Generalized Method Of Moments Research Articles

PENGARUH CASHLESS PAYMENT TERHADAP PERTUMBUHAN EKONOMI: STUDI KOMPARASI NEGARA MAJU DAN BERKEMBANG ANGGOTA G20

The purpose of this study is to analyze the impact of cashless payments on economic growth in G20 countries. Additionally, a comparison of the impact of cashless payments in developed and developing countries is also analyzed. In this study, economic growth is used as the dependent variable, and transaction amounts of debit cards, credit cards, and electronic money are used as the independent variables. Data were collected from various databases for the period 2013-2021 covering a total of 19 countries divided into 10 developed countries and 9 developing countries that are members of the G20. The test results using the Generalized Method of Moments (GMM) dynamic panel found that all three variables have a significant effect in both developed and developing G20 member countries. Furthermore, the study found that the biggest influence of non-cash payments in developed countries is transactions using debit cards while in developing countries it is transactions using credit cards and electronic money. From these results, it was concluded that cashless payments have an impact on economic growth. It is hoped that these findings will provide new insights into cashless payments and their impact on economic growth.

Dampak Industri Halal pada Perekonomian di Indonesia: Pengaruh Pendapatan, Ekspor, dan FDI terhadap PDB Melalui Pendekatan GMM

This research explores the influence of income, exports and foreign direct investment (FDI) on Gross Domestic Product (GDP) in the halal industry in Indonesia, using the Generalized Method of Moments (GMM) approach. This study is based on panel data from companies operating in the halal sector between 2010 and 2022. The results show that income and exports positively and significantly influence GDP growth, confirming the importance of company activities and export performance in driving national economic growth. In contrast, FDI was found to have no significant effect on GDP, indicating that foreign investment's contribution in this sector is not yet optimal or is influenced by other factors such as the quality of institutions and infrastructure. This research provides important implications for policymakers and stakeholders, considering the urgency of improving export strategies, diversifying markets, and improving the quality of institutions and infrastructure to maximize the economic benefits of FDI. In addition, the results of this research also emphasize the important role of the halal industry as a major contributor to Indonesia's economic growth, as well as the need for policies that support further development and diversification of the halal industrial sector.

Green finance and renewable energy in Africa: Does inclusive finance play any role?

This paper examines the role that inclusive finance plays in the relationship between green finance and renewable energy consumption. We employ a dynamic System Generalized Methods of Moments (GMM) for a sample of 54 African countries, from 2004–2022. The findings of the study show that green finance increases inclusive finance. In addition, it finds evidence to support a U-shaped relationship between green finance and renewable energy consumption. We confirm that green finance substitutes inclusive finance to yield a desirable outcome of renewable energy consumption. We provide evidence to support that the negative impact of green finance on renewable energy consumption is reduced when countries increase their level of inclusive finance.

Minimum Capital Requirements for Banks and the Financing of the Economies of the Economic and Monetary Community of Central Africa1

Abstract This article analyses the impact of minimum bank capital on the financing of economies of the Economic and Monetary Community of Central Africa over the period 1998-2020, based on data from the Bank of Central African States and the annual reports and bulletins of the Banking Commission of Central Africa. To do this, we analysed the impact of minimum bank capital requirements on the real cost of credit, the term structure of credit and on economic agents with financing needs. We used a panel VAR specification estimated using the Generalised Method of Moments and impulse response function analysis based on Monte Carlo simulations to arrive at two main results: minimum bank capital reduces the cost of credit and increases the economy’s credit level. The conclusion is that regulators would benefit from encouraging credit institutions to increase the current level of bank capital in order to benefit from the positive effects of minimum bank capital.

Green Economic Growth, Renewable Energy and food Security in Sub-Saharan Africa

This study examines the impact of green economic growth and renewable energy on food security in Sub-Saharan Africa (SSA). The rationale for the study comes from the background that with a fast rate of growing population, there is a high pressure on natural resources, which often leads to resource depletion, being experienced across the globe. This study utilises panel data analysis consisting of 37 SSA countries that are members of the Official Development Assistance (ODA). Data was obtained from the Food and Agriculture Organisation (FAO) and World Development Indicators (WDI) for the period 2005 - 2022. To control for endogeneity, the study applies the system Generalised Method of Moments (GMM). The result shows that renewable energy and green economic growth have a positive significant impact on food security, though this impact is asymmetric across SSA sub-regions. On the other hand, industrialisation through its emissions, contributes negatively to food security. The implication is that SSA countries should focus on policies aimed at improving green economic growth and renewable energy consumption; while policies aimed at reducing the inefficient adoption of renewable electricity and discouraging industrialization aimed at suppressing agricultural practices should be adopted.

From death to birth: Do logistics parks help local renewals in logistics industry?

In the era of E-commerce and globalization, the logistics industry has become a new driving force for local economic development, with government-led logistics parks planned and constructed as a powerful policy instrument. Skeptical about whether logistics parks really take effect as expected, this paper investigates the local process of creative destruction in the logistics industry, focusing on how government-led logistics parks bridge between firm exit and firm entry during industrial renewal. Using firm-level data of third-party logistics firms in China from 2003 to 2021 and adopting system GMM estimator method, we verify that previous exit contributes to future entry but varies by the firm type and the city's importance in the regional transport network. Furthermore, we find two major roles of government-led logistics parks: (1) accelerating this process by providing the platform where various resources can be reused and reorganized into high-quality new logistics firms; and (2) prioritizing the rebirths from local existing firms over arrivals from other cities, though with some level of local protectionism. Government policies and planning decisions should maintain such function without inhibiting regional market integration.

Transparency in Central Bank and Credit Expansion: Empirical Evidence from Asian Countries

Abstract This research investigated the influence of central bank transparency on credit expansion in 15 Asian nations (both advanced and emerging) during the period from 2000 to 2019. Panel OLS and Dynamic GMM estimation are used to identify the impact of central bank transparency on the credit spread. The findings indicate that central bank transparency plays a crucial role in lowering credit spreads and facilitating credit expansion. In addition, the influence of central bank transparency on credit spreads has a greater effect in emerging economies than in developed economies, highlighting the significance of transparency for tackling information asymmetry within the credit system. Overall, the research highlights the significance of central bank independence in reducing knowledge disparities and promoting a more transparent credit environment.

Effect of Capital Adequacy on Operational Efficiency of Commercial Banks in Kenya

This study investigates the impact of capital adequacy on the operational efficiency of Kenyan banks, highlighting its importance for financial stability and risk management using a two-step analytical approach: first, Stochastic Frontier Analysis was used to determine operational efficiency scores for each bank; second, a panel Generalized Method of Moments (GMM) regression model assessed the relationship between these scores and capital adequacy. The study employed a panel GMM Method, accounting for individual and time-specific effects as well as endogeneity and correlation biases. The study concentrated on data from 2008 to 2022, from verified audited financial statements from the Central Bank of Kenya and the respective banks' websites. The study revealed a positive relationship between capital adequacy and operational efficiency. Specifically, increased capital adequacy was associated with a 10.32% improvement in operational efficiency. The study also found that market structure plays a significant role in this relationship. Based on these findings, policymakers should adopt comprehensive strategies focusing on stringent capital adequacy regulations to enhance bank performance and stability.

BOARD STRUCTURE AND ISLAMIC BANK STABILITY: A STANDALONE RISK COMMITTEE MODERATING EFFECT

This study investigates the impact of board attributes on the stability of Islamic banks and whether the presence a standalone risk management committee (SARC) moderates their relation. Applying the feasible generalized least squares (FGLS) regression as well as the two-step system generalized method of moments (GMM) estimator for robustness to a panel sample of 43 Islamic banks across 15 countries over eleven years from 2010 to 2020, we document evidence suggesting that board meetings, board gender diversity and foreign directors do not influence the stability of Islamic banks. Conversely, board members holding doctorate degrees (PhDs) significantly and negatively affect the stability of Islamic banks. In addition, the presence of SARC significantly improves the stability of Islamic banks. The study further finds that SARC partially and positively moderates the effects of board members with PhDs and foreign directors on the stability of Islamic banks.

Dual-Credit Policy of New Energy Automobiles in China: Corporate Innovation Capability

This study investigates the impact of China’s Dual-Credit Policy on innovation capability in the new energy vehicle (NEV) industry using a difference-in-differences approach with dynamic panel data from 2013 to 2022. We employ multiple innovation measures, including patent counts, valid invention patents, and patent grant rates. Our findings reveal that the policy has a positive and significant effect on NEV innovation, partially mediated by R&D investment. Using GMM estimation to address endogeneity, we find the policy effect varies across subgroups based on location, ESG rating, and ownership type. Dynamic effect analysis shows the policy’s impact intensifies over time. Threshold effect analysis identifies a critical policy intensity level beyond which innovation effects are amplified. Our results have implications for policymakers in designing effective innovation incentives and for firms in strategically responding to regulatory changes in the NEV sector.

Revisiting the nexus between governance and poverty in Sub‐Saharan Africa

AbstractThe aim of this study is to investigate the influence of different components of governance on poverty. Hence, the study investigates the direct impact of four pillars of governance and 16 subindicators of governance on poverty in Sub‐Saharan Africa (SSA). This is unlike most previous studies that use a composite index of governance which does not have a bearing on specific policy variables. A panel data set of 41 SSA countries over a period from 2012 to 2022 is analyzed using the System GMM (Generalised Method of Moment) estimation technique. The findings show that improvement in the four pillars of governance (security and rule of law; participation, rights and inclusion; foundation for economic opportunity; and human development) would yield significant reduction of poverty in SSA. However, not all the sub‐indicators have a direct impact on poverty, those that show significant effects are: (a) rule of law and justice, (b) accountability and transparency, (c) anticorruption, (d) public administration, (e) infrastructure, (f) rural development, (g) social welfare, and (h) sustainable environment. All the significant indicators have bearing on the creation and protection of an enabling environment and opportunity for productive activities. Hence, it is recommended that policymakers should undertake judicial system reforms including reforms of the police services. Civil service reform is also recommended, while the business of government should be carried out transparently with zero tolerance for corruption.

Causal links between patents and economic growth: empirical evidence from OECD countries

Objective of the Study: This paper empirically investigates the reciprocal relationship and causality between patents and economic growth. Methodology/Approach: Utilizing the Generalized Method of Moments (GMM) Panel Vector Autoregression (PVAR) and panel VAR-Granger Causality frameworks, the study concentrates on Organisation for Economic Co-operation and Development (OECD) economies where a high fraction of global innovative activities take place. Originality/Relevance: The relationship and causality between patents and economic growth are investigated and evaluated by distinguishing the former variable into patent applications and grants. Main Results: The findings from the GMM panel VAR approach indicate that patent applications and grants significantly affect economic growth, whereas economic activities do not influence patent-related variables. The estimations from the panel VAR-Granger approach confirm these findings by presenting a unidirectional causality from patent applications and grants to economic growth. The impulse-response functions (IRFs) exhibit parallel findings, and further checks validate the stability of the findings obtained. The outcomes of this study point out two crucial implications. First, the impacts of patent applications and grants affect economic growth similarly while the impact of patent grants lasts longer. Second, while patents cause higher economic activity, the latter does not induce innovative activity through patents in the OECD. Theoretical/Methodological Contributions: It would be useful to conduct separate analyses for a selected product, sector, or country by including research and development (R&D) expenditures for different periods, country groups, and analysis methods. Social/Management Contributions: Countries should prioritize the establishment of an effective patent management system that will increase the pace of innovation and the implementation of incentive policies for the development of high-value-added technology products. JEL Classifications: O34, O40, O50, C23

Being good by doing good: an analysis of audit fees, philanthropic initiatives and board gender diversity among Chinese listed firms

Purpose Despite the acknowledged significance of the relationship between audit fees and corporate philanthropic initiatives, the existing literature has not yet reached the desired level of providing explicit evidence on how this relationship can be moderated by board gender diversity. This paper aims to contribute to the ongoing debate by using a panel data set comprising 905 Chinese listed firms over a five-year period from 2015 to 2019. Design/methodology/approach To generate solid findings and overcome the potential endogeneity bias, various econometric estimators, namely, ordinary least squares, two-step generalized method of moments, robust two-stage least squares and subsample analysis, have been carefully used. More interestingly, the study’s results remain consistent across different estimation methods. Findings The results reveal a statistically significant positive link between audit fees and corporate charitable giving. More interestingly, this connection strengthens with a higher representation of women directors on the board, particularly when there are three or more female directors. Furthermore, the results suggest that nonstate-owned firms exhibit greater motivation to participate in charitable giving initiatives compared to state-owned counterparts. Practical implications Stakeholders from various groups should attentively recognize the importance of gender-diverse boards as a dynamic factor impacting the association between audit fees and corporate charitable giving. Originality/value To the best of the authors’ knowledge, the crushing majority of the preceding research has not delved deeply into the critical role of board gender diversity in the relationship between audit fees and corporate charitable donations. Hence, this study provides a profound understanding of how audit fees predict corporate philanthropic initiatives.

AIDS SOCIAL EXPENDITURES, POVERTY AND INEQUALITY IN TIME OF COVID-19 PANDEMIC IN INDONESIA

The research investigates the correlation between social aid expenditure and poverty, and inequality across 34 Indonesian provinces from 2004 to 2022. Utilizing the two-step Generalized Method of Moments (GMM) estimate, it examines the impact of social aid expenditure on poverty rates and the Gini coefficient during the COVID-19 pandemic. Results show a significant decrease in the proportion of the impoverished population due to social aid expenditure, with minimal effects on inequality. The study highlights a substantial increase in both poverty and inequality during the pandemic, particularly in rural and urban areas. Analyzing the relationship between social welfare spending and COVID-19 impact reveals a positive influence on disadvantaged populations and inequality in Indonesian provinces. This underscores the need for a comprehensive review of social aid programs, especially amidst COVID-19 challenges.

Renewable Energy Transition and the Paris Agreement: How Governance Quality Makes a Difference?

This paper investigates whether the Paris Agreement affects renewable energy deployment and how institutional quality moderates this relationship. According to a generalized method of moments estimation for panel data for both developed and developing countries over the period 2000–2022, the Paris Agreement positively influences renewable energy deployment, suggesting that countries are promoting renewable energy to align with institutional expectations to maintain their reputations. The results further show that governance quality is the main determinant of renewable energy deployment. However, the moderating role of governance underscores the less-pronounced impact of the Paris Agreement on countries with high governance indicators, suggesting that these countries may have shifted their focus toward other avenues of climate management beyond the deployment of renewable energy. Furthermore, there is strong evidence of the relationship between forest area, CO2 emission, trade openness, domestic credit, and renewable energy deployment. The results are robust with the use of a dynamic panel threshold model.

The Influence of Women on Boards on the Relationship between Executive and Employee Remuneration

The growing presence of women at the top of companies has sparked interest in examining their role in the remuneration gap between senior managers and employees. This article analyses the traditional Chief Executive Officer (CEO)-to-employee pay ratio but includes a new relation, the senior-management-to-employee pay ratio, and extends the research by including six positions for women in company management: on the board of directors, executive directors, CEOs, proprietary directors, independent directors, and senior managers. The study is based on a sample of 77 listed companies in Spain from 2015 to 2022 and the panel data models have been estimated using the Generalised Method of Moments (GMM). The main findings indicate that the proportion of women in different categories of board and senior management positions has a positive effect on the CEO-to-employee pay ratio, especially in companies with higher market capitalisation. In contrast, the proportion of women in senior management positions has a negative effect on the CEO-to-employee pay ratio in all the samples analysed. Government agencies should prioritise the participation of women in non-board senior management positions in order to at least reduce the pay gap between senior managers and employees.

Impact of corporate philanthropy on firm performance: The moderating role of board structure

Corporate philanthropy plays an important role in enhancing firm reputation and financial performance. Further, board structure has the responsibility to make philanthropic decisions. This study investigates the moderating role of board structure on the relationship between corporate philanthropy and financial performance. We apply fixed effect model for analysing the results, while generalized method of moments (GMM) is employed to check the robustness of the results. We find that corporate philanthropy has a significant positive impact on financial performance. Further, results provide support for the moderating role of board attributes. The findings suggest that the policymakers should take appropriate decisions regarding corporate philanthropy while considering other factors such as board attributes.

The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

Non-financial companies listed on the Frankfurt Stock Exchange face considerable difficulties due to expensive funding and the need to make complex decisions about their capital structure. These problems impact their judgments about dividend policy, resulting in ambiguity and possible inefficiency. This study draws on the bird-in-hand theory to investigate the influence of the cost of capital on dividend policy decisions among non-financial firms listed on the Frankfurt Stock Exchange, focusing on 227 companies from 2005 to 2022. The data for this study were sourced from Thomson Reuters Datastream. Employing the common shock autoregressive distributed lag (CS-ARDL) and two-step generalized method of moments (GMM) estimations, findings reveal that the cost of debt consistently negatively impacts dividend payouts and coverage ratios. In contrast, the cost of equity has an insignificant effect. Conversely, the weighted average cost of capital positively influences dividend payouts and coverage ratios but negatively influences dividend yield. All the findings supported the bird-in-hand theory except for the negative impact of WACC on dividend yield. These insights highlight the importance of considering the cost of capital and market share dynamics in dividend policy formulation. Firms should prioritize efficient debt management to sustain dividend distributions, and aligning dividend policies with overall capital structure management is crucial in this regard, providing a sense of reassurance and confidence to the firms and their stakeholders. This study provides valuable guidance for financial decision-makers navigating dividend-related strategies within corporate environments.

Infrastructure's role in enhancing child well-being across sub-Saharan Africa

Even though several studies link access to infrastructure and wellbeing, very few clearly examine the impact of this relationship on children. so, does enhanced access to infrastructures improve child well-being? Thus, the study examines the contribution of access to infrastructure on children's well-being. It uses the Generalized Method of Moments (GMM) on 30 countries in sub-Saharan Africa from 2000 to 2020.. Results of the study show that access to education, healthcare, electricity and sanitation helps reduce child mortality and anemia. Thus, authorities in developing countries should Improve the construction and development of these infrastructures. Furthermore, public policies should ensure that infrastructures are accessible to all children, including those with special needs or living in rural or disadvantaged areas.

Can Africa–China cooperation influence African green growth to truly alleviate undernourishment? Evidence of the quadruple mediating effect

AbstractClimate change has significantly threatened the global economy and increased the risk of food insecurity. Despite humanitarian efforts, African countries continue to face huge challenges related to global warming and deep undernourishment to reach a sustainable future. In this respect, China and Africa engage in bilateral exchanges to overcome these difficulties. However, exploring sustainable partnerships between China and Africa is a complicated and multifaceted topic, notably in the green economy and treating undernourishment, which needs more pertinence scientific research. Accordingly, this paper aims to explore the combined effect of eco‐innovation, Chinese investment, and trade on green growth while simultaneously addressing the issues of undernourishment in the context of Africa–China cooperation. This study applies the generalized method of moments (GMM) to analyze a sample of 26 African countries over 11 years. This paper finds that eco‐innovations and FDI positively impact green growth, with p‐values below .046. The study reveals that Chinese exports have a detrimental effect on green growth, with p‐values below .033. This paper shows that green growth has a positive impact on undernourishment. This research finds a quadruple mediating effect of green growth between its driving factors and undernourishment. Therefore, our findings demonstrated that China's growing involvement in Africa, mainly through exporting natural resources, is likely to impede the attainment of sustainable development goals. However, countries can still gain from FDI and import sustainable products from China. Lastly, policymakers must consider the importance of the increasing interaction between China and Africa to achieve sustainable growth and reduce undernourishment.