Fixed Effects Estimation Research Articles

The Impact of Fintech Development on Commercial Banks' Profitability

Fintech is the creative application of technology in developing and delivering financial products and services. Studying its impact on the banking sector, mainly commercial banks, is interesting. Using panel data of 210 Chinese commercial banks from 2011-2018, fixed effects estimation was used to examine the impact of Fintech development on banks' profitability. The findings indicate that Fintech development is significantly and negatively related to bank performance, i.e., Fintech development significantly weakens bank performance. The results are robust to using different Fintech and bank profitability indicators based on endogeneity analysis. On this basis, the heterogeneity factor of the above relationship is also investigated, and it is found that loose monetary policy weakens the negative effect of Fintech on bank profitability. Moreover, for commercial banks with solid monopoly power, the negative impact of Fintech on their performance is mitigated accordingly.

Mitigating ecological footprint in BRICS countries: unveiling the role of disaggregated clean energy, green technology innovation and political stability

BRICS nations as emerging economies have undergone a substantial structural transformation; however, achieving economic growth while sustaining the ecology is a pressing challenge for these economies. Nonetheless, one of the possible ways to achieve ecological sustainability is to promote clean energy use and green innovation backed by a strengthened political system. Thus, this study assesses the effect of disaggregated clean energy use (hydro and nuclear energy), green technology innovation, and political stability on the ecological footprint in BRICS countries from 1993 to 2022 while controlling for the impacts of natural resources rent, population growth, and GDP per capita. Using dynamic fixed effect and CS-ARDL estimators, the outcomes reveal that hydro and nuclear energy use and political stability induce the ecological footprint in BRICS countries. However, the empirical findings indicate that green technology innovation substantially reduces the ecological footprint. Therefore, from a policy perspective, the study encourages policy coordination among BRICS countries to embrace targeted policies to strengthen regulatory frameworks, promote innovations in technological know-how, and encourage the utilization of clean and sustainable energy to foster environmental sustainability.Graphical

The Legitimizing Role of Outsider Board Members: The Case of the U.S. Nonprofit Health Care Sector

Establishing a Nonprofit Hospital’s (NPH’s) legitimacy is central to gaining the support of external stakeholders. Yet, institutional studies have long argued that smaller and less established organizations face a liabilities of smallness/newness problem where they lack the legitimacy of larger and more established organizations. This study develops an institutional explanation of board governance in which outside board members develop a legitimacy that overcomes these liabilities. A panel of 231 U.S. NPHs was used to examine this institutional explanation where Quantile Fixed Effect (QFE) estimations find that the proportion, tenure, and compensation of outside members offer a legitimacy that increases the performance of smaller/newer NPHs over their larger and more established counterparts. This institutional explanation offers a broadened view of board governance that addresses the legitimacy demands of NPHs.

Consumer Prices in German Food E‐Retailing: the Impact of the Value Added Tax Cut in 2020

SummaryIn July 2020, the German government reduced the VAT rate for six months in order to stimulate private consumption and support the economy, which had been weakened by the Covid‐19 pandemic. It was crucial for the success of the tax cut that retailers passed it on to consumers by reducing retail prices. This article applies a fixed effects estimation model to analyse the price effects of the VAT reduction in grocery e‐retailing. It uses price data collected directly from the websites for major food categories of four food e‐retailers, Bringmeister, MyTime, Real and Rewe. The tax reduction overall was largely passed on to consumers by price reductions. However, the pass‐through rates, i.e. the extent to which the tax rate change was translated into lower prices, varied among the stores, ranging from 16 to 134 per cent, with the highest rate being for Bringmeister. The pass‐through rate for Rewe was 84 per cent. Also, the timing of the pass‐through varies. The highly divergent pass‐through rates were below the expectations of politicians and the announcements made in advance by food retailers, suggesting some strategic pricing within and between stores. For future VAT reduction initiatives, the results of this study and consumers' reactions to price changes should be considered in more detail in order to complete the assessment of the effectiveness of such measures.

Locked out of banking: The limits of financial inclusion for formerly incarcerated individuals

Using data from the 1979 and 1997 National Longitudinal Surveys of Youth (NLSY), this study investigates the relationship between criminal justice system contact history, particularly incarceration, and being excluded from the financial system. Individual fixed effects estimates show that people who have been incarcerated have a lower likelihood of having a checking or savings account after incarceration. While this association could be due to justice-involved individuals avoiding formal systems like financial services, there is no evidence of a relationship between arrest history and being unbanked. Even adjusted for age and other factors, formerly incarcerated people are more likely to be unbanked in the years after release than before being incarcerated. This study offers further evidence on the challenges facing formerly incarcerated individuals, as well as for banking and financial services regulators seeking to expand financial inclusion efforts in the U.S.

Physical isolation and loneliness: Evidence from COVID lock-downs in Australia

Loneliness contributes to mortality risk, comparable to the risks associated with smoking and obesity, although the causal determinants of loneliness remain less clear. This paper leverages mandatory stay-at-home orders in Australia as a natural experiment and employs data from a panel study to investigate the causal link between physical isolation and loneliness. By analyzing variations in the number of lockdown days experienced by respondents up until their interview dates, and utilizing difference-in-differences analyses with individual, region, and year fixed-effects estimations, we find, contrary to expectations, that the number of days in lockdown does not significantly impact loneliness. Our study examines cumulative, concurrent, and non-linear effects, and assesses external validity through community morale and peer effects during lockdowns using spatial analysis. Additionally, we delve into heterogeneous effects across various factors, such as income, age, personality, living arrangements, and remoteness, finding statistically and empirically insignificant effects. However, for extroverts and young people, we observe weak statistical significance. We investigate exclusion restrictions by analyzing factors including social contacts, internet access, job industry, and household characteristics in relation to loneliness; as well as time use and relationship satisfaction to better understand the underlying mechanism. Our study challenges the notion that 'being alone' and 'being lonely' are interchangeable concepts, providing the first empirical causal evidence of no links between the two. Furthermore, our findings refine earlier understandings of social isolation, highlighting that it likely encompasses factors beyond physical isolation.

Children's bullying victimization and the acculturative stress of immigrant mothers in Korea: Exploring heterogeneity by mother's country of origin.

Over the past three decades, the number of multicultural families in Korea, defined as a family consisting of a native Korean and a marriage immigrant, has increased significantly. Although bullying victimization among multicultural family youth is rightfully a growing concern, less is known about the effects bullying has on immigrant mothers of children who have been bullying victims. Using data from the Multicultural Adolescents Panel Study, this study investigates whether children's bullying victimization is associated with immigrant mothers' acculturative stress and whether this association differs depending on mothers' country of origin (China, Japan, and Southeast Asian countries). Fixed effects estimates revealed that children's bullying victimization is positively associated with their immigrant mother's acculturative stress, and this association is robust to controlling for unobserved time-constant individual-level heterogeneity. When stratified by mother's country of origin, the association was larger and statistically significant only among Southeast Asian mothers. No associations were observed among Japanese and Chinese mothers. Our findings suggest that interventions aiming to support bullied children should be expanded to also support their immigrant mothers. Policymakers may wish to consider the specific backgrounds and contexts of immigrant mothers, with special attention to Southeast Asian women. (PsycInfo Database Record (c) 2024 APA, all rights reserved).

Causal models for longitudinal and panel data: a survey

Summary In this survey we discuss the recent causal panel data literature. This recent literature has focused on credibly estimating causal effects of binary interventions in settings with longitudinal data, emphasising practical advice for empirical researchers. It pays particular attention to heterogeneity in the causal effects, often in situations where few units are treated and with particular structures on the assignment pattern. The literature has extended earlier work on difference-in-differences or two-way fixed effect estimators. It has more generally incorporated factor models or interactive fixed effects. It has also developed novel methods using synthetic control approaches.

Influence of Quality Education on FDI Inflows in Subs-Saharan Africa: A Theoretical and Empirical Research

The non-traditional influences of Foreign Direct Investment (FDI) are increasingly gaining attention in international business studies; however, the empirical evidence of these influences is still scant. Using human capital theory within the context of the national competitive framework, the study reported in this paper considers the progress towards achieving Quality education as a likely influence of FDI inflows in Sub-Saharan Africa (SSA). The paper employs a panel data research design and conducts fixed effects estimations. The analysis categorizes FDI flows into global FDI, FDI from developed countries, and FDI from developing countries to SSA. Thus, the paper is centred around three research questions: (1) How does progress toward quality education influence global FDI inflows? (2) How does progress towards quality education influence FDI inflows from developed and (3) from developing countries? The analysis mainly utilizes a bespoke dataset from the United Nations Conference on Trade and Development (UNCTAD) and data from trustworthy databases such as UNCTADSTAT and the World Development Indicators (WDI). The results support the claim of the increasing importance of non-traditional influences of FDI flow. Quality Education significantly influenced FDI inflows from the globe and developing countries to SSA. This research provides further evidence that the national competitive framework can thoroughly explain the factors that have different significant powers in influencing FDI flows to SSA from developed and developing countries. The study is highly policy-relevant because it examines the effects of the degree of attainment of specific UN Sustainable Development Goals (quality education) on inward FDI performance. It, therefore, shows the benefits of SSA countries investing in the SDGs for the policy goal of attracting more considerable amounts of inward FDI.

The Effect of National Origin and Skin Color on Playing Time in the WNBA

This article uses data from the 1997–2022 seasons to investigate the role of bias in the distribution of playing time in the WNBA. We evaluate national origin, a fixed and objective measure, and improve upon past uses of subjective, perception-based measures of race by using a more objective measure of skin tone. More specifically, via a fixed-effect estimation of 2,949 WNBA player-year combinations we find no evidence that the national origin of either players or coaches is related to the provision of playing time. Similarly, skin tone of players or coaches ( n = 893), either alone or in combination with national origin, shows no robust significance. Evidence of national origin bias has previously been reported in professional men's basketball leagues in the U.S., Spain, and China. The WNBA may be demographically similar to the National Basketball Association, but it is culturally different and we find no evidence of employer discrimination.

The spillover effect of mandatory renewable portfolio standards

Renewable Portfolio Standards (RPSs) are one of the most prevalent and impactful clean energy policies implemented by states in the United States. This paper investigates the regional spillover effect of RPS policies using a directed dyad panel dataset of renewable electricity generation in US states from 1991 to 2021. Regional spillover effect is measured in two ways: by considering the influence of an RPS enacted in neighboring states and in states in the same regional transmission organization or independent system operator region. We use dyadic fixed effects estimation and conclude that the neighboring state’s RPS stringency score is a strong determinant of a state’s total renewable electricity generation. For states without an RPS, the positive influence of an RPS in a neighboring state is larger when the non-RPS state has more abundant renewable energy resources than the neighboring RPS state. Our findings suggest that past RPS policy evaluation research using a confined within-state focus may have underestimated the holistic impact of an RPS, as the impacts of an RPS policy can extend beyond the enacting state’s borders. Overall, this study contributes to an improved understanding of the holistic impact of state RPS policies.

The inflationary effect of the budget deficit: does financial sector development matter?

This study aims to examine the budget deficit–inflation relationship, considering financial sector development and broad money supply as moderating and mediating variables. For this purpose, a panel data set ranging from polled mean group, mean group, and dynamic fixed effect estimation techniques are employed. Hence, the pooled mean group estimation result reveals that the budget deficit is inflationary. In addition, GDP per capita, the effective exchange rate, financial sector development, regulatory quality, and the interaction term of the budget deficit and financial sector development are significant determinants of inflation. The study further examines the role of the broad money supply as a mediating variable in the budget deficit–inflation relationship. The structural equation model results and the mediation effect tests confirmed a partial mediation effect of the broad money supply on the budget deficit–inflation relationship. Based on the findings, it is recommended to strengthen regulatory quality, reduce broad money supply, and improve financial sector development. By doing so, we can create a more stable and efficient economy that benefits everyone in the long run.

Delayed cerebrovascular reactivity in individuals with spinal cord injury in the right inferior parietal lobe: a breath-hold functional near-infrared spectroscopy study.

Cerebrovascular reactivity (CVR) reflects the ability of blood vessels to dilate or constrict in response to a vasoactive stimulus, and allows researchers to assess the brain's vascular health. Individuals with spinal cord injury (SCI) are at an increased risk for autonomic dysfunction in addition to cognitive impairments, which have been linked to a decline in CVR; however, there is currently a lack of brain-imaging studies that investigate how CVR is altered after SCI. In this study, we used a breath-holding hypercapnic stimulus and functional near-infrared spectroscopy (fNIRS) to investigate CVR alterations in individuals with SCI (n = 20, 14M, 6F, mean age = 46.3 ± 10.2 years) as compared to age- and sex-matched able-bodied (AB) controls (n = 25, 19M, 6F, mean age = 43.2 ± 12.28 years). CVR was evaluated by its amplitude and delay components separately by using principal component analysis and cross-correlation analysis, respectively. We observed significantly delayed CVR in the right inferior parietal lobe in individuals with SCI compared to AB controls (linear mixed-effects model, fixed-effects estimate = 6.565, Satterthwaite's t-test, t = 2.663, p = 0.008), while the amplitude of CVR was not significantly different. The average CVR delay in the SCI group in the right inferior parietal lobe was 14.21 s (sd: 6.60 s), and for the AB group, the average delay in the right inferior parietal lobe was 7.08 s (sd: 7.39 s). CVR delays were also associated with the duration since injury in individuals with SCI, in which a longer duration since injury was associated with a shortened delay in CVR in the right inferior parietal region (Pearson's r-correlation, r = -0.59, p = 0.04). This study shows that fNIRS can be used to quantify changes in CVR in individuals with SCI, and may be further used in rehabilitative settings to monitor the cerebrovascular health of individuals with SCI.

Does Environmental, Social and Governance Have an Impact on Stock Performance? A Panel Study of Indian Companies

The present study investigates the impact of environmental, social, and governance (ESG) on firms' profitability in the Indian setting on a sample of 23 firms. The bootstrap corrected fixed effects estimation and inference in the dynamic panel method is employed to investigate the relationship. The dynamic panel results show that the relationship between ESG score and firms' profitability is inconclusive in the short run. However, governance conditions affect firms' investment decisions and the nexus between ESG and firm financial performance in the long run. Therefore, institutional reforms are warranted to stabilise property rights and check parent-client politics for the long-run effects of sustainable environmental governance on firms' profitability.

STEM Pathway and College Progression: The Link Between Engineering CTE and Postsecondary Outcomes for Students With Learning Disabilities

Despite growing calls to increase diversity in science, technology, engineering, and mathematics (STEM) fields, students with learning disabilities (SWLDs) remain underrepresented in STEM at the postsecondary level. Considering this call for increased diversity as a means to expand and strengthen STEM success, we used the High School Longitudinal Study of 2009 to explore how participation in engineering career and technical education (E-CTE) links to postsecondary educational outcomes for SWLDs. Particularly, we examined how E-CTE participation relates to postsecondary remedial course taking, enrollment in a 4-year postsecondary institution, and declaration of a STEM major. Results from school fixed-effects estimations suggest that each credit of E-CTE earned is associated with fewer remedial college courses, a higher likelihood of enrolling in a 4-year as opposed to sub-baccalaureate institution, and increased odds of declaring a STEM major. To conclude, we discuss the implications of our findings for both policymakers and practitioners.

Determinants of Bank Profitability—Do Institutions, Globalization, and Global Uncertainty Matter for Banks in Island Economies? The Case of Fiji

The objective of this study is to examine the influences of institutions, globalization, and world uncertainty on bank profitability in small developing economies. Consequently, we emphasize the significance of both bank-specific and other external factors influencing bank profitability. The empirical estimation is based on seven banks in Fiji—a small island economy—over the period 2000–2021. Together with bank-specific and macro factors, we account for institutions, globalization, and world uncertainty in analyzing the determinants of bank profitability. The study uses the fixed-effect estimation method. From the results, we observe that bank-specific variables, like the net interest margin, non-interest income, bank size, and capital adequacy ratio, are positively associated with bank profitability. Non-performing loans and credit risk are negatively associated with bank profitability. Macro variables, such as real GDP growth and remittances, have positive effects on bank profitability. Institutional factors, such as government effectiveness and voice and accountability, are positively associated with bank profitability. Regarding globalization, we find that it supports bank profitability. Global uncertainty and the Global Financial Crisis (2007–2008) are positively associated with profitability, whereas the global pandemic (COVID-19) is negatively associated. This study underscores the need to analyze the bank performance with factors beyond those reported in financial statements to derive a comprehensive understanding and appreciation of the complex nature of banking operations.

ESG Performance and Corporate Default Risk: Do Countries’ Shareholder Protection Levels Affect This Relationship?

This paper explores the nexus between environmental, social, and governance (ESG) performance and corporate default risk. Employing a panel dataset from 1,094 non-financial companies in 21 nations in Europe, corresponding to 9,522 firm-year observations, and using fixed effects estimations, we empirically demonstrate that corporations with higher ESG scores tend to have lower firm default risk. Among the three categories of the ESG score, both the social and the environmental categories participate in this significant association. Moreover, our study presents novel evidence that within ESGs’ ten subcategories, resource use, product responsibility, emissions, human rights, workforce, and CSR strategy significantly reduce firm default risk. Furthermore, country-level shareholder protection moderates the linkage between default risk and ESG performance, such that the negative impact of ESG on default risk is lower for corporations located in nations with higher shareholder protection. Hence, if the countries’ shareholder protection levels are high, stronger ESG would decrease firm default risk by a lesser amount than countries with lower shareholder protection levels. Our findings are robust to alternate variable measurements and alternate methodologies, capturing endogeneity issues.

A simulation study to assess the impact missing values on the performance of different statistical methods for analysis of binary repeated measures data with an additional hierarchical structure

The primary objective of the study was to assess the impact of missing values on the analy- sis of binary repeated measures data with an additional hierarchical structure. One motivat- ing example for the present study was records of high somatic cell counts in milk samples obtained by approximately monthly sampling throughout the lactations of cows in dairy herds. Random effects models with autocorrelated (ρ = 1, 0.9 or 0.5) subject-level ran- dom effects were behind the simulated data. In general, the settings of the simulation were chosen to reflect a real somatic cell count dataset (scc40), except that the within-cow time series length was set to 8-time points for each cow. The estimation procedures consid- ered were: Ordinary Logistic Regression (OLR), Alternating Logistic Regression (ALR), Weighted Generalized Estimating Equations (WGEE), Penalized Quasi Likelihood (PQL), Maximum likelihood via numerical integration (ML) and Bayesian Markov chain Monte Carlo (MCMC). Multiple scenarios of simulated incomplete datasets were considered and include: a scenario corresponded to a combination of missingness patterns present in the scc40 dataset (scc40 scenario) The remaining scenarios involved only drop-outs, and corre- sponded to either moderate or high percentages of values either missing at random (MAR) or not missing at random (NMAR), respectively. In the scc40 scenario, all estimation procedures except OLR performed well and produced estimates with small relative bias (generally less than 5%) for levels of missingness that roughly corresponded to the scc40 data. In MAR missingness scenarios, some biases were found for ALR, WGEE and PQL procedures, whereas the likelihood-based procedures were largely unaffected by the miss- ing values. In NMAR scenarios, all procedures experienced similar and strong biases in the time coefficient; however, fixed effects estimates at the subject and cluster levels were relatively unaffected. Journal of Statistical Research 2023, Vol 57, No.1-2, pp.35-67

The Impact of Climate Change on Work: Lessons for Developing Countries

Abstract We identify five areas where climate change may impact work and draw lessons for developing countries by reviewing the evidence. Firstly, demand for labor is unevenly affected, with agriculture, heat-exposed manufacturing, and the brown energy sector experiencing downturns, while other sectors may see a rise, resulting in an uncertain overall impact. Secondly, climate change impacts labor supply through absenteeism, shirking, and altering work-time patterns, depending on the activity and sector. Thirdly, productivity may decline, especially in heat-exposed industries, primarily due to health reasons. Fourthly, heightened earnings variability likely increases vulnerability among the self-employed. Fifthly, climate change can influence labor allocation and catalyze sectoral reallocation. Higher temperatures are also linked to increased migration. But caution is needed in interpreting these findings, as studies across these topics predominantly use fixed effect estimation and concentrate on short-term impacts, neglecting adaptation. Emerging research on adaptation indicates that workplace cooling is unappealing for firms with narrow profit margins, while coping strategies of farms and households have unclear optimality due to adoption barriers. Government responses remain understudied, with six potential areas identified: green jobs, green skills, labor-oriented adaptation, flexible work regulation, labor market integration, and social protection. We conclude by outlining future research directions.

Asymmetric Exchange Rate Effects on Trade Flows in India

This paper examines the role of exchange rate changes on India’s trade. The drivers of exports and imports (income, exchange rate including sectoral differences, and exchange rate variability) are estimated for the short and long run including a structural break. Using annual data from 1994 to 2022, the results of dynamic fixed effects estimation show that both exports and imports are income-elastic in the short and long run, but income elasticity is far stronger for exports. Moreover, exports are responsive to the real effective exchange rate in the short run but not in the long run, and the reverse is true for imports. Furthermore, exchange rates have asymmetric effects for high-volume and primary sectors for exports and imports. The combined impacts show the ineffectiveness of using currency depreciation to address trade imbalances.