Feasible Generalized Least Squares Research Articles

Is there an EKC between economic growth and air pollutant emissions in SAARC countries? Evidence from disaggregated analysis.

The manufacturing and construction (M&C) sector not only plays a vital role in promoting economic growth, but is also a significant contributor to global air pollution. Growing concerns regarding air pollutant emissions necessitate a more disaggregated (i.e., sectoral) investigation in order to identify the major contributors. This study employs aggregated and disaggregated data to determine the fundamental effects of economic growth (i.e., overall growth and sectoral growth) on air pollutant emissions (APE) (specifically, PM2.5 and PM10 released by the M&C sector) in SAARC economies between 1995 and 2018. It assesses the environmental Kuznets curve (i.e., inverted U-shaped and N-shaped) using the feasible generalized least squares (FGLS), panel-corrected standard errors (PCSE), and generalized method of moments (GMM) techniques. The sectoral analysis reveals the presence of an N-shaped EKC while the overall analysis indicates an inverted U-shaped EKC. Population, financial development (FD), and merchandise exports (MX) have no influence on the estimates. Population and FD increase APE in all models, whereas the effects of MX vary between models. As SAARC economies are capital-deficient, these economies can adopt unbalanced environmental protection policies. First, focus on major contributing sectors (e.g., M&C sector) to curb APE, then focus on less emitting sectors in turn. By implementing pollution reduction strategies on M&C sector activities, governments may reach their threshold (peak) points earlier than expected. A reduction in APE is impossible without rigorous monitoring and application. Being capital-deficient nations and given the collective nature of the problem, a Transboundary Haze/Pollution agreement is required to solve this issue.

Climate change and agricultural productivity in Asian and Pacific countries: how does research and development matter?

PurposeThis study empirically examines the impact of climate change and agricultural research and development (R&D) as well as their interaction on agricultural productivity in 12 selected Asian and Pacific countries over the period of 1990–2018.Design/methodology/approachVarious estimation methods for panel data, including Fixed Effects (FE), the Feasible Generalized Least Squares (FGLS) and two-step System Generalized Method of Moments (SGMM) were used.FindingsResults show that both proxies of climate change – temperature and precipitation – have negative impacts on agricultural productivity. Notably, agricultural R&D investments not only increase agricultural productivity but also mitigate the detrimental impact of climate change proxied by temperature on agricultural productivity. Interestingly, climate change proxied by precipitation initially reduces agricultural productivity until a threshold of agricultural R&D beyond which precipitation increases agricultural productivity.Practical implicationsThe findings imply useful policies to boost agricultural productivity by using R&D in the context of rising climate change in the vulnerable continent.Originality/valueThis study contributes to the literature in two ways. First, this study examines how climate change affects agricultural productivity in Asian and Pacific countries – those are most vulnerable to climate change. Second, this study assesses the role of R&D in improving agricultural productivity as well as its moderating effect in reducing the harmful impact of climate change on agricultural productivity.

DIVIDEND POLICY AND VALUE OF LISTED NON-FINANCIAL COMPANIES IN NIGERIA: THE MODERATING EFFECT OF INVESTMENT OPPORTUNITY

The relationship between dividend policy (DP) and the value of firms (FV) has been investigated by several researchers in different jurisdictions. However, the findings of these researchers have been always inconsistent. This is due to the other factors that affect this relationship, which include the investment opportunity (IO). This paper is therefore aimed to empirically examine the impact of dividend policy on firms’ value with investment opportunity as moderator. The population of the study consists of 102 listed Non-financial companies. Based on the criterion set by the researcher, a judgmental technique of sampling was used in selecting 30 non-financial companies from the year 2011 to 2020. Tobin’s’ Q (TQ) and Market Price Per share (MPS) are the proxies for firms’ value, while Dividend per share (DPS) dividend payout ratio (DPR) and dividend yield (DY) are the proxies for dividend policy. Investment opportunity (IO) was measured as fixed asset growth. The study also used Firms’ size (FSIZE), Leverage (LEV) and Industry dummy (IND) as control variables. Descriptive statistics, correlation, and Feasible Generalized Least Squares (FGLS) analysis were used. It was found that DP, DPR, and DY are statistically significant to influence TQ. While MPS was only influenced by DP and DY. It was also found that IO did not moderate the relationship between dividend policy and firm value. It is recommended that the management of corporations should put measures in place that will increase revenue and decrease expenses so that regular dividend payments could be maintained.

Globalization and regional consumption disparity in China: A disaggregated analysis

Developing countries are increasingly concerned about globalization's impact on regional disparities. This paper looks at the relationship between globalization and regional (rural-urban) differences in consumption in China. It does this by separating globalization into the trade of domestic-invested enterprises (DIEs) and the trade of foreign-invested enterprises (FIEs). Feasible generalized least square (FGLS) is used for empirical analysis based on panel diagnostics. For the robustness of the findings, we also employed panel-corrected standard errors (PCSE) model. The results show a reduction in China's regional (i.e., urban-rural) consumption disparity (RCD) caused by both DIEs and FIEs trade perspectives. The impact of FIEs trade on regional disparity is higher than that of DIEs trade, reflecting the fact that FIEs are predominantly labor-intensive. Our findings are robust and unaffected by the type of trade disaggregation or the econometric techniques used (i.e., FGLS and PCSE). However, the results for the three regions differ depending on the type of trade disaggregation. To achieve the goal of economic development and closing the regional consumption gap, the government must pay close attention to the distribution effects of FIEs and DIEs trade separately and implement a set of measures to reinforce its strengths and mitigate its weaknesses.

Bank Governance, Asset Quality, and Risk. Do Macro-Prudential Policy and Macroeconomic Factors Matter? Evidence from Nigeria’s Banking Sector

Purpose: This study examines the nexus between bank governance, asset quality, and banking risk measured by the distance to default (DTD) and their interactions with prudential policy and macroeconomic factors. Theoretical framework: This study uses the Resource Based View (RBV) lens to examine how banks use their unique resources, asset, competencies, and governance framework to mitigate the adverse impact of risks and navigate regulatory policies and macroeconomic variables. The RBV provides context on banks’ unique resources to optimise their long-term objectives in a complex economic landscape. Design/Methodology/Approach: The study analyses panel data from 12 listed banks on the Nigeria Stock Exchanges (NGX) from 2008 to 2021. This study tests autocorrelation, heteroskedasticity, and cross-sectional dependence to validate the study’s analysis. Based on various diagnostic tests, the Feasible Generalised Least Squares (FGLS) are suitable for hypothesis testing. Findings: The findings revealed that bank governance interaction with asset quality has a negative and insignificant impact on bank risk. And liquidity, interest rate, inflation and gross domestic product are significant determinants of banking risk. Research, practical & social implications: Maintaining effective bank risk management requires adherence by all stakeholders to macro-prudential policies by monetary policymakers and macroeconomic factors from the fiscal policymakers. Originality/Value: This study empirically examines bank governance, asset quality, and banking risk in a developing country, incorporates macro-prudential policies and macroeconomic factors, and uses the DTD metric for risk assessment rarely used in related studies in developing countries.

Tax Planning And Financial Constraints With Moderated Effect Of Audit Quality: Evidence From East African Countries

This study aims to provide empirical evidence on the relationship between tax planning and financial constraints with the moderated role of audit quality. This study draws its sample from listed firms operating in developing countries particularly East African Countries, the region where firms are most famous for facing higher financial constraints. We used ordinary least squares (OLS,) fixed effect and feasible generalized least square (FGLS) to estimate the regression on the data spanning 2009 to 2019. The results show a negative relationship between book tax differences and financial constraints, which suggests that companies with larger book tax differences are less likely to experience financial constraints. However, this study found no significant moderated role of audit quality. Nonetheless, the negative relationship between book tax differences and financial constraints has practical and theoretical implications. It highlighted the need for tax authorities and policy makers to reform and enforce their tax regulations to limit aggressive tax planning. It also provides insights into the potential conflicts of interest that can arise between managers and other stakeholders in a company, and highlights the importance of transparency and accurate financial reporting in mitigating these conflicts.

The role of financial development in improving marine living resources towards sustainable blue economy

Our paper sheds light on the relationship between financial development and the performance of marine living resources. We use factor cost as a measure of the blue economy sustainability of European countries. Indices for financial institutions and financial markets development are considered. These two sub-indicators are then analyzed using three dimensions: depth, access, and efficiency. A panel-corrected standard error (PCSE) model, the Feasible Generalized Least Squares (FGLS) model, and the two-step GMM are employed to examine this link. Furthermore, we use the dynamic fixed effect in ARDL to distinguish between the short-run and long-run impacts of financial development. Our estimation results highlight the significance of financial development in improving the sustainability of the blue economy during the 2009–2020 period in the European region. It can be clearly seen that although financial development negatively impacts the factor cost in the short run, a positive relationship between financial development and factor cost can be observed in the long run. Understanding how financial maturity affects the ocean economy provides critical policy implications to promote the sustainable blue economy.

Effects of the supply reduction in the peer-to-peer market for tourist accommodation on the housing market

The aim of this paper is to analyse the relationship between the supply of peer-to-peer accommodation and the housing market. Using data from Barcelona between 2018 and 2021 we take the variation in Airbnb density in neighbourhoods induced by the COVID-19 pandemic as a natural experiment and observe its effect on rents and housing prices. According to these estimates, using a feasible generalized least squares (FGLS) under a Differences-in-Differences (DiD) framework, the reaction of prices to an exogenous COVID-19 shock that reduces Airbnb density in 1% is of 7% for rents and of 39% for purchase prices, which is significant and in line with model predictions and current research.

Interplay of Urbanization and Ecological Environment: Coordinated Development and Drivers

The interplay between urbanization and ecological environmental efficiency has gained increasing significance in the context of sustainable development, as rapid urban growth poses challenges to resource consumption, greenhouse gas emissions, and the overall ecological well-being of urban areas. Understanding and analyzing the coordinated development of urbanization and ecological environmental efficiency, as well as assessing the influence of drivers on this relationship, is crucial for developing effective policies and strategies that promote environmentally sustainable urban development. This study establishes an urbanization index based on four key aspects: economy, society, population, and ecology. This investigation focuses on 30 provinces in China spanning from 2011 to 2020. The following methods are applied: global Malmquist–Luenberger productivity index, entropy method, TOPSIS model, coupled coordination degree model, panel-corrected standard error (PCSE), and feasible generalized least squares (FGLS) models. The empirical results demonstrate a favorable level of coordinated development between urbanization and the ecological environment overall, with more pronounced regional evolution trends. The trade openness, energy structure, and digitalization level play significant roles in effectively promoting the coordinated development of urbanization and the ecological environment to varying extents. The growth of trade openness and digitalization level promote coordinated development between urbanization and the ecological environment by 0.125 and 0.049, respectively. However, the increase in the energy structure decreases it by 0.509. These results have significant implications for policymakers, urban planners, and stakeholders, emphasizing the need for a balanced approach that prioritizes ecological environmental protection in urbanization efforts. This study underscores the importance of sustainable urban development strategies to ensure long-term ecological and environmental sustainability.

Energy imports as inhibitor of economic growth: The role of impact of renewable and non-renewable energy consumption

ABSTRACT This study investigates the role of energy imports in domestic production function in the case of 15 energy-importing countries for the period of 1995–2015. Apart from energy imports, renewable energy consumption, non-renewable energy consumption, capital, trade openness, and urbanization are included in the growth model. In doing so, long-run elasticity coefficients are estimated with the Dynamic Seemingly Unrelated Regressions (DSUR) model after determining the cointegration relationship between the variables. In addition, for robustness checks, Panel Correlated Standard Errors (PCSE) and Feasible Generalized Least Squares (FGLS) estimators are applied. Our results show that renewable energy consumption, non-renewable energy consumption, trade openness, and capital have a positive effect on economic growth. Energy imports negatively affect economic growth. The Dumitrescu-Hurlin causality analysis reveals a bidirectional causality relationship between renewable energy consumption, capital, trade openness, urbanization, and economic growth. A unidirectional causality relationship exists from economic growth to non-renewable energy consumption and energy imports. This analysis can be interpreted as having a negative impact on economic growth by putting pressure on the current account deficit due to energy imports. Therefore, investments in the renewable energy sector will play an important role in economic growth.

Financial Literacy, Financial Innovation, and Financial Inclusion as Mitigating Factors of the Adverse Effect of Corruption on Banking Stability Indicators

AbstractThe purpose of this study is to examine the ability of financial literacy, financial innovation, and financial inclusion to mitigate the adverse effect of corruption on banks’ credit risk, profitability, and financial stability, with this joint inclusion being the novelty explored. Furthermore, we aim to compare the results across four different groups of countries, namely African, Asian, American, and European countries. The Feasible Generalized Least Squares (FGLS) estimation results indicate that corruption increases credit risk, reducing profitability and bank stability, being these effects mitigated by financial literacy, financial innovation, and financial inclusion. Furthermore, we find that financial literacy, financial innovation, and financial inclusion reduce credit risk while increasing bank profitability and stability. These results enable policymakers and managers to promote inclusion, innovation, and financial literacy to achieve banking sector stability while combating corruption.

Does tourism increase energy consumption in BRICS countries?

Tourism has been the fastest-growing sector in the world over the last decade, contributes to employment opportunities, and generates earnings in foreign currencies. Tourism intensively needs energy to promote tourist activities, which in turn causes economic growth. However, as almost all tourist activities, like hotel accommodations and transportation, strongly depend on energy use, it may contribute to increased energy consumption. Our study explores the impact of tourism on energy consumption in the BRICS (i.e., Brazil, Russia, India, China, and South Africa) by using the panel data set of 1995–2014. In this study, feasible generalized least squares (FGLS) and Panel corrected standard error (PCSE) panel regression techniques are used for empirical analysis. The results reveal that tourism has a positive and significant impact on energy consumption. Our findings are robust and unaffected by the use of various energy consumption proxies and econometric techniques. Furthermore, our findings are robust and significant due to the inclusion of various controls such as financial development, gross fixed capital formation, total population, and gross domestic product. The policy implication is that governments should promote the tourism sector as a way to boost the growth of their economies. Sustainable tourism can help these economies achieve sustainable development.

Gender-Inclusive Development through Fintech: Studying Gender-Based Digital Financial Inclusion in a Cross-Country Setting

Financial inclusion (FI) for vulnerable populations, such as women, is critical for achieving gender equality, women’s empowerment, and thereby, inclusive growth. Sustainable development goal 5 considers gender equality as a fundamental right and views the empowerment of women as a necessary step. Access to finance is a significant means to empower a person. In this regard, the use of digital financial services is of particular significance for women as it allows them easier access to financial products for business and household needs. For implementing policies to reduce financial exclusion of women, it is necessary to first measure the extent of FI in society. While there are several attempts to measure FI for the general population, there is limited literature on the gender-based measurement of FI. This paper fills this important research gap by developing a gender-based FI index (GFII) focusing particularly on digital services and evaluating the performance of countries across the globe (by considering 109 countries based on data availability) in terms of a gender-based FI measure developed by us. This index is developed using two separate indices, a digital financial service usage index (DFI) and a conventional financial service usage index (CFI). We calculate it for different countries for 2011, 2014, 2017, and 2021 using the Global Findex databaseIt helps us to investigate the performance of different countries over the years in ensuring the financial inclusion of women and how digital services are penetrating over the years. One contribution of the paper is to relate the Gender Development Index (GDI) and Gender Inequality Index (GII) of countries, two well-known measures of inclusive and sustainable development, with GFII and DFI for female (DFIF). This exercise shows that while there is a positive correlation between these two sets of indicators, there are a number of countries that are high (or low) in gender development (or inequality) that need to improve their digital FI. Interestingly, using the Global Findex database and the Feasible Generalized Least Squares (FGLS) and instrumental variable panel data model, we show that health, education, labour force participation rate, and political empowerment of women significantly impact the digital financial inclusion of women. The paper brings out relevant policy suggestions for improving women’s digital financial access and thereby enhancing gender empowerment for faster and more inclusive growth.

The impact of entrepreneurship on economic growth: Empirical evidence in the Mekong Delta

Entrepreneurship is the main motivation of economic development, a large amount of literature analyzing the impact of entrepreneurship on solid growth and survival has appeared. This paper aims to quantify the impact of entrepreneurship on economic growth using a balanced panel data of 8 provinces in the Mekong Delta region over 20 years. Two indicators of entrepreneurship (Private Employment Rate, Self-Employment Rate) are identified and incorporated into the traditional growth regression model demonstrated using the Feasible Generalized Least Square (FGLS) method. The results show that entrepreneurship has a positive impact on economic growth and this finding is very strong through the private employment rate of 8 Mekong Delta provinces but does not provide enough evidence that the self-employment rate has a positive impact on growth. Public policies that promote entrepreneurship should be expected to positively influence economic growth

Heterogenous influence of productive capacities pillars and natural resources on ecological sustainability in developing Belt and Road host countries

Global climate change and environmental pollution force humanity to create new sustainable growth models. Growth policy relies heavily on the pillars of sectoral productivity: resource efficiency and sustainable resource management. This research adds to the determination of the impact of the numerous productive capacity indices (PCI) and natural resources on the ecological sustainability of emerging Belt and Road host nations from 2000 to 2018. The study utilized the system generalized method of moments (Sys-GMM) and the Feasible generalized least squares (FGLS) estimators to analyze the association among the variables. The empirical findings suggest that cumulative PCI and technological innovation have a promising impact on emissions reduction, while natural resources positively derive emissions. Manifestly, sub-indicators of PCI offer heterogeneous outcomes. Productive capacities in human capital, ICT, energy, and governance encourage ecological sustainability, while transport, private sector development, and structural change increase emissions. Augmented Mean Group estimator also validates similar findings. This research suggests improving operational efficiencies and productive capacities leads to better ecological outcomes.

Does financial inclusion catalyze trade

This study scrutinizes the effect of financial inclusion (FI) on trade by employing the Newey West standard approach, Feasible Generalized Least Square (FGLS), Pooled Ordinary Least Square (POLS) regression, Fixed Effect Model (FEM) and Random Effect Model (REM) on 24 developing economies from 2004 to 2020. Results found strong, significant and positive association linking FI and trade. Policy recommendations are developing countries should take serious measures to deepen FI which will boost the effect on trade. Furthermore, these economies should expand trade in new markets and use formal financial institutions as channels for carrying out trade transactions.

Cấu trúc vốn và hiệu quả hoạt động của công ty nông nghiệp niêm yết trên thị trường chứng khoán Việt Nam

The main objective of this study is to measure the effect of capital structure on firm performance of listed agricultural companies on Vietnam Stock Exchange (VNX). Data used in the study are panel data that were mainly collected from audited financial statements of 71 companies listed on VNX during the period from 2016 to 2021. Empirical results derived from FGLS (feasible generalized least squares) reveal that three capital structure ratios, namely leverage, long-term debts and short-term debts, and tangibility ratio have negative relationships with firm performance which is measured by ROA, ROE. In addition, this study finds a positive relation between firm size and firm performance. Finally, based on the empirical evidences derived from this study, it is concluded that Covid-19 pandemic causes negative impact to the performance of that companies.

The effects of trade, renewable energy, and financial development on consumption-based carbon emissions (comparative policy analysis for the G20 and European Union countries).

Recently, there has been a lot of focus on global trade and consumption-based carbon (CCO2) emissions. More research, however, has examined how financial development (FD) and international trade in renewable energy affect CO2 emissions. Furthermore, there are no distinct trends in the research about how globalization affects environmental quality. Our research analyzes and empirically investigates the relationship between CCO2 emissions and renewable energy, FD, and trade. A large panel of data from 41 G20 and European Union (EU) countries is assembled for empirical analysis from 1990 to 2019. The practical outcomes of panel quantile regression and feasible generalized least square (FGLS) approaches display that renewable energy and FD positively relate to CCO2 emissions; furthermore, trade to GDP hurts CCO2 emissions; market classification has been taken as a control variable which shows that the developed countries released more carbon than non-developed countries. These results suggest that the financial sector focuses more on supporting companies that use ecologically friendly techniques and pushing them to use other energy well-organized technologies in their production processes. As a result, CCO2 emissions will be reduced, preventing environmental damage at the non-renewable energy plant.

How does economic complexity influence environmental degradation? New insights from African countries

AbstractThis paper seeks to investigate the effect of economic complexity on environmental degradation in 20 selected African countries over the period 1991–2014. The Feasible Generalized Least Square (FGLS), and Driscoll‐Kraay estimators (DK) are used to capture the objectives of the study. The results suggest that economic complexity and economic growth enhance environmental degradation. Also, natural resources rents and globalization improve environmental quality. Furthermore, the findings reject the U‐shaped relationship between economic complexity and environmental degradation. In addition, the Dumitrescu‐Hurlin panel causality test shows a bidirectional causal relation between economic complexity and environmental degradation. Taking into account the ecological deficit or ecological reserve status of country, it is shown that while the natural resource rents reduce environmental degradation in ecological reserve countries, they increase environmental degradation in ecological deficit countries. The results are robust when an alternative measure of economic complexity is used. Based on these findings, the paper suggests that the governments of African countries should take into account economic complexity when designing their environmental protection policies.

Market share and efficiency: Causality test in Indonesian general insurance industry

This study aims to analyze the relationship between market share and technical efficiency in the Indonesian general insurance industry. The data for the period 2010-2020 is used, which was obtained from the Indonesian Financial Services Authority (OJK). The results show that efficient companies emerged from the category of industry possessing comparatively higher and lower market shares. Furthermore, the panel Granger-causality test indicates a one-way direction of causality, where only the market share has an impact on the technical efficiency score. The panel regression using the Feasible Generalized Least Square (FGLS) model shows that market share has a negative impact on technical efficiency scores. Other variables, such as the age of the industry, merger, and acquisition are listed in the stock exchange and do not have a significant effect on the efficiency score. Based on the aforementioned findings, it can be inferred that the quiet-life hypothesis is applicable within the Indonesian general insurance sector. Consequently, the government must foster competition among the businesses operating within the industry.