GMM Model Research Articles

Study on the influence of digital inclusive finance on the development of provincial fishery economy and regional economic convergence in China

In recent years, the rapid development of digital inclusive finance in China has affected many aspects of social development, especially economic development, which has a good driving force. At the same time, the development of the fishery economy has been challenged by many aspects, and digital inclusive finance may inject new development momentum into the development of the fishery economy. Using the digital financial inclusion index and relevant data on the fishery economic development of 31 provinces, autonomous regions, and municipalities in China from 2013 to 2020, this paper empirically analyzes the impact of digital financial inclusion on provincial fishery economic development through the dual fixed effect panel data econometric model of controlled region and time. The main conclusions are as follows: The benchmark regression results show that digital inclusive finance can positively promote the development of the fishery economy at the significance level of 1%, and the digital development degree of digital inclusive finance also has a significant role in promoting the development of the fishery economy. After the endogeneity test of the system GMM model and a series of robustness tests, the model results are still significant. The results of the moderating effect model show that technological innovation plays a positive moderating role in the impact of digital inclusive finance on the development of the fishery economy, while the upgrading of the industrial structure plays an inhibitory role. Based on the results of the β convergence model, it can be found that there is no convergence in the level of fishery economic development among provinces. The development of digital inclusive finance will play a greater role in promoting areas with better fisheries and economic development, thus widening the development gap between regions. Finally, the paper discusses the effect of the conclusion and the improvement, which is of reference significance for the coordinated development of the fishery economy based on finance between regions.

Driving economic success: Fintech, tourism, FDI, and digitalization in the top 10 tourist destinations

Economic growth in leading tourist destinations faces challenges requiring investment, technological advancement, and resource management. This study examines the impact of tourism, Fintech, FDI, and digitalization on economic growth in Austria, France, Germany, Greece, Italy, Mexico, Spain, Turkey, the UK, and the USA. These countries, identified by UNWTO for 2022, represent 46% of the global tourism market. Utilizing yearly data from 2010 to 2022 from sources like the World Bank, Crunchbase, and UNWTO, we apply Pooled OLS, PCSEs, FGLS, and Two-Step GMM models using Stata v17.0. Additionally, Necessary Condition Analysis (NCA) was conducted using SmartPLS v.4.3 software. Our findings reveal that Fintech, tourism, FDI, and digitalization significantly contribute to economic growth, with varying degrees of impact across different models. Specifically, digitalization and tourism demonstrate the most substantial positive effects, while FDI and Fintech also play crucial roles. The study highlights the necessity of integrating these factors to foster sustainable economic growth in top tourist destinations. These results provide actionable insights for policymakers, stakeholders, and government officials, emphasizing the importance of strategic investments in Fintech, tourism, FDI, and digital infrastructure to enhance economic performance. The implications of this research extend to informing policy formulation and strategic decision-making aimed at leveraging technological advancements and investments for sustained economic development in major tourist economies.

The effect of global collaboration on climate mitigation technologies in reducing CO2

The fundamental approaches to industrial growth, government interventions, and market structure have ignored the main consequences of the common idea of “growth first, clean later”. This study investigates the relationship between carbon emissions (CO2) and international collaboration in climate change mitigation technologies (ICCCMT), renewable energy consumption (REC), exports (EXP), imports (IMP), gross domestic product (GDP), foreign direct investment (FDI), natural resources rents (NRR), and domestic innovation in climate change mitigation technologies (DICCMT) for a panel of the Organization for Economic Cooperation and Development (OECD) countries over the period of 1990-2020. We adopted a series of econometric techniques for the visualization of the available data. We used second-generation econometrics estimations to verify cross-sectional dependence, co-integration, and stationary between the variables.Based on our findings, the study reveals that ICCCMT, REC, and DICCMT have a positive effect and contribute to CO2 mitigation of the 30 OECD economies. Furthermore, the findings reveal that ICCCMT can promote renewable energy consumption, thus the increase of REC will significantly mitigate CO2 emissions. The outcomes from the panel dynamic GMM model confirmed a positive relationship between CO2 emissions, FDI, exports, imports, and GDP. The study indicates that these variables can adversely affect climate change mitigation.

What environmental and social factors are most relevant to the efficiency and performance of companies? The case of a small bank-oriented country

PurposeThis work aims to analyze the factors that influence the performance and efficiency of Portuguese companies, namely the influence of social and environmental features.Design/methodology/approachTo achieve our aim, we have used the Portuguese benchmark index, the Portuguese stock index – PSI, during the period from 2016 to 2020. To test the hypothesis panel data methodology was used, specifically, the GMM system originally proposed by Arellano and Bond (1991) and the Value-Based DEA developed by Gouveia et al. (2008).FindingsThe results of the GMM model show that social performance has a negative relationship with the company’s performance, from the perspective of different stakeholders, reinforcing that the cost-benefit trade-off of social spending is not yet understood as advantageous for the company’s performance. On the other hand, environmental performance, for external stakeholders, positively influences the company’s performance, perhaps due to pressure from society and the tradition of disclosing environmental matters. The value-based DEA results reinforce that from the perspective of the external stakeholder, non-efficient companies must increase their environmental performance to become efficient, highlighting the role of environmental performance in explaining efficiency. It is unanimous that social performance is still not seen as a lever of efficiency.Originality/valueThis is the first work to use a hybrid methodology to understand the performance determinants of a small banking-oriented country, emphasizing environmental and social aspects.

The Role of Government Health Expenditure in Driving Economic Growth: Evidence from OECD Countries

This study examines the influence of government health expenditure and life expectancy on economic growth. The study makes use of panel data analysis and utilizes data from the OECD nations between 2000 and 2021. The study applies panel data analysis using POLS, FEM and REM models and dynamic GMM models. The study also gauges the moderating role of life expectancy on the relationship between government health expenditure and economic growth. The results indicate that government expenditure on health hurts economic growth. A detrimental relationship between life expectancy and economic growth indicates that higher life expectancy could result in elevated healthcare and financial expenses. Nevertheless, the interactive regression model suggests that there is no significant moderation of the association between government expenditure on health and economic growth by life expectancy, implying that the influence of government health expenditure on economic growth is generally unaffected by demographic changes. These findings emphasize the significance of differentiating between the short-term and long-term economic consequences of healthcare expenditure. This study offers insights into the optimization of public spending in OECD nations to promote sustainable economic growth and enhance public health outcomes.

Mechanism analysis of the impact of regional digital transformation on the employment quality in the perspective of labor force structure

Regional digital transformation has revitalized economic development and revolutionized the employment landscape of the labor force. The study employs a dynamic panel system GMM model to investigate the direct and indirect effects of regional digital transformation on the employment quality of China’s labor force using panel data from 31 mainland provinces. The findings suggest that regional digital transformation initially has a negative impact on employment quality, but that it continues to improve continuously as it progresses, showing a “U-shaped” trend. A nonlinear mediation analysis across industry, sector, and skill levels of the labor force structure uncovers a complex, bridging effect on employment quality. This study provides valuable insights for improving employment policies and promoting full employment, highlighting the dynamic interplay between regional digitization and the labor market.

Corruption and emigration from the Western Balkans: evidence from a dynamic system GMM model (2012-2022)

According to neoclassical models, migration takes place when there is a strong probability that individuals will recoup their human capital investments. As a result, workers typically move from low-income to high-income areas and the larger the expected income gap between areas, the higher the number of migrants. In countries where corruption is endemic, jobs are often secured through political connections and bribes. This will lead to a higher unemployment level as well as to a lower return to human capital. Consequently, a significant proportion of the population considers emigration as the only path to succeed. The present study is focused on the impact of corruption on emigration from six Western Balkan countries. A System Generalized Method of Moments is estimated to analyze migrant stocks in 28 receiving countries during the period from 2012 to 2022. We suggest that corruption can directly influence migration stocks in receiving countries.

Economic Growth and Democratic Political System in Developing Countries

The relationship between a democratic political system and economic growth has been the focus of debate in recent years. This article is a contribution to the economic analysis of the relationship between democracy and economic growth. Using an econometric illustration of panel data from twenty developing countries, in a period from 2000 to 2021, Fixed-effect, random-effect and GMM model estimates show that a democratic political regime positively affects economic growth in developing countries. This result is explained by the importance of the role of democracy in implementing economic and social reforms, encouraging investment, opening up trade and protecting civil liberties and political powers.

Impact of environmental, social, and governance performance on cash holdings in BRICS: Mediating role of cost of capital

AbstractAs businesses globally navigate the intricate landscape of environmental, social, and governance (ESG) practices, understanding their financial implications becomes paramount. The primary objective is to illuminate the impact of ESG performance on cash holdings (CHO) within the context of the BRICS nations. Additionally, the study aims to explore the mediating role of the cost of capital (COC) in shaping these relationships. The empirical analysis was conducted on comprehensive dataset over the period 2010–2022 of BRICS. We establish the regression analysis by utilizing a fixed effect and system GMM models. The empirical findings reveal a significant negative (−0.012 coefficient value) impact of ESG performance on CHO, indicating that a one‐unit increase in ESG can decrease the CHO by 1.2% and this effect is significant at 1%. This further highlights declining trend in cash reserves among companies embracing sustainability practices. Notably, the study documents the mediating role of the COC, showcasing its influence in reducing internal cash reserves in the presence of low external financing costs. The study highlights the financial benefits associated with robust ESG practices. Companies in the BRICS nations are encouraged to integrate sustainability considerations into their business strategies, recognizing the potential for reduced CHO and favorable COC outcomes. Beyond financial gains, the study underscores the societal and environmental contributions of ESG practices. This study contributes to the literature by uncovering the mediating role of the COC, providing a comprehensive understanding of how sustainability practices influence internal cash reserves in the context of diverse economic landscapes.

Air Pollution and Urban Economic Growth: A Study Based on Dynamic Models

<p class="Paragraph"><span lang="EN-US">With China's economic growth, the issue of air pollution has become increasingly prominent. As the core of political and economic development, 184 major cities in China face severe air pollution and significant environmental pressures due to high population density. Consequently, China has established key urban environmental monitoring stations in these cities to monitor pollution emissions in real time. This paper utilizes panel data from 184 Chinese cities spanning 2012-2022 and employs dynamic GMM models, fixed effects models, and mediation effect models to empirically examine the impact of air pollution on urban environmental pollution and its mediation mechanisms. From the perspective of cities with different income levels, a dynamic GMM model is established to determine the correlation between air pollution and various factors influencing urban economic growth. The study finds that air pollution significantly reduces economic growth in Chinese cities at the 1 per cent level, with each unit increase in air pollution reducing economic growth in Chinese cities by 0.84 units. Urbanization and human capital are identified as two crucial channels through which air pollution affects the economic development of Chinese cities. The negative impact of air pollution on economic growth is more pronounced in larger cities compared to smaller ones, and the adverse effects of haze pollution become increasingly significant over time. Therefore, policymakers should take the cultivation and application of new quality productivity as a key strategy to enhance the quality of economic development, and realise a win-win situation between economic growth and environmental protection through scientific and technological innovation and industrial restructuring. This will not only help alleviate the air pollution problem, but also inject new momentum into the high-quality development of China’s economy.</span></p>

Study on the influence of global tourism development on the upgrading of county industrial structure

Taking the global tourism as an important grasp, promoting the tourism to the industrial structure optimization and economic development of the driving force, is conducive to the high-quality development of China's county economy. Based on the panel data of 255 demonstration counties of global tourism in 30 provinces in China from 2012 to 2020, and on the basis of analyzing the correlation between the two, this paper empirically tests the relationship between the development of global tourism and the upgrading of county industrial structure by using static panel model and systematic GMM estimation method. It is found that the development of global tourism has a positive and significant impact on the upgrading of county industrial structure, and there are significant differences in this effect between the eastern, central and western regions of China. Therefore, this paper puts forward some countermeasures and suggestions to promote the upgrading of county industrial structure through the development of global tourism.

The impact of smart city construction on achieving peak carbon neutrality: Evidence from 31 provinces in China

Amidst the intensification of global warming concerns, addressing climate change has become an urgent imperative, with carbon dioxide emissions standing as the primary driver of the greenhouse effect. This study delves into the relationship between smart city development and carbon emissions in China, leveraging panel data spanning 2012–2021 across 31 provincial units for empirical analysis. The study posits a negative correlation between smart city construction and carbon emissions. To comprehensively gauge the level of smart city development, a weighted evaluation index was constructed using the panel entropy weighting-topsis method. Employing fixed effects, random effects, high-dimensional fixed effects, and two-step system GMM models, the study aims to comprehensively assess the impact of smart city construction levels on carbon emissions. Results reveal that heightened smart city construction levels coincide with reduced carbon emissions, thus substantiating the research hypothesis.

Capital price distortion, financial leverage, and credit risk in commercial banks

This paper uses panel data from 30 provinces and cities from 2012 to 2022 (excluding Tibet, Hong Kong, Macao, and Taiwan), and empirically examines the impact of capital price distortion and financial leverage on the non-performing loan (NPL) ratio of banks by constructing a dynamic panel system GMM model. The study finds that capital price distortion and financial leverage have a significantly positive impact on the NPL ratio of commercial banks. Increasing the degree of capital price distortion and financial leverage leads to a higher NPL ratio. Further analysis reveals that capital price distortion has a significantly positive impact on financial leverage, while Overcapacity has a significantly negative impact on financial leverage.

Using social Cognitive theory to reengage dormant users in question and answer Communities: A case study of active StackOverflow participants

Online question-and-answer communities are seriously threatened by low user participation. There is currently a rare comprehensive study on the knowledge contribution pattern of consistently active participants and the moderating role of peer recognition, which can help improve low participation and reengage inactive users, despite researchers having examined the various facets of knowledge contribution and made helpful suggestions. As per the self-determination and social cognitive theory, the communal environment impacts peers and imitates role models or reliable sources in their involvement patterns. We have examined StackOverflow’s most reliable active users from 2010 to 2020 using the social cognition and self-determination theories to use the findings to reactivate dormant users. We have used a two-step dynamic system GMM model to get robust and reliable findings. The research discovered that peer repudiation, reputation, and online social interactions favorably affect the contributed knowledge. However, knowledge-seeking and earning virtual badges such as gold and bronze usually negatively impact it. Furthermore, it was revealed that the effect of virtual badges on contributed knowledge was positively moderated by peer recognition. However, peer recognition reduces the benefits of social interaction and reputation on the contributed knowledge. The study’s findings advance the body of knowledge and provide thorough management implications for raising low participation, reengaging inactive users, and cultivating a culture of innovative sharing of knowledge.

Major Customers and the Speed of Leverage Adjustments

Purpose: This study investigates how major customers influence the speed of adjustment (SOA) in a firm's capital structure, specifically examining the effects of governmental versus non-governmental major customers.Study design/methodology/approach: The study employs Blundell and Bond’s (1998) GMM model to estimate SOA. Robustness methods include fixed effects, two-stage least squares (2SLS), propensity score matching (PSM), and the augmented doubly censored Tobit (DPF estimator).Sample and data: The sample consists of 186,240 firm-year observations from Compustat North America annual files and Compustat historical segment files, spanning 1978 to 2013. Firms in the utility and financial sectors are excluded.Results: Findings indicate that major customers significantly influence SOA by reducing market uncertainty through certifications. Firms with major customers have a higher SOA, with governmental customers exhibiting an even higher SOA than non-governmental ones. Results are consistent across various models and settings.Originality/value: This study uniquely identifies major customers as critical determinants of SOA, highlighting the heterogeneities in firms' SOA. It stresses the importance of considering customer type in financial strategies, differentiating between governmental and non-governmental impacts. These findings offer valuable insights for scholars, policymakers, and practitioners.Research limitations/implications: Focusing on publicly listed U.S. firms limits generalization. Future research should extend the analysis to other regions and recent periods. The findings provide insights for supplier firms in strategizing financial decisions and managing relationships with major customers. We emphasize the significant role of major customers in financial strategies, advocating for more detailed disclosure policies in the U.S. and globally to enhance transparency and market efficiency.

Balancing profit and planet: The effect of corporate tax rates on environmental quality and innovation in Asian Countries

In contemporary literature, extensive research has focused on the influence of environmental taxation on the environmental performance of industrial sectors. However, it is still uncommon in the existing literature how corporate statutory tax rate (CTR) affects environmental performance. Therefore, this study aims to empirically investigate the relationship between CTR and environmental quality (ENQ) as well as environmental innovation (EIN). To conduct this analysis, we utilized 19 years of financial data spanning from 2001 to 2019 across all 48 Asian economies. Our research employed both panel quantile regression (PQR) and system GMM models for the regression analysis. The empirical findings reveal that the corporate statutory tax rate has a positive impact on CO2 emissions, leading to deterioration of the environmental quality, while simultaneously exerting a negative influence on environmental innovation, inhibiting green innovation. These effects of the CTR on ENQ and EIN remained consistent even when controlling for factors such as economic growth, foreign capital, financial development, and environmental taxation. These findings have significant policy implications, suggesting the need for a reevaluation of current tax policies and the introduction of tax rebates for companies striving to enhance their environmental sustainability. This study contributes to the literature by shedding light on the adverse consequences of high taxation on the environmental performance of businesses.

A comprehensive analysis of the impact of greenhouse gases, energy usage, institutional quality and globalization on health: A case study of selected developing nations

AbstractThis study inspects the health consequences of greenhouse gases, energy use, institutional quality and globalization for the 23 developing economies. Utilizing panel data from 2000 to 2022, various estimation techniques, including static models (pooled, fixed and random), the two‐step systemGeneralized Methods of Moments (GMM and Panel Auto Regressive Distributive Model (PARDL), are applied to investigate the short‐ and long‐term effects of greenhouse gases, energy use, institutional quality and globalization on health. Panel causality tests, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) are employed to ensure robustness and causal linkage among variables. The results confirmed a positive association between health and its lag value. Institutional quality negatively influences health expenditure, while greenhouse gases, energy use and globalization exhibit an increasing effect on health expenditure. Life expectancy, institutional quality, energy use and globalization have favourable effects, while greenhouse gases negatively affect health outcomes. In Model 1, energy usage and health expenditures have two‐way causality, and green house gases and energy use in Model 2 have a bi‐directional causal linkage. All variables exhibit unidirectional causality, except globalization and institutional quality, as shown by the Dumitrescu and Hurlin causality test. The study complements the literature by stating that institutional quality is the key instrument for managing the negative consequences of the recent increase in globalization and energy use and their detrimental impact on health in developing economies.

Damage identification of plain-woven composites at T > Tg using AE: Damage clustering and initiation detection

In this work, the damage modes and their initiation detections of plain-woven composites under tensile and compressive loads at T > Tg are investigated by conducting a comprehensive analysis of AE signals, including the feature selection, algorithm comparison and clustering validity. According to a newly proposed Pearson correlation coefficient cumulative criterion, the PF and PA are the most representative features of AE signals. A systematic comparison of K-Means, GMM and Hierarchical model, reveals that the Hierarchical model is the most suitable clustering algorithm for plain-woven composites at T > Tg. The cluster validity indexes combined with microscopic observations identify matrix cracking, interface debonding and fiber breakage as the three dominant damage modes, with PF ranges of [0–200 kHz], [200–350 kHz] and [350–600 kHz], respectively, and independent of different loading conditions. Three damage initiation criteria, sentry function, b-value and cumulative AE counts, are compared and the sentry function is determined to be optimal. The damage initiations of matrix cracking, interface debonding and fiber breakage within plain-woven composites at T > Tg can be effectively detected by AE.

Internet development and green economic efficiency in China: A new perspective of government's dual goal constraints and citizens' green lifestyle

AbstractThe rapid development of the information and communication technologies (ITCs) and the internet is deeply embedded in all aspects of economic life. With its high economic efficiency and significant green attributes, digitalization provides opportunities for promoting a green economy. However, the effects of digitalization and internet development on China's green economic efficiency are understudied. There is also a gap in research on how digitalization and internet development influence Chinese citizens to choose a green lifestyle from the consumer perspective. This article aims to enrich the research in this field by exploring the effects of internet development on green economic efficiency in China. The article further analyses how digitalization and internet development can encourage citizens to choose a green lifestyle. Drawing on panel data from 257 cities in China spanning the period from 2012 to 2020, this article utilizes the entropy method and the SBM‐GML model to assess the correlation between internet development and green economy efficiency. We also employ the basic regression model, system GMM model, mediation effect model and adjustment model to study the impact of internet development on urban green economic efficiency. The study found that internet development and green economic efficiency face constraints that are inherent in the government's dual economic growth and environmental goals and targets. We also found that digitalization and internet development can promote citizens' adoption of green lifestyles through the fostering of citizen environmental concern and green consumption habits. Further analysis shows that internet development has a more pronounced effect on green economic efficiency in eastern cities, large cities, non‐resource‐based cities and cities with higher economic development. These findings provide useful references for developing countries that promote urban green economic efficiency through digitalization and internet development.

Subprime Crisis Revisited: Effect of Payment Shock on Foreclosure Rates

This study investigates how payment shock from interest rate resets affects subprime mortgage foreclosure rates. Using robust econometric techniques (OLS, 2SLS, GMM), it isolates the causal effect of payment shock while accounting for house prices and borrowers’ ability to pay. Our findings show a significant positive link (27%) between payment shock and foreclosure rates. It highlights economic stability’s importance, showing negative correlations between foreclosure rates and ability to pay, as well as foreclosure rates and house prices. Lagged foreclosure rates show a persistent effect. The GMM model provides the most reliable estimates by addressing endogeneity, heteroscedasticity, and serial correlation.