Fixed-effects Techniques Research Articles

How does social trust promote enterprises' financialization?

Using data from A-share listed companies from 2011 to 2022, this paper uses the two-way fixed effects technique to investigate the relationship between social trust and corporate financialization. The finding shows that implementing regional social trust can help the business financialization process faster. Reducing cash dividends, improving managers' incentive to seek remuneration, and easing financing restrictions also help to generate stimulating advantages. Moreover, the degrees of internal control and external governance of the companies have different effects on mediation. This study's findings help us better grasp a society's unique qualities and effectiveness marked by confidence. Furthermore, it underlined the need to use its internalized value to create positive interactions between the institutional environment and corporate investment, promoting a fairer real economy and finance growth.

The Impact of ESG Reforms on Economic Growth in GCC Countries: The Role of Financial Development

This study explores how ESG reforms impact economic growth in GCC countries, using annual data from 2000 to 2022 and analyzing the role of financial development in supporting these effects. Applying a fixed effect technique, results reveal that ESG factors contribute significantly to economic growth, with financial development further strengthening this relationship. Findings suggest that aligning ESG practices with financial development can foster a resilient and sustainable growth model for the GCC, underscoring the importance of economic diversification and robust governance. This research offers unique insights into tailoring ESG policies for resource-dependent economies, paving the way for further studies on ESG adaptation in similar contexts.

A comparative Research on the Effect of Executive Ownership and the Characteristics of Boards on the Financial Results of companies

Purpose- This study aims to examine the impact of executive ownership and board characteristics—including size, independence, audit committee structure, and CEO family affiliation—on the financial performance (ROA/ROE) of companies listed on the Pakistan Stock Exchange (PSX). It also seeks to explore how these governance factors influence the financial results of both financial and non-financial companies. Study Design/Methodology/Approach - The study employs panel data, which includes both cross-sectional and time-series features, drawn from 30 financial companies over the period from 2010 to 2023, as well as the annual reports of 266 out of 375 listed companies. Data analysis is conducted using multiple regression and fixed effects techniques for both types of companies. Control variables include leverage and cash ratio for non-financial companies and firm size for financial companies, chosen due to their potential impact on financial performance. Findings- The research findings reveal that executive ownership and board characteristics have a significant impact on the performance of non-financial companies. Additionally, the study indicates that the influence of executive ownership and board characteristics on financial performance varies across different types of companies, with financial companies showing minimal variation due to corporate governance practices. Research Implications- The findings suggest that non-financial companies should emphasize corporate governance practices to enhance their financial performance. This has implications for policymakers, regulators, and company management, emphasizing the need for robust governance frameworks to improve company outcomes. Originality/Novelty- This study contributes to the literature by providing insights into the relationship between executive ownership, board characteristics, and financial performance in the context of the Pakistan Stock Exchange. It offers a comparative analysis of the effects on financial and non-financial companies, filling a gap in understanding how corporate governance impacts different types of firms.

Institutional quality and US FDI outflows: Do political regimes matter?

To what extent are the locational decisions for US FDI outflows affected by the nature of the political regimes along with the quality of institutions in the host countries? Using property rights protection as an indicator of institutional quality, this study analyses how sensitive US FDI outflows are to institutional factors and to the nature of the hosting countries’ political regimes. In other words, whether a democratic or an autocratic regime makes any difference in terms of attracting US FDI. A joint effect between democracy and the protection of property rights on US FDI flows is examined using a panel data fixed effect technique for forty-one countries during the period 1984–2021. The instrumental variable method is used to check the endogeneity concerns. The results predict that the protection of property rights can have a positive impact in attracting US FDI, provided the countries in question become more democratic in nature. The findings suggest that partial reform to enhance the institutional quality or unconsolidated democratization are insufficient to attract US FDI rather than complementing each other in bringing FDI. The implication of the findings reveals that a democratic country such as India can be a good location for US investment if its protection of property rights becomes stronger. Moreover, some highly democratic countries with strong institutions should be more market oriented and improve their quality of infrastructure to receive the maximum benefit. Our results are robust to alternate measures of institutional quality/democracy and endogeneity concerns.

Foreign Financial Flows on Financial Efficiency in Sub-Sahara African Countries

The level of financial efficiency in Sub-Saharan Africa (SSA) remained low and incomparable to that of industrialized nations of the world, despite the supposed advantages of foreign capital inflows. This study examined the relationship between foreign financial inflows and financial efficiency in Sub-Saharan Africa against this backdrop (SSA). This study's specific goals are to look into how remittance inflows affected financial efficiency in SSA and how FDI inflows affected it as well. Out of 49 countries in Sub-Saharan Africa, 42 were chosen for the study using a purposive sampling technique and an ex-post facto research design. The study used pooled mean group, mean group, and dynamic fixed effects techniques to estimate the model parameters using panel autoregressive distributed lag (PARDL) methods of estimation. The findings revealed that remittance inflows have significant positive impact on the financial efficiency, while FDI inflows have insignificant influence on the financial efficiency. In addition, the combination of economic growth with remittance inflows yielded negative impact on the financial efficiency while the combination of economic growth with FDI inflows yielded a positive impact on financial efficiency. The study concluded that remittance and FDI inflows play vital roles in guaranteeing improvement in financial efficiency of Sub-Sahara African countries directly and indirectly through inclusive economic growth. The study recommended that financial openness policies, like removing restrictions and encouraging free flow of financial resources between entities in domestic economy and foreign economies to promote further foreign financial inflows and enhance further financial efficiency. It is also recommended that financial openness policy should be pursued alongside inclusive economic growth measures such as economic diversification policies.

CORPORATE ATTRIBUTES AND SUSTAINABLE GROWTH: EVIDENCE FROM LISTED CONGLOMERATE COMPANIES IN NIGERIA

Corporate attributes has been identified as one of the main factors that influence company’s growth. In line with this statement, this research work investigated the effect of corporate attributes on sustainable growth of listed conglomerate companies in Nigeria for the period of twenty-three years, 2000 to 2022. Secondary data acquired from annual report and accounts of sampled firms were used. Data obtained were subjected to analysis using descriptive, correlation and fixed effect regression technique. Results of fixed effect technique revealed that corporate attributes of profitability, assets efficiency, firm size and innovation of conglomerate companies in Nigeria have positive and substantial impact on their sustainable growth. Firm age and managerial ownership have favourable but frivolous effect on sustainable growth. Furthermore, the results also indicated that together as a whole all the corporate attributes examined by this research work has strong and important influence on sustainable growth of quoted conglomerate companies in Nigeria. It was recommends that management of quoted conglomerate companies in Nigeria should continue to sustain and further improve their corporate attributes that have positive and significant influence on their sustainable growth.

A multidimensional appraisal of domestic investment, external debt and economic development nexus: evidence from SSA

PurposeThis study examines the effect of external debt and domestic capital formation on economic development in Sub-Saharan African (SSA) economies.Design/methodology/approachUsing the Dynamic Common Correlation Effects (DCCE) technique and the Driscoll and Kraay fixed-effect technique, this paper conducts a multidimensional assessment of external debt and domestic investment on economic development across a panel of 35 SSA countries from 1995 to 2018. The data utilized are sourced from the World Development Indicators (2021) and the United Nations Development Program (UNDP) database (2021).FindingsThe results reveal that domestic investment has a positive impact on economic development in SSA countries, consistent across all three dimensions of the human development index (income, education and life expectancy). However, external debt exhibits an adverse effect on economic development, consistently yielding negative outcomes for life expectancy, education and income.Practical implicationsBased on these findings, the authors recommend that SSA economies implement appropriate policies, such as reducing bureaucratic requirements and addressing corruption, to enhance domestic capital investment. Additionally, efforts should be directed toward channeling contracted debt into productive sectors like road construction and electricity provision.Originality/valueThis study is among the first to assess the impact of domestic investment and external debt on the three dimensions of human development outlined by the UNDP. Furthermore, it employs a robust econometric method that considers cross-sectional dependence (CD).

Globalisation and mental health: is globalisation good or bad for mental health? Testing for quadratic effects.

This paper explores the relationship between globalisation and mental health by using the global dataset of high-, middle-, and low-income countries for the period 1970-2020. Although the consequences of globalisation on general health have been extensively studied, limited attention has been paid to investigating the implications on mental health. To show robustness, globalisation has been divided into three main dimensions such as economic globalisation, political globalisation, and social globalisation while, mental health has been classified through various indicators, i.e., mental disorder, anxiety disorder, and depressive disorder. The study used panel fixed effect techniques to demonstrate the quadratic effects of globalisation on mental health. A U-shaped curve relationship between globalisation (including economic, political, and political globalisation) and mental disorders, anxiety disorders, and depressive disorders was identified. However, findings also indicate an inverted U-shaped curve relationship between globalisation and mental health for high-income countries and a U-shaped curve relationship for middle- and low-income countries. Prioritizing mental health is crucial for overall well-being and productivity. Furthermore, a comprehensive policy implementation is strongly recommended to protect societies from mental distress when a country plans to expand globalisation worldwide.

Economic impact of the carbon tax: Evaluation of the reduction in CO2 emissions

AbstractThe use of environmental protection policies has developed considerably over the last two decades and has generated a prolific literature. This study examines the impact of environmental policies on environmental quality for a panel of 36 OECD countries over the period from 1994 to 2018. To do this, we use matching and double‐difference methods. This enabled us to find a causal link between the environmental tax and CO2 emissions in the manufacturing and transport sectors. Furthermore, by estimating our model using fixed effects techniques, Driscoll and Kraay, Lewbel 2SLS and Quantiles, we obtained the result demonstrating that the environmental tax contributes to reducing CO2 emissions from the transport and manufacturing sectors. On the basis of these results, we suggest that taxes should be strengthened quantitatively and qualitatively in order to better target sectors known to be highly polluting.

Income Redistributive Propensities of Self-Employment, ICT and Remittances: Panel Quantile Regression with Nonadditive Fixed Effects Perspective

This study provides updated modalities for ensuring equitable income distributions in developing countries. This was achieved through the lens of self-employment, information and communication technologies (ICT), and remittances. To circumvent the dark spots in prior studies, this study harnesses annual panel series for 52 African countries. The study engaged both the system generalized method of moments (sGMM) and the panel quantile regression with nonadditive fixed effects (QRPD) techniques to elicit updated insights. Meanwhile, three metrics of income inequality, the Gini coefficient, the Atkinson index, and the Palma ratio, were explored for robust insights. A key discovery from both panel computations is the self-exacerbating inclinations of income disparities in the continent. Furthermore, it was discovered that both self-employment and ICT are significant income equalization factors. However, their influence is most effective at the upper quantiles of inequality. The influence of remittance inflows is predominantly unfavorable for equitable income distribution. Both financial inclusion and government effectiveness provided varying inequality-reducing effects. Notably, their influence is more formidable at the upper quantiles. Human capital development provides some noticeable income equalization effects, particularly at the lower quantiles. Policy insights for minifying income inequality in the continent are highlighted herein.

The Complex Nexus: Analyzing the Interplay of Economic Growth, Corruption, Foreign Direct Investment, and Institutions

A significant component of economic growth is the enlightenment of the economy. Corruption slows down economic growth. Human civilization is influenced by corruption, a relic of an ancient occurrence in all countries worldwide. Economic growth is negatively affected by corruption. In the presence of poor institutions, corruption slows the flow of FDI. In this analysis, FDI and institutions are studied using panel data. Drisc and Kraay and. fixed effects techniques are used to determine nexus. The analysis is carried out for 53 developing countries from 2005 to 2022. The results indicate that corruption hinders economic growth, whereas the inflow of FDI boosts economic growth. Results show that economic growth decreases due to weak political and economic institutions in developing countries. This suggests that countries should invest in developing strong economic and political institutions to benefit from FDI. Also, countries should focus on reducing corruption to encourage economic growth. Governments should also create incentives to attract FDI, such as lower taxes, improved infrastructure, and relaxed labor regulations. Finally, countries should put in place measures to protect FDI from political interference and instability.

Underestimating the uncertainty of aggregated results: the case of W-Boson mass

Estimates of uncertainty or variance in experimental means are central to physics. This is especially the case for ‘world averages’ of fundamental parameters in particle physics, which aggregate results from a number of experiments to express current knowledge about these parameters and where variances in these world averages reflect uncertainty in that knowledge. The standard aggregation method used in Particle Data Group reports to estimate such parameters is a form of fixed-effect meta-analysis. One problem with the fixed-effect approach is that it assumes no random variation between experiments (that is, no variation in experimental accuracy, which becomes increasingly important as experimental precision rises). This problem is well-known in the statistical literature, where the typical recommendation is to use random- rather than fixed-effect techniques. We illustrate this problem by applying random-effect meta-analysis to estimates of the W-Boson mass.

The Effect of Corruption and Money Laundering on Banking Profitability and Stability of Licensed Commercial Banks in Sri Lanka

This study investigated the impact of corruption and money laundering on banking profitability and stability of licensed commercial banks in Sri Lanka, by using the panel data of 24 licensed commercial banks from 2015-2021 in Sri Lanka. The data for this study was collected from secondary data sources. In the study, corruption and money laundering data were obtained from Transparency International and Basel Institute of Governance, respectively. The analysis of the study followed the multiple regression analysis. Further, this study used fixed effect and random effect regression techniques for analyzing the data. The result of the study found evidence consistent with previous studies indicating that corruption has a negative and money laundering has a positive relationship with the banking profitability. Further, this paper also found that bank size and management efficiency also have positive impact on banking profitability and stability. Based on the findings of the study Government can take necessary actions to uplift the knowledge of Corruption and Money Laundering in accordance with the findings of this research. Moreover, findings of this study will be useful for future researchers to enhance their knowledge on this area of study.

The growth-inequality debate revisited by rent-seeking theory: Some empirical evidence

The growth/income inequality nexus is surrounded by theoretical as well as empirical ambiguities. These ambiguities can be lifted by focusing on the nature of inequalities and not their level. Inequalities may be the result of productive profit-seeking activities or unproductive rent-seeking activities. To re-assess empirically the growth/income inequality nexus, we first propose a strategy to approximate the nature of inequalities by an indicator of institutional quality. We propose an indicator of institutions' productivity which describes the prevalence of institutions favourable to the search for profit and institutions fostering the search for rents, and conversely. It is an indirect measure of the predominance of rent-seeking activities over profit-seeking ones, and conversely. Then, using a panel data covering the period 1990–2020 for 114 countries (88 developing countries and 26 developed countries) and relying on the two-way fixed effects technique to test our estimator, we show that countries where institutions' productivity is high, growth is positively related to income inequality. Conversely, growth is negatively related to income inequality in countries where institutions' productivity is low. There is thus a positive relationship between productive inequalities and growth in countries where profit-seeking institutions dominate the institutional setting. By analogy, in countries where rent-seeking institutions are dominant there is a negative relationship between unproductive inequalities and growth. Contrary to previous public policy recommendations, inequalities should not be tackled since they are pro-growth in countries with high levels of institutions’ productivity.

Can Urbanization Influence Carbon Dioxide Emissions? Evidence from BRICS–T Countries

Climate change is one of several issues confronting the planet today. Addressing this problem will create a safer environment for humans and other species. Thus, this study explores how the urban population (UBNP) influences carbon dioxide emissions (CO2e) levels in BRICS–T from 1990–2021 (192 observations) using Pooled OLS and Fixed Effects techniques. In addition, energy intensity (ENIT) and economic growth (GDP) are utilized as control variables. The Pooled OLS result demonstrates that UBNP growth reduces CO2e by 0.19%; a rise in ENIT levels spurs CO2e by 1.10%, and an increase in GDP enhances CO2e by 0.61%. The Fixed Effects outcome shows that an upsurge in UBNP reduces CO2e by 1.19%, while ENIT and GDP rise boosts CO2e by 1.19% and 1.04%, respectively. This study recommends continuous urban planning, rural area development, renewable energy integration, and the use ofenergy–efficient buildings.

Nexus between Old Age Demographic Ratio and Economic Growth: An Empirical Analysis of Selected Developing Countries

The global population is ageing in all areas of the globe. First, ageing was an issue in developed countries but nowadays it is a burning research topic for developing countries. So, this study has taken selected ASIAN developing countries for investigation. This study probes the relationship between the old age demographic ratio on economic growth. Panel data has been taken for seven developing countries (India,Pakistan, China, Nepal, Bangladesh, Malaysia, and Sri Lanka) for the period 1990 to 2019 from World Development Indicators. The study uses the panel fixed effect technique for the analysis. The results of the study reveal that the old-age demographic ratio is statistically significant and has a negative impact on the economic growth of developing countries. The control variable inflation and life expectancy are statistically significant and carry a positive sign while carbon emission and remittance have a negative sign and are statistically insignificant.

Nexus between FinTech, renewable energy resource consumption, and carbon emissions.

An increase in energy crises and environmental degradation has pushed countries to adopt more sustainable practices. In this situation, financial technology has played an important role to lower carbon emissions by integrating renewable energy resources that can help increase renewable energy resource consumption (REC) and lower carbon emissions (CE). To better understand this transmission mechanism, this study has collected a panel dataset of 26 Morgan Stanley Capital International (MSCI) developing countries for the 2011-2021 period. Furthermore, a proxy indicator for financial technology (FinTech) was developed by extracting relevant data from CrunchBase. Pooled ordinary least square and robust fixed effects technique was adopted to analyse the influence of FinTech on renewable energy and carbon emissions for robustness. Results of the study show that FinTech development promotes renewable energy resource consumption (REC) and discourages carbon emissions (CE), moreover, economic growth positively impacts, and carbon emissions (CE). This research emphasizes the importance of adopting financial technology as an important deterrent of further environmental damage. Additionally, in line with the results of this study, policymakers should design and implement an industrial policy which promotes sustainable economic growth which can pave the path for a circular economy model in the future.

Do Macroeconomic Variables and Effective Fiscal Policies Affect Indonesian Economic Development?

This study aims to examine the impact of demographic, poverty, fiscal policy, and investment on economic growth in 20 provinces. This study uses fixed effect techniques to estimate panel regression. The data used from 2008 to 2021 comes from the Central Bureau of Statistics and the Ministry of Finance of the Republic of Indonesia. The results of the study show that population, poverty, balanced funds, government spending, foreign capital influence on economic growth. The impact of government spending through education, health, agriculture, fisheries, and marine sectors has not been effective in encouraging regional economic growth. Other results from BPK's opinion on Regional Government Financial Reports have an impact on encouraging economic growth. These findings indicate that the government must take the necessary steps to reduce the impact of balance funds which in the short term impede economic growth, increase the effectiveness of government spending through targeting development spending and the use of the budget must be able to provide clear information, regarding the goals, objectives, results and benefits of the budget that are formulated using a performance approach that prioritizes the performance of work results from a predetermined budget or input allocation plan and continues the policy of providing opinions on Regional Government Financial Reports. If the BPK's opinion shows deviations, then it must be followed up immediately so that the regional economic development target can be achieved.

Public debt and economic growth nexus in sub-saharan Africa: does institutional qualitymatter?

ABSTRACT This paper investigates the effect of institutional quality and public debt on economic growth among sub-Saharan African countries. The study employs the System Generalized Method of Moments (SGMM) and the Fixed Effect techniques on data from 35 Sub Saharan African countries (sourced from the World Development Indicators (WDI) and the World Governance Index (WGI) databases from 2010 to 2020). The results reveal that institutional quality has a significantly negative effect on public debt; public debt has a significantly negative effect on economic growth; and institutional quality has a significantly positive effect on economic growth. This suggests that countries with weak institutions may have debt overhang deleterious to economic growth.

Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity

Productivity influences of agglomeration for developed countries has been well documented so far, however, the studies are still rare for emerging and developing countries, especially ones focusing on firm heterogeneity. This article empirically investigates the effects of agglomeration on productivity using firm-level data from Vietnam – a typical emerging country. Firstly, the consistent productivity measure of each individual firm is yielded using the control function approach along with the instrumental variable procedure. Next, it is regressed on proxies of agglomeration, controlling firm and regional characteristics. Potential issues of self-selection and endogeneity are dealt with using the fixed effects technique and taking advantage of micro data. Findings show the productivity-enhancing influences of employment density and industrial diversity but no clear evidence on the productivity gains from specialization for a general firm. In addition, the most advantaged firms in highly agglomerated regions are proved to be foreign-owned, small-sized, or young. Finally, several sensitivity checks demonstrate that the estimated results are robust across various productivity measures, industrial levels, and samples.