Long-run Association Research Articles

Nexus of Green Finance Environment in G-7 Countries: A fresh insights from EKC using GHG Emissions and Ecological Footprint

The main intention of the study is to investigate the trade openness, economic development and greenhouse gases which make their influence on environmental quality regarding G-7 countries. The study employed the Panel Ordinary Least Squares (POLS), Grangers causality test and panel ARDL model for data analysis. This study analyzes the robustness of Environmental Kuznets curve (EKC) hypothesis by investigating the extent to which trade openness whose have their influence on quality of environment through various environmental indicators for the period of 1970 to 2018. On the basis of empirical findings, there is long-run association exist among GHG emissions and economic development of G-7 economies. The estimated consequences present that GDP exists in bidirectional causality with the combination of green finance in long-run. Meanwhile, there is unidirectional association exist among GDP and energy consumption. This study found that trade openness among these seven economies increased the environmental degradation and disturb the environmental quality. Various safety measures are adopted to control the environment and make over the different agreements among G-7 economies to increase the trade openness and control the GHG emissions. This has shown significant effects for maximizing the GDP wealth of G-7 economies. There is a significant association exist between trade and environmental degradation with respect to these seven countries. The consequences reveal the positive relationship of trade openness with N2O and environmental quality while the positive association with the ecological footprint in overall G-7 economies. The findings make sure the inverted U-shaped EKC exists in all economies when N2O and ecological footprint are used as environmental indicators. However, this U-shaped EKC exist in all G-7 countries who have acme income level when greenhouse gases indicators are applied for the evaluation. Eventually, it recommended, if G-7 countries continue trade openness policies with energy sector reforms and maintains sustainable use of bio- capacity, then they will be able to combat environment issues with increase their development. This might increase more GDP of these economies which make stronger and development in long-run. In such a way, more financial development take over these economies make beneficial.

How Does Inward FDI Lead to Trade Performance and Sustainable Growth In India?

Objectives: The purpose of this study is to examines the relationship between Foreign Direct Investment and trade performance (Export and Import) in India from 1991-2022. The purpose of the study is Causality analysis also, between FDI and trade with other considered variables. Methods: This study utilizes annual data from 1991 to 2022 from the World Bank (2022) and the Reserve Bank of India (2022). Data on GDP, Export, Inflation and interest rate, and FDI are collected from the World Bank. Autoregressive Distributive lag Model procedure has been used for the study in order to establish relationship between trade performance and FDI. Results and discussion: The Auto-regressive distributive lag-bound-co-integration (ARDL) method confirms a long-run association between FDI and export. Coefficient indicates significant and negative relation establishes between FDI and Export but the coefficient between FDI and import represent weak relation. Causality analysis reveals unidirectional relation between FDI and Export, and the direction of causality is from export to FDI. It means export causes FDI, FDI does not causes Export. A negative coefficient indicates that there is a need for efficiency-seeking and export-oriented FDI but negative relations support that Foreign Direct investors prefer market seeking FDI and they focused more on the domestic market opportunity of India. Research Implication: This result supports the market-seeking approach and FDI trade substitute theorem which confirms that the inflow of FDI in India is only for utilizing domestic market opportunity instead of exporting goods to other countries. Therefore, there is a need for efficiency-seeking or export-oriented FDI. The government should facilitate and accordingly create their policy to increase export-oriented FDI to improve technology and productivity of India as well as increases foreign exchange and infrastructure dvelopment in order to sustain growth of india. Originality: India’s FDI situation is presently seeing a growth with liberalized reforms over the recent two decades, several changes like ease of doing, infrastructural development, increased the limit of FDI in several sectors create alluring investment atmosphere having a beneficial outcome of the inflows. Result contributed towards trade and FDI relation that FDI comes from the other countries in india to capture our market potenials so government should try to enhance export oriented FDI in order to know the techniques and improves the export potential as well. Investment and export both simultaneously create a path for sustainable development.

Life expectancy and health care spending in South Asia: An econometric analysis

Affordable health care is often a result of increased government spending on the health sector. Out-of-pocket expenses remain the primary health care funding source in many South Asian nations. Lack of adequate public funding for health services, difficulty in obtaining health insurance, and high out-of-pocket costs can result in indebtedness, reductions in actual consumption, and decreased access to health care services. The study examines life expectancy and health care spending in South Asian countries. The life expectancy of South Asian countries is studied as a health outcome in relation to health care spending, gross national income per capita, and expected years of schooling. This study is based on secondary data from World Bank statistics that covers eight South Asian countries from 2000 to 2021, for a total of 176 pooled time series and cross-sectional observations. The data were analysed using econometric models, including the cross sectional dependency test, panel unit root test, panel co-integration test, vector error correction model, pair-wise Granger causality test, and Wald test statistics. The vector error correction model results indicate that health care spending, anticipated years of schooling, and gross national income per capita have a long-run association with health outcomes. Health care spending, per capita gross national income, and expected years of education have all greatly enhanced life expectancy in South Asian countries. An effective health strategy is necessary to increase people’s healthy life expectancy and well-being. To accomplish this, government may need to promote school enrolment to help people become more health literate and aware of their health outcomes. As a result, persons with more years of schooling have better health, higher levels of well-being, healthier habits, and ultimately, a longer life expectancy. This study will provide an important insight to policymakers in improving health outcomes through targeted and sustained health care spending in South Asia.

The impact of decentralized finance development on banks deposits variability: PVAR approach

Purpose This study aims to investigate the potential impact of total value locked (TVL) fluctuation in decentralized finance (DeFi) on banks deposits for a sample of 21 countries, including the Eurozone members and the USA, over the period from July 2018 to October 2023. Design/methodology/approach Panel vector autoregression model has been used to analyze the existence of a relationship between TVL and banks deposits. In the second stage, the impulse response function has been exercised to find out the response of banks deposits among each nation. Findings Empirical findings exhibit that while increases in TVL have a significant negative long-run association with banks deposits in a global perspective, the effect is weak, suggesting modest disruption to traditional banking services to date. However, the impact varies between short and long-run effects at the country level. Six nations exhibit substantial negative long-run effects, whereas eight countries experience only temporary decreases in deposits following TVL upticks that rebound over time, reflecting the lack of trust in DeFi services and the engagement in speculative instead of long-term activities. Research limitations/implications This study provides general insights into DeFi’s impact on banking performance and deposit stability. However, it likely has limitations in scope and time frame. Future research could explore long-term effects, specific DeFi protocols and cross-country comparisons. Practical implications This study’s findings provide key insights for policymakers, central banks and bank managers on the impact of DeFi growth on banking performance and deposit stability. The results highlight the need for adaptive regulatory frameworks and investment strategies to address the emerging DeFi ecosystem. At the country level, the observed variations suggest the importance of tailored policy approaches. These insights are crucial for developing effective regulations and strategies in the evolving financial landscape. Social implications DeFi growth may alter financial access and inclusion, raising concerns about consumer protection and literacy. It could shift power dynamics in finance, potentially reducing traditional intermediaries’ influence while creating new forms of inequality. Balancing innovation with social responsibility is crucial for equitable distribution of benefits. Originality/value Although numerous studies have been conducted on the effects of cryptocurrencies on bank deposits and stock performance across various regions, they have largely overlooked the DeFi and its role in influencing deposits as a new competitor to traditional banks services. This study aims to address this gap by examining the influence of TVL developments on banks deposits, and to what extent it can be served as an alternative to banking services.

Macroeconomic determinants of housing demand in Saudi Arabia: an autoregressive distributed lag approach

Purpose This study aims to investigate the macroeconomic factors influencing housing demand in Saudi Arabia using quarterly data for the period 2010 Q1–2024 Q2. Design/methodology/approach The autoregressive distributed lag bounds test and vector error correction model are used to determine the dynamic relationship between the macroeconomic factors. Findings The results reveal that the F-statistic value of 4.2043 is higher than the upper bound of the critical values at 5% level of significance, indicating long-run association among the series. While there is a negative and significant influence of interest and inflation rates on housing demand, income per capita and population have a positive and significant influence on housing demand. Similar result is found for the short run analysis except income per capita which has positive but insignificant impact. Moreso, the population seems to be very crucial to housing demand in both short-run and long-run periods. Social implications The outcome of the study has important policy implications by enjoining the policymakers in Saudi Arabia to consider a decisive management of monetary and fiscal policies to ensure that inflation and interest rates for housing are kept at a low level to encourage housing demand. Also, adequate policies should be put in place to ensure housing/property affordability that matches the increasing population due to tourism, urbanisation and growing birth rate. Originality/value Studies on the macroeconomic determinants of housing demand are less explored as most studies dwell more on social and demographic factors despite the importance of macroeconomic factors towards house ownerships. There is a dearth of related studies in Saudi Arabia.

Relationship between Bank Credit and Economic Growth: Evidence from Nepal

Bank credit serves as the lifeblood of economic activities. The paper aims to investigate how bank credit contributes to economic growth by employing the ARDL model, spanning the period 1975 to 2023 in Nepal. The observed empirical analysis shows a positive short-run and long-run association between bank credit and the growth in the economy. The findings of the study suggested that policymakers should focus on increasing credit by the banking and financial sectors to boost economic growth in the long run.

Macroeconomic determinants of marriage and divorces in Azerbaijan

This research aims to identify how macroeconomic performance affects the marriage and divorce trends in Azerbaijan. Authors take economic growth, unemployment, and inflation rate indicators as primary measures of overall macroeconomic performance for 2000-2022 and employ ARDL methodology to examine the existence of long-run associations. Research results are in line with previous findings in the literature, confirming the significant long-term impact of inflation and unemployment rate on the divorce rate in Azerbaijan. Though the economic growth rate has no significant impact on the divorce rate, the research shows a positive impact on marriages and a decreasing influence on divorces in the country. Higher inflation and unemployment rates push the divorce rate upward. The unemployment rate has a particularly significant negative influence on the number of marriages in the case of Azerbaijan. Because the upward trend in the divorce rate is a hot topic in public discourse and perceived to be a social problem in the country, the research has substantial policy implications perspective.

Assessing the Environmental Sustainability Corridor: Carbon Emissions in Relation to Gold Price, Economic Growth, Foreign Direct Investment, and Renewable Energy Consumption

The growing concerns about global warming and its perceived influence on economic sustainability require a reassessment of the environmental consequences of gold mining, with a special focus on BRICS countries: Brazil, Russia, India, China, and South Africa. This paper examines the environmental sustainability corridor, carbon emission, gold price, economic growth, foreign direct investment (FDI), and renewable energy use between 1989 and 2020. The long-run association among the variables is checked by us through the PMG technique. Our findings indicate that while the gold price, FDI, and renewable energy use decrease carbon emission, economic growth adds to the increase in carbon emissions in the long run. These findings bring out the dual challenge of promoting economic growth while managing environmental impact. The study underlines how policymakers need to provide regulatory frameworks which will encourage renewable energy and responsible foreign investment, as a means of trying to mitigate the environmental impacts of gold mining and achieve sustainable development. Our research adds to the continuing debate about how economic expansion can be balanced with environmental preservation for resource-rich countries.

Macroeconomic variables and initial public offerings in Sri Lanka: a principal component analysis approach

PurposeThis study aims to comprehensively examine the relationship between initial public offering (IPO) activities and macroeconomic factors in Sri Lanka.Design/methodology/approachThis study uses principal component analysis (PCA) and autoregressive distributed lag (ARDL) techniques to examine the relationship between IPO activities and macroeconomic factors. Ten macroeconomic variables are transformed into principal components (factors) using PCA. Then, ARDL is applied to investigate the long- and short-term relationships between IPO activities and the transformed macroeconomic factors.FindingsThe empirical investigation identifies three principal factors from the ten macroeconomic variables, of which two factors have a significant long-run association with IPO activities: “return on investment (RTOI)” and “economic and market development (ECMD).” In the short run, “trade openness and banking sector development (TOBD)” and RTOI are significantly associated with IPO activities.Research limitations/implicationsThe study was based on 30 years of observations, which passed all diagnostic tests but may be insufficient for generalizing the findings. Future studies could use high-frequency data (monthly or quarterly) to increase the number of observations and repeat the method and analysis. Also, while the symmetrical ARDL method was used in this study, an asymmetrical ARDL method may provide more insightful results and interpretations.Practical implicationsThe study highlights the importance of considering both long- and short-term associations when analyzing the impact of macroeconomic variables on IPO activities.Originality/valueThis study is the first to comprehensively examine the relationship between IPO activities and macroeconomic variables using PCA and the ARDL technique. The study provides insight into the macroeconomic factors that influence IPO activities in Sri Lanka and highlights the importance of considering long- and short-term associations.

Macroeconomic Stability in Bangladesh: Unraveling the Nexus between Exchange Rate, Inflation, and Export Dynamics through Nonlinear Modeling

This study explores the effects of exchange rate and inflation on the export of goods and services in Bangladesh. Applying Nonlinear Autoregressive Distributed Lag (NARDL) model and using data from 1987 to 2021, in the case of a negative shock, this study finds a significant negative long-run association of exchange rate and inflation with export. Besides, in the case of positive shock, we see a meaningful positive relationship between inflation and exports. Following the findings, this study suggests exchange rate and inflation to ensure stability in Bangladesh’s economy through the issuance of new policies considering the reduction of inflationary pressures, formulation of contractionary monetary policy, recapping exchange-traded funds, and modification of exchange rate determination.

The Long-Run Association between Corruption and CO2 Emission: Evidence from Developing Economies

Given the motivation of that lax environmental regulations and policies are common in highly corrupted countries; this study seeks empirical evidence for hypothesis asserting that corruption worsens CO2 emission in a country in the long run. We used a balanced data of 127 developing economies for the period of 2002 and 2017 to implement our analyses. A cointegration association between corruption and CO2 emission was identified. According to the estimation results, an increase in the corruption significantly increases CO2 emission in the long run. In other words, CO2 emission goes up by 1.05% given a 1% rise in corruption. Also, a two-way causality between series of corruption and CO2 emission was found.

FINANCIAL DEEPENING AND ECONOMIC GROWTH: EVIDENCE FROM BANGLADESH

The present study investigated the causal impact of financial deepening on economic growth in Bangladesh for the period of 1990 to 2022 applying cointegration analysis. The ratio of broad money to GDP, private sector credit to GDP and stock market capitalization to GDP used as proxies for financial deepening indicators in this study. Using Johansen co-integration test, the result of the study explored a positive and statistically significant relationship in the long run among the broad money to GDP, private sector credit to GDP, stock market capitalization to GDP and economic growth. Moreover, the error correction term supported the long-run association, and the variables adjust to their long-run equilibrium. The findings suggested that policymakers should promote policies that increase the money supply and market capitalization and ensure the private sector credit is channeled to the more productive sector which would help to support and boost economic growth in Bangladesh.

The Nexus between Remittance and Economic Growth in Nepal

Background: Remittance has been a pivotal source of financing economic activities in lower-income nations, including Nepal and could significantly boost the economy.The key objective of the study is to inspect the link between remittance inflow and economic growth in Nepal. Methodology: This study uses the Auto-Regressive Distributive Lag (ARDL) approach to cointegration. The Bounds test has been carried out to explore the existence of a long-run association between variables. Results: The empirical outcomes indicated a positive and significant long-run relationship between remittance inflow and economic growth in Nepal. Similarly, capital spending and consumption expenditure have also positively and significantly contributed to the economy. Conclusion: The study concludes that remittance inflow has been supporting economic growth episodes in Nepal, and an increased flow of remittance can boost the economy permanently if it is utilized in productive and capital formation channels. Implications: The study implies that real economic growth in Nepal can be enlarged if the policymakers focus on the productive linkage of remittance income in the country. Originality: This paper is original and has not been published in other publications. Similarly, no financial support has been received while working on this paper. Paper Type: Research paper

Do Trade and Foreign Direct Investment Contribute to Environmental Degradation in Pakistan

This study aimed to examine the impact of trade and Foreign Direct Investment on environmental degradation in Pakistan. This study used annual time series data over the period of 1990 to 2022. Based on the nature of the data, ADF and PP tests are employed to test the stationarity of the data. Tests reported a mixed order of stationarity for different variables of the study. Therefore, the literature advised to use ARDL estimation Technique for estimation purpose of the parameters of the model. In the first step, Bound Test confirmed the existence of the long-run association between the variables of the model of the study. Some additional variables are also added to the model based on their importance these variables are national income /production and energy consumption. The impact of FDI and income is found positive and significant in the long run.

Nexus of Human Development and Environmental Quality in Low-Income and Developing Countries: Do Renewable Energy and Good Governance Matter?

The relationship between human development and environmental quality has been explored in this study by examining the human-development status and carbon (CO2)-emissions levels of 60 countries from the low, lower-middle, and upper-middle income categories. The roles of renewable energy and some economic and institutional factors such as GDP, the rule of law, regulatory quality, and corruption control have also been investigated to ascertain their impacts on the relationship. The empirical investigations apply the generalized method of moments (GMM), fixed effects (FE), and random effects (RE) methods, and the long-run associations among the variables are investigated by applying the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) techniques. The robust findings support the trade-off relationship between human development and environmental quality in the selected low-income and developing countries. With evidence of an environmental Kuznets’s relationship between economic growth and environmental quality, these findings reveal that the measures pursued to improve human-development status have a contributory impact on CO2 emissions in the selected countries. However, an increased demand for renewable energy, effective enforcement of the rule of law, and improved control over corruption have a mitigating effect on CO2 emissions. The result has also highlighted the policy issues instrumental to increased emissions levels in these countries. Consequently, it is recommended to formulate policies for resolving disparities within the various dimensions of human development while also making deliberate investments in the socio-economic aspects of human development to ensure both sustainable human development and environmental quality.

Divergence or convergence: trade globalization, regulatory and environmental quality in QUAD countries – a robust ARDL and decoupling index inquiry

PurposeThe Quadrilateral Group for Security Dialogues (QUAD), comprising Japan, Australia, India, and the USA, has experienced a noteworthy escalation in both environmental depletion and economic performance over the preceding 2 decades. Consequently, it becomes crucial to outline strategies through which the QUAD can attain a harmonious equilibrium between sustainable economic growth and ecological well-being. This research endeavors to dissect the intricate relationships among trade globalization, regulatory quality, and environmental sustainability within the QUAD for the period 1990–2021. The study checks for the Pollution Haven Hypothesis (PHH), and Pollution Halo Effect Hypothesis (PHEH).Design/methodology/approachThe long-run association is based on the autoregressive distributed lag (ARDL) model and bounds test approach to cointegration while divergence or convergence is studied with the help of decoupling index (DI). Results have been verified by applying serial correlation LM test, autoregressive conditional heteroskedasticity (ARCH), and cumulative sum of recursive residuals (CUSUM) tests to ensure the robustness and stability of the model.FindingsThe empirical results of this study affirm the applicability of the PHEH in the contexts of India, Japan, and the USA, whereas the PHH is validated in the case of Australia. Furthermore, the analysis reveals the existence of relative decoupling solely in the case of India. This testifies that the rate of growth of the Indian economy surpasses the rate of growth in ecological footprint (EF), indicating a relative reduction in the intensity of environmental impact per unit of economic growth.Research limitations/implicationsThe empirical findings of our study suggest that countries with effective regulatory systems are better positioned to control and mitigate the potential adverse environmental effects resulting from increased global trade. Thus, policymakers are prompted to reassess the development policies for sustainable economic growth that will minimize adverse environmental repercussions. The implication of the negative relation between urbanization and EF is paramount for policymakers in developing countries seeking strategies for balanced urban development that aligns with environmental sustainability.Originality/valueThe present study is a unique exploration of the impact of trade globalization and regulatory quality on EF, specifically on PHH/PHEH in the context of QUAD.

Mineral resources policy with economic risk: Envisaging the role of mineral resources with inclusive financial development for the US economy

While previous research has thoroughly examined the influence of natural resources and economic growth on a global scale, there is a noticeable gap in the literature regarding analyzing the impact of mineral rents. This gap is significant and warrants attention due to mineral rents crucial role in renewable energy projects, its contribution to the promotion of mining activities, and its potential to influence regional stability. Hence, unlike previous studies, this research investigates the nexus of mineral rents and economic growth in the USA from 1984 to 2022. The research also incorporates the role of economic risk, financial development index, renewable energy consumption, and technological innovation. This research used time series methods encompass relevant parametric approaches, i.e., Fully modified OLS, Dynamic OLS and canonical cointegration regression for the unit root specifications in the data. For robustness, simple OLS with break years and robust OLS are deployed in the research to evaluate the robustness of estimated findings. The empirical outcomes assert that long-run equilibrium exists between economic progression and all its co-variates across models. The outcomes of linear and non-linear procedures based on the long-run association and quantile-based approach disclose that mineral rents established a resource curse hypothesis for economic growth. The increase in mineral rents by 1% causes a decrease in economic growth by -0.026% and -0.014% across all methods. Moreover, financial development index, renewable energy consumption, and technological innovation are found to induce economic progression in the long run. However, in contrast, economic risk is determined to decrease economic progression, but its outcomes are found to be insignificant in the long run across quantiles. The outcomes of robustness procedures provide a better understanding of supporting the main estimations through logical findings. In terms of policy implications, the research recommends channeling mineral resources to influence the real segments of the economy, i.e., economic progression. Moreover, the research encourages the promotion of multilevel financial development, renewable energy, and technological innovation to benefit from its influence on expanding sustainable economic progression.

Competency and efficacy of energy futures: empirical investigation from emerging economy

PurposeThe purpose of this study is to analyze the price discovery and market efficiency of energy futures traded in India. The study also examines the volatility spillover effect between the cash and futures markets of energy commodities.Design/methodology/approachThe study uses crude oil and natural gas spot and futures series traded at Multi Commodity Exchange (MCX), India. To evaluate the objectives, the paper employs the cointegration test, causality check, dynamic ordinary least squares (DOLS) method and Baba, Engle, Kraft and Kroner (BEKK) GARCH Model.FindingsThe study supports the long-run association between the selected markets. Unlike natural gas, in the case of crude oil bidirectional, flow of information is observed. The study rejects the unbiasedness and efficient market hypothesis of the energy futures market in India. Further, the study confirms that the selected energy commodities indicate bidirectional shock transmission between their respective cash and futures markets.Practical implicationsThe study will assist the commodity market participants in designing their trading strategy. The volatility signal will be used by investors and portfolio managers for risk management and portfolio adjustment. Regulators will be able to anticipate future spillover and can design policies to strengthen the market.Originality/valueThe paper evaluates the three aspects of the energy futures market, namely price discovery, market efficiency and volatility slipover. To the best of the authors’ knowledge, studies on efficacy and shock transmission in the context of the energy futures market in India are rare. Further, the study also contributes by investigating the price discovery process of the energy futures market.

The relationship between foreign direct investment and trade openness: Evidence from six developed economies

Abstract Subject and purpose of work In recent years, the competition for economic dominance globally has led developed economies increasingly to focus on outward foreign direct investment (FDI) and exports to other developing nations. However, there has been a notable research gap, with most studies concentrating on assessing the significance of FDI and trade openness in developing countries, while less attention has been paid to developed countries. This study explores the relationship between FDI and trade openness with economic growth in six developed economies. Material and methods Utilising annual data spanning from 1990 to 2022 from the World Bank, the study employs the panel Autoregressive Distributed Lag (ARDL) method for analysis. Results The estimated results indicate a negative long-run relationship and a positive short-run effect of FDI in the selected economies. Furthermore, the findings reveal a positive long-run association and a negative short-run impact of trade openness. The causality test indicated a bidirectional relationship between trade openness and economic growth. Conclusions The study suggests that various governments should enhance their investment environments to leverage the benefits of FDI inflows.

The dynamics of financial development, environmental degradation, economic growth and population health in the Economic Community of West African States

Abstract By exploring the nexus between financial development and population health in the ECOWAS region we contribute to the debate on population health and also examine the direction of causality between population health and its determinants. We utilised a panel dataset of 11 ECOWAS nations from 1990-2019. The study used the augmented mean group (AMG) estimator to examine the long-run associations among the chosen variables. The empirical results indicate that financial development and economic growth are positive drivers of population health. The analysis also demonstrates that lower population health is associated with increased environmental degradation (CO2 emissions) in the ECOWAS region. However, regarding the country-specific analysis, the impact of the determinants of population health varied per country. The empirical estimates of the Dumitrescu Hurlin panel causality tests reveal a bidirectional causality between population health and its determinants. The empirical outcomes offer new insights for policymakers by means of financial development, environmental degradation, and income as economic tools to promote population health by guiding finance, growth, and environmental policies.