Foreign Funds Research Articles

China's Investment in Bangladesh: Backdrop of Debt Trap Diplomacy

This research investigates the implications of Chinese investment in Bangladesh, particularly in the context of concerns surrounding debt trap diplomacy. As China extends its Belt and Road Initiative (BRI), Bangladesh has emerged as a significant recipient of Chinese loans and investments, encompassing infrastructure projects such as ports, power plants, and highways. While these investments are poised to bolster Bangladesh's economic development, they also raise concerns about the potential for unsustainable debt levels and the erosion of sovereignty. This study delves into the economic, political, and social ramifications of Chinese investments in Bangladesh. Through a mixed-methods approach combining quantitative analysis of debt sustainability indicators and qualitative assessments from stakeholder interviews, the research examines whether Chinese funding is leading to a debt trap scenario. Preliminary findings suggest that while Chinese investments have accelerated infrastructure development, they have also increased Bangladesh's debt burden and dependency on China. Furthermore, the strategic placement of investments suggests potential geopolitical motivations behind Chinese funding. This research aims to contribute to the broader discourse on the impact of Chinese foreign direct investment in developing countries, offering policy recommendations for Bangladesh to navigate the complexities of foreign financing without compromising its economic sovereignty. The study underscores the necessity for rigorous debt management and transparent investment policies to mitigate the risks associated with large-scale foreign loans.

Impact of bank-affiliation on liquidity seeking of foreign mutual funds during adverse shocks: Evidence from China

Using daily shareholding data and event-based measures of composite shocks, we investigate the liquidity-seeking behavior of foreign mutual funds in China that are affiliated with commercial banks, comparing it with the behavior of unaffiliated foreign mutual funds. Fixed effect and panel structural VAR models both reveal differential responses between affiliated and unaffiliated foreign mutual funds. While both types of mutual funds seek liquidity by withdrawing from illiquid, volatile and growth-oriented stocks facing negative shocks, unaffiliated mutual funds exhibit a higher degree of liquidity seeking, consistent with the results of bank-affiliated funds providing liquidity stability. This finding is robust to the selection of shock periods and measurements. The evidence shed new lights on the liquidity management of open-end foreign mutual funds in emerging markets.

Potential Tax Discrimination against Italian-Sourced Dividends and Capital Gains Received by Foreign Investment Funds Not Compliant with EU Regulatory Framework

This article delves into the complexities of cross-border taxation of Italian-sourced dividends and capital gains paid to Italian and foreign investment funds. More specifically, the authors scrutinize whether Italy’s current domestic tax laws violate the EU fundamental freedoms, particularly regarding foreign funds that, despite not being subject to the UCITS or AIFM Directives, are subject to a regulatory framework similar to that imposed on Italian funds.

Re-Proportioning, Re-Framing, Re-Purposing: Foreign Experience in Russian Disability Organising After the Retreat of Foreign Funding

Russian civil society has experienced a retreat of foreign funding and NGOs. However, where foreign, formal organisations leave, Russian individuals remain. Exploring the pathways of these individuals shows how they navigate a shifting organising environment. Foreign experience is recognised as formational; it continues to inform action and moves into new spheres. However, some actors perceive overt publicisation of foreign connections and experience as heightening risk, and may disavow or obscure these experiences. Where foreign experience is associated with political threat, actors respond with strategies of apparent depoliticisation. Investigating how foreign experience is obscured thus provides a route into examining the political question of who, or what, is perceived as belonging.

Risk factors-adjusted performance and persistence during the post-subprime crisis period: evidence from Indian mutual fund industry

PurposeThe main objective of the paper is to find evidence of abnormal returns and performance persistence of actively managed equity funds in the Indian context on an annual basis during the post-subprime crisis period between 2009 and 10 and 2019 and 2020.Design/methodology/approachThe study is exploratory and empirical, used daily net asset value (NAV) of 180 equity funds for 10 years and applied the risk-adjusted, Jensen's (1968) single-factor, Fama and French's (1993) three-factor model and Carhart's (1997) four-factor model to evaluate the performance. The performance persistence has been tested using cross-section regression (Bollen and Busse, 2005), the non-parametric contingency approach, along with the robustness measure, i.e. Malkiel's (1995) Z-score, Brown and Goetzmann's (1995) cross-product ratio (CPR) and Kahn and Rudd's (1995) χ2 value.FindingsThe results show that the Indian equity funds are unable to generate abnormal returns, and the size, value and momentum strategies applied by the fund managers in generating abnormal returns do not work effectively. However, funds provide strong evidence of significant performance persistence on an annual basis in the short-term, mid-term and long-term periods. Both parametric as well as non-parametric tests provide identical evidence of persistence, and the performance persistence is independent of the choice of models, as all the models (i.e. two, three or four-factor models) provide significant evidence of persistence.Research limitations/implicationsThough the study is comprehensive and covered a longer period, there is a scope for future research by examining the influence of fund characteristics, fund rating and macroeconomic factors on performance and persistence. It can be extended over to a longer period covering the post-COVID-19 period, a larger sample size and a comparative study of Indian and foreign mutual funds (MFs).Practical implicationsThe outcomes of this research paper can help wealth-maximizing investors in the identification of persistent equity funds and can apply the previous period’s performance information as a useful investment strategy to generate higher returns in the future. We believe that these outcomes will have significant ramifications for all MF stakeholders and policymakers, especially for the Indian industry in ensuring and establishing the credibility of MF managers, in providing better returns as well as to make MF investment more attractive to Indian retail investors.Originality/valueDespite the exponential growth in the Indian MF industry, limited evidence is available on performance and persistence covering a large sample size during the post-sub-prime crisis period using different return models and parametric and non-parametric approaches. The study is based on the daily data set of a larger sample size representing all the Asset Management Company (AMC) and the longer period following the post-subprime crises, which affected capital flows significantly. Moreover, the application of all the measures enables us to understand performance persistence in a larger context.

Optimization of human capital in the agrarian sphere: goals, principles and methods

Sufficient provision of agricultural enterprises with labor resources, their territorial and structural balance, rational use, high level of labor productivity are the key directions of effective functioning of agro-industrial complex, growth of production volumes and increase of its efficiency. Purpose - to analyze the criteria of human capital optimization in the agrarian sphere, to identify existing problems and to determine promising directions. Methods - the study used quantitative and qualitative analysis methods, including the collection and processing of statistical data, questionnaire survey of employees of the agrarian sector, as well as interviews with farm managers. Using the correlation and regression method, the influence of the studied factors on the optimization of labor activity was substantiated. Results - the article identifies the main issues of agricultural staffing, which consist in the decline in the professional qualification level of specialists, low staffing levels, outflow of able-bodied population from rural areas, loss of prestige of agricultural professions. Conclusions - this study emphasizes the need for a comprehensive approach to the management of labor potential in agro-industrial production of the republic. The introduction of advanced training programs, improvement of working conditions and social infrastructure is the basis for sustainable development of the industry. It is also recommended to strengthen state support and stimulate the attraction of capital of domestic and foreign private investors and investment funds in rural regions to ensure stable activity of agricultural enterprises. It shows further prospects for increasing human resources to ensure the competitiveness of domestic agricultural producers and as the main driving element in the establishment of innovation economy and the expansion of globalization processes.

Analysis of Private Sector Investment on Economic Growth in Nigeria

The study examined the effect of private sector investment on economic growth in the liberalised Nigerian economy 1990 to 2021. The data for this were analysed using descriptive and analytical tools. The study employed Auto-regressive distribution lags model (ARDL) estimation technique based on the unit root test to determine the effect of four major factors; Loan and Advances (LA), Interest rate (INTR) Exchange rate (EXR) and Inflation rate (INFR) on real gross domestic product (RGDP) which proxies economic growth. Findings revealed that there is negative and significant impact of Interest rate (INTR) Exchange rate (EXR) and Inflation rate (INFR) on economic growth in Nigeria. The study thus concludes that, by improving and strengthening private sector investment, economic growth would be enhanced in Nigeria. The study therefore recommends that in order to boost economic growth in Nigeria more emphasis should be placed on encouraging private investment through domestic and foreign financing.

Known and Unknown Environmental Impacts Related to Climate Changes in Pakistan: An Under-Recognized Risk to Local Communities

This study prioritized initiatives within the China–Pakistan Economic Corridor (CPEC), foreign funding, and the associated environmental and national issues. Additionally, it analyzed these factors’ effects on improving infrastructure, commerce, and economic cooperation between China and Pakistan. Besides that, it also studies the current climatic, economic, and political challenges, mainly focused on water and agriculture issues. Climate, economic, and political issues affect the environment. These concerns deserve global attention. Pakistan mainly relies on agriculture, and its water scarcity predisposes it to economic losses, urbanization, and many socioeconomic problems. Climate change and the current flood have devastated the agriculture sector. Water scarcity affects agriculture too and significantly impacts the economy and food resources. The nation has not previously experienced such a profoundly distressing epoch. Pakistan has faced several environmental, economic, and political challenges; specifically, the fields of agriculture and water present notable apprehensions. Unfavorable climatic conditions impede the attainment of sustainable agriculture in Pakistan. Considering the strong reliance of agriculture on water resources, it is crucial to acknowledge that industrialization has resulted in substantial water contamination due to the presence of microplastics and heavy metals. Moreover, the South Asian region experiences a significant scarcity of water resources. Besides that, CPEC is the solution for the financial issues, but it is a big challenge for environmental degradation in the current stage, especially since foreign funding is a key challenge for increasing corruption and bringing more burden on the economy. Unfortunately, foreign funding is not good for Pakistan. To ensure safety, security, and sustainability, CPEC projects should follow environmental regulations. This study provides a new list of CPEC initiative priority tasks that more openly disrupt the initiative, serve the whole project, and give appropriate recommendations for future research and policy-making.

Impact of capital inflows on bank profitability: a comparative analysis of dual banking systems

PurposeUsing data on 739 banks from 22 countries with a dual banking system from 2012 to 2019, this paper aims to examine whether capital inflows affect banks’ profitability in recipient countries.Design/methodology/approachThe authors check the conjecture about the effect of capital inflows on the profitability of the host country’s banks by estimating the following regression:Pict=α0+α1·CFct+α2·Islamici+α3·CFct×Islamici+δ·Xict+θ·Yct+εict (1)where the dependent variable (Pict) refers to bank profitability, measured by either ROA or ROE for bank i, country c and year t. ROA is defined as the ratio of net profit to average total assets expressed as a percentage, which determines how efficiently a bank uses its assets to generate a profit. ROE is defined as the ratio of net profit to average total equity expressed as a percentage, which is a measure of increases in shareholders’ wealth.FindingsThe authors find that capital inflows are generally positively associated with bank profitability. However, cross-border capital inflows reduce the rate of return in Islamic banks relative to their conventional counterparts. When decomposing inflows by instrument, the authors find that the enhancing role of capital inflows on bank profitability comes mainly from debt inflows and borrowers; the authors observe that the documented results emanate mostly from the inflows to the financial sector. These results remain unchanged if holding a bank’s risk constant. Overall, foreign funds in the form of debt inflows targeting the financial sector can disproportionately improve the performance of commercial banks in recipient countries.Originality/valueThe paper is an original research project. The analysis contributes to the existing literature in several ways: the authors study whether the impact of capital inflows on bank profitability varies with the bank business model by looking at both the Islamic and conventional bank systems. The profitability of the banking system is an important catalyst for growth and stability. The authors also decompose capital inflows to recipient countries into their equity and debt components and study the differential impact of those components on the profitability of Islamic and conventional banks.

Exploring The Dynamics of Foreign Employment in Indonesian Local Businesses: Barriers, Experiences, And Opportunities for Cultural Integration

This observation delves into the dynamics of foreign employment inside nearby Indonesian agencies, focusing on barriers, stories, and possibilities for cultural integration. Recognizing the significance of know-how in these dynamics, the observer explores the effects along with foreign direct funding (FDI), multinational agencies (MNCs), and nearby research and development (R&D) support. Cultural integration is emphasized, as are the challenging situations that foreign personnel face, such as language barriers, cultural differences, and regulatory hurdles. A qualitative technique is proposed, using purposive sampling and file evaluation to apprehend overseas personnel's experiences. Ethical issues are prioritized. The examination identifies barriers, including criminal and regulatory hurdles, cultural and language challenges, and perceptions toward overseas workers. The stories of foreigners working in Indonesian corporations are examined, specializing in cultural editions, workplace-demanding situations, and aid structures. Recruitment practices, place of work challenges, assistance structures are discussed, along with opportunities for talent switching and knowledge exchange. The look concludes by underscoring the significance of addressing limitations, fostering cultural integration, and maximizing possibilities for the ability to switch and understand alternatives within Indonesian businesses. It gives insights into government guidelines concerning financial development, cultural integration, and collaboration between the authorities and the personal region, imparting suggestions for future research and policy interventions.

Strategic For Direct Investment: Market Entry Dynamics And Policy Implications For Multinational Corporations

Examining the complex international of marketplace entry strategies, this research zeroes in at the direct investment strategies utilized by market heavyweights like Sony, PepsiCo, and CEMEX. The studies elucidate the numerous benefits of direct investment in overseas markets by inspecting the strategic selections and operational dynamics of these multinational businesses. The studies indicate, via a thorough literature analysis and case studies, that direct funding offers organizations unrivaled manipulation, flexibility, and marketplace insights; this, in flip, helps them adapt their offerings to one of a kind cultural context, reduce regulatory chance, and shield their highbrow assets. The study also assesses government guidelines on FDI, drawing interest to the necessity to strike a balance among protecting the kingdom's protection and encouraging free alternatives. Furthermore, it delves into the impact of political ideologies on foreign direct funding guidelines, highlighting the vital position that they've in molding funding environments. In sum, the findings of this look at have important outcomes for lecturers, businesspeople, and politicians on the strategic imperatives and problems of entering new markets.

Chinese Financing and Domestic Politics in Sri Lanka—Parallel Evolution across Mid-20th vs 21st Century Episodes of Bilateral Interactions

Abstract: This article studies the parallel evolution of Sri Lanka’s domestic politics and China’s foreign financing in Sri Lanka’s post-independence era through four lenses, namely, political opposition, political gains, economic structure, and institutions. We focus on the bilateral relationship prior to Sri Lanka’s economic liberalization and the aftermath of the middle-income transition and add three major findings to the literature. Firstly, Chinese economic engagements continue to have substantial political opposition in Sri Lanka. But the nature of such opposition evolved from ideology-based to sovereignty-based anti-China sentiments, which heavily correlate with elections. Economic relations with China have continued to evolve as political gains, which helped maintain government popularity in the short-to-medium term and exceeded the costs inflicted by political opposition. Secondly, the nature of the bilateral economic relationship has become more complex, moving from being purely government-to-government to involving multiple actors: Chinese policy banks, state-owned enterprises (SOEs), and the private sector. Thirdly, despite differences, Sri Lanka’s governments have utilized economic relations with China for short-term political gains and to avoid structural reforms, especially in the run-up to Sri Lanka’s sovereign default and unprecedented economic crisis in 2022. We conclude that China’s approach to ongoing debt restructuring will affect domestic politics around China’s engagements and affect how the bilateral economic relationship evolves.

Quanto fund protection using partial lookback participation

In light of the intricate nature of global fund markets, investors need securities that enable them to manage the values of foreign funds adjusted by exchange rates, commonly referred to as quanto fund values. This paper delves into the development of contracts that protect quanto fund values through partial lookback participation and their valuations. In order to accomplish this, we derive a generalized analytical expected value of a function of state variables and partial extreme, which serves to streamline the process of developing and pricing exotic quanto fund protections. These pricing formulas are useful in determining fair participation rates for a preferred return during a monitoring period. Numerical experiments that showcase the properties of the proposed contracts are provided.

Earnest struggles: structural transformation, government finance and the recurrence of debt crisis in Senegal

Faced with a more multipolar world, scholars of International Political Economy are sharpening their tools to make sense of the longue durée of post-colonial institutions, international financial subordination and the quest for self-determination. This article develops the notion of ‘earnest struggles’ in Senegal’s postcolonial history and shows that successive governments have indeed tried to move their country forward against the odds. The focus is on three struggles: First, the attempts at transforming the Senegalese economy away from colonial cash crops and the influence of the French from 1960 to 1980. Second, the struggle of grappling with Global South debt crisis and the devaluation of the Franc CFA by 50% between 1980 to 2004. Third, the struggle to expand the Senegalese economy with newfound fiscal space and novel forms of external debt since international debt relief in 2004 until today. Based on financial data and interviews in Dakar and Paris, I argue that these struggles have led to some structural transformation. However, the danger of debt crisis has not gone, and economic self-determination has remained precarious. Dependence on foreign finance has stayed and reached record levels in recent years. Relative delinking and the search for regional complementarities offers a more promising avenue to break out of the structural condition of international financial subordination.

Macro fundamentals and the resurgence of the Feldstein–Horioka puzzle in Europe

This paper discusses the resurgence of the Feldstein–Horioka puzzle after the global financial crisis within the European space. Revisiting the theory of intertemporal choice, this paper suggests that the deterioration of macroeconomic fundamentals that favor capital flows from richer to poorer economies can lead investment and savings to correlate across countries even without frictions to capital mobility. I test this hypothesis against a data set of 12 European economies spanning since the inception of the Maastricht treaty and ending immediately before the start of the Covid-19 pandemic. I find that the investment-savings correlation is generally low both across and within open economies, aligning with the theoretical stylized fact. However, this can be jeopardized when low-income economies accumulate large net stocks of foreign liabilities coupled with sluggish prospects for productivity growth. Ultimately, if investment and savings are not managed in line with macro fundamentals, foreign investors eventually impose a premium on new liabilities, raising the cost of financing investment with foreign funds and leading the correlation between investment and savings to rise both across and within countries.

The governance of non-governmental organizations: Critical lens for laws and regulations

In the context of evolving legal frameworks, this research investigates the changing dynamics of Non-Governmental Organizations (NGO)-government relationships in Jordan. Employing a critical methodology, the study conducts in-depth interviews with NGO board members to gain insights into these intricate interactions. The primary findings highlight significant demands within the NGO sector. Firstly, there is a call for a streamlined process for registering new NGOs, aimed at reducing bureaucratic obstacles and promoting organizational agility. Secondly, respondents emphasize the need to curtail government intervention in the NGO domain, advocating for a more autonomous civil society. Concurrently, there is a push for expanding the operational scope of NGOs, freeing them from unnecessary constraints. These demands collectively signify a transformation in the typology of the NGO-government relationship, moving away from traditional autonomy and competition towards a paradigm characterized by complementarity, collaboration, and direct engagement. This shift has notable implications for NGO governance, impacting communication styles and facilitating the flow of foreign funds. In essence, this research offers a glimpse into the evolving NGO-government relationship and its potential to enhance the efficiency and resilience of NGOs in Jordan, reflecting broader global trends in governance and civil society.

Integration Maturity of Georgia, Moldova, and Ukraine: Has DCFTA Helped Prepare Them for the EU Accession Process?

The aim of this article is to research the economic preparedness for EU integration—or “integration maturity”—of Georgia, Moldova, and Ukraine, the three countries that have signed Association Agreements with the European Union. A major part of these is the Deep and Comprehensive Free Trade Agreements, which offer significant access to the EU single market and provide a pathway to deeper economic integration. The article analyzes the three countries’ economic integration maturity through five key components: macroeconomic stability, functioning market economy, competitiveness, access to foreign finance, and, lastly, convergence with the European Union. The analysis shows that although all three countries have made significant progress since signing the agreements, they have still not progressed to the point where they will be competitive and capable of maximizing the economic benefits from deeper integration. However, the current framework provides a beneficial platform from which to conduct further reform, and is therefore a good interim solution for the short to medium term. This finding is particularly relevant in the context of Russia’s war on Ukraine, the significant rebuilding efforts that await at the end of the war, and the expressed desire of all three countries for full EU membership.

Correction to: Shaking up Foreign Finance: FDI in a Post-Disaster World

Correction to: Shaking up Foreign Finance: FDI in a Post-Disaster World

Government venture capital funds: Balancing the impact of social and financial goals on startups

This study evaluates the policy objectives and efficacy of government venture capital funds (GVCs) on the performance of invested entrepreneurial ventures. Analyzing data from China on GVCs, private venture capital funds (PVCs), and foreign venture capital funds (FVCs), it reveals that GVC-supported firms surpass those backed solely by domestic PVCs in R&D investment, return on assets (ROA), Tobin's Q, and corporate social responsibility metrics. Acting as government stewards, GVCs effectively fulfill policy goals. Moreover, GVC-backed ventures attract more venture capital following their lead and achieve higher one-day returns at IPOs compared to firms backed solely by private VC funds.

Role of international remittances in poverty alleviation: A panel data study of developing countries

Remittances are the funds sent by individuals to their home country from the host country and are the main source of foreign funding after FDI. Remittances are a crucial source of subsistence for the countries that are still in developing phase. Due to of the increasing scale and effect on the origin country, the international remittance flows into the developing country have gained the attention of numerous analysts from all over the world. This study examines the role of foreign remittances in poverty alleviation utilizing the panel data set of Asian countries, precisely nine developing countries. For the dependent variable this study uses poverty gap and the independent variables are Remittances as percentage of GDP, Per capita GDP, External debt as percentage of GNI and Trade openness as percentage of GDP. The findings reveal that foreign emittances have a significant role in alleviating poverty gap. The results of the random effect model showed that a 1% increase in international remittances as percentage of GDP leads to a decrease of 65.932% in poverty gap at $1.90 poverty line in the sample developing economies from 1990-2019. In addition, the results indicate, trade openness and per capita GDP decrease poverty and external debt seems to increase poverty.