Macroeconomic Environment Research Articles

Effect of Government Capital Expenditure on Tourism Sector Growth in Kenya

Tourism is a vital sector of Kenya’s economy by contributing to employment, alleviation of poverty, Gross Domestic Product (GDP), foreign exchange earnings, and balance of payments surplus. Tourism is a productive economic activity that needs a stable macroeconomic environment in terms of budgetary resource allocation for sustainable and continued growth. Thus, this study sought to establish the effect of government capital expenditure on tourism sector growth in Kenya. The study adopted a causal research design using quarterly time series data from 2012 to 2021. The findings revealed that government capital expenditure (t=3.4746, p<0.05), government recurrent expenditure (t=6.1303, p<0.05), and taxation (t=2.8608, p<0.05) had positive significant effects on tourism sector growth in Kenya. The study recommends an increase in capital budgetary allocation for continued growth of the sector which is the main source of foreign revenue in Kenya.

Coaching in the Development of Leadership Qualities of Heads of Ukrainian Business Organizations in the Conditions of War

Purpose: The article aims to analyze the possible development of managerial and leadership skills of managers of business organizations through variable coaching models, the practice of which confirms their effectiveness and feasibility.
 
 Theoretical framework: The development of coaching to improve the quality of leadership and management skills of managers of Ukrainian business organizations is important for achieving economic stability in Ukraine and ensuring a sustainable macroeconomic environment. In particular, the use of coaching is becoming increasingly popular due to the potential for stabilizing the corporate sector through effective management.
 
 Design/methodology/approach: While writing the article, materials from periodicals on the organization of the coaching process and its dissemination as a practice of developing managerial skills of business organization managers were used.
 
 Findings: The article focuses on the functioning of the Ukrainian economy and key areas for focusing on the use of coaching as a tool for investing in improving the quality of business environment management and possible further development. The use of coaching is a priority area of research, as the application of this practice can be a factor in improving the quality of management of a business organization.
 
 Research, Practical & Social implications: Based on leadership skills and characteristics, managers of business organizations use innovative means of management, which is made possible through coaching programs. The key aspects of coaching and opportunities for its improvement in the context of the global environment are outlined. The development of leadership skills and managerial abilities of managers of business organizations will serve as a factor in the sustainable operation of the Ukrainian corporate sector, which is in difficult conditions due to the threat of hostilities.
 
 Originality/value: The results of the study can be used by modern managers of Ukrainian business organizations to improve management practices and ensure the stability of the functioning of structural units at the operational level.

The Impact of the Macroeconomic Environment on Social Preferences: Evidence from the Global Preference Survey.

The effect of social preferences, such as altruism and trust, on economic development is widely recognized. However, the reciprocal impact, i.e., how individuals experience the economic environment and how this shapes their social preferences, has remained largely under-explored. This study sheds light on this reciprocal effect, revealing an intriguing macroeconomic impact on individuals' social preferences. By harnessing the Global Preference Survey data and a non-linear regression model, our findings highlight an interesting trend: there is a discernible decrease in individuals' social preference as they experience enhanced economic conditions, and this effect is more pronounced for males. This crucial revelation underscores the importance for researchers and policymakers to take into account the prospective attenuation of social preferences in the pursuit of economic well-being.

Examination of the Mechanism of Fintech Empowerment in Commercial Banks Based on Text Mining

Against the backdrop of financial technology empowering the transformation of commercial banks, this paper uses panel data from 38 commercial banks in China between 2012 and 2020, and constructs a financial technology index using text mining techniques, to investigate the mechanism of fintech empowerment in commercial banks. The study found a significant positive "U" -shaped relationship between the level of bank fintech and profitability. The results of the examination indicate that fintech has a stronger positive impact on the profitability of small and medium-sized local state-owned banks, and that fintech affects bank profitability through risk-bearing, capital structure, and operational capabilities. This paper takes the risk-bearing ability, capital structure, and operational level of commercial banks as intermediate variables in the model, and controls for variables through macroeconomic environment and policy, and internal factors of commercial banks, to make the research results more convincing. This provides new research ideas for the study of systematic fintech theory and financial risk theory.

The Impacts of Economic and Political Drivers on the Performance of the Chinese Fintech Sector: The Mediating Role of Blockchain Developments

The emergence of finance technologies (fintech) has revolutionised traditional financial services and delivery processes, the advancement of blockchain technologies has aided the transition of fintech services with optimized efficiency and added values for modern customers. This study critically explored the impacts of macroeconomic environment factors and policy interventions in China on the developments of blockchain across the period of 2017 to 2021, examining how blockchain developments (BDI) mediate the relationship between economic driver influence (EDI), political driver influence (PDI) and Chinese fintech market performance (CFMP). This study contributed to literature gap and utilised empirical knowledge on the measurement of macroeconomic and political factors toward technological development, forming designated proxies and latent variables to offer new parameters to measure the influence of these factors in unified manners. This study measured economic driver influence under GDP per capita (GDP), gross national income (GNI), government borrowing and debt (GBD), gross domestic expenditure on R&D per capita (GERD) and labour cost index (LCI), political factor influence is measured under government funding (GF), pilot zones (PZ), incubators (IC), national champions (NC) and supportive policies by engaged province ratio (SP). Blockchain development is measured by the number of blockchain company registrations (BCR), blockchain patents (NBP), venture capital investment volume (VCI) and revenue of blockchain companies (RBC). The results reveal that both EDI and PDI have highly statistically significant relationships with BDI, positively impacting the growth of the overall Chinese fintech market sector and across 4 key fintech segments of alternative finance, digital assets/ investments and payments.

Factor analysis of the relationships between governance and macroeconomic indicators in countries of the Andean community (2002-2018)

The purpose of this article is to review the relationships between governance and macroeconomic indicators for countries of the Andean Community (CAN). The approach is exploratory, using factor analysis to establish relationships between variables and then contextualize them with historical milestones in the selected countries. The resulting factors that explain the relationship between governance and macroeconomics fit the data by more than 70%, indicating satisfactory factor models. For all countries, the factor that best explains behavior combines governance and macroeconomic variables. In the factors, the constant is the instability of the variables, especially macroeconomic ones, which predominate in each of them. The models are pessimistic in showing that both macroeconomic aspects and governance variables remain stable above the average, but for short periods of time. The methodological design does not allow or expect to establish causal relationships or project trends, but it does observe, through milestones, some changes that could be interpreted by the different relationships between the variables studied.“Keywords: governance, macroeconomic environment, factor analysis, Andean Community.

Improving Macroeconomic Management: Experiences and Lessons

The relationship between growth and macroeconomic stability is a wellestablished phenomenon. Long-term growth requires a higher level of investment and a stable economic environment contributes in promoting saving and investment. Good macroeconomic policies help attract foreign saving. Sound fiscal and monetary policies create a conducive climate for private investment and economic growth. So, the policymakers need to redress the problems of domestic and external financial imbalances by designing and implementing an appropriate mix of policies for achieving higher growth, lower price uncertainty, reduced external imbalances, and other macroeconomic vulnerabilities. So, the important issues facing the policymakers are designing sound exchange rate arrangement, making current account sustainable, and promoting financial and macroeconomic stability. In order to promote sound macroeconomic environment for attaining sustained economic growth, there is a need to pursue more flexible exchange rate regime and make progress toward adopting inflation targeting in addition to improving the financial sector soundness, strength and stability.

Innovation, global competitiveness, and green total factor productivity: evidence from theBelt and Road Initiative region?

In the context of intensifying global competition, the Belt and Road Initiative is increasingly becoming an important choice for countries to achieve green development. Therefore, this study selected 116 countries worldwide as samples to empirically test the green development situation of Belt and Road Initiative countries from 2013 to 2020. Additionally, a simultaneous equation model was used to study the impact and mechanism of innovation capability on green total factor productivity (GTFP) in Belt and Road Initiative countries. The results show that he average annual growth in green total factor productivity was 2.9% between 2013 and 2020 in Belt and Road Initiative countries. Innovation is an effective means of promoting the improvement of GTFP, mainly relying on the single-track drive of green technical progress. Furthermore, global competitiveness has a significant moderating effect on this result, with market size, financial market, and labor market efficiency being the main regulating factors for efficiency enhancers, while infrastructure and macro-economic environment are the main regulating factors for basic requirements. In addition, developing countries rely more on innovation types that involve technology imports to promote the improvement of GTFP. Finally, in the analysis of regional heterogeneity, we found that the results of the four continents were more consistent with the regression results of the total sample, but the mechanisms of action between regions were different.

Regularized Poisson regressions predict regional innovation output

AbstractRegional innovation output is influenced by many factors such as macroeconomic environments, residents consumption, fixed asset investment, foreign trade, fiscal revenue and expenditure, education, and research and development (R&D) input. Correctly predicting regional innovation output is an important subject in the economic field. In this paper, we propose four regularized Poisson regressions to forecast regional innovation output for 31 provinces in China. Firstly, we screen out 20 important factors and combine with four penalties: ridge penalty , least absolute shrinkage and selection operator penalty (LASSO), smoothly clipped absolute deviation penalty (SCAD), and minimax concave penalty (MCP) to construct four regularized Poisson regressions. Secondly, we introduce the cyclic coordinate descent (CCD) algorithm and the training set to complete variable selection and obtain the least squares weighted iterative estimators and make model selection by introducing three criterions to compare goodness of fit to different models. Finally, we apply the testing set and the learned regressions to exhibit the prediction performances and found that SCAD/MCP regularized Poisson regression predicts better than /LASSO regularized Poisson regression in terms of root mean square error (RMSE), mean absolute error (MAE), and mean absolute percentage error (MAPE). In particular, MCP regularized Poisson regression outperforms the other three regularized Poisson regressions in predicting the number of granted patents in the three regions.

Deciphering the influence of the macroeconomic environment on economic preferences: A comprehensive analysis of the Global Preferences Survey

This study investigates the nuanced impact of macroeconomic conditions on various economic preferences, broadening the scope beyond conventional risk preference analysis. Utilizing the Global Preference Survey data with a sophisticated nonlinear regression model, we reveal that favorable macroeconomic conditions boost patience, yet simultaneously reduce risk aversion, altruism, willingness to penalize unfair actions, and trust levels. These significant shifts in economic preferences, driven by macroeconomic scenarios, carry substantial implications for financial markets, investment behaviors, and the broader macroeconomy, necessitating in-depth exploration in financial research and policy design.

The Impact of the COVID-19 Pandemic on the German Pension System

The COVID-19 pandemic was declared over in April 2023. Like the financial crisis of 2008, the pandemic outbreak had an exogenous shock effect on Germany's micro- and macroeconomic environment. This mainly affected the labor market, and after that, the Bundesregierung took measures to stabilize the labor market to prevent a dramatic increase in unemployment. The German pension system is a pay-as-you-go system that is financed on a long-term basis by demographic and economic developments. Based on these factors, projections on the effects of the COVID-19 pandemic on statutory pension insurance in Germany were already made in 2020. This paper compares the forecasts from 2020 with the actual development, combined with whether German pension insurance can be assessed as sustainable after the pandemic.

Technology investments from China into other emerging economies: a push and pull perspective on the Eurasia region

PurposeDrawn from the push–pull perspective, this research aims to identify the determinants of Chinese technology's outward foreign direct investments (OFDI) into the Eurasian region.Design/methodology/approachThe authors argue that contrary to the extant literature, technology-driven OFDI from emerging-market multinationals (EMNEs) do not always seek developed countries, and EMNEs' technology investments in emerging economies are rising indicating that there are factors in these economies that can prove attractive. The authors recognize the influence of the macroeconomic environment and the interaction of home and host-country institutional contexts that influence the location choice of EMNEs technology-driven OFDI into other emerging economies, mediated by the industry sector and firm's ownership structure. The authors test our hypotheses using a sample of 1,656 observations of Chinese MNEs' tech-investments in the Eurasian region from 2005 to 2019.Findings The study results indicate that bilateral diplomatic relations pave the way of the host-country institutional environment for Chinese MNEs uncovering the role of the Chinese government as an OFDI facilitator. This study also unveils a lower technology level of the Chinese MNEs' investments in the Eurasian region connoting an interest in market opportunities exploitation through their existing technologies – through its comparative advantage in the global markets – rather than strategic assets acquisition aiming at augmenting their technological capabilities. This trend is similar to that of other major foreign direct investment (FDI) source countries.Originality/valueThis research contributes to a better understanding of the characteristics and the location choice of technology investments from EMNEs into other emerging economies that have received scant attention in the literature. In addition, it extends the institutional theory by analyzing how home-country institutions, through bilateral diplomatic relations, may smooth the host country institutional environment for home-country MNEs' foreign investments and contributes as well to the debate on the applicability of the existing theoretical framework in the case of emerging-market MNEs.

Realized semi variance quantile connectedness between oil prices and stock market: Spillover from Russian-Ukraine clash

This study aims to investigate the dynamic relationship between oil prices and stock markets in the G5+ countries using Parkinson's proximal realized volatility. We separate positive and negative semi-variance to compute asymmetric aggregate static spillovers according to the Diebold and Yilmaz (DY) approach. Moreover, we use a Quantile VAR to investigate the behavior of series in different quantiles corresponding to different market scenarios. Consistently with the literature concerns, we use a daily sample of market indices prices with the Brent oil price from June 1, 2017, to July 2, 2022. We found an asymmetric linkage between oil prices and the stock market, which has significant implications for portfolio hedging strategies. Specifically, our research indicates that the impact of the Russian-Ukrainian conflict on the energy crisis has been significantly higher than that of the COVID-19 pandemic, especially in the short term. However, we observe a higher persistence of negative spillovers for COVID-19 compared to those recorded during the Russia-Ukraine war. From a methodological viewpoint, this result enforces the choice of an asymmetric model to investigate the volatility transmission between financial market series. Finally, we found crude oil to emit volatility spillovers in quantiles above 80%. This result emphasizes the instability perceived in crude oil price when general market volatility increase. Quite the opposite, about one-third of oil price shocks, are linked to the national stock exchange uncertainty in low and middle quantiles, underlining the investors' dependency on this commodity. These results have important implications for policymakers and institutional authorities, who must consider the changing macroeconomic environment and reduce dependence on Russian energy.

An Investigation of the Nonlinear and Asymmetric Spillover Effects of U.S. Economic Policy Uncertainty on Bond Return Volatility of Emerging Markets

ABSTRACT This paper investigates the nonlinear and asymmetric relationships between the U.S. economic policy uncertainty (EPU) index and the volatility of bond returns in 36 emerging markets (EMs) using panel quantile regression methods. Our findings indicate that the spillover effects of the U.S. EPU on the volatility of bond returns are strong in EMs, particularly in the upper quantiles of volatility, and are substantial in magnitude. We also explore the impact of the U.S. monetary policy uncertainty (MPU) index and fiscal policy uncertainty (FPU) indices on the volatility of bond returns in 36 EMs, and observe a positive correlation between both the U.S. MPU and the U.S. FPU and bond return volatility in EMs. Of all the spillover effects, the U.S. MPU has the largest magnitude. Additionally, our results demonstrate that the spillover effects induced by three U.S. policy uncertainties are sensitive to the macroeconomic environment, with a stronger impact during financial crises and in countries with high degrees of financial openness.

Trends in Earning Management (EM) Practices: A Cross Country and Industrial Analysis

This paper analyzes the trends in earnings management (EM) practices of 500 non-financial firms across 8 major industries operating in both developing and developed economies for the period 2008-2017. It significantly contributes to the literature by identifying the country-specific, industry-specific, and over the time trends in accrual and real earnings management practices prevailing in the non-financial sector of both developed and developing economies of the world. EM trends are analyzed across countries, across industries, and over the sample period. The sample consists of 500 non-financial firms from 8 different industries of 22 developed and developing economies for the period 2007-2018. Accrual and real earnings management are alternatively used in the non-financial sector across the world. This study uses the Modified Jones Model (Dechow et al., 1996) and the Roychowdhury model (2006) to estimate accrual and real earnings management. The analysis of variance (ANOVA) is used to examine the mean differences between countries and industries as well as over the time differences. The country-wise analysis concludes that Pakistan is on the top of the list in managing earnings followed by Canada, particularly in accrual-based earnings management. It may be attributed to poor accounting standards and regulatory frameworks. The industry-wise analysis shows that the mining industry, characterized by high dependency on capital markets and the uncertainty associated with the prospects of mineral reserves, is highly involved in EM. Finally, the year-wise analysis determines that the year 2009 was highly escorted with accrual and real earnings management practices, which may be the result of the global financial crisis of 2007-2008. The findings imply that the policymakers of developing economies should strongly emphasize improving the general macroeconomic environment of the economy by controlling inflation, improving law and order conditions, and ensuring political stability. Additionally, the findings have potential implications for corporate managers while formulating strategies to restrict them from EM that may diminish both firm value and the economy.

FISCAL POLICY OF UKRAINE IN THE CONTEXT OF EUROPEAN INTEGRATION: ORGANIZATIONAL AND LEGAL PROBLEMS OF IMPLEMENTATION

The relevance of the chosen issue is due to the fact that in the face of negative external and internal factors, the economic system of the state is under threat of destruction, which requires an appropriate response from the state authorities. Therefore, in order to overcome or minimize these challenges, as well as to promote healthy macroeconomic environment, fiscal policy can be used as a powerful tool for regulating economic activity. The purpose of the article is to analyze the institutional problems of implementing fiscal policy in Ukraine in the context of European integration. The systemic-structural method, systemic method, critical analysis method, formal-and-legal method, and analytical methods were used to achieve this goal. The normative basis of the study is the legal acts of Ukraine, while the scientific framework of this study is primarily the interpretation of basic concepts, notably, “fiscal policy». The content and elements of the fiscal policy are defined. The essence and system of fiscal policy bodies, which are divided into bodies of general and special competence, are determined. The shortcomings of the organizational and legal regulation of fiscal policy in Ukraine in the context of European integration are analyzed. The foreign experience of implementing fiscal policy is reviewed. It is concluded that there is an objective need to develop a concept for improving the fiscal policy of Ukraine in the context of European integration, the content of which wouldvf be aimed at a gradual conceptual transition of Ukraine to the model of fiscal policy of the EU member states. Furthermore, taking into account the lack of criteria for determining the efficiency and effectiveness of the state’s activities in the economic sphere, the need to elaborate a mechanism that allows assessing the activities of state bodies in terms of spending the state’s financial resources is established. The practical value of this study lies in the fact that the proposals set out in the article are aimed at improving the implementation of fiscal policy in Ukraine, which will facilitate its integration into the European space.

Rippling effect of liquidity risk in the sovereign term structure

PurposeThe study attempts to identify the linkages in the term structure of illiquidity and the impact of global and domestic factors on sovereign bonds in emerging Asia. The objective of the study ensues on defining the direction of illiquidity spillover across bonds of varying tenors.Design/methodology/approachThis study explores the joint dynamics of contemporary liquidity risk premia and its time-varying effect on the term structure spectrum using the Diebold and Yilmaz (2012) spillover framework.FindingsA substantial relationship was found to exist between the liquidity of bonds with closer terms to maturity. The macroeconomic environment primarily impacts the liquidity of 10-year bonds, and they spiral down to the subsequent bond liquidity, exhibiting a rippling effect. The authors further show that the direction of liquidity shock transmission is from long- to medium- and thence to short-term bonds. Among the global factors, foreign investments and S & P 500 VIX significantly affect the liquidity of 10-year bonds.Research limitations/implicationsThe study has several implications for academicians, policymakers and domestic and global investment professionals. The drivers of liquidity risk and the transmission across the term structure help investors in designing efficient portfolio diversification strategies. The results are relevant for cross-border investors in the valuation of emerging Asian sovereign bonds while deciding on asset allocations and hedging strategies. The monetary regulators strive on a continuous basis to improve the liquidity in sovereign bond markets in order to ensure efficient funding of development activities. This study finds that short-term bonds are more liquid than long-term bonds. Their auction framework with higher series of short-term bond issues helps to provide the required liquidity in the markets.Practical implicationsThe term structure of illiquidity is upward sloping, inferring a higher underlying liquidity risk of long-term bonds compared to short-term bonds. This finding suggests that a higher representation of short-term bonds in the auction framework helps to enhance the overall market liquidity.Originality/valueThis study offers insights into the debate on the shape of the term structure of illiquidity and the point of origination of liquidity shocks. Further, the direction of spillover across a wide spectrum of bonds is also demonstrated.

Liberalization and Economic Growth in Nigeria

This study looked at how Nigeria’s financial markets, economic growth, and liberalization interacted between 1986 and 2020. To account for both the short-run and long-run effects, the study used an econometric model of autoregressive distributed lag modelling. To check the time series qualities, several diagnostic tests were carried out, including descriptive statistics, a correlation matrix, and a unit root test. Inferences were drawn at the 5% significant level. The study’s findings confirmed that while trade openness had a statistically significant negative impact on economic growth [ =-1.4391; P -value = 0.0000], foreign ownership of shares had a statistically favorable impact [ = 0.3027; P -value = 0.0000]. Additionally, it was shown that during the studied years, inflation was negative but minor in relation to economic growth [ = -0.0032; P-value = 0.5870]. Based on the study’s findings, it was advised that an enabling macroeconomic environment be present to make use of the advantages that financial liberalization and the financial market have to offer. Financial liberalization requires a favorable macroeconomic climate, according to studies. Macroeconomic instability makes information asymmetry worse and makes the financial sector more vulnerable. If the macroeconomic indicators are stable, foreign investors will be more eager to make investments in Nigeria.

Does credit default swap trading improve managerial learning from outsiders?

AbstractWe investigate whether credit default swap (CDS) trading results in managers learning new information through stock prices that is relevant to their investment and forecasting decisions. We argue that the CDS market structure, the sophistication of CDS market participants, and the cleanness of CDS spreads as a signal of default risk together produce and convey information that is new to managers of firms referenced in CDS contracts. We consider two measures for managerial learning: (1) the sensitivity of managerial investments to share prices and (2) the sensitivity of changes in management forecast accuracy to stock returns. We find that both sensitivity measures increase significantly when firms are referenced in any traded CDS contracts, indicating that CDS trading improves managerial learning. We also find that the improvement in managerial learning is more pronounced for firms that are subject to higher uncertainty in industry‐specific and economy‐wide prospects, consistent with the view that CDS market participants have informational advantages with respect to the industry‐level and macroeconomic environments. We further find that the improvement in managerial learning is more evident for firms with higher credit risk. Our findings provide large‐sample evidence on a positive consequence of CDS trading in the context of managers' ability to learn from outside investors.

The Impact of Sociodemographic, Macroeconomic, and Health Status and Resources on Infant Mortality Rates in Oman: Evidence from 1980 to 2022

Background: The infant mortality rate (IMR) is an important reflection of the well-being of infants and the overall health of the population. This study aims to examine the macroeconomic (ME), sociodemographic (SD), and health status and resources (HSR) effects on IMR, as well as how they may interact with each other. Methods: A retrospective time-series study using yearly data for Oman from 1980 to 2022. Partial Least Squares-Structural Equation Modelling (PLS-SEM) was utilized to develop the exploratory model of the determinants of IMR. Results: The model indicates that HSR determinants directly, but negatively, affect IMR (β = −0.617, p < 0.001). SD directly and positively affects IMR (β = 0.447, p < 0.001). ME only indirectly affects IMR (β = −0.854, p < 0.001). ME determinants also exert some direct influences on both HSR (β = 0.722, p < 0.001) and SD (β = −0.916, p < 0.001) determinants. Conclusions: This study has indicated that IMR is a multi-faceted issue. It also highlighted the interplay of numerous variables and their influence on IMR, particularly the role that social status, the health sector, and the wealth of the country and its population play in reducing IMR. These findings indicate that an integrated policy that addresses socioeconomic and health-related factors and the overall ME environment is necessary for the health and well-being of the children and the population overall in Oman.