as proxies for environmental sustainability and GFDI for the first time. Secondly, incorporating PCSE and FGLS models in this context is an innovative methodological strategy. The present research work provides to the existing theoretical and empirical discussions on GFDI and EQ and has practical implications that inform policy-making.

Integrating climate resilience with sports, exercise, and public health expenditures on sustainable environment: Evidence from coastal regions of China

The adoption of environmentally-friendly habits has become more crucial in the present period as a means to mitigate the rate of environmental degradation and its detrimental consequences. The augmentation of sports, exercise and physical activities has been associated with favourable health outcomes, in addition to the ability to mitigate carbon emissions resulting from vehicular transportation. Consequently, the objective of this study is to examine the influence of sports, exercise, and physical activities, along with public health expenditure, on the environmental performance of China's coastal regions throughout the period spanning from 2010 to 2019. The proposed study employs the Feasible Generalized Least Squares (F.G.L.S) and the Generalized Method of Moments (G.M.M) methodologies. Results show that participation in sports and other forms of physical activity significantly improves environmental performance in China's coastal areas. Likewise, a robust negative correlation exists between air pollution and healthcare expenses, hence favouring enhanced environmental outcomes. Nevertheless, it is important to acknowledge that economic expansion has a direct correlation with increased emissions, hence harming environmental performance. There exists compelling evidence indicating a significant impact on environmental quality resulting from the combined influence of heightened health expenditures and increased engagement in sports. This is demonstrated by the presence of an interaction term between health expenses and sports activities. The findings of this study suggest that there is a requirement to re-evaluate healthcare spending initiatives and sporting activities in order to effectively pursue carbon neutrality goals and improve environmental sustainability.

The role of outward foreign direct investment as a filter for high energy intensity economies in the European Union

This study examines the effects of outward foreign direct investment (FDI) on energy intensity among the member countries of the European Union between 2000 and 2021. This relationship is deemed important in elucidating whether there is a process of filtering out energy-intensive companies where the use of FDI is employed to lead out production and improve energy intensity in the source country of the investment. To estimate this relationship, we employ feasible generalized least squares (FGLS) and panel corrected standard error (PCSE) for robustness purposes. Additionally, we complement our results with an estimation of the Granger causality relationships between our variables. Our findings reveal a highly significant trend wherein outward FDI from European Union countries tends to reduce energy intensity, thereby enhancing the productivity of the source countries of the investment. Conversely, only the technological productivity ratio exhibits a unidirectional causal relationship with energy intensity, while GDP per capita and natural resource rents serve as causes of energy intensity and vice versa. From this study, some policy recommendations can be derived whereby the European Union can continue to incentivize this filtering process to ensure better technological advancement in its production system, thereby improving the efficiency of the European industrial fabric.

INFORMAL ECONOMY, ISLAMIC FINANCE DEVELOPMENT, AND SUSTAINABLE DEVELOPMENT IN MUSLIM-MAJORITY COUNTRIES

The paper focuses on the impact of informal economy and Islamic finance development on sustainable development using a panel dataset of 15 Muslim-majority countries from 2016 to 2022. The results based on the feasible GLS and panel quantile regression methods reveal that Islamic finance development has a positive impact on sustainable development. Meanwhile, the informal economy has a negative impact on sustainable development.  Assessing the components of Islamic finance development, we further note that only quantitative development/financial performance and knowledge indicators are effective in achieving sustainable development. Besides these key results, GDP per capita, trade openness, and foreign direct investment emerge to be positive factors while the natural resource rents a negative factor in sustainable development. We reason that low productivity and precarious working conditions associated with informal economy may have hindered economic, social, and environmental wellbeing. The positive contribution of the Islamic finance development especially those related to Islamic financial performance and knowledge sharing to sustainable development hints the importance of further development of the Islamic financial sector in these countries. 

The Impact of Special Autonomy Fiscal Policy on Papua's Economic Development

Economic development needs to be viewed as a process that is interrelated, and interconnected and mutually influences the factors that produce development itself. The movement of economic development in a region is indicated by regional economic growth in that region. It is believed that Papua's economic growth can be stimulated by the special autonomy fiscal policy implemented by the Papua government. This research aims to analyze the impact of fiscal policy through education spending from special autonomy funding sources together with other economic variables on Papua's economic growth by applying the Neoclassical Solow growth model and the growth model from Mankiw. This research was conducted using secondary data from nine districts/cities in Papua Province in the 2013-2021 period which used panel data regression and for analysis using the Feasible Generalized Least Square (FGLS) approach with either the Panel Corrected Standard Error (PCSE) model or the Seemingly Unrelated Regression (SUR) model. The research results show that education spending variables and other economic variables have a significant impact on spurring Papua's economic growth. This shows that the special autonomy fiscal policy can drive Papua's economic development

PERANAN BANTUAN OPERASIONAL PENYELENGGARAAN PENDIDIKAN ANAK USIA DINI TERHADAP AKSES LAYANAN PENDIDIKAN ANAK USIA DINI DI INDONESIA

There is limited knowledge and information for parents in the process of early childhood growth and development, so the right step for parents is to enrol their children in Early Childhood Education (PAUD) institutions. Government intervention is needed to expand access to PAUD services in Indonesia, one of which is by providing BOP PAUD to PAUD providers. This research uses panel data to analyze the relationship between Operational Assistance for Providing Early Childhood Education (BOP PAUD) and the Gross Participation Rate (APK) for PAUD in Indonesia. Selecting the best panel data model from three types of panel data regression models (Ordinary Least Square ( Pooled Least Square), Fixed Effect Model, and Random Effect Model) can be carried out using the Chow Test, Hausman Test, and Lagrange Multiple Test. Classical assumption tests and model feasibility tests were also carried out using the Feasible Generalized Least Squares (FGLS) estimation technique. PAUD BOP per student was tested with several control variables and the results found that PAUD BOP per student did not have a significant relationship with PAUD APK. Meanwhile, school variables, student-teacher ratio and urban households with their own home status have a significant relationship to PAUD APK.

Energy, Forests and Environmental Sustainability: A Comparative Analysis of Developed and Developing Economies

The use of fossil fuels is essential for economic growth, but it also creates environmental hazards that cause 5 million people to die every year. The use of renewable energy is limited because of financial constraints, and there is a need to find ways to decouple fossil fuel consumption and pollution. This study provides a way forward by introducing forest as a moderator. This study has taken data from all countries of the world from 2011 to 2021 and estimated the impact of forests, energy consumption, forest-energy moderator, population, and gross fixed capital formation on the environment. Leveraging the Feasible Generalized Least Squares (FGLS) estimation technique to address heterogeneity and outliers, the study reveals that while the effects of forests and energy consumption align, population density and gross fixed capital formation exert disparate influences on the environment in developing and developed nations. The incorporation of forests as a moderator emerges as a consistently effective measure.

Financial statements’ reliability affects firms’ performance: A case of Vietnam

This paper aims to estimate the effect of the reliability of financial statements on listed firms’ performance in Vietnam, especially on the Ho Chi Minh City Stock Exchange, from 2015 to 2022. Based on International Financial Reporting Standards, Generally Accepted Accounting Principles and theories, reliability is a key attribute of information quality in financial statements. Besides, using the quantitative method of feasible generalized least squares (FGLS), the findings show that reliability positively affects listed firms’ performance with a confidence interval of 95%. On the platform of agency theory, the reliability of financial statements is considered a tool to fulfill the duties and responsibilities of managers and the board of directors to external users, while stakeholder theory considers the advantages of the disclosure of reliable financial statements in terms of gaining performance.

Climate change and income inequality in Asia: how does institutional quality matter?

Asia – the most vulnerable continent to climate change – problematizes policy makers with its dual challenges of high income inequality and low institutional quality. This paper sheds light on the impact of climate change and institutional quality on income inequality for a panel data set of 35 Asian countries and territories over the period of 1990–2021. Results from estimations of Feasible Generalized Least Squares (FGLS) and two-step System Generalized Method of Moments (SGMM) demonstrate that the climate change – proxied by temperature and precipitation – exacerbates income inequality, while improvement in institutional quality not only reduces it, but also lessens the harmful impact of climate change on income equality. Findings are robust with various proxies of income inequality. These results strongly confirm the important role of institutional reform in the context of rising climate change and high level of income inequality in Asian countries.

Environmental sustainability in high‐income countries: Does natural resource protection, financial inclusion, and energy innovation matters?

AbstractEnvironmental sustainability (ES) is critical for high‐income countries (HICs) because of their high ecological footprints. They are responsible for global environmental problems as they consume more natural resources, produce more output, and generate more greenhouse gases than other countries, which could have severe consequences for land degradation. In the context of resource conservation and land development policies, this study examined the impact of natural resource protection (i.e., land, water, and biodiversity), financial institution inclusion, financial market inclusion, and energy innovation (EI) on the enhancement of ES in 15 HICs from 1995 to 2020. The study applied Feasible GLS and Prais–Winsten regression to consider cross‐sectional dependence, autocorrelation, heteroscedasticity, and slope heterogeneity problems for unbiased and robust findings along with 2nd generation cointegration tests and the JKS Granger non‐causality test. Natural resource protection, financial institution inclusion, financial market inclusion, and EI have positive effects on ES, along with green energy and environmental regulations. It was also found that an increase in real income negatively impacts ES, as it increases the use of natural resources and energy and generates more waste and pollution which further accelerates land degradation. Cointegration and causality also exist between variables of interest. This shows that protecting natural resources, increasing financial inclusion, and EI can be successful strategies for fostering a green transition, reducing environmental impacts, and embracing more sustainable practices and laws to meet development goals and develop sustainable land use policies. This study suggests that HICs should protect land, water, and biodiversity, promote green financing, digital payments, EI, energy diversification, and environmental protection to achieve ES which is critically important to reduce land degradation.

Assessing the Intensity of Economic Progress, Industrialization,Energy Use on Environmental Degradation

This study intensifies the interrelationship between environmental downfall, economic and industrial enhancement, renewable and non-renewable energy consumption in the period of 1997 to 2018 for the G-7 and selected five MENA countries. The paper intends to explore how renewable energy, fossil fuel, electricity generation, GDP, and industrialization affect the environmental pollution. For a dynamic panel data analysis, some statistical methods have been utilized, including Slope Homogeneity (SH), Cross Section Dependence (CSD), Cross-Section Im-Pesaran-Shin (CIPS), and Cross-Section Augmented Dickey-Fuller (CADF) of the second generation unit root tests, and the second generation (Westerlund-2007) CO-integration test, both Feasible Generalized Least Squares (FGLS), Panel-Corrected Standard Error (PCSE), and dynamic generalized method of moments (d-GMM) panel estimation approach have been applied. Feasible generalized least square (FGLS) shows that if GDP, fossil fuel energy consumption, industrialization, and electricity generation, increase by 1% then CO2 emission increases by 79.8%, 5.3%, 10.37%, and 8.26% respectively. If renewable energy increases by 1% CO2 emission decreases by 6.56%. When GDP growth rises, there is a corresponding increase in environmental pollution within industrialized economies. This demonstrates a positive correlation between GDP, industrialization, and CO2 emissions, which means that as the economy grows, environmental degradation will continue to worsen over time. Therefore, concerned parties should take proper policy steps to protect environment in industries and towards sustainable growth.

CEO characteristics and bank stability: Evidence from an emerging economy

AbstractThis paper investigates the effect of CEO characteristics on bank stability of commercial banks in Vietnam. The study used regression models Pooled OLS, Fixed effects Model (FEM), random effects model (REM), and Feasible Generalized Least Square (FGLS) to evaluate the relationship between CEO characteristics and bank stability of 26 commercial banks in Vietnam. To deal with the limitations of traditional regression methods, we propose Bayesian regression method. The data collection period in the study is from 2013 to 2022. In these regression models, CEO power, female CEO, CEO tenure, and CEO age are independent variables. The dependent variable representing bank stability is the Z‐score. The research results show that the factors CEO power, female CEO, CEO tenure, CEO age have a positive impact on bank stability in Vietnam.

Empirical Analysis of the Effect of Institutional Governance Indicators on Climate Financing

Sustainable Development Goal 13 echoes the fact that all countries must make urgent and stringent efforts to mitigate against and adapt to climate change and its associated impacts. Climate financing is one of the key mechanisms used to enable countries to remain resilient to the hastening effects of climate change. In this paper, we empirically assess the effect of institutional governance indicators on the amount of climate finance received by 21 nations for which progress towards the internationally agreed-upon target of reducing global warming to 1.5 °C is tracked. We use the fixed-effects ordinary least squares (OLS) and the feasible generalized least squares (FGLS) estimators, drawing on the Climate Action Tracker panel data from 2002 to 2020. Empirical results reveal that perceived political stability significantly enhanced climate finance inflows among countries that strongly increased their NDC targets, while perceived deterioration in corruption control negatively impacted the amount of climate finance received by the same group of countries. Therefore, governments should reduce corruption tendencies while striving to avoid practices and alliances that lead to any form of violence, including terrorism and civil war. Low developing countries (LDCs) in particular need to improve the standard of public services provided to the populace while maintaining a respectable level of autonomy from political influences. Above all, as countries work towards strengthening institutional governance, there is an urgent need for developed economies to assist developing economies in overcoming debt stress since the likelihood of future resilience and prosperity is being undermined by the debt crisis, with developing countries spending almost five times as much annually on repayment of debt as they allocate to climate adaptation.

Effects of mining sector FDI, environmental regulations, and economic complexity, on mineral resource dependency in selected OECD countries

Mineral resources are pivotal in boosting a country's foreign direct investment and economic complexity; nevertheless, their exploitation should be regulated by implementing environmental policies governing economic activities. Thus, current study explores the quantile-dependent association of mineral resource dependency with the mining sector's foreign direct investment (FDI), economic complexity, and environmental regulations for selected OECD economies. The OECD nations comprise developed and developing zones; thus, their importance regarding mineral resource dependency is immensely vital. The annual data from 2004 to 2021 has been taken and Method of Moments Quantile Regression (MMQR) is employed after a preliminary investigation of the panel series. The outcomes revealed that mining sector FDI and economic complexity exert pressure on resources in low- and high-resources-dependent countries. In comparison, environmental regulations reduce mineral resource dependency. A bi-directional causality is documented between mining sector FDI, economic complexity and environmental regulations. This study also applies Generalized Method of Moments (GMM) and Feasible Generalized Least Square (FGLS) to address reverse causality and cross sectional dependency. Notably, a two way relationship is confirm using causality test between FDI, economic complexity, environmental regulations, and mineral resources. Robustness estimators confirm the prior estimations and offer relevant policy implications.

Macro-determinants of current account balance performance in selected African countries

AbstractMost African countries are open to international trade as shown by their signatories to various trade agreements such as the Economic Partnership Agreement (EPA) with the EU, and the Forum on China-Africa Cooperation (FOCAC). However, these countries face persistent current account deficits and institutional underdevelopment. The existing literature investigates the underlying factors at country-specific levels while ignoring the role of institutions. Meanwhile, African countries are also rapidly transitioning towards economic integration with the establishment of the African Continental Free Trade Area Agreement (AFCFTA) to deepen intra-Africa trade. Therefore, for unionized policy proposition, this study controls for the effects of institutions and investigates the macro-determinants of the current account balance (CAB) performance using panel data from 2002 to 2020 for 20 African countries. To account for cross-country correlation and country-level heteroscedasticity, the study employed panel-corrected standard errors (PCSE) and feasible generalized least squares (FGLS) techniques for the governance indicators-related step-wise estimations. The results show that after controlling for the effects of institutions, income, trade openness, the price level, the interplay between manufacturing and financial sector development, and the money supply are the significant macro-determinants of the CAB performance in Africa. Further, the marginal info-graphics show that the predictive effects of value addition and financial development on the CAB increase positively with good governance and that improved governance could reverse any negative effects of trade openness on the CAB performance. Based on the findings, the study recommends inter alia that African countries pursue value-addition-oriented trade, zero Central Bank budgetary financing, and institutional quality improvement to enhance the performance of their CABs.

The impact of digital infrastructure on provincial green innovation efficiency-empirical evidence from China.

In the epoch of the digital economy, technological innovation and energy conservation are significantly facilitated by digital infrastructure, leading to substantial improvements in green innovation efficiency at the provincial level. This study employed the feasible generalized least square (FGLS) method to examine the effects of digital infrastructure on the green innovation efficiency across 30 provinces in the Chinese mainland, utilizing panel data from 2011 to 2020. Additionally, this investigation delves into the intervening role of industrial structure upgrading and the amplifying effects of environmental regulation and human capital on the process. Findings indicate that, to begin with, digital infrastructure contributes to the meaningful enhancement of green innovation efficiency within provinces. Subsequently, the industrial structure upgrading partially mediates the impact of digital infrastructure on the efficiency of provincial green innovation. Lastly, both human capital and environmental regulations amplify the beneficial influence of digital infrastructure on the effectiveness of green innovation at the provincial level. This study provides valuable insights into the mechanisms through which digital infrastructure boosts green innovation efficiency, aiding policymakers in formulating appropriate policies to augment digital infrastructure, thereby promoting provincial green innovation efficiency.

Environmental Sustainability in Developing Countries: Does Democracy Matter?

One of the sustainable development goals is to reduce environmental degradation and promote a sustainable environment. One of the significant factors in promoting a sustainable environment is the level of democracy in a country. This study investigates the impact of democracy on the ecological footprint (EF) per capita in 68 developing countries from 1990 to 2018. To do so, we use the Feasible Generalized Least Squares (FGLS) and Panel Corrected Standard Errors (PCSE) estimators. The empirical findings show that there is a positive relationship between democracy and EF. In other words, an increase in democracy increases environmental degradation in developing countries. Besides, the findings also show that while an increase in GDP per capita increases EF, an increase in renewable energy consumption reduces EF. Overall, our findings show that democracy matters for environmental sustainability in developing countries. Therefore, governments and policymakers should consider democracy to formulate environmental policies.

Joint regression analysis of multiple traits based on genetic relationships.

Polygenic scores (PGSs) are widely available and employed in genomic data analyses for predicting and understanding genetic architectures. Existing approaches either require information on SNP level, do not infer clusters of traits sharing genetic characteristic, or do not have any immediate predictive properties. Here, we present geneJAM, which is a novel clustering and estimation method using PGSs for inferring a genetic relationship among multiple, simultaneously measured and potentially correlated traits in a multivariate GWAS.Using graphical lasso, we estimate a sparse covariance matrix of the PGSs and obtain clusters of traits sharing genetic characteristics. We use the clusters to specify the structure of the error covariance matrix of a generalized least squares (GLS) model and use the feasible GLS estimator for estimating a linear regression model with a certain unknown degree of correlation between the residuals.The method suits many biology studies well with traits embedded in some genetic functioning groups and facilitates development of the PGS research. We compare the method with fully parametric techniques on simulated data and illustrate the utility of the methods by examining a heterogeneous stock mouse data set from the Wellcome Trust Centre for Human Genetics. We demonstrate that the method successfully identifies clusters of traits and increases precision, power, and computational efficiency. GeneJAM is implemented in R and available at: https://github.com/abuchardt/geneJAM.