Role Of Political Instability Research Articles

Diversification and bank stability: Role of political instability and climate risk

Amid the changing regulatory environment, economic volatility, and environmental complexities, the banking industry has experienced significant transformation. In this scenario, diversification has arisen as a critical risk management approach. This research investigates the intricate dynamics between bank diversification strategy and stability, particularly concentrating on the influences exerted by political uncertainty and climate-related risks. Our study examines the effect of bank diversification strategies on bank stability by using a sample of 271 banks operating in the MENA countries during the period 2009–2020. We also analyze how political instability and climate risk impact the nexus between diversification and bank stability. Our results show that the impact of enhancing banking diversification on stability is mixed. The bank's income and assets diversification improve the bank's stability. In contrast, diversification benefits appear to be deteriorating with the increase in non-interest activities-the so-called 'dark side of diversification.' While political instability and climate risk significantly affect the bank's stability and reduce the benefits of the bank's diversification strategy. Furthermore, the impact of diversification on bank stability varies across banks due to differing size and market power levels. Notably, the adverse impact of bank diversification on stability is more pronounced in conventional and GCC countries than in Islamic and non-GCC countries. The study offers significant policy implications for bank regulators to identify measures needed to address the risks of climate change in the banking sector and improve the stability of banks.

Socio‐emotional Wealth Preservation and Alliance Success in Family Firms: The Role of Political Instability and Alliance Management Capability

AbstractSocio‐emotional wealth preservation (SEW‐P) can create a dilemma for family firms when seeking to establish strategic alliance: how to manage the need to establish strategic alliances aimed at obtaining complementary network‐based resources (the economic dimension) with the fear that such a move may jeopardize family control and domination (the SEW dimension). To address this dilemma (also labelled as a ‘mixed gamble’), we theorized that the concern to preserve SEW (i.e. SEW‐P) can contribute to family firms’ alliance success being dependent on the leverage of alliance management capability (AMC). We also propose that SEW‐P can act as an organizational cognitive enabler for AMC. Yet the positive association between SEW‐P and AMC will become stronger when family firms operate in a politically unstable environment. We tested these hypotheses using a unique dataset collected from 302 family firms operating in a politically unstable environment (the Libyan context), and the analysis lends support to our model and predictions. Overall, the study advances the alliance theories and family business literature by adding new insights that explain the effect of non‐financial priorities of family firms, and related contingencies, in predicting alliance success.

Examining the effect of liquidity creation on banking profitability and stability: moderating role of political instability

PurposeThe paper aims to test the effect of liquidity creation on profitability and stability with the moderating role of political instability and its level of implication on the overall banking sector of Pakistan.Design/methodology/approachThis study uses the panel data estimation technique, including fixed- and random-effect model, by taking sample data of 28 banks of Pakistan that are providing their services from 2006 to 2019. Moreover, this study uses the Genreralized Method of Moments (GMM) estimation technique to check the robustness of the results.FindingsThe empirical outcomes of this study found a negative relationship of liquidity creation with profitability meanwhile positive relation with banking stability. However, this study shows a negative relation of political instability with liquidity creation, profitability and stability of overall banks of Pakistan.Practical implicationsThe findings of this paper recommended the vital role of liquidity creation in the profitability and stability of banks, especially in the decision-making process of the investors and bank managers, and how it is affected strongly in the presence of an unstable political situation. These findings may be helpful for policymakers to devise appropriate policies to maintain a fair field between state authority and financial institutions and also assist in formulating strategies to strengthen the banking sector of Pakistan to avoid financial turmoil in the future.Originality/valueAs per the knowledge of the authors, this study is the first contribution to examine the moderating effect of political instability on liquidity creation, profitability and stability of the overall banking sector of Pakistan.

Role of Political Instability in Attracting FDI Inflow to Pakistan

Purpose: The reason of this study is to recognize the impact of key determinants of overseas direct asset in case of Pakistan, based on annual information covering the period of 1981-2018.
 Design/Methodology/Approach: After checking for still of the sequence, the technique of ARDL is used for estimation of long run parameters estimates and error alteration instrument for short run dynamics.
 Findings: The results of the study indicate that politically stable environment and long term policies are necessary to attract foreign investors. furthermore, investment profile of any government also matter for direct asset in the country as the study conclusions reveal that marketplace size as well as domestic investment are positively related to foreign direct investment while taxes have negative association with overseas straight investment in the case of Pakistan.
 Implications/Originality/Value: The most important factor for FDI inflow to Pakistan is interest rate or ease of doing business which has negative sign means inverse relation exists between the two variables.

Global dynamics of international migration systems across South\u2013South, North\u2013North, and North\u2013South flows, 1990\u20132015

Evidence from 184 countries over the span of 25 years is gathered and analyzed to understand North–North, South–South, and North–South international migration flows. Conceptually, the analysis borrows from network theory and Migration Systems Theory (MST) to develop a model to characterize the structure and evolution of international migration flows. Methodologically, the Stochastic Actor-oriented Model of network dynamics is used to jointly model the three types of flows under analysis. Results show that endogenous network effects at the monadic, dyadic, and triadic levels of analysis are relevant to understand the emergence and evolution of migration flows. The findings also show that a core set of non-network covariates, suggested by MST as key drivers of migration flows, does not always explain migration dynamics in the systems under analysis in a consistent fashion; thus, suggesting the existence of important levels of heterogeneity inherent to these three types of flows. Finally, evidence related to the role of political instability and countries’ care deficits is also discussed as part of the analysis. Overall, the results highlight the importance of analyzing flows across the globe beyond typically studied migratory corridors (e.g., North–South flows) or regions (e.g., Europe).

Role of Political Instability in Trade Pattern and Economic Growth: A Case of Pakistan

Economic growth is based on the foreign investments and international trade based on stable and consistent policies. Stable political and economic policies attract the foreign investments and international trade. Political instability affect the foreign investment and economic growth. The role political instability has been tested on the pattern of international trade and economic growth. The results shows that terms of trade insignificant while trade restriction indication a significant impact on economic growth. Trade patterns indicates a significant relationship with economic growth. The results indicates that political instability affect the relation of trade pattern and economic growth adversely as moderating factor. It has been observed that political instability is quite high in case of Pakistan. Since last ten years political system of Pakistan is improving after the revival of democratic system and trade with neighboring and developed countries is improving and a positive signals has been observed in economic growth of Pakistan

Politics, Instability, and International Investment Flows

In this paper, we propose a political theory of international equity flows. We analyze the choice between foreign direct investment (FDI) in which investor retains control and foreign portfolio investment (FPI) in which control remains in the hands of the other party. The central trade-off in the model is the following: FDI mitigates agency problems and reduces tunnelling, while with FPI domestic partners are able to lobby the government. As a result, FPI allows foreign investors to get preferential arrangements, such as firm-specific tax breaks, which they would not get with FDI. We also look at the role of political instability in this trade-off. Political instability diminishes the relative value of FPI as compared with FDI as it decreases the probability of getting tax breaks through political connections of domestic partners in the future. Consistent with stylized facts and existing empirical evidence, our model shows that FDI should be relatively more attractive when investor protection is worse, when political inequality is lower, or when political instability is higher. It also produces predictions for the effect of crisis in different countries. It shows that the effect of crisis is expected to be more important in countries with more stable politics and in countries in which corporate insiders have more influence on political process.

Transforming Economic Growth to Human Development in Sub-Saharan Africa: The Role of Elite Political Instability

In the light of the increasing attention on human development (HD) as well as the importance of political instability (PI) in economic performance, this paper examines the role of PI in the transformation of economic growth to HD. It finds that élite PI—the frequency of coups d'état in sub-Saharan Africa—adversely affected the transformation of economic growth to HD, measured as the change in an index of life expectancy and literacy, between 1970 and 1985. Coupled with an additional indirect negative effect on GDP growth, élite PI is found to have engendered a significant adverse impact on HD.

The Role of Political Instability in Stock Market Development and Economic Growth: The Case of Greece

This article examines empirically the relationship between stock market development, political instability and economic growth in Greece. We measure socio‐political instability by constructing an index which captures the occurrence of various phenomena of political violence using time‐series data. The main advantages of analysing political instability in a case study framework using time‐series, in contrast with the widely used cross‐country empirical studies, are: (a) a more careful and in‐depth examination of institutional and historical characteristics of a particular country; (b) the use of a data set comprised of the most appropriate and highest quality measures; and (c) a more detailed exposition of the dynamic evolution of the economy. The empirical results indicate the existence of a strong negative relationship between uncertain socio‐political conditions and the general index of the Athens Stock Exchange (ASE) and support the theoretical hypothesis that uncertain socio‐political conditions affect economic growth negatively, is true for the Greek case.(J.E.L.: G10, G14, O40, C32)