Fixed Effects Estimation Research Articles

Loan growth drivers in state-owned banks: A fixed effects model approach

Loan growth is a critical driver for economic development, and comprehending the determinants affecting lending in state-owned banks is vital for enhancing financial sector stability and performance. This paper examines the factors that affect loan growth in state-owned banks in Bangladesh. We collected data over a 11-year period from 2012 to 2022. We applied ordinary least square method primarily followed by fixed effect estimation. To check the validity of the regression models of the study, we have considered several diagnostic tests. Our findings indicate that loan growth in state-owned banks is influenced by several industry-dependent variables i.e. size, liquidity, efficiency, non-performing loans, etc. The influence of bank size, income, liquidity, non-performing loan ratio, and cost-to-income ratio is the main emphasis of this study's investigation into the factors influencing bank lending. According to the statistics, there is a significant positive correlation between size and lending. Bank liquidity and lending show a strong negative correlation. The study also found higher lending is associated with higher non-performing loans significantly. The efficiency ratio shows a substantial negative impact on lending. To improve bank performance and stability, policymakers and bank management may benefit greatly from these results. Policymakers need to integrate various macroeconomic and qualitative elements into regulatory frameworks to bolster financial stability while facilitating sustainable loan expansion. Bank management can enhance efficiency by decreasing the cost-to-income ratio and strengthening credit risk management, while utilizing bank size for strategic expansions to increase lending capacity.

Revitalizing Agricultural Economy Through Rural E-Commerce? Experience from China’s Revolutionary Old Areas

Many of the world’s less developed regions may not be able to improve the well-being of rural residents through agricultural revitalization because of their remoteness from agricultural markets. Using the county-level data set of China’s underdeveloped old revolutionary base areas from 2010 to 2021, this paper takes the policy planning of rural e-commerce as event intervention to investigate the driving role of the digital product market on agricultural economic development. Empirical results show that rural e-commerce planning policy has significantly promoted the agricultural added value of the pilot counties, and the digital market is the key driving factor of the agricultural economic growth in these underdeveloped areas. Both food production and livestock output have increased significantly as a result of e-commerce policies. Considering the potential bias of the bidirectional fixed effect estimators of staggered differences-in-differences (DID), this study uses heterogeneous robust estimators to verify the growth effect of the agricultural economy. Specifically, digital agricultural markets have significantly promoted agricultural mechanization and significantly improved agricultural total factor productivity. Moreover, empirical evidence does not support transmission mechanisms for off-farm employment and agricultural entrepreneurship. The findings can help less developed countries and regions develop policies to expand the agricultural markets with digital dividends, thereby promoting the development of the agricultural economy.

Intellectual property protection intensity and regional technological innovation structure: Based on the perspective of economic complexity theory

Exploring the intrinsic link between the intensity of intellectual property protection and the optimization of regional technological innovation structure from the perspective of economic complexity theory. Using panel data and employing the dual fixed effects estimation method, we empirically examine the impact of intellectual property protection strength on innovation factors, the innovation environment, and innovation output. Our study finds that intellectual property protection has a positive incentive effect on knowledge acquisition, knowledge creation, the innovation environment, and substantive innovation, while it inhibits non-substantive innovation. Strong intellectual property protection effectively promotes the optimization of innovation factors, the innovation environment, and innovation output structures, thereby driving the optimization of the regional technological innovation structure. In terms of impact magnitude, the order from high to low is: knowledge creation, substantive innovation, innovation environment, knowledge acquisition, and non-substantive innovation. The “optimal intensity” of intellectual property protection significantly promotes the optimization of the regional technological innovation structure, whereas excessively strong or weak intellectual property protection hinders this optimization. Implementing a strategy of innovation-driven development requires further reform and improvement of the national intellectual property protection system to establish the optimal intensity of protection and promote the optimization of the regional technological innovation structure.

Mental health impacts of spousal caregiving intensity in the US.

In the US, spouses are a major source of informal care for older adults and, therefore, key to the US national strategy to provide long-term care to the growing population of older adults. Understanding the mental health impacts of spousal caregiving is therefore critically important. Existing studies on the topic have often been limited by methodological limitations, and most overlook the role of caregiving intensity. In this study, we assess the impact of providing different intensities of caregiving to a spouse on mental health outcomes using data from the Health and Retirement Study. We address the endogeneity of the decision to provide different caregiving intensities using an augmented inverse probability weighted (AIPW) estimator adapted to handle multivalued treatments. We check the robustness of our estimates to the AIPW's identifying assumptions by re-estimating the model using a dynamic fixed effects estimator. We find strong evidence that becoming a caregiver is associated with worsened mental health outcomes for women, while the evidence for men is weaker. When disaggregating by caregiving intensity, we find that transitions into high-intensity caregiving lead to large increases in depression symptoms and the probability of exhibiting major depression for both men and women. The overall mental health impact of transiting into caregiving is driven almost exclusively by the negative impact of high-intensity caregiving, as transitions into low- and moderate-intensity caregiving are not associated with worsening mental health in most specifications. This study provides timely insights that can inform the targeting of long-term care policies and programs aimed at supporting family caregivers of older adults.

Time junior middle school students invested to sports and their cognitive skill development: a time economics perspective

Great importance is attached to physical exercise and students’ cognitive development, yet the precise mechanism linking the time duration of physical activities or sports with adolescents’ cognitive development remains inconclusive. Based on the two-wave panel data of China Education Panel Survey (CEPS), this paper empirically examines the impact of daily physical exercise duration on junior middle school students’ cognitive abilities, by using the two-way fixed-effect estimation. The findings reveal a nonlinear relationship, specifically an inverted “U”-shaped pattern, between daily time length of physical activities or sports and students’ cognitive performance. The cognitive benefits of time investment in physical activities or sports reach the peak at approximately 0.829 h (equivalent to 50 min) per day among the teenagers in China. Furthermore, the daily time allocated to physical activities or sports affects students’ cognitive performance differentially, students attending rural schools were rewarded more progressively, students of poorer physical fitness and those in good shape did not show discernible between-group differences. This study shades light on educational governance and time management, urging school administrators, parents and students to optimize the efficiency and utility of time resource invested in sports activities.

Do higher public and private debt levels benefit the wealthy? An empirical analysis of top wealth shares in the UK

Purpose Despite the concomitant rise in recent decades in both debt levels (public as well as private) and wealth inequality, empirical evidence on the relationship is absent in existing literature. This is striking especially since recent theoretical contributions point to a link between debt and wealth inequality. We contribute to the debate by investigating empirically whether higher levels of UK public and household debt increase the UK wealth concentration at the top 1 and 10% of the wealth distribution.Design/methodology/approach We employ the Autoregressive Distributed Lag (ARDL) cointegration approach with UK time series data from 1970 to 2019. For robustness, a further analysis using panel data fixed effects estimation on a cross-country sample that also includes France and the USA is undertaken. We also use bootstrapping to conservatively estimate statistical significance.Findings Higher levels of public and household debt are found to increase wealth concentration at the top 1 and 10%. The effect is stronger for household debt. Fixed effects estimation on a cross-country dataset supports the results for the UK.Originality/valueThis study is the first to investigate empirically whether rising levels of UK public and household debt benefit the wealthy and thus widen the gap between the “haves” and “have-nots”.

The impact of corruption and Islamicity on bank stability and profitability: assessing the moderating effect in dual banking systems

Purpose This paper aims to examine the impact of corruption on bank stability and bank profitability separately for Islamic banks as well as conventional banks. Moreover, it also investigates whether the existence of Islamicity and corruption in the environment can moderate the Islamic banks-stability and Islamic banks-profitability relationships. Design/methodology/approach Sample of the study consists 136 banks comprising 70 Islamic and 66 conventional banks over the period 2015–2021 from nine countries with dual banking systems. Panel data fixed effect estimator with year effects is used to estimate the results. Findings Results of the study show that Islamicity is positively and corruption is negatively related to bank stability as well as bank profitability. Further, it is found that the effect of corruption is significantly different between Islamic and conventional banks, wherein conventional banks are more adversely affected than Islamic banks. However, an insignificant difference between Islamic and conventional banks is observed in the case of Islamicity. Practical implications The study provides theoretical and practical implications. On theoretical side, the study presents Islamicity as more reliable measure of religiosity based on Islamic values that can help in control of corruption by moderating corruption-bank stability nexus especially in dual banking economies which have high share of Muslim population. On practical side, the study recommends policy and operational measures for mitigating corruption aiming bank stability. Originality/value The results of this study contribute to the corruption-finance, religion-finance and dual banking literature. This study suggests that regulators and bank management must consider corruption and Islamicity while formulating their policies for better bank performance/stability.

Climate change and economic growth: Evidence for European countries

AbstractClimate change may affect economies and the welfare of people around the world. To design appropriate policy responses, the economic effects of climate change should be known. One strand in the literature empirically estimates the growth effects of climatic variations. However, those studies often neglect economic variables that have proven to be robust in explaining economic growth. Further, often they fail to check for the robustness of their results. The main aim of this study is to detect whether there exists a statistically significant robust relation between climate change and economic growth by estimating different model specifications. To do so panel estimation techniques for 24 European economies for the period from 2002 to 2019 are applied whereby panel fixed effects estimations and dynamic Generalized Methods of Moments estimations are resorted to. No statistically significant robust relationship between the temperature change and economic growth is found just as for precipitation that does not exert a significant effect on growth. As regards the institutional and macroeconomic control variables the rule of law, the fiscal variable, and the output gap are statistically significant and robust. It is argued that far‐reaching policy measures, such as the net zero goal of the European Union, should be given only based on robust results. Otherwise, economic policy may turn out to be inadequate and can lead to welfare losses. Hence, the conclusion is that the net zero goal of the European Green Deal is to be seen skeptical.

Using double-debiased machine learning to estimate the impact of Covid-19 vaccination on mortality and staff absences in elderly care homes.

Machine learning approaches provide an alternative to traditional fixed effects estimators in causal inference. In particular, double-debiased machine learning (DDML) can control for confounders without making subjective judgements about appropriate functional forms. In this paper, we use DDML to examine the impact of differential Covid-19 vaccination rates on care home mortality and other outcomes. Our approach accommodates fixed effects to account for unobserved heterogeneity. In contrast to standard fixed effects estimates, the DDML results provide some evidence that higher vaccination take-up amongst residents, but not staff, reduced Covid mortality in elderly care homes. However, this effect was relatively small, is not robust to alternative measures of mortality and was restricted to the initial vaccination roll-out period.

A full-factorial test of motivational and volitional intervention strategies for promoting exercise habit formation and exercise maintenance among new users of an online exercise class platform.

Interventions often fail to achieve long-term behavioral maintenance. Utilizing motivational and volitional strategies to promote behavioral maintenance factors may improve this. Using a full-factorial experiment, we tested the effects of three intervention components (focused on intrinsic motivation and identity, exercise preparation habit, and exercise instigation habit) on exercise participation over a year, among new users (N = 751; 91% identifying as female, 54% identifying as White race) of a global, online exercise class platform, run by Les Mills International Ltd, called LM+. We also tested the intervention components' theoretical mechanisms of action-habit formation, intrinsic motivation, identity, and self-efficacy. Multi-level models found some support for a main effect of the exercise preparation habit intervention component in promoting self-reported and objective exercise participation (behavioral outcomes measured via monthly surveys and the LM+ platform; mechanisms measured via monthly surveys)-in particular online exercise class frequency (fixed effect estimate = 0.84, p < 0.05, and = 0.12, p < 0.05, respectively). The preparation habit component also significantly increased preparation habit strength (0.30, p < 0.05) and instigation habit strength (0.33, p < 0.05). Other expected effects were nonsignificant. Helping individuals form an exercise preparation habit may facilitate initiating and maintaining exercise over time, in particular for attending online exercise classes, potentially through promoting greater preparation and exercise instigation habit strength.

Entrepreneurial worries: Self-employment and potential loss of well-being

The relationship between self-employment and life satisfaction has been shown to be heterogeneous in the literature. This paper analyzes a channel through which lower well-being can come about for the self-employed, namely, their worries about their business (“entrepreneurial worries”). Using a two-way fixed effects estimator on German panel data (1984-2020), I find no overall effect of becoming self-employed on life satisfaction, and heterogeneity analysis shows that only those self-employed individuals who change from unemployment to self-employment report higher life satisfaction. Mediation analysis reveals that worries about one’s financial situation (and, to some extent, job security) mediate the relationship between self-employment and life satisfaction. Life satisfaction decreases as self-employed individuals worry more about their financial situation as a result of becoming self-employed. Only if one does not worry about one’s financial situation at all does self-employment contribute positively to life satisfaction.

Which route to elite turnover leads to women's political empowerment in developing countries?

AbstractIt's commonly accepted that policymakers should promote women's inclusion for a more inclusive society. Drawing from the literature on democratic and non‐democratic routes of elite turnover, this study analyses the effects of elite turnover on women's political empowerment (WPE) by comparing two main routes: political alternation and internal conflict. We measure WPE by using women's political empowerment index (WPEI) from the varieties of democracy database. Based on a large sample of 128 developing countries over the period 1980–2021, the ordinary least square fixed effect and Driscoll‐Kraay fixed effects estimations show that elite turnover has a positive and statistically significant impact on WPE. Similar evidence is found when decomposing the WPEI in its sub‐indices notably women's political participation, civil society participation, and women's civil liberties sub‐indices. This result is also supported by the view that elite turnover increases education, as well as the institutional environment which therefore enables WPE. These results are robust to alternative estimation techniques including the system generalized method of moments and two‐stage least squares (GMM and IV 2SLS). Furthermore, the results remain unchanged when considering the majority of the geographical locations of our sample (it is insignificant for the MENA region) and the role of decentraliszation.

Daylight duration and time allocation of children and adolescents

This study explores the allocation of time, particularly to sleep, among children and adolescents in response to daily daylight variation. Utilising a dataset of over 50,000 time-use diaries from two Australian cohorts spanning 16 years and employing an individual fixed effects estimator, we uncover a substantial causal impact of daily daylight duration on sleep patterns. Our findings reveal that days with longer daylight hours are associated with a decrease in total sleep duration, primarily driven by a later sleep onset time. Additionally, longer daylight hours correspond to reduced time spent on personal care and media activities, with increased dedication to school and physical activities. Furthermore, we identify socio-demographic factors moderating these effects, such as older age and weekend days exerting a stronger influence on sleep duration, while females and children of unemployed mothers exhibit a subtle impact. These insights contribute to our understanding of how environmental factors shape daily routines and offer implications for designing schedules that promote positive developmental outcomes in young individuals.

European institutional quality and carbon emissions: Convergence club analysis

If the quality of institutions in the European Union (EU) converged, harmonized policies could achieve climate neutrality. This paper examines institutional convergence within the EU using log-t regression, allowing for the possibility of multiple equilibria. It also analyzes how overall institutional quality affects carbon dioxide (CO2) emissions in three identified convergence clubs over thirty years. Driscoll-Kraay and Prais-Winsten standard errors estimators are used, accounting for economic growth, renewable energy, industrialization, urbanization, innovation, and exogenous shocks. The results show that institutional quality affects CO2 emissions differently across clubs, emphasizing customized policy approaches. Addressing endogeneity, a two-stage least squares fixed effects estimator reveals that institutional quality has a negative, but statistically insignificant, effect on CO2 emissions in both the highest and lowest institutional quality clubs, while significantly increasing emissions in the mid-tier club. Economic growth increases CO2 emissions, whereas renewable energy consumption reduces them across all convergence clubs and methods. Other factors vary across clubs.

Adolescent depressive symptoms and memory performance in young adulthood: Testing critical period, accumulation, and pathway models using a sibling comparison design

RationaleDespite the existing literature connecting depressive symptoms with cognitive function in adulthood, there is limited knowledge about the longitudinal association between depressive symptoms in adolescence and memory function in adulthood, as well as the mechanisms underlying this relationship. ObjectivesThis study aims to determine whether depressive symptoms in adolescence are associated with memory function in young adulthood. To explore the underlying mechanisms of this association, it employs a life course approach, testing the critical period, accumulation, and pathway models. MethodsUtilizing data from the sibling sample of the National Longitudinal Study of Adolescent to Adult Health (Add Health), this study employed sibling fixed effects models to control for unobserved heterogeneity at the family level. To test various life course models, the analysis incorporated adult depressive symptoms, as well as an array of behavioral, psychosocial, and educational mechanism variables. ResultsSibling fixed effects estimates indicated a longitudinal association between depressive symptoms in adolescence and memory function in young adulthood (b = −0.084, p < 0.01). Depressive symptoms in adulthood neither explained nor intensified this association. Mediation analysis revealed that educational attainment modestly accounted for about 11% of the relationship between adolescent depressive symptoms and adult memory function. Combined, these findings lend support to the life course approach, with a specific focus on the critical period model. ConclusionsThis study's findings suggest that depressive symptoms in adolescence are an independent risk factor for memory function in adulthood. The empirical support for the critical period model underscores the importance of implementing early intervention programs and targeted strategies to support adolescents experiencing depressive symptoms.

The impact of the European Union emissions trading system on carbon dioxide emissions: a matrix completion analysis

Despite the negative externalities on the environment and human health, today’s economies still produce excessive carbon dioxide emissions. As a result, governments are trying to shift production and consumption to more sustainable models that reduce the environmental impact of carbon dioxide emissions. The European Union, in particular, has implemented an innovative policy to reduce carbon dioxide emissions by creating a market for emission rights, the emissions trading system. The objective of this paper is to perform a counterfactual analysis to measure the impact of the emissions trading system on the reduction of carbon dioxide emissions. For this purpose, a recently-developed statistical machine learning method called matrix completion with fixed effects estimation is used and compared to traditional econometric techniques. We apply matrix completion with fixed effects estimation to the prediction of missing counterfactual entries of a carbon dioxide emissions matrix whose elements (indexed row-wise by country and column-wise by year) represent emissions without the emissions trading system for country-year pairs. The results obtained, confirmed by robust diagnostic tests, show a significant effect of the emissions trading system on the reduction of carbon dioxide emissions: the majority of European Union countries included in our analysis reduced their total carbon dioxide emissions (associated with selected industries) by about 15.4% during the emissions trading system treatment period 2005–2020, compared to the total carbon dioxide emissions (associated with the same industries) that would have been achieved in the absence of the emissions trading system policy. Finally, several managerial/practical implications of the study are discussed, together with its possible extensions.

Impact of crop commercialization on smallholder farmers’ resilience to shocks: Evidence from panel data for rural Southeast Asia

We assess the impact of crop commercialization on the resilience to shocks of smallholder farmers and examine which groups of smallholders are more resilient from crop commercialization. We use balanced panel of 1,370 smallholders from Thailand and 1,497 smallholders from Vietnam collected in three survey waves for the empirical analysis. We employ a generalized structural equation model to estimate the (latent) variable of smallholders’ resilience. Then, we apply fixed-effects estimations with an instrumental variable and a control function approach to address the endogeneity concerns of crop commercialization in assessing the impact of commercialization on the resilience of smallholders. The results show that crop commercialization has a positive effect on smallholders’ resilience capacity. To examine which groups of smallholders are more resilient from crop commercialization, we apply an unconditional quantile regression model. The results show that crop commercialization has the highest impact on smallholders in 10th and 25th quantile groups of resilience capacity. Thus, crop commercialization should be stimulated to improve smallholders’ resilience to shocks. Besides, improving infrastructure for transportation and information and communication technology at the village level and the effectiveness of public governance at the national level could lead to a better resilience of smallholders.

The Impact of Board Gender Diversity on European Firms’ Performance: The Moderating Role of Liquidity

This study examines how board gender diversity affects listed non-financial European companies’ financial performance. Data from the Refinitiv Eikon Platform—LSEG and World Bank databases was used to complete the analysis. The total sample included 4257 companies for the period 2011–2023. This study examined board gender diversity and its interaction with liquidity while controlling for board characteristics such as board size, independence, and board meetings. Controlling for firm characteristics (firm size and leverage) and macroeconomic variables like inflation and GDP. This study estimated the connection using panel regression. Due to Hausman test significance, fixed effect estimation was used. The findings demonstrated a notable and favorable influence of board features, such as gender diversity, board independence, and board size, on European nonfinancial companies. Additionally, liquidity positively affects firm performance. Furthermore, the findings indicated that leverage had a significant negative impact on profitability. Finally, both the size and GDP have a significant beneficial impact on profitability. Our findings indicate that an increased representation of women on the board of directors is associated with greater independence among board members and a higher number of board members being hired. This, in turn, has a positive impact on profitability due to the extensive experience shared among board members. Additionally, this leads to improved governance, enabling better control over decisions and a greater focus on the long-term investment strategy of the company. Our results are robust, as are similar results reported by the GMM regression.

Parental perceptions of neighborhood safety and preschool children's outdoor play: An exploration of sex and safety type differences

Despite the growing evidence on the influence of neighborhood safety on physical activity, few studies have specifically focused on preschool-aged children and differentiated the various domains of neighborhood safety. This study investigates the relationship between parental perceptions of neighborhood safety and preschool children's time spent outdoors and explores potential sex differences in this relationship. This study analyzed nationally representative data from 1656 Korean children (848 boys and 808 girls) aged 3, 5, 6 years collected over the course of three waves of the Panel Study on Korean Children (PSKC). Outdoor playtime was measured by maternal reports of the time their children spent playing outdoors on a typical weekday. Parental perceptions of neighborhood safety were assessed using two items that inquired about neighborhood safety in terms of crime and accidents, respectively. Fixed effects estimates revealed that parental perceptions of social safety were associated with an increase in children's outdoor physical activity (b = 3.778, p < 0.05), whereas perceptions of physical safety were not. Sex-stratified models showed that the association between parental perceptions of social safety and children's outdoor play was driven largely by boys (b = 8.498, p < 0.001), with no association observed for girls. The findings of this study underscore the importance of addressing the social safety of neighborhood environments to promote outdoor play in preschool children. Moreover, sex differences should be considered when developing interventions aimed at increasing physical activity among young children.

Can world heritage sites boost sales in non‐tourism firms? The role of visibility

AbstractWorld Heritage sites can positively impact local manufacturing industries. Using two‐way fixed effects estimation, we find that manufacturing firms in cities with World Heritage sites see a 9% increase in operating revenue. This finding is robust to matching methods and a control function method. The impact is especially strong for businesses with low online visibility, highlighting that World Heritage sites enhance visibility toward lesser‐known enterprises. The study also shows that the positive impact on sales is greater in cities with better support for economic development, consistent with the notion that firms need good industrial infrastructure and financial resources to produce high‐quality goods.