Fixed Effect Method Research Articles

Chief executive officers’ compensation: Does gender pay parity exist in the Nigerian context?

The optimal contract theory posits that an effective compensation plan should be based on performance. Globally, legislators are concerned about the gender pay gap due to stereotypes against women in line with congruity theory. Despite the plethora of gender-related studies, empirical evidence on the gender pay gap at the upper-echelon management level is limited, especially in Africa. Hence, the study examines the effect of CEO gender on CEO compensation in the Nigerian deposit money banks using a longitudinal research design. The study employed the ordinary least square (OLS), fixed effect method, and random effect method to analyze the 144 firm-year observations collected from the Nigerian Exchange Group (NGX) factbooks and the financial reports of 12 banks during 2011–2022. The Hausman Test (chi sq = 3.623, P = 0.003) and Redundant Fixed Effect Test (chi sq = 8.159, P = 0.000) indicated that the appropriate method of reporting is the fixed effect method. The association between CEO gender and CEO compensation (coeff = –8.690 and t = –10.31) is statistically negatively related. The study concluded a gender pay gap in favor of men among Nigerian Nigerian deposit money banks’ CEOs. These findings align with the congruity theory. The study recommends a mandatory gender pay parity plan in line with the optimal contract theory to reduce gender pay inequality.

An Empirical Investigation on the Determinants of Interest Rate Spread of Commercial Banks in Bangladesh

This paper aims to investigate the determinants or factors affecting the interest rate spread of private commercial banks in Bangladesh from 2013 to 2022. For the purpose of the study, the interest rate spread (IRS) of banks has been considered as a dependent variable while bank-specific factors and macroeconomic factors have been considered independent variables. Bank-specific factors are credit risk, bank size, operating cost ratio, liquidity risk, net interest income as a ratio of total income, capital adequacy ratio, and loan to deposit ratio while macroeconomic factors are Inflation and GDP. The Pooled Ordinary Least Square method (OLS), the Fixed Effect method (FE), the Random Effect method (RE), and the Generalized Least Square method (GLS) have been used to investigate the impact of the factors on interest rate spread. The results exhibit that bank-specific factors such as net interest income as a ratio of total income, and capital adequacy ratio are found to be statistically significant and positively impact the interest rate spread. In contrast, the results also exhibit that bank-specific factors such as bank size, operating expense ratio, and loan to deposit ratio are statistically significant and negatively impact the interest rate spread. Again, the results determine that the macroeconomic factor which is inflation found to be statistically significant and positively impacts the interest rate spread. The study’s findings will assist the banks’ regulatory body in formulating and developing strategies to maintain a satisfactory level of interest rate spread.

Identification of Average Marginal Effects in Fixed Effects Dynamic Discrete Choice Models

Abstract In nonlinear panel data models, fixed-effects methods are often criticized because they cannot identify average marginal effects (AMEs) in short panels. In contrast with that criticism, we prove the point identification of different AMEs, including causal effects of changes in the lagged dependent variable or the last choice's duration, in a panel dynamic logit model for T as small as three. Our proofs are constructive and provide simple closed-form expressions for the AMEs in terms of probabilities of choice histories. We illustrate our results using Monte Carlo experiments and with an empirical application of a dynamic model of consumer brand choice.

Analysing the Capital Structure of Indian Entertainment and Pharmaceutical Industry: A Comparative Study

This research work has been done through the various analysis regarding the capital structure of different industries. The work has been done to know the different capital structure mix of Entertainment and Pharmaceutical industry of India. Where to know the Capital structure impact on the profitability of different companies along with Covid 19 period. I also had been used the statistical analysis for comparison of both the industries which is R Software programme. The panel data models had been analysed in this research with Fixed effect method of Least squared Dummy Variable [LSDV] model.

Determinants of bank deposit in a small economy’s banking sector: a study of Fiji

Purpose Deposits, a liability component of banks’ balance sheet, are an important source of funding for commercial and retail banks. In this study, the authors consider deposits as dependent variable and examine factors (bank-specific, macrofinance and structural) that could plausibly explain deposits. Subsequently, the findings are expected to support analysts, bank managers and regulators, especially in small economies such as Fiji, for asset–liability management. Design/methodology/approach This study uses a balanced panel of six commercial banks and two credit institutions over the period 2000–2022. To control for bank heterogeneity, a fixed-effect regression method is used. Findings Bank-specific variables such as bank size, profitability, loan-to-deposit ratio and bank stability are positively associated with bank deposits, whereas the capital adequacy ratio is negatively associated with bank deposits. Macroeconomic variables such as remittances and gross domestic product per capita are positively associated with bank deposits. Moreover, institutional variables such as control of corruption, political stability and regulatory quality are positively associated with bank deposits. However, tail events such as the global financial crisis of 2007–09 and the COVID-19 pandemic negatively influence bank deposits. Structural breaks for 2007 and 2011 of two banks (Bank of the Baroda and Bank of the South Pacific, respectively) are positively associated with bank deposits. Originality/value Previous studies have considered profitability, competition, nonperforming loans and stability of banks in Fiji. To the best of the authors’ knowledge, this study is the first to consider the determinants of bank deposits, an important source of funds for banks in many small countries including Fiji. In addition, this study examines the impact of structural breaks, tail events such as the recent pandemic (COVID-19) and institutional variables.

Buying inferior to selling: Explore the impact of transaction direction on the effects of related-party transactions

Throughout, the effects of related-party transactions (RPTs) have been a hot topic in financial markets and corporate governance research. This paper analyzes the theoretical foundation of the effects of RPTs and constructs a new indicator, the quasi-profit margin, to assess the effects of RPTs by studying their impact on the quasi-profit margin. Based on the information asymmetry between transaction parties and the information screening theory, the paper proposes the buying inferior to selling theory, systematically explaining the impact of transaction direction on the effects of RPTs. Subsequently, using panel data from Chinese A-share listed companies from 2016 to 2021, the paper constructs fixed-effects models and conducts empirical studies from both exogenous and endogenous perspectives, employing estimation methods such as high dimensional fixed effects method, two-stage least squares method, and three-stage least squares method. The research indicates that RPTs of Chinese A-share listed companies generally exhibit a tunneling effect, and the transaction direction significantly affects the effects of RPTs. The higher the proportion of RPTs conducted as sellers to the total RPTs, the smaller the overall tunneling effect of the RPTs. This study has implications for reducing the tunneling risk of RPTs and improving corporate governance for listed companies, as well as providing some references for financial regulatory authorities to identify and rectify illegal RPTs.

Unveiling economic resilience: exploring the impact of financial vulnerabilities on economic volatility through the economic vulnerability index

While earlier studies have explored the relationship between economic vulnerability and economic resilience, they have repeatedly overlooked the significance of financial vulnerabilities within the economic vulnerability index, and the effects of financial and economic vulnerabilities on economic volatility. An attempt is made in this study to close this research gap by conducting a detailed analysis of the relationship between financial vulnerabilities, economic vulnerability and economic volatility, stressing the significance of tweaking prevailing vulnerability indices to fully encapsulate its multidimensional nature in developing countries. Employing panel data for 142 countries over the 2002 to 2022 period and a robust econometric approach like the Driscoll and Kraay fixed effect method, the study reveals that financial vulnerabilities yield significant coefficients to influence economic volatility, thereby accentuating their significance in the Economic Vulnerability Index. Sub-group analyses reinforce the need for incorporating financial variables in vulnerability investigations. Moreover, the causality tests reveal that all the variables and indices meant to capture the economic and financial vulnerabilities Granger causes economic volatility across the sample. In essence, this study fills a critical gap in existing research by demonstrating, that financial vulnerabilities significantly influence economic volatility, underscoring the imperative of integrating financial variables into vulnerability assessments for policymakers and scholars focusing on sustainable development. This study contributes to a broader understanding of economic vulnerability by highlighting the crucial role of financial vulnerabilities in driving economic volatility, suggesting a fundamental reconsideration of existing vulnerability assessment frameworks for policymakers and researchers focused on sustainable development frameworks. By uncovering the causal relationship between financial vulnerabilities and economic volatility across a diverse set of countries, the findings underscore the imperative of integrating financial factors into vulnerability investigations to enhance resilience and stability in developing economies.

The Effect of Audit Quality on Real Earnings Management: Evidence from Jordan

The purpose of the current study is to examine whether audit quality is capable of restricting real earnings management in a developing country such as Jordan. The fixed effect method was used to study the association between two audit quality (audit fees and audit firm size), and cash flow from operations (CFO), discretionary expenditure (DISX), and production cost (PROD) as proxies of real earnings management, for the industrial and service firms listed on the Amman Stock Exchange (ASE) during the period 2014-2023. Using 740 firm-year observations, the results showed that the audit fees (AFEE) are significantly and negatively related to cash flow from operations (CFO) and discretionary expenditure (DISX), and also significantly and positively related to production cost (PROD). Meanwhile, the result showed that the existence of audit firm size (B4) has a negative and significant effect on cash flow from operations (CFO) and production cost (PROD), and a positive and significant effect on discretionary expenditure (DISX). Further, for the control variables, the results showed that the firm size (FSIZE) has an insignificant effect on all model variants of real earnings management (REM). Meanwhile, financial leverage (LEV) has a negative effect on all model variants of real earnings management (REM). Thus, these findings provide shreds of evidence for all the regulators, investors, and executives in Jordan due to the significant impact on public policies and interest to the regulators and standard setters.

The Impact of ESG Performance on Corporate Financial Performance: The Moderating Effect of Digital Level

In response to economic development, companies are striving to improve their financial performance in order to seek long-term growth and development. As a major player in market economic activities, corporations are constantly undergoing digital transformation. Its qualities of technology, innovation, intelligence and uniqueness can enable companies to gain new competitive advantages and gradually become one of the important factors influencing ESG practices. The current study examines how ESG performance affects corporate financial performance using a two-way fixed-effects method employing a moderating effects framework. This study uses panel data from listed companies on the Shanghai and Shenzhen stock exchanges between 2014 and 2022 to investigate whether ESG performance could enhance corporate financial performance. The statistical results show that, the impact of ESG performance on corporate financial performance is moderated by three dimensions of digital level. Digital strategy, digital investment and digital staff all have significant, beneficial moderating effect on the relationship between ESG performance and corporate financial performance. The study adds to the body of knowledge in ESG performance and corporate financial performance by providing insights into the moderating effect of digital level that improve their financial performance.

Cyclicality of public debt in developing countries: Does dependence on natural resources matter?

We revisit the resource curse theory, producing empirical evidence of the importance of natural resources on the cyclical orientation of public debt. Using the Driscoll-Kraay fixed-effects method and panel data from 51 developing countries for the period 1986 to 2020, we show that natural resource rents accentuate the procyclicality of public debt. However, our results suggest that the impact of natural resource endowment in procyclicality does not have the same magnitude when taking into account (i) the disaggregation of public debt, (ii) alternative measures of natural resource rent and (iii) the division of the sample into African and non-African countries. More specifically, natural resource rents amplify the procyclicality of external public debt more than domestic public debt. In addition, we find that while coal and forest rents have no effect on the cyclical orientation of public debt, mineral and especially oil rents do amplify the procyclical nature of public debt. Finally, our results show that the accentuation of the procyclical nature of public debt generated by the interaction between the economic cycle and natural resource endowment is more pronounced in African developing countries than in non-African developing countries. Our results shed new light on the Dutch disease hypothesis, and have relevant policy implications for governments in resource-rich countries wishing to move towards counter-cyclical fiscal interventions.

Meta-analysis of soil and dust ingestion studies

The ingestion of soil and dust by children and adults is a potential source of exposure to environmental contaminants. To advance beyond the simple averaging of estimates used in the U.S. EPA's Exposure Factors Handbook (EFH), we describe a novel meta-analysis of all available studies that provided soil or dust ingestion estimates for children or adults conducted in the United States and Canada. Using meta-analytic techniques, we estimate the mean total soil plus dust ingestion rates and confidence intervals (CIs) for eleven age groups (0 - <1 month (m), 1 - <3 m, 3 - <6 m, 6 - <12 m, 1 - <2 years (y), 2 - <3 y, 3 - <6 y, 6 - <11 y, 11 - <16 y, 16 - <21 y, and 21+ y). These age groups were selected for consistency with the EFH update to Chapter 5 and the U.S. EPA's Age Grouping Guidance. For each age group, we calculated best estimates for the three main types of ingestion studies: tracer studies based on the aluminum tracer, biokinetic studies, and activity pattern (modeling) studies, as well as overall estimates for all three study types combined. Our meta-analysis combined study estimates using the alternative statistical approaches of the fixed effect method (inverse variance method, “I–V”) and two random effects methods, DerSimonian and Laird's method of moments (“DSL”) and the restricted maximum likelihood method (“MIXED”). For each approach, the mean total soil plus dust ingestion rate estimates for each study type generally aligned well with the EFH, ranging from 36 to 68 mg/day for infants, 56–72 mg/day for young children, and 12–32 mg/day for adolescents and adults. When all three study types were combined, the upper bounds of the 95% CI were generally the lowest for the I–V method and the highest for the MIXED method. The estimates produced here can be used for stochastic risk assessments and provide a better estimate of soil and dust ingestion rates across age groups.

ESG dynamics in real estate: temporal patterns and financial implications for REITs returns

PurposeThis paper aims to explore the dynamic relationship between ESG scores and REITS returns. The overarching goal is to provide a better understanding of how ESG considerations impact financial performance across different temporal contexts.Design/methodology/approachUsing a sample of 175 European Equity REITs, this analysis combines numerical ESG scores with the Fama-French model, employing both random and fixed effects methods. It integrates individual REIT data and the HESGL (High ESG Scores Minus Low ESG Scores) factors to assess their impact on REIT returns.FindingsThe findings highlight divergent patterns between the numerical ESG score and the HESGL factor concerning REIT returns. While the numerical ESG score displays a negative impact in later periods, the HESGL factor demonstrates a positive effect during prosperous times but loses significance during crises.Originality/valueThis research contributes original insights by emphasizing the importance of temporal segmentation in understanding the nuanced and evolving nature of the relationship between ESG scores and REITs’ returns. The study provides a comprehensive analysis and highlights divergent outcomes that are essential for a better interpretation of ESG impacts on real estate investments.

Travel for health as a type of niche tourism and economic growth: A cross‐country panel data analysis

AbstractAlthough the potential of the health tourism to support economic growth can be based on strong theoretical foundations, it is also argued that this tourism type may hinder economic growth by weakening labor productivity. On this basis, the present study aims to examine the effect of health tourism on economic growth. The study uses panel data fixed effects method with Driscoll–Kraay standard errors and dataset of 72 countries. The findings strongly supported that health tourism boosts economic growth. To be more precise, it was estimated that a one‐point increase in health tourism revenues, expressed as a percentage of gross domestic product (GDP) of personal health travel exports, causes an increase of 4.9345 in GDP growth rate and 4.2558 in per capita GDP growth rate. Furthermore, the negative growth effect of health tourism through labor productivity, which is theoretically proposed and expressed as crowding‐out effect, was not supported by the findings.

The Association of Broadband Internet Use With Drug Overdose Mortality Rates in the United States: Cross-Sectional Analysis.

The availability and use of broadband internet play an increasingly important role in health care and public health. This study examined the associations between broadband internet availability and use with drug overdose deaths in the United States. We linked 2019 county-level drug overdose death data in restricted-access multiple causes of death files from the National Vital Statistics System at the US Centers for Disease Control and Prevention with the 2019 county-level broadband internet rollout data from the Federal Communications Commission and the 2019 county-level broadband usage data available from Microsoft's Airband Initiative. Cross-sectional analysis was performed with the fixed-effects regression method to assess the association of broadband internet availability and usage with opioid overdose deaths. Our model also controlled for county-level socioeconomic characteristics and county-level health policy variables. Overall, a 1% increase in broadband internet use was linked with a 1.2% increase in overall drug overdose deaths. No significant association was observed for broadband internet availability. Although similar positive associations were found for both male and female populations, the association varied across different age subgroups. The positive association on overall drug overdose deaths was the greatest among Hispanic and Non-Hispanic White populations. Broadband internet use was positively associated with increased drug overdose deaths among the overall US population and some subpopulations, even after controlling for broadband availability, sociodemographic characteristics, unemployment, and median household income.

Does Expenditure Structure Affect Rural Poverty Alleviation in Indonesia? The Role of Village Fund Management

This study aimed to explore public financial management at the village level and identify the types of village fund expenditures that had the most significant relationship in reducing short-term rural poverty in Indonesia. Using the 2019-2021 panel data and the fixed effect method, the authors analyzed the relationship between the five types of village fund spending on poverty in 49,192 village units. The estimation results showed that spending merely on village development negatively and significantly affected the number of low-income rural families in Indonesia. Meanwhile, spending on disaster management, emergencies, and village urgency indicated a positive and significant relationship with the number of low-income families in the village. It implies that the government should focus on spending programs and activities that create job opportunities and increase income for rural poverty reduction. The government also needs to improve data related to uniformity and validity in measuring, recording, and reporting data in ministries, institutions, and regional governments. Thus, in allocating village funds, the government must expand the formula allocation so that village funds can significantly reduce rural poverty.

PENGARUH IPM, PERTUMBUHAN EKONOMI DAN PENGANGGURAN TERHADAP KEMISKINAN KABUPATEN/KOTA DI PROVINSI JAWA TENGAH TAHUN 2017-2019

Central Java Province is a province with a poverty rate percentage that ranks second in Java after DIY, but the poverty rate in Central Java Province is still quite high because it is still above the national poverty rate. This study aims to analyze the effect of the Human Development Index (HDI), economic growth and unemployment rates in districts/cities in Central Java Province in 2017-2019.Based on the data used, in this study using panel data regression analysis with the fixed effect method which was tested using the Eviews 9.0 application. The data used in this study is secondary data. The independent variables used in this study are the Human Development Index (HDI), economic growth and unemployment rates, while the dependent variable used is the poverty rate in 35 regencies/cities in Central Java Province in 2017-2019.The results of this research that the Human Development Index (HDI) had a positive effect on the poverty rate in districts/cities in Central Java Province in 2017-2019. Variables of economic growth and unemployment had no significant effect on the poverty rate. The variables of the Human Development Index (HDI), economic growth and the unemployment rate together have a significant effect on poverty in Central Java Province in districts/cities in Central Java Province in 2017-2019. Keywords: poverty, human development index (HDI), economic growth, unemployment rate

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.

Assessing the performance of methods for central statistical monitoring of a binary or continuous outcome in multi-center trials: A simulation study

BackgroundQuality study monitoring is fundamental to patient safety and data integrity. Regulators and industry consortia have increasingly advocated for risk-based monitoring (RBM) and central statistical monitoring (CSM) for more effective and efficient monitoring. Assessing which statistical methods underpin these approaches can best identify unusual data patterns in multi-center clinical trials that may be driven by potential systematic errors is important. MethodsWe assessed various CSM techniques, including cross-tests, fixed-effects, mixed-effects, and finite mixture models, across scenarios with different sample sizes, contamination rates, and overdispersion via simulation. Our evaluation utilized threshold-independent metrics such as the area under the curve (AUC) and average precision (AP), offering a fuller picture of CSM performance. ResultsAll CSM methods showed consistent characteristics across center sizes or overdispersion. The adaptive finite mixture model outperformed others in AUC and AP, especially at 30% contamination, upholding high specificity unless converging to a single-component model due to low contamination or deviation. The mixed-effects model performed well at lower contamination rates. However, it became conservative in specificity and exhibited declined performance for binary outcomes under high deviation. Cross-tests and fixed-effects methods underperformed, especially when deviation increased. ConclusionOur evaluation explored the merits and drawbacks of multiple CSM methods, and found that relying on sensitivity and specificity alone is likely insufficient to fully measure predictive performance. The finite mixture method demonstrated more consistent performance across scenarios by mitigating the influence of outliers. In practice, considering the study-specific costs of false positives/negatives with available resources for monitoring is important.

Impact of intellectual property rights on foreign direct investment in Africa

The study investigated the impact of intellectual property rights on foreign direct investment (FDI) in selected African countries (Burkina Faso, Ivory Coast, Nigeria, Cameroon, Mali, Kenya, Burundi, Central African Republic, Rwanda, Senegal, Zimbabwe, and Tanzania). The purpose of the study is to develop property rights policies that encourages FDI in African countries. How FDI is influenced by the combination of trade openness and intellectual property rights was also examined using the same data set and econometric methods such as the dynamic generalized method of moments (GMM), fixed effects, and pooled ordinary least squares (OLS). Panel data ranging from 2005 to 2019 were used for the purposes of this study. A 1% increase in intellectual property rights led to a 22.73% increase in FDI inflows under the dynamic GMM and a 45.55% increase in FDI inflows under the random effects. These results show that intellectual property rights significantly enhanced FDI under the random effects and dynamic GMM. FDI was insignificantly enhanced by intellectual property rights under the pooled OLS and fixed effects methods. A 1% increase in complementarity between intellectual property rights and trade openness (complementarity term) pushed up FDI inflows by 17.78% under the dynamic GMM, whilst a 1% increase in the complementarity term increased FDI inflows by 16.72% under the fixed effects. In other words, dynamic GMM and fixed effects approaches show that the complementarity component significantly improved FDI inflows. The paper recommends implementing the best property rights strategies to improve FDI inflows into African countries. AcknowledgmentThe author appreciates the moral support from the University of South Africa, his employer.

Economic globalisation and Africa's quest for greener and more inclusive growth: The missing link

This study examines the contingency and threshold effects of economic freedom in the economic globalisation (EG) and inclusive green growth (IGG) relationship. To this end, we apply the fixed-effects generalized method of moments with Driscoll-Kraay standard errors estimator to macro data for the period 2008–2020 for 22 selected African countries. The following findings are established. First, we find that economic freedom reduces the negative effect of EG on IGG. Second, when we disaggregate EG into financial and trade globalisation, we show that the moderating effect of economic freedom on the former is rather striking. Third, our threshold analysis suggests that by improving Africa's unfree economic architecture to 60% (moderately free), the IGG-deteriorating marginal effects of EG are significantly mitigated (but not nullified). We conclude that unless an effort is made to improve economic freedom in Africa, the envisaged IGG gains of economic globalisation might prove elusive.