Fixed Effects Approach Research Articles

Shadow banking from China's perspective: an empirical analysis of bank-issued wealth management products

PurposeWealth Management Products (WMPs) are the largest and most crucial component of China's Shadow banking, which are off the balance sheet and considered as a substitute for deposits. Commercial banks in China are involved in the issuance of WMPs mainly to; evade the regulatory restrictions, move non-performing loans away from the balance sheet, chase the profits and take advantage of yield spread (the difference between WMPs yield and deposit rate).Design/methodology/approachIn this study, the authors investigate what bank related characteristics and needs; influenced and prompted the issuance of WMPs. By using a quarterly panel data from 2010 to 2019, this study performed the fixed effects approach favored by the Hausman specification test, and a feasible generalized least square (FGLS) estimation method is employed to deal with any issues of heteroscedasticity and auto-correlation.FindingsThis study found that there is a positive and significant association between the non-performing loan ratio and the issuance of WMPs. Moreover, profitability and spread were found to play an essential role in the issuance of WMPs. The findings of this study suggest that WMPs are issued for multi-purpose, and off the balance sheet status of these products makes them very lucrative for regulated Chinese commercial banks.Research limitations/implicationsNon-guaranteed WMPs are considered as an item of shadow banking in China, as banks do not consolidate this type of WMPs into their balance sheet; due to that reason, there is no individual bank data available for the amount of WMPs. The authors use the number of WMPs issued by banks as a proxy for the bank's exposure to the WMPs business.Practical implicationsFrom a regulatory perspective, this study helps regulators to understand the risk associated with the issuance of WMPs; by providing empirical evidence that Chinese banks issue WMPs to hide the actual risk of non-performing loans, and this practice could mislead the regulators to evaluate the bank credit risk and loan quality. This study also identifies that Chinese banks issue WMPs for multi-purpose; this can help potential investors to understand the dynamics of WMPs issuance.Originality/valueThis research is innovative in its orientation because it is designed to investigate the less explored wealth management products (WMPs) issued by Chinese banks. This study's content includes not only innovation but also contributes to the existing literature on the shadow banking sector in terms of regulatory arbitrage. Moreover, the inclusion of FGLS estimation models, ten years of quarterly data, and the top 30 Chinese banks (covers 70% of the total Chinese commercial banking system's assets) make this research more comprehensive and significant.

Reviewing Local Revenue Capacity in Indonesia

Fiscal capacity through Local Own-Source Revenuedescribes the region's ability to explore existing sources of income in the region. Data from BPS (2019) on the level of regional independence shows 11 provinces in the low category, 15 provinces in the low category, and eight provinces in the moderate category. Until now, no province in Indonesia has been included in the high category of regional independence. The novelty of this study, trying to revisit the issue of Local Own-Source Revenue in Indonesia. The purpose of the study was to analyze the influence of per capita GDP variables, the value of the trade sector, and the value of the agricultural sector on Local Own-Source Revenuecapacity. Local Own-Source Revenue capacity is measured using the concept of tax capacity, namely Local Own-Source Revenuedivided by PDRB. The object of the study was 34 provinces in Indonesia during the period 2010-2019 (10 years). The research method uses an unbalanced regression panel with a fixed-effect model approach. The study results were that the per capita GDP had a positive and significant effect on Local Own-Source Revenue capacity. The trade sector had a positive and insignificant effect, and the agricultural sector had a significant negative impact on Local Own-Source Revenuecapacity. Therefore, the Provincial Government needs to continue to increase GDP per capita, issue regulations, and maintain regional conditions to support trade activities and approach the public to pay taxes, especially provincial taxes. The provincial government also needs to increase the downstream and industrialization of agricultural products to increase the capacity of Local Own-Source Revenue. Keywords: Local Own-Source Revenue; Tax Capacity

The Impact of Tariff Reduction on Poverty in Indonesia: Regional Level Analysis

The study examines the effect of trade liberalization on poverty reduction across districts in Indonesia during the period from 2000 to 2016 using the fixed effect approach. Tariff exposure is used to measure trade liberalization, which is computed at the district level by combining information on sector composition of the economy in each district and tariff lines by sectors. This study also distinguishes between tariff exposure for output products and intermediate inputs. This produces a measure indicating how changes in exposure to tariff reductions in outputs and inputs vary by region over the period. Due to the available multi-district and 17-year dataset, the study includes a set of fixed effects: the district-fixed effects and the time-fixed effects, which controls for aggregate time trend. The results indicate that the impact of output and input tariff on regional poverty headcount index (P0) is different. Output tariff has a negative correlation with poverty, while input tariff has a positive correlation with poverty. This suggests that trade liberalization in input sectors could reduce poverty in Indonesia. It is also found that GRDP per capita, literacy rates, and road length are negatively associated with poverty. Also, the effect of reducing input tariffs on poverty reduction will be larger if the districts have higher GRDP per capita and higher literacy rates.

Firm, Industry and Macroeconomics Dynamics of Stock Returns: A Case of Pakistan Non-Financial Sector

The available research literature on stock performance has primarily stressed the importance of asset price theories, macroeconomic and microeconomic, and institutional differences. However, there is still an open question: Are there any other factors those influence stock performance? This research aims to answer this question by providing new insights into industry factors along with country-level and firm-specific factors in conjunction with the stock performance of the non-financial sector firms listed at the Pakistan Stock Exchange. The study provides new insights into the prevailing research literature by considering an emerging economy, Pakistan. We find that non-financial sector firms are heterogeneous, suggesting applying a fixed effect approach for reliable estimation. To investigate the issue, data from 80 companies spanning 17 years (2004–2020) were analyzed with a fixed-effect model. Our study results revealed that firm tangibility, munificence, gross domestic product, inflation and money supply have negative, while size, growth, dynamism, Herfindahl–Hirschman index, exchange rate and oil prices have a positive relationship with financial performance. The results are robust under alternative estimation approaches and offer useful policy implications.

The effects of cross-border electricity trade on power production from different energy sources

In this study, we provide empirical evidence to emphasize the crucial role of cross-border electricity trade for decreasing the use of fossil fuels in power industries and attaining higher electricity supply from solar and wind energy sources. We collected data for 48 countries across three continents (Americas, Europe and Asia) from 1991 to 2018 to create a world sample that would reflect the diversity of various energy mixes in different electricity markets. We showed the existence of long-term relationships between power production from natural gas, solar, wind and the level of cross-border electricity trade. Later on, we conducted panel data analyses that utilize the fixed-effect approach with interactive variables. The empirical evidence reveals that when electricity production from solar and wind energy sources interacts with cross-border electricity trade, the rate of power production from natural gas decreases statistically significantly. Furthermore, we created efficiency indices for solar and wind energy sources and to provide evidence for the increased utilization of solar and wind electricity production in the presence of cross-border electricity trade. The resulting empirical evidence reveals that for countries with positive economic growth, a rise in the levels of cross-border electricity trade leads to more efficient electricity production from solar and wind energy sources.

The Influence of Human Capital on Economic Growth

This research examines the effect of human capital on regional financial development in West Java Province from 2017 to 2019. This study's procedure employs a quantitative approach, and the data used is secondary data. Secondary evidence in this analysis comes from BPS data reporting. Panel regression with the GLS fixed-effect model approach was used as the research technique. The results of this study are the human capital variable, namely the level of education level. Based on the estimation results in this study, the education variable is considered the variable with the most dominant influence on economic growth. This research also provides suggestions to local governments so that there is a need for an increase in regional expenditure allocations for the education and health sectors to improve the workforce's quality so that they can have high productivity that can encourage financial growth.

The Influence of Human Capital on Economic Growth

This research examines the effect of human capital on regional financial development in West Java Province from 2017 to 2019. This study's procedure employs a quantitative approach, and the data used is secondary data. Secondary evidence in this analysis comes from BPS data reporting. Panel regression with the GLS fixed-effect model approach was used as the research technique. The results of this study are the human capital variable, namely the level of education level. Based on the estimation results in this study, the education variable is considered the variable with the most dominant influence on economic growth. This research also provides suggestions to local governments so that there is a need for an increase in regional expenditure allocations for the education and health sectors to improve the workforce's quality so that they can have high productivity that can encourage financial growth.

Forensic Auditing and Financial Performance of Deposit Money Banks in Nigeria: The Dynamic Fixed Effects Approach

Forensic Auditing and Financial Performance of Deposit Money Banks in Nigeria: The Dynamic Fixed Effects Approach

The Impact of Corporate Social Responsibility on the Managers' Behaviors in Companies Listed on the Tehran Stock Exchange

Corporate social responsibility (CSR) is a fundamental factor for the survival of any organization. Companies and institutions are active in a society that provides them various opportunities to earn profits and realize their goals. The increasing importance of corporate social responsibility and the costs required by companies to operate and participate in these issue has led to the purpose of this study to investigate the impact of corporate social responsibility on the managers' behaviors in companies listed on the Tehran Stock Exchange. This study is based on purpose, application and data analysis in the field of causal descriptive studies. In this study, the reflection of managers’ myopic and optimistic behaviors is considered as managers' behaviors. Therefore, two hypotheses were developed to investigate this issue, and data from 174 listed companies were analyzed from 2008 to 2018. The regression model of the research was evaluated using a panel data method with a fixed-effects approach and logistic regression method. The result showed that the fulfillment of corporate social responsibility has a significant negative effect on the optimistic behavior of managers and decreases this type of behavior by managers. On the other hand, the results confirmed that accomplishing corporate social responsibility does not have a significant effect on managers' myopic behavior.

The Impact of Smart Prepaid Metering on Non-Technical Losses in Ghana

The high incidence of electricity theft, meter tampering, meter bypassing, reading errors, and defective and aged meters, among others, increases utility losses, especially non-technical losses (NTL). A utility in Ghana piloted a non-technical loss reduction program in 2019 to replace postpaid meters with anti-tamper, anti-fraud, and anti-theft smart prepaid meters. By using customer-level residential billing panel data from 2018 to 2019 obtained from the utility, we assess the effectiveness of this program using the difference-in-differences fixed-effect approach. On average, the results indicated that the reported amount of customers’ monthly electricity consumption increases by 13.2% when any tampered postpaid meter is replaced with a smart prepaid meter, indicating the NTLs by customers. We further employed quantile difference-in-differences regression and observed that reported energy consumption has increased for all households except those at the lower quantile (25th quantile). We conclude that smart prepaid metering could be a remedy to reduce NTLs for the electricity distribution sector in areas where electricity theft is rampant.

Transmission Mechanism of Globalization and Its Impact on Human Welfare Development in Sub-Saharan African Countries

The increased intensity of globalization across borders integrated the sub-Saharan African (SSA) countries into the world economy as shown by the increasing degree of trade openness (from 55.4% in 1980–1984 to 65.6% in 2000–2015) and foreign direct investment as a percentage of GDP (from 0.3% in 1980–1984 to 2.85% in 2000–2015). The quality of life of the people in the region improved marginally regarding access to basic needs. However, the effects of globalization on access to basic needs such as water, sanitation, healthcare services have received little attention. Thus, this study investigates the impact of globalization on human welfare in sixteen SSA countries over the period 1980-2015. Using a panel fixed effect approach, the findings revealed that globalization through its various channels (trade openness, capital and financial flows and labour mobility and information technology), improves human welfare indicators in sub-Saharan Africa. However, the low level of good governance in the region deteriorates the development of human wellbeing. Thus, there is a need to improve the quality of overnance to enhance the welfare of the people through global interactions.

Boys lagging behind: Unpacking gender differences in academic achievement across East Africa

We estimate the current magnitude of gender gaps in literacy and numeracy in Kenya, Tanzania and Uganda, using large-scale nationally representative data of children ages 6–16. Using a household fixed effects approach, we document that girls outperform boys in all three countries; in numeracy by 0.03 SDs (Uganda) to 0.05 SDs (Kenya and Tanzania) and literacy by 0.06 SDs (Uganda and Tanzania) to 0.09 SDs (Kenya). However, the gender gap in achievement is highly geographically clustered, reversing in sign in some districts. In highlighting the heterogeneity of gender disparities in academic performance in these three countries in East Africa, this study show that systematic female disadvantage in schooling is no longer the norm.

Migrant inflows, capital outflows, growth and distribution: should we control capital rather than immigration?

Liberalization policies of international movements of capital and labour have represented a crucial feature of the so-called ‘globalization’ era. More recently, however, several restrictions on migratory movements have been adopted to face the alleged negative effects of immigration. On the contrary, free movement of capital has almost always been preserved. This paper aims to verify whether this current framework of international economic policy can be justified in economic terms. We propose an unprecedented direct comparison between the macroeconomic and distributive impacts of ‘extreme’ episodes of net capital outflows and net migrant inflows in OECD countries between 1970 and 2017. Applying a fixed-effects approach and an event-study approach, we show that GDP growth and functional income distribution have null or even positive statistical relationships with immigration, while they have largely negative statistical relationships with capital flights. More specifically, extreme migrant inflows are not related or in some cases are positively related to real GDP growth, real GDP per capita growth and the wage share, while extreme capital outflows are negatively related to real GDP growth and real GDP per capita growth. These results contrast with current policy agendas and seem to suggest that controls should concern capital movements rather than migratory flows of people.

The Rate of Return to Education in Iran

There is no doubt that education is the key to development. An important step in evaluating the condition of education in a society is to estimate the rate of return to education in that society. This paper estimates the private rate of return to schooling for men born in 1951–1983 in Iran using a pseudo-panel fixed-effect model. This is the first study that measures unbiasedly the rate of return to schooling in Iran. We construct the pseudo-panel data using six repeated cross sections of Household Expenditures and Income Surveys between 2008 and 2013. Our estimates show that the overall rate of return is around 9% based on the pseudo-panel fixed-effect approach. The estimates reveal a downward bias in ordinary least squares with individual data. This study also evaluates the rate of return to education in rural and urban areas. The rate of return in urban and rural areas is about 7.8 and 10%, respectively.

Media Attention and Bureaucratic Responsiveness

Abstract How does media attention shape bureaucratic behavior? We answer this question using novel data from the Mexican federal government. We first develop a new indicator for periods of anomalously heightened media attention, based on 150,000 news articles pertaining to 22 Mexican government ministries and agencies, and qualitatively categorize their themes. We then evaluate government responsiveness using administrative data on roughly 500,000 requests for government information over a 10-year period, with their associated responses. A panel fixed-effects approach demonstrates effects of media attention on the volume of outgoing weekly responses, while a second approach finds effects on the “queue” of information requests already filed when anomalous media attention begins. Consistent across these empirical approaches, we find that media attention shapes bureaucratic behavior. Positive or neutral attention is associated with reduced responsiveness, while the effects of negative attention vary, with attention to government failures leading to increased responsiveness but attention to corruption leading to reduced responsiveness. These patterns are consistent with mechanisms of reputation management, disclosure threat, and workload burden, but inconsistent with mechanisms of credit claiming or blame avoidance.

THE IMPACT OF GOVERNMENT EFFECTIVENESS AND POLITICAL STABILITY ON ENERGY CONSUMPTION IN THE SELECTED MENA ECONOMIES

This paper examines the impact of the quality governance on the energy sector in the MENA region, particularly, political stability and government effectiveness. Several macroeconomic variables are taken into account in a panel analysis, and the study employs the POLS and Fixed effect approaches to find out if the government's effectiveness and political stability among all governance indicators have a vital role in promoting energy efficiency in MENA. Panel data for the period 2003-2018 are used. The empirical results show he political stability and the effectiveness of government are positively affected the energy consumption for the MENA countries. Moreover, the findings of the study show a negative relationship between energy consumption and economic growth. This situation referred to the unimproved relationship in the MENA region, as literature confirms no relationship exists for some countries in the region.Keywords: Energy Consumption; Quality Governance; Political Stability; Government Effectiveness; POLS; Fixed Effect; MENA.JEL Classifications: H11; Q38; Q43DOI: https://doi.org/10.32479/ijeep.10786

Observational-based study to explore pedestrian crossing behaviors at signalized and unsignalized crosswalks

Despite many studies on exploring the behaviors of pedestrians crossing the road, there is a need for comprehensive studies that identify the factors that may influence pedestrians crossing behavior at signalized and unsignalized intersections. This study aims to comprehensively examine the influence of gender, age group, group-crossing, technological devices and carrying items on pedestrians crossing behaviors at signalized and unsignalized crosswalks simultaneously. Observational data of 552 pedestrians at two signalized and two unsignalized crosswalks in Tehran were collected. Temporal and spatial violations, conflict experience and collision avoidance, situational awareness, and pedestrians crossing speed were used as pedestrians crossing behaviors indicators. To model crossing behaviors, linear mixed models (LMMs) and Generalized linear mixed models (GLMMs) with fixed-effect approach were applied for the continuous outcome (pedestrians’ crossing speed) and binary outcomes, respectively. Phi and Cramer's V coefficients were used to avoid multicollinearity. Results showed that traffic checks before and while crossing showed a high positive correlation with crossing at “don’t walk” and flashing “don’t walk” signals and conflict experience at signalized crosswalks. As compared to females, males started their crossing more on flashing “don’t walk” signal and crossed the crosswalk faster. Older pedestrians exhibited more cautious behaviors at signalized intersections but less in unsignalized intersections. Alone pedestrians behaved more cautiously than groups and crossed the crosswalk more quickly. Using technological devices, regardless of their types, caused pedestrians to not exhibit one or more safe crossing indicators considered in this study. Pedestrians talking on their phones had the least cautious behaviors. Pedestrians listening to music mostly looked at the ground or straight direction rather than looking left-right for traffic. The findings from this study are a valuable resource to road authorities and policy makers to develop appropriate targeted strategies to prevent pedestrians’ injuries and fatalities and improve crosswalks safety.

IMMIGRATION, UNEMPLOYMENT RATE, AND CRIME IN THE USA: EVIDENCE FROM COUNTY LEVEL DATA

Immigration has become an increasingly important problem of the nations during the last half-century. This paper investigates the impact of immigration on crime rate by using a county-level panel data set from the United States of America (USA). County-level panel data for the period from 2012 to 2015 for 3142 counties are collected from the Census Bureau and the Federal Bureau of Investigation (FBI). The findings from the fixed effect approach (FE) show that any change in the percentage of domestic immigrants has impact on violent and property crimes but not murder. The estimates find a limited association between international migration and incidence of crime. Data show that international migration and domestic migration have significantly different impact on the incidence of violent and property crimes. Also, the results show that unemployment rate is an important economic factor that affects the number of crimes per 100,000 people.

A Fixed- Effects Study of Twenty Norwegian First-Marriage Cohorts

Decisions to divorce could be affected by a number of characteristics of the local community.Community characteristics may be barriers to divorce (e.g. strong social control) or increasethe attractiveness of divorcing (e.g. through access to a good remarriage market), but ourknowledge of such influences is sparse. This study examines the impact of severalcommunity-level factors that may influence a couple’s risk of divorce: Socioeconomicconditions, the local marriage market, and the normative climate. Discrete-time hazardmodels with community-level fixed effects are estimated using a register-based data set of allNorwegian first marriages contracted 1980-2000 that includes longitudinal information onboth the community and the couple level. Results show that higher average education, anunbalanced marriage market, and population density drive divorce rates down but thateconomic conditions do not matter for divorce risk. Estimates obtained from regular modelsare markedly different than those obtained with the fixed-effects approach.

Relationship Between Outward Foreign Direct Investment and Domestic Investment: Evidence from GCC Countries

This paper examines the relationship between outward foreign direct investment and domestic investment, which is regarded with increased interest as a driver of growth in domestic markets for Gulf Cooperation Council (GCC) economies. Mean group (MG), pooled mean group (PMG) and dynamic fixed effect (DFE) approaches have been applied to measure short-run and long-run effects of domestic investment (DI) on outward foreign direct investment (OFDI) by relaxing the assumption of cross-sectional dependence (CD). This research shows that ignoring cross-sectional dependency among the countries which are parallel in economic structure may result in biased economic estimations. The findings of the dynamic fixed effect estimators show that domestic investment has negative and significant effects on FDI outflows in the long run in GCC countries. Furthermore, some of macroeconomic variables (trade and inflation) have insignificant effects on OFDI, whereas human capital has positive and significant effects on FDI outflows in the long run. The findings of this research remain important for policy makers to determine the practical efficacy of market reforms steered towards boosting domestic investment and growth. Furthermore, the policies related to the development of human capital can also take guidance from this study.