System GMM Estimation Methods Research Articles

The Impact Of Islamic Finance, Economic Growth, And Globalization On CO2 Emissions

This paper examines the impact of Islamic finance, economic growth, and globalization (economic, social, political, and overall aspects) on carbon dioxide emissions in 4 countries for the period 2015-2020. Employing the System GMM estimation method, which fulfills criteria for model unbiasedness, validity, and consistency. Findings reveal that Islamic finance, economic growth, and globalization simultaneously contribute to increasing and decreasing carbon dioxide emissions with a significance level of 0.010. Partially, Islamic finance and globalization’s overall aspect in short or long term contribute to a decrease in carbon dioxide emissions with a significance level of 0.010. Meanwhile, economic growth and globalization in economic, social, or political aspects in short or long term contribute to an increase in carbon dioxide emissions with a significance level of 0.010. This scientific article provides a new contribution to the research results that have been obtained with a significance level of 0.010 or 99 per cent confidence level.

The incentive effects of the macro tax burden on economic growth: A negative or positive incentive effect? Analysis based on panel data

Utilizing macroeconomic panel data from 2010 to 2022 of 31 provinces in China, this paper employed the fixed effect model, the random effect mode, the robust test method, the system GMM estimation method, the instrumental variables method (IV), and subregional heterogeneity analysis to conduct an empirical investigation into the effect of China's small-caliber macro tax burden, large-caliber macro tax burden and the burden of various major taxes and fees on economic growth. The research revealed that the small-caliber macro tax burden exerts a positive incentive effect on economic growth, while the large-caliber macro tax burden acts in the opposite way. The tax burden of VAT and CIT is relatively moderate, which can stimulate a positive incentive effect on economic growth. However, the tax burden of total nontax income and individual income tax is too heavy and overburdens negatively economic growth. Moreover, this paper reveals regional heterogeneity in the effects of China's small-caliber and large-caliber macro tax burdens and the burden of major taxes and fees on economic growth. Drawing from the findings of this study and considering the specific context of China, this paper offers several policy recommendations for optimizing China's tax system.

The impact of FinTech development on stock price crash risk and the role of corporate social responsibility: Evidence from Vietnam

AbstractWith the strong development of Financial Technology (FinTech) innovation in recent years, academic interest in the effect of FinTech on financial market has also increased significantly. To develop the field further, this study investigates the effect of FinTech development on future stock price crash risk and the role of corporate social responsibility in an emerging financial market. By using a sample of 662 listed firms in the Vietnamese stock exchange for the period 2011–2020 and applying the fixed‐effect and System GMM estimation method, we find that FinTech development results in increased stock price crash risk. However, corporate social responsibility disclosure can mitigate such effect. As an extension, we also provide evidence that the effect of FinTech development on crash risk is stronger and the role of corporate social responsibility disclosure becomes more important in small firms. Our findings provide several important implications for shareholders, investors, and regulators in the fields of management and investment.

The effects of environmental regulation and environmental protection investment on green technology innovation of enterprises in heavily polluting industries—based on threshold and mediation effect models

Introduction: Studying the influence and mechanism between environmental regulation, environmental protection investment, and enterprise green technology innovation is crucial to realize ecological civilization construction and sustainable economic growth.Methods: Based on the green patent data and the corresponding enterprise data of A-share heavily polluting industry enterprises from 2010 to 2020, a comprehensive index of environmental regulation is constructed, and the system GMM estimation method, threshold effect test, and intermediary effect model are used. The impact and mechanism of environmental regulation on enterprise green technology innovation are studied, and the heterogeneity of property rights is analyzed.Results: The following conclusions are drawn: 1) Environmental regulation presents a “U”-shaped relationship of first suppressing and then promoting enterprise green technology innovation, and there is only a single threshold effect, and the “inflection point” is 2.756. 2) There is an intermediary effect of environmental investment in the impact of environmental regulation on enterprise green technology creation; that is, environmental regulation affects enterprise green technology innovation by affecting the environmental protection investment behavior of enterprises. 3) State-owned enterprises are more sensitive to environmental regulation, and environmental regulation has a greater impact on enterprise green technology innovation.Discussion: These conclusions play an important role in the formulation of environmental policies by governments and in the green development of enterprises.

Private capital holding, financial awareness of government and steadying operation of banks: Evidence from China.

Based on the panel data of 123 city commercial banks in China from 2007 to 2017, we use the dynamic panel system GMM estimation method to empirically test the impact of private capital holdings on the stability of city commercial banks. The results show that private capital holding improves the operating performance of city commercial banks, reduces the volatility of return on total assets, and is conducive to the stability of city commercial banks. Furthermore, the lack of financial awareness of local governments has led to the negative impact of private capital, that is, the stability of the banks has declined.

The Impact of Financial Resilience and Steady Growth on High-Quality Economic Development—Based on a Heterogeneous Intermediary Effect Analysis

Finding a way to move the economy away from rapid growth and toward high-quality development is essential for China’s economic success. Financial resilience and steady economic growth provide possible paths for high-quality economic development. This paper uses the panel data of 31 provinces and cities in mainland China from 2009 to 2020 to establish a comprehensive evaluation indicator system using the entropy weight method so as to measure the level of high-quality economic development and financial resilience of each province and city. On this basis, combined with the System-GMM estimation method of the dynamic panel system and the intermediary effect model, the impact of financial resilience and stable growth on high-quality economic development is demonstrated. The results show that financial resilience is essential for fostering high-quality economic development, and that steady growth plays a beneficial intermediary position in the connection between financial resilience and high-quality economic development. Furthermore, the impact of financial resilience and steady growth on high-quality economic development has obvious regional, developmental stage, and industrial structure heterogeneity characteristics. Therefore, enhancing financial resilience and boosting steady growth can serve the economy and boost high-quality economic development.

A Revisit of Motives for Chinese Outward Foreign Direct Investment: The Role of the Institution in Host Countries

This study explores how the institution of the host countries affects the natural resource-seeking and strategic asset-seeking motives of the Chinese outward foreign direct investment. Using the system GMM estimation method and data of the Chinese outward foreign direct investment during the period from 2003 to 2020, the study shows that the search for strategic assets by the Chinese outward foreign direct investment is directed toward the host countries with well-established institutions, while the search for natural resources is driven by poor institutions of the host countries. Findings from this study provide empirical evidence for policymakers to formulate appropriate foreign investment policies given the dynamics of Chinese foreign direct investment worldwide.

Https://www.insanvetoplum.org/sayilar/11-4/m0637

This study analyzes how bilateral trade between Turkey and Organisation for Economic Co-operation and Development (OECD) countries has been affected by the immigrant flows from Turkey to OECD countries. The main objective is to unveil which channels of foreign trade are affected by immigrant flows from Turkey to OECD countries. Most empirical studies examining the static relationship between international migration and bilateral foreign trade take advantage of panel gravity models. This paper outlines a new approach on using a dynamic panel gravity model to analyze the dynamic relationship between international migration and bilateral foreign trade. This study tests the impact of immigrant flows from Turkey to OECD countries on bilateral foreign trade between countries from 2000-2016 for the first time using the system GMM estimation method. The evidence from this study indicates the relationship between bilateral foreign trade and immigrant flows from Turkey to OECD countries from Turkey to have complementarity. In addition, this study’s findings indicate immigration flows from Turkey to OECD countries to contribute to the exports from immigrants’ host countries and to increase Turkey’s imports. The results show these immigrant flows to be effective by means of networking channels in terms of foreign trade.

Does increasing environmental policy stringency lead to accelerated environmental innovation? A research note

ABSTRACT This research note empirically investigates the effect of stringent environmental regulations on environmentally friendly technological innovation for 27 OECD countries from 1990 to 2015, using the two-step system-GMM estimation method for a linear dynamic panel data model. We further test the robustness of the empirical results by the method of correlated random effects for dynamic panel data estimated by Maximum Likelihood, the fixed effect with Driscoll–Kraay standard errors and the mixed-effect maximum-likelihood estimator. Overall, we find that increasing environmental policy stringency leads to accelerated environmental innovation. In addition, the non-market-based environmental policy instruments are found to stimulate more environmental innovation than market -based instruments. Thus, the instruments based on command and control policies are more effective than price mechanisms in inducing eco-innovation.

Cross-national knowledge transfer, absorptive capacity, and total factor productivity: the intermediary effect test of international technology spillover

ABSTRACT Knowledge has become the most important factor of production with the emergence of the knowledge economy. We use the system GMM estimation method to analyze how cross-national knowledge transfer (CNKT) impacts the total factor productivity (TFP) of China’s 31 provinces and evolution of China’s ability to absorb foreign knowledge. We also examine the possible intermediary effects of foreign direct investment (FDI), outward FDI, import trade, export trade, and direct technology spillovers between CNKT and TFP. We find that: (1) CNKT improves China’s TFP and positively impacts FDI, import trade, export trade, and direct technology spillover; It shows that CNKT not only helps to improve China’s TFP, but also provides innovative knowledge reserve for the absorption of international technology spillovers. (2) The improvement in the domestic infrastructure construction level, R&D capacity, human capital, economic development and openness has obvious absorption effect on CNKT, which is conducive to the absorption and utilisation of international advanced knowledge. (3) FDI, import trade, and direct technology spillover play a partial mediating role between CNKT and TFP, and the intermediary effect of import trade technology spillover is the strongest.

Impact of Regional Environmental Regulations on Taiwanese Investment in Mainland China

Based on the perspective of regional differences and decentralization, this article investigated the impact of environmental regulations on Taiwanese investment in mainland China from theoretical and empirical perspectives, and analyzed whether local governments are competing to lower environmental standards to attract Taiwanese investment so as to maintain their comparative advantages. This paper constructed a theoretical model through a two-stage game model. With the panel data of each province in Mainland China from 2006 to 2016, the theoretical propositions were empirically tested through the system GMM estimation method. The results show that the environmental regulation policies adopted by the local governments in the mainland have a significant inhibitory effect on the investment volume of Taiwan-funded enterprises, and the interaction between environmental regulations and local tax burden levels also has a negative effect on Taiwanese investment. Local governments have the motive to reduce environmental regulations to attract investment.

The Impact of University Efficiency and Financial Development on Technology Transfer from the Perspective of Economic Innovation

Based on the provincial panel data of 30 provinces in China from 2009 to 2018, this paper uses the system GMM estimation method to examine the impact of university efficiency and financial development on technology transfer from the perspective of economic innovation, and validates the hypotheses of theoretical analysis. The research results show that university efficiency may promote technology agglomeration, but significantly inhibit technology transfer, which is not conducive to directly promoting economic innovation; while financial development significantly promotes technology transfer, which is conducive to promoting economic innovation. Finally, based on the above conclusions, in order to better promote economic innovation and technology transfer, and promote the sustainable development of the national innovation system, this article puts forward corresponding policy recommendations.

Schooling is Not Learning - the Impact of the Learning-Adjusted Years of Schooling on Growth in a Dynamic Panel Data Framework

Schooling is not the same as learning. Nonetheless, many cross-country studies still use the mean school years, that is, a purely quantitative measure, to control for human capital. Thus, they ignore that the learning outcomes of two countries can differ dramatically even if they have the same average years of schooling. The concept of the learning-adjusted years of schooling (LAYS), introduced by the World Bank in 2018, tries to mitigate this problem by combining quantitative and qualitative components of education. However, so far, the impact of the LAYS has only been analyzed in a cross-sectional framework, ignoring several potential problems such as endogeneity, omitted variable bias, unobserved country heterogeneity, and measurement error. Our paper is the first to provide a country-level LAYS database covering up to 5 periods. Analyzing the impact of the LAYS on growth within a dynamic panel data framework (using system GMM estimation methods) enables us to take advantage of the time series variation in the data and to control for the problems listed above. We find that the LAYS have a highly significant positive impact on economic growth, even when controlling for institutional quality, investment ratios, trade openness, and government expenditures. Moreover, we compare the LAYS measure to the traditional measures of education. Our findings suggest that the LAYS appear to be a better predictor of economic outcome than the standard educational measures. Finally, we also investigate the interrelationship between institutional quality and human capital. Our evidence suggests that human capital and ‘good’ institutions serve as substitutes in the growth process, meaning that the positive effect of the LAYS on growth is smaller in countries where institutions are already strong than in countries with poorly functioning institutions. Our results are robust for many different specifications and have important policy implications, since investments in human capital and institutional quality are both costly measures, especially for developing countries.

Does export intensity affect corporate leverage? Evidence from Portuguese SMEs

This paper examines the effect of export intensity on a firm's capital structure using a sample of 7,676 Portuguese SMEs. Results obtained from a system GMM estimation method show that the leverage ratio is negatively affected by export intensity. We document that firms with more growth opportunities have a higher leverage, while firms that have more profits, higher asset tangibility and face higher business risk have lower debt ratios. Our results also show that the implementation of governmental mechanisms that support export firms’ borrowing activities are critical in economies facing a financial crisis.

Sovereign and private claims in the hands of foreign banks – are they substitutes? The case of CEE countries

ABSTRACT The aim of this paper is to verify the impact of sovereign indebtedness on banking capital inflows in Central and Eastern European (CEE) countries. Using bilateral data on cross-border banking capital flows to 17 emerging CEE countries from 15 advanced economies in the 2005–2016 period and the System GMM estimation method we found that foreign banks’ claims on the public sector reduced claims on the private sector, banks, and non-bank financial institutions. Therefore, the main conclusion stemming from our research is that the effect of public debt on the private sector’s access to foreign credit is not limited to the impact of the overall level of sovereign debt; the access to foreign credit for the private sector is also affected directly by the public sector’s activity on the market for foreign credit, as measured by the claims on the public sector held by foreign banks.

Persistence and determinants of income inequality: The Brazilian case

AbstractLatin America, which is a region known for its high and persistent income inequality levels, experienced a significant decline in income inequality since the second half of the 1990s. Brazil is a particularly interesting case in Latin America. While the country presented notable economic growth and improvements in income distribution in the early 2000s, Brazil continues to experience high levels of income inequality in comparison with other Latin American or advanced economies. This research contributes to the literature by examining the key drivers of income distribution and the degree of persistence of income inequality among Brazilian states. This research also improves upon previous works by using more recent and comprehensive data and addressing concerns regarding heterogeneity and endogeneity by using the system GMM estimation method. Our findings show that income inequality is highly persistent across Brazilian states and that government policies including income transfer programs made important contributions to reduce income inequality in Brazil. This study also shows that the decline in labor income ratios between different ethnic groups and the increase of the share of formal jobs in the labor market contributed to reduce income inequality.

Financial and corporate social performance in the UK listed firms: the relevance of non-linearity and lag effects

Using environmental, social and governance scores compiled by Reuters Datastream for each company’s corporate social performance (CSP), we examine the relationship between CSP and corporate financial performance (CFP) of 314 UK listed companies over the period 2002–2015. We further evaluate the relationship between prior and subsequent CFP and prior and subsequent CSP. Based on the system-GMM estimation method, we provide direct evidence that suggests that while CFP and CSP can be linked linearly; however, when we examine the impact of CSP on CFP, the association is more non-linear (cubic) than linear. Our results suggest that firms periodically adjust their level of commitment to society, in order to meet their target CSP. The primary contributions of this paper are testing (1) the non-monotonous relationship between CSP and CFP, (2) the lagged relationship between the two and the optimality of CSP levels, and (3) the presence of a virtuous circle. Our results further suggest that CSP contributes to CFP better during post-crisis years. Our findings are robust to year-on-year changes in CFP and CSP, financial versus non-financial firms, and the intensity of corporate social responsibility (CSR) engagement across industries.

The Influence of Peg and F_Score on Stock Return by Valued Investment Portfolios: Empirical Evidence from Vietnam

The study determines the effects of the PEG valuation factor (P/E combined growth rate) and the F_score on the calculation of the impacts on the return on the portfolio of empirically value stocks at 250 non-financial firms listed on the Vietnam’s stock market from 2006 to 2017. The authors used system-GMM estimation method, quantile regression and t-test estimation to confirm the research hypotheses made by the authors. The results show that firms with low PEG and high F_score will yield higher return from empirical tests in the Vietnamese market, which is consistent with previous theories. Firms with increasing F_score will earn higher stock return and the portfolio of PEG-valued stocks will outperform others in the market. The authors used system-GMM estimation method to deal with the defects of the model and used quantile regression analysis to determine the effect level of the rate of return on each quantile in the Vietnamese stock market.

A Comparative Analysis of Firms’ Financing Decisions in Export and Non-Export Sectors: Evidence from Portugal

This paper examines the effect of export intensity on a firm's capital structure using a sample of 7,676 Portuguese SMEs. Results obtained from a system GMM estimation method show that the leverage ratio is negatively affected by export intensity. We document that firms with more growth opportunities have a higher leverage, while firms that have more profits, higher asset tangibility and face higher business risk have lower debt ratios. Our results also show that the implementation of governmental mechanisms that support export firms’ borrowing activities are critical in economies facing a financial crisis.

Do Firms Benefit From Agglomeration? A Productivity Analysis For Turkish Manufacturing Industry

The link between productivity and agglomeration is important to answer the question ‘Do firms benefit from agglomeration?’ This study aims to investigate such link using proper proxies and econometric methods. This study employs the Ellison and Glaeser index and Total Factor Productivity to represent agglomeration economies and productivity levels in Turkish manufacturing industries, using 1980-2001 panel data. TFP is measured using SFA and then regressed along agglomeration and other control variables using a dynamic system GMM estimation method. This estimation method allows to account for the dynamic nature of TFP and also the possible endogeneitiy between productivity and agglomeration. The results indicate that Turkish manufacturing industries stand as an example to negative externalities.