Panel-corrected Standard Errors Research Articles

The Impact of Trade Openness, Tariff, and Globalization on Food Security in the ASEAN Region

In 2023, many crises hit the world due to heated geopolitical conditions resulting from the war in Russia and Ukraine; the world situation was fragmented because of competition between the USA and PRC blocs, economic recovery due to COVID-19 was shaken again, and food inflation was soaring high. The leading cause of food insecurity in ASEAN, which consists of most developing countries, is the lack of distribution access due to the affordability of logistics and food supplies. Most investors shift their investment preferences from the primary sector to manufacturing due to the volatility and high risk of assets. In 2020, in Asia, there were 78.7 million toddlers who were stunted, with the second majority in Southeast Asia (27.40%). Although most of the ASEAN member countries are connected geographically, the market share of ASEAN member countries in world trade is only 8.8%, so intra-trade relations are considered not optimal enough. This study aims to analyze the effect of three different trade openness indicators (trade openness, tariffs, and globalization) on the food security of Southeast Asian people in 2000–2021. The method used in this research is panel data, which combines pool least squares (PLS) and fixed effect models (FEM) by developing Beck and Katz’s two panels corrected standard errors (PCSE): cross-section weights and SUR. Trade openness significantly affects the two pillars of food security: stability and utilization, with U-shaped results. Ad-valorem tariffs are significant and positive for the two pillars of food security: availability and utilization. Increasing taxes in Southeast Asia can improve the average dietary energy supply’s adequacy; however, this can also increase the prevalence of stunting in children under five. It happens because the availability of abundant food in terms of quantity differs from the quality and safety of its consumption. The increase in globalization from an economic, political, and social perspective in Southeast Asia is significant for the four pillars of food security; if globalization is increased, then this can positively impact reducing cases of stunting and malnutrition; on the other hand, increasing globalization has harmed food availability and stability. Increasing one policy has a different impact. In the first stage, policy improvements can positively impact a pillar of food security. However, after reaching a turning point, there is a possibility that the increased policy will harm the other pillars. Therefore, it is necessary to choose an integrative policy trade-off and be able to solve problems better. This study suggests several main policy implications, namely building a more assertive trade policy based on the WTO and food safety technical rules that comply with WHO rules, increasing intra-trade within the ASEAN group, maintaining food price stability, encouraging investment in agriculture, promoting governance reforms, and strengthening the regional food security system in terms of production, consumption, and distribution. Support policies are also needed regarding solid prevention efforts against stunting and malnutrition and digitalization (Agritech 4.0), which supports food availability. In addition, this research also suggests that ASEAN can continue to increase domestic food production for resilience to the global crisis. Keywords: trade openness, tariff, globalization, food security, ASEAN, dynamic panel

Towards Efforts to Equalize Income in Africa: The Role of Tourism Development

ABSTRACT A vast literature has investigated the nexus between tourism and income inequality in developing and developed countries. Unfortunately, the literature on the impact of tourism on income inequality in Africa is sparse. Hence, this study examines the influence of tourism on income inequality in 30 African countries over the period 1996–2020. In addition to international tourism arrivals and international tourism receipts which have been widely used by previous studies, this study uses a plethora of tourism indicators, namely business tourism spending, leisure tourism spending, internal travel and tourism consumption, domestic tourism spending, and visitor exports. Moreover, unlike previous studies that have extensively used the Gini index with its inadequacy as a measurement of income inequality; this study uses the Atkinson index and Palma ratio to capture extreme points of the inequality distribution. The empirical evidence is based on the panel-corrected standard error (PCSE) estimation technique. The results reveal that tourism contributes to the equalization of income in Africa, contingent on the type of tourism. Policy implications are discussed.

Examining the Influence of Macroeconomic Factors and Corporate Governance on Firm Performance in the ACE Market

This study focused on investigating the impact of macroeconomic factors and corporate governance on the financial performance of firms listed on the ACE Market of Bursa Malaysia. The ACE Market serves as a platform for smaller, emerging companies, providing them with an opportunity to raise capital with less stringent requirements compared to the Main Market. Using a panel data set of 72 companies over the period 2018-2022, the research employed panel-corrected standard errors (PCSE) regression. PCSE is a panel regression model that accounts for contemporaneous correlations, corrects for deviations from spherical errors, and enhances inference from linear models. The analysis revealed that ACE market companies, on average, show a negative return on equity (ROE) but positive numbers of women (NOW) and board meetings (NOM). The PCSE regression results, however, failed to show a statistically significant relationship between NOW and ROE, suggesting that the presence of women on the board of directors does not significantly impact the firm performance. The findings provide valuable insights for the firms in the ACE market companies regarding the consideration of important factors in improving firm performance. The research's broader goal is to inform the development of strategies fostering enhanced overall performance and sustainability in the ACE market. The study also suggests several recommendations such as broadening the scope and inclusion of international trade dynamics variables.

The Effectiveness of Climate Adaptation Finance and Readiness on Vulnerability in African Economies

Addressing climate vulnerability remains a priority for economies globally. This study used the panel-corrected standard error (PCSE) methodology to investigate the impact of adaptation financing on climate vulnerability. This analysis examined 52 African countries from 2012 to 2021 while considering their climate adaptation readiness. The impact was also assessed based on the Human Development Index (HDI) categories to reflect different levels of development. The findings showed that adaptation finance considerably influenced climate vulnerability reduction in Africa, particularly in nations with a moderate HDI. However, most countries still need higher levels of adaptation financing, resulting in a small impact on vulnerability reduction. Furthermore, the impact of readiness measures differed by HDI category. Economic and social climate readiness strongly impacted climate vulnerability in high-HDI nations, but governance preparedness was more critical in low-HDI countries. Based on the empirical facts, two policy proposals emerge. First, it is critical to reconsider the distribution of adaptation financing to reduce disparities and effectively alleviate climate vulnerability. Moreover, African economies should consider implementing innovative localized financing mechanisms to mobilize extra adaptation finance. Second, African governments should customize climate readiness interventions based on their HDI levels to improve the achievement of a positive impact on climate vulnerability.

Determinants of corporate environmental performance and the moderating effect of economic crises

PurposeThis paper aims to identify the effect of environmental management systems (EMSs), commitment to stakeholders and gender diversity on corporate environmental performance (CEP) and the extent to which an economic crisis moderates these relationships.Design/methodology/approachA regression analysis was conducted on a sample of 14,217 observations from 1,933 firms from 26 countries from 2002 to 2010. The estimator used is ordinary least squares with heteroscedastic panel-corrected standard errors (PCSEs), which allows us to obtain consistent results in the presence of heteroscedasticity and autocorrelation.FindingsThe results show that EMSs and stakeholder engagement are mechanisms that drive CEP but lose their effectiveness in times of crisis. However, the presence of women on boards has a positive effect on CEP that is not affected by an economic crisis.Research limitations/implicationsThe study has some limitations that could be addressed in the future. We present board gender diversity as a governance mechanism because its role is strongly related to non-financial performance. Future studies could focus on other corporate governance mechanisms, such as the presence of institutional or long-term investors. In addition, other mechanisms could be found that can counteract poor environmental performance in times of crisis. Finally, it might be useful to contrast these results with the crisis generated by the coronavirus pandemic.Practical implicationsThe results obtained have important practical implications at the corporate and institutional levels. At the corporate level, they highlight, as essential contributions, that environmental management systems and stakeholder orientation are not effective in times of economic crisis, except for with the presence of women on the board.Social implicationsFollowing the crisis, the European Commission has promoted gender diversity on boards as a mechanism to improve the governance of entities – improving, among other aspects, sustainability. In this sense, another one of the practical implications of the study is support for the policies that the European Union has implemented over the last two decades.Originality/valueThe paper analyses how a crisis affects the moral and cultural institutional mechanisms that promote CEP. Gender diversity on the board of directors not only promotes environmental performance but also appears to be a governance mechanism that ensures this performance in times of crisis when the other mechanisms lose their effectiveness. The study proposes specific policies that help maintain environmental performance in an economic crisis.

Innovation, institutions, and sustainability: Evaluating drivers of household green technology adoption and environmental sustainability of Africa

Energy access, affordability, and quality of institutions play an important role in adopting green technologies at the household level and facilitating the transition towards a sustainable future. This study examines environmental sustainability dynamics in 26 nations from 2001 to 2021 to emphasize Africa’s ecological calamity. The study evaluates the individual and interactive effects of green technology adoption-innovation, institutional quality, and energy access on household clean fuels technologies (CFT) adoption and GHG emissions. The hypotheses are robustly tested using Feasible Generalized Least Squares (FGLS), Panel Corrected Standard Errors (PCSE), and Bootstrap Granger Causality is used for country-specific outcomes. The research revealed positive associations between CFT energy usage, climate change, and R&D expenditure but negative correlations with population and affordability. Innovation lowers GHG and CO2 emissions, and forests mitigate environmental damage. However, green innovation and institution quality (INIQ) negatively affect CFT. Meanwhile, the CTIQ reveals that adopting clean fuel technology and institutional quality has moderate environmental impacts. The study observed robust uni/bidirectional causality evidence in country-specific cases. The outcomes emphasize strategic investments in clean energy absorption, innovation, and institutional quality to promote sustainable environmental practices in African countries via customized green policies.

Asymmetric effects of digitalization, natural resources, capital formation, and green innovations on environmental sustainability in ASEAN countries

The present study provides new insights by presenting the role of digitalization, natural resources, capital formation, and green technology innovations in environmental sustainability. It uses Panel Corrected Standard Errors (PCSE) and Method of Moments Quantile Regression (MMQR) to integrate asymmetric drivers of sustainability in ASEAN countries data from 2000 to 2021.The study's findings established a long-run positive association between natural resources, digitalization, capital formation, and ecological footprints in PCSE estimation, whereas green technology innovations exert no significant impact on ecological footprints in ASEAN countries. The MMQR findings also provide similar evidence over varying quantiles. However, the coefficient parameters vary at lower and higher quantiles, implying that the impact of all variables substantially varied in highly and lower ecologically damaged countries. These findings offer valuable policy implications.

Impact of board characteristics on integrated reporting: evidence from South Asian countries

Purpose The purpose of this study is to observe the practice of integrated reporting (IR) and investigate the impact of board characteristics on IR in three South Asian economies: Bangladesh, India and Sri Lanka. Design/methodology/approach The study uses the content analysis approach to measure the integrated reporting index (IRI) based on a structured checklist. To examine the impact of board characteristics (board size, board independence and gender diversity) on IRI, a multivariate analysis using pooled ordinary least square with panel-corrected standard error (PCSE) model has been conducted. Findings The content analysis findings show that the disclosure practice of IR is highest in India, followed by Sri Lanka and Bangladesh. The regression result indicates that all the proxies of board characteristics have a positive and significant impact on IRI. Research limitations/implications The study’s outcomes may not be generalised for every region due to the differences in institutional contexts. Practical implications The findings of this study will assist the policymakers in understanding the importance of effective boards in enhancing the IR practice in their respective countries where the adoption of IR is still a voluntary requirement. Originality/value To the best of the authors’ knowledge, this is the first study in the field of existing literature to conduct a comparative analysis of IR practice among three South Asian countries. It shows how an effective board improves IR practice using a broader institutional context by underpinning the agency theory and legitimacy theory.

Unveiling the effects of mineral markets, fintech and governance on business performance: Evidence from China

The study intends to empirically estimate the effects of mineral markets, fintech, and governance on business performance in China. For this purpose, the study collects the data of 18 Chinese companies belonging to different sectors over the 2009 to 2020 period. To address the issue of cross-sectional dependence, “Panel Corrected Standard Error (PCSE) estimation is applied in the study. According to the study findings, there is a significant and negative impact of gold prices and coal prices and a positive impact of silver prices on business performance in China. No significant impact of oil prices on business performance is observed in the study. Governance is found to have a significant positive impact on business performance. However, no significant effect of fintech is found in the analysis. The study recommends that business firms should adopt appropriate measures to prevent bad effects of mineral market conditions on their profitability or performance. Strengthening the regulatory or institutional system and promoting innovations in the financial sector are also recommended by the present study.

IFRS adoption and the value-relevance of financial statements figures in Nigeria

Research Question: Has IFRS adoption improved the value-relevance of financial statement figures in Nigeria? Motivation: The informativeness of the reported earnings, book values, and cash flows depends on the accounting standards used in preparing the financial statements. IFRS is a global set of accounting standards that tries to improve the relevance of accounting figures by recommending more realistic measurement and recognition criteria and increasing the level of disclosure of relevant information. Idea: The value relevance of accounting figures in predicting stock prices is widely acknowledged. However, this study tests whether IFRS adoption significantly improves this value-relevance by increasing the degree of correlation between accounting figures and stock prices in Nigeria. Data: The data were collected from the Bloomberg market data terminal and Datastream financial database. A sample of 85 listed companies was selected. The sample period was from 2007 to 2016. Tools: The study applied the Ohlson model (using fixed and random-effect models) along with the Driscoll-Kraay standard errors (DKSE) and Panel-corrected standard errors (PCSE) to anticipate autocorrelation, heteroscedasticity, and cross-sectional dependence biases. The Ohlson model was estimated separately for the pre- and post-IFRS adoption periods to detect changes in value relevance. The interactions of the IFRS dummy with earnings, book values, and cash flows were also estimated separately to detect the significance of IFRS interaction with the accounting figures. Findings: The results showed an overall increase in value-relevance by comparing adjusted R2s across the pre- and post-IFRS adoption period. Also, the interactions of IFRS with earnings, book value, and cash flows were all significant. Contribution: The study contributes to the existing literature by including cash flow in the value-relevance test in Nigeria and by applying estimation techniques that control for possible estimation biases. The authors recommend that investors pay more attention to these accounting figures under the IFRS regime when making investment decisions.

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

The present study particularly aims to probe the quadratic effects of the combined and individual sovereign environmental, social, and governance (ESG) activities on the banking sector’s profitability. Furthermore, we attempt to shed light on the channels through which sovereign ESG practices impact the banking sector’s profitability. Unlike the vast majority of prior works that investigated the sustainability practice–firms’ profitability nexus from the firm level, this study originally probes this relationship from the country level by considering the sovereign ESG sustainability activities. To attain this purpose, we focus on banking sectors operating in Gulf Cooperation Council (GCC) economies and employ the panel-fixed effects and panel-corrected standard errors approaches between 2000 and 2022. Remarkably, the findings uncover that the nexus between combined sovereign ESG and profitability is a non-linear and inversed U-shape (concave), implying that investing in sovereign ESG enhances the banking sector’s profitability. However, after exceeding an inflection point (0.349), its effect turns out to be negative and it develops into activities of destruction. Furthermore, the findings underscore that the association between individual sovereign environmental responsibility and the banking sector’s profitability is a non-linear U-shape (convex), while an inversed U-shaped (concave) nexus is uncovered for the individual sovereign social and governance activities. Moreover, the significant non-linear inverted U-shape for the combined sovereign ESG–stability nexus corroborates that financial stability is a channel through which sovereign ESG significantly impacts profitability.

The role of institutional quality on the impact of Chinese foreign direct investments and human capital development on macroeconomic performance in the CEMAC zone

This paper investigates the role of institutional quality in terms of governance on the impact of Chinese foreign direct investments and human capital development on the macroeconomic performance of the CEMAC zone between 2003 and 2020. The data were analyzed using descriptive statistics and the Correlated Panels Corrected Standard Errors (PCSEs) Approach. The findings indicated that poor governance performance in the CEMAC zone deteriorates the effects of Chinese foreign direct investments and human capital development on the macroeconomic performance of the CEMAC zone. At the same time, poor governance performance also deteriorates the impact of foreign aid and personal remittances received on the macroeconomic performance of the CEMAC zone. This study strongly recommends measures to improve institutional quality such as increased training on ethical thinking in all forms of education, meritocratic recruitment to the civil service, and auditing of public finances and services.

The impact of green FDI on environmental quality in less developed countries: A case study of load capacity factor based on PCSE and FGLS techniques

This paper examines the effect of green foreign direct investment (GFDI) on environmental quality (EQ) in 34 less-developed countries (LDCs) from 2003 to 2021. We analyze balanced panel data using Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE). Our findings reveal several vital insights: (1) GFDI helps improve EQ. (2) Environmental costs associated with economic growth are negative. (3) Trade openness positively influences EQ. (4) EQ is enhanced by institutional quality, energy use, and population expansion in the chosen countries. (5) The existence of a U-shaped curve was established. This is valuable to the relatively scanty literature on GFDI, especially in LDCs. To the best of our awareness, this study simultaneously employs the Load Capacity Factor (LCF) and Total Value of Announced Greenfield projects as proxies for environmental sustainability and GFDI for the first time. Secondly, incorporating PCSE and FGLS models in this context is an innovative methodological strategy. The present research work provides to the existing theoretical and empirical discussions on GFDI and EQ and has practical implications that inform policy-making.

Foreign direct investment and carbon emissions in ECOWAS: does good governance matter?

PurposeThe present study investigates the effect of foreign direct investment (FDI) and governance quality on carbon emissions in the Economics Community of West African States (ECOWAS).Design/methodology/approachTo achieve the objective of this research, panel data for dependent and explanatory variables over the period 2005–2016, collected in the World Development Indicators (WDI) database and World Governance Indicators (WGI), are analyzed using the generalized method of moments (GMM). Also, the panel-corrected standard errors (PCSE) method is applied to the four segments of the overall sample to analyze the stability of the results.FindingsThe findings of this study are: (1) FDI inflows have a negative effect on carbon emissions in ECOWAS and (2) The interaction between FDI inflows and governance quality have a negative effect on carbon emissions. These results show the decreasing of environmental damage by increasing institutional quality. However, the estimation results on the country subsamples show similar and non-similar aspects.Practical implicationsThis study suggests that policymakers in the ECOWAS countries should strengthen their environmental policies while encouraging FDI flows to be environmentally friendly.Originality/valueThe subject has rarely been explored in West Africa, with gaps such as the lack of use of institutional variables. This study contributes to the literature by drawing on previous work to examine the role of good governance on FDI and the CO2 emission relationship in the ECOWAS, which have received little attention. However, this research differs from previous work by subdividing the overall sample into four groups to test the stability of the results.

A Panel-corrected Standard Error (PCSE) Framework to Estimate Capital Structure and Banking Performance within the Tunisian Context

The objective of this article is to empirically examine the effect of financing structure on the market share of banks, and their performance in Tunisian banks. To this end, we gathered financial statements of ten commercial banks over the period 2012-2019, and we employed the panel-corrected standard error (PCSE) regression. The empirical results show that the bank capital structure measured by the equity to total assets ratio negatively affects bank performance while the debt to total assets ratio can be a robust and positive driver of bank performance. Through this research, we recommend to Tunisian commercial banks to reduce their operating costs through a better management of their resources, and to find cheaper sources of financing such as increasing equity. We also recommend to Tunisian commercial banks to diversify further their revenues in order to enhance their performance and to generate more profits.

Determinan Penerimaan Pajak Penghasilan Badan: Studi Negara Amerika Latin

Latin America as a region with great natural resource potential, still has a narrow tax base due to problems of law enforcement, tax incentives and tariff reductions. The corporate income tax that significantly increases revenue in the Latin America/LAC in 2019 around 3.7 percent of GDP is interesting to study. Therefore, this research was conducted to examine the determinants of corporate income tax revenue in the Latin American. This study uses panel data on 12 countries in Latin America in 2008-2018. The statistical method used is a quantitative method with multiple linear regression. Based on testing, the panel-corrected standard error estimation model is the best model. The results show that all independent variables simultaneously affect tax revenue. The variables of economic growth, FDI inflows, land area, and trade openness partially have significant positive effect on corporate income tax revenues. Meanwhile, the tax attractiveness index variable has significant negative effect on corporate income tax revenue in Latin American. Based on the results of this study, it is necessary to review the international trade policies in the Latin American because trade openness still tends to have no effect and even weaken the positive relationship between FDI inflows and corporate income tax revenues.

Economic and non-economic determinants of renewable energy consumption (REC): evidence from BRICS nations

Purpose This study aims to identify the various economic and non-economic determinants of renewable energy consumption (REC) in Brazil, Russia, India, China and South Africa (BRICS). Due to the adverse effect of carbon emission on the environment, every country is trying for a transition from fossil fuel towards renewable energy. Renewable energy plays a crucial role in reducing carbon emission and combating climate change. Understanding the determinants that influence REC helps to promote this transition. Design/methodology/approach The study is based on an unbalanced panel data over the period 2002–2019 for all five BRICS nations. The panel corrected standard error (PCSE) method has been adopted to examine the determinants of REC. Findings Industrialization, population growth and foreign direct investment (FDI) are found to be significant economic determinants of REC while patent on environmental technologies, political instability and industrial design are significant non-economic determinants of REC in the BRICS nations. Research limitations/implications The findings imply that to increase REC in BRICS nations, policymakers should incentivize industries for investments in renewable energy, attract FDI aligned with environmental regulations, raise population awareness through training, enforce industrial design standards, establish fair technology transfer frameworks to overcome patent barriers and create stable, long-term renewable energy policies with risk mitigation instruments to address political instability. Originality/value The study captures the effect of patents on environmental technologies and industrial design on the consumption of renewable energy. Thus, the novelty lies in investigating unexplored variables in the previous literature likely to affect REC.

The role of outward foreign direct investment as a filter for high energy intensity economies in the European Union

This study examines the effects of outward foreign direct investment (FDI) on energy intensity among the member countries of the European Union between 2000 and 2021. This relationship is deemed important in elucidating whether there is a process of filtering out energy-intensive companies where the use of FDI is employed to lead out production and improve energy intensity in the source country of the investment. To estimate this relationship, we employ feasible generalized least squares (FGLS) and panel corrected standard error (PCSE) for robustness purposes. Additionally, we complement our results with an estimation of the Granger causality relationships between our variables. Our findings reveal a highly significant trend wherein outward FDI from European Union countries tends to reduce energy intensity, thereby enhancing the productivity of the source countries of the investment. Conversely, only the technological productivity ratio exhibits a unidirectional causal relationship with energy intensity, while GDP per capita and natural resource rents serve as causes of energy intensity and vice versa. From this study, some policy recommendations can be derived whereby the European Union can continue to incentivize this filtering process to ensure better technological advancement in its production system, thereby improving the efficiency of the European industrial fabric.

Role Of Fintech Adoption on Banking Sector Efficiency: A Survey Based Research Approach

Comparing financial technology businesses during the fourth industrial age to their counterparts, this study investigates the effects of these companies adhering to effective manufacturing practices. The objective is to offer actual proof of the operational effectiveness of FinTech companies and how business efficiency affects market performance. FinTech has to pass through different business models to attain the maturity as a successful pure player actor. This demonstrates that FinTech innovations improve banks' performance using several panel data estimators, including panel-corrected standard errors for linear regression, fixed effects, and random effects.  Furthermore, it also show that the proportion of capital that is adequate, earnings capacity, total assets, and yearly GDP growth rate of banks also have a noteworthy beneficial influence on bank performance. By using a balanced scorecard to examine financial points of view, customer perspectives, business internal perspectives, education and growth perspectives, and competitive advantage in services growth and development, monetary advantage, and economic inclusion when implementing FinTech, this study seeks to understand the impact of these factors on banks' performance. A sample of 259 respondents was collected from people working in banking sector. The variables that identify the role of Fintech adoption on banking sector efficiency are Financial Inclusion, Data Analytics and Insights, Cost Reduction, and Improved Customer Experience.

Evolution of food price inflation in the European Union 27 member states

ABSTRACT The objective of the research is to investigate the evolution of food price inflation in the 27 Member States between January 2001 and May 2022. Our paper focuses on the role of global oil prices, exchange rate volatility, and the impact of the Russian-Ukrainian war, which started in February 2022 and their effects on food prices. We compiled a panel data set that includes monthly values. Based on the a priori test results, Granger causality test, panel ADRL model, along with Random Effects (RE), linear regression with panel-corrected standard errors (PCSE), cointegration regression using panel fully modified ordinary least squares (FMOLS) regression methods and panel event study estimation were applied. Our result shows that both the increasing Brent oil prices and the fluctuating exchange rates significantly stimulated food price inflation in the EU-27. Data demonstrates that Russia’s war against Ukraine also contributed to increasing food prices in the EU-27. In this regard, we also provide a country-level analysis. Our results contribute to theoretical analyses, as well as the implication for policymakers, and food service companies.