Tobit Regression Model Research Articles

Multidimensional child poverty and its determinants: Empirical Evidence from Sub-Saharan Africa

Poverty has been a subject of global discourse most especially in sub-Saharan Africa where little progress has been achieved. Most literature sources regard poverty mainly as a household threat rather than one to affectsthe children living within the household. Thus, through a multidimensional approach, this study analyses poverty, specifically in the context of its effect on children. In carrying out this study, the General Household Survey dataset for Nigeria (the mostpopulous country in sub-Saharan Africa) for 2018/2019 obtained from the National Bureau of Statistics (NBS) was used. Descriptive statistics, the Multidimensional Poverty Measure, and the Tobit Regression Model were usedin this study. The results showed that there are more male children (52.17%) than females (47.83%), with most of the children falling within the middle-age group of households (45.51%). Less than half of the household heads were found to be literate, while the mean size of the household amounted to nine. This study found that the poverty dimension,mainly affecting the research sample of Nigerian children,was their deprivation in terms of sanitation, while the least significant dimension was their lack of food. Child poverty is prevalent among the three respective age groups of children, among rural dwellers (57.16%), and among residents in the northern divide of the country. The rural sector, the residents in the north-eastern region of the country, and the gender of the household head were found to be significant variablesinfluencing child poverty in Nigeria. As such, poverty reduction strategies directed towards the rural sector, the northern region, and the identified age groups of children should be of primary focus in tackling child poverty in Nigeria to achieve the United Nations’ Sustainable Development Goal (SDG1) -“End poverty in all its forms everywhere”.

Digitalization and Operational Efficiency in Fisheries: Evidence from China

Fisheries contribute significantly to the global economy while playing a crucial role in environmental conservation, food security, and socio-economic development. Analyzing the operational efficiency of the fisheries industry not only enhances its economic and social benefits but strengthens the sector’s capacity for sustainable growth. This study initially evaluates the operational efficiency of Chinese fishery-listed companies using the DEA-BCC model and Malmquist index, both statically and dynamically, from 2012 to 2022. It then investigates the impact of digital transformation on the operational efficiency of these companies using the Tobit regression model. The findings reveal that the mean values of comprehensive, technical, and scale efficiency for Chinese fishery-listed firms are below 1, with scale efficiency exhibiting particularly low mean values under static conditions. Additionally, during the observation period, these companies’ average total factor productivity decreased by 0.1% annually compared to the base period. From a dynamic perspective, the decline in total factor productivity can primarily be attributed to reduced technical efficiency resulting from decreased scale efficiency. Ultimately, it can be reasonably concluded that the operational efficiency of listed fishing firms can be significantly enhanced by implementing digital transformation. This underscores the potential of digitalization as a critical factor in advancing the fisheries sector, facilitating modernization, and enabling intelligent upgrading across the industry.

Analysis of Factors Influencing Agricultural Commercialisation Among Youth Group in Agricultural Output Market: Empirical Evidence from Mwanza City and Ukerewe Districts, Tanzania

Although agriculture has great potential for Sub-Saharan Africa particularly in the creation of decent jobs for youth, the youth are less attracted and reluctant to pursue agriculture as both a career and activity for livelihood due to several aspects. For this reason, the study examined the Agricultural Commercialisation among youth groups in the agricultural Output Market in the Mwanza region, Tanzania. The cross-sectional study used a quantitative and qualitative approach and included ninety-three (93) youth groups from two selected Districts (Mwanza City and Ukerewe District) Data were analyzed with the Commercialisation Index and Tobit Regression Model with the aid of statistical tools for analysis which were R-Software (Ri3863.6.1) and SPSS version 20. The results showed that the commercialisation index for this study is about 79.4 %, then empowered youth groups were highly participating in the agricultural output market for both Mwanza City and Ukerewe District. This justifies the assumption of the Commercialisation Index (CI) when CI is greater than 50% of farmers are considered they be commercial oriented which in other words they participate in agricultural output markets. Moreover, the degree of participation in agricultural output among empowered youth groups was also influenced by market experience, market arrangement and market infrastructure. The participation of empowered youth groups from both agricultural output markets seemed also to be determined by the education level of group leaders. Youth groups in which their leaders had attained diploma education level had less participation in the agricultural output market as compared to groups with leaders who attained primary school education level

ASSESSMENT OF AGRICULTURAL LIVELIHOOD DIVERSIFICATION FOR SELF-CARE AMONG FEMALE YOUTH FARMERS IN KADUNA SOUTH LOCAL GOVERNMENT AREA, KADUNA STATE, NIGERIA

The study examined the agricultural livelihood diversification strategies for self-care among female youth farmers in Kaduna South Local Government area of Kaduna State. The specific objectives were to: examine the extent of female youth diversification strategies in agricultural livelihood activities in the study area; examine the extent of use of livelihood income on female youths’ self-care, and determine the factors influencing categories of livelihood diversified among the female youths in the study area. A multi-staged sampling procedure was used in selecting 131 respondents and primary data were collected with the aid of structured questionnaire. Descriptive statistics and Tobit regression model were used for data analysis. The results showed that 44.0% of female youth were engaged in processing and value addition activities while 21.2% of them were engaged in production activities and about (48.0%) of them were engaged in more than one livelihood activities. The findings further revealed that livelihood diversification strategies were influenced by level of education (2.550), agricultural experience (0.001) and number of livelihood activities (0.626) among others. Thus, the study recommends that government and private organization should provide financial support and entrepreneurial training to female youth to boost their capacity to diversify to more and better livelihood activities, thereby keeping them away from youth restiveness

Towards environmental sustainability: an empirical study on airports efficiency

ABSTRACT The transition to more environmentally sustainable production processes and managerial practices is an increasingly important topic. Many industries need to undergo radical change to meet environmental sustainability requirements; the air transport industry is no exception. In this respect, a particular aspect that needs further attention is the relationship between airport performances and investments in environmental sustainability policies. This work represents the first attempt to provide empirical evidence about this relationship. Through the application of a non-parametric method, we first assess the efficiency of the Italian airports’ industry. Secondly, we investigated the relationship between airports’ performance and management commitment towards the ecological transition using a Tobit regression model. The results show that airports’ adherence to formal multi-year ecological transition programmes has a positive and consistent impact on their performance.

Determinants of Microfinance Demand (Evidence from Chiredzi Smallholder Resettled Sugarcane Farmers in Zimbabwe)

Despite the MFI insurgency, agricultural financing remains critically low, even though microcredit is widely accepted as both a substitute and compliment to formal credit. Zimbabwe is an agro-based economy and very little is known about the determinants of microcredit demand and microcredit size in smallholder resettled sugarcane farmers. Research is concentrated in short-term agriculture activities. Thus, this study aims to fill the unattended gap in lagged returns agriculture activities such as sugarcane production which takes at least a year to mature, hence, the greater need for agriculture financing alternatives such as microfinance. The study examined the determinants of both microcredit demand and loan size (magnitude of microcredit participation) by smallholder resettled A2 sugarcane farmers in Chiredzi. Primary data from 370 smallholder resettled sugarcane farmers (214 borrower participants and 156 non-borrower participants) were used. Probit and Tobit regression models were used for data analysis in STATA. Operational costs, interest rate, grace period, and land size significantly affect both the demand for microcredit and microcredit size, while education, household farming assets, extension services, and payback period significantly affect microfinance demand, and risk attitude/perception additionally determine microcredit size. Special microfinance schemes best suitable for the agriculture sector and crop/plant-specific agriculture financing schemes, currency, and macroeconomic stability are the major policy recommendations.

GLOBAL–LOCAL DRIVING FORCES of CHINA’S GREENING of INDUSTRY

ABSTRACT The greening of industry is an inevitable path for developing economies to achieve sustainability transition. However, the specific roles of global and local driving forces are still not substantially understood. This study develops a three-dimensional framework, which includes coercive pressures, normative pressures, and technology acquisition to analyze the influence of global and local drivers on China’s greening of industry. We measure the industrial eco-efficiency (IEE) using Super-SBM model and analyze its influencing factors using the Tobit regression model at the provincial level in China from 2010 to 2020. China’s IEE evolution and its drivers are stage-specific and regionally differentiated, and differences also exist in the roles of global and local drivers. Developing countries initially start the green development of industry under global normative pressures through integration in the global production network. Thereafter, global coercive pressures and local forces, including domestic technologies, market demands, and effective regulations, drive the further greening of industry. The different potentials of regional coercive and normative pressures depend on industrial structures and socio-technical regimes. Policy recommendations for the greening of industry in developing economies are proposed.

Knowledge and perceptions towards organic farming: a case of pineapple farmers in central Uganda

This study examined the knowledge and perceptions as well as factors that influence the knowledge and perceptions of pineapple farmers towards organic farming in Uganda. Through multi-stage sampling procedures, purposive and random techniques were applied at different stages to select participants from both Luwero and Kayunga districts in central Uganda. Data was collected using a semi-structured questionnaire. A composite index for knowledge and perceptions was computed for each respondent and subjected to descriptive statistics while the censored Tobit regression model was used to determine factors that influenced farmers’ knowledge and perceptions of organic farming. Results showed that both organic and non-organic farmers had a high level of knowledge and favorable perceptions towards organic farming with no significant difference. Perceived environmental and economic benefits of organic farming did not significantly differ (p > 0.05) among organic and non-organic farmers. However, mean scores for perceived health and nutritional (4.30 vs. 3.94) benefits, and access to markets (4.10 vs. 3.89) differed significantly (p < 0.05) between organic and non-organic farmers. There was a positive and significant relationship between knowledge and perception of organic farming among non-organic farmers while for organic farmers, a significant and negative relationship was observed. Factors that significantly influenced farmers’ knowledge were information sources and farmers’ experiences. Farmer perceptions were influenced by education, information sources, group membership and extension services. Therefore, to enhance the adoption and growth of organic pineapple production in Uganda, policymakers and promoters should consider these factors when designing policy documents and sustainability strategies for the development of organic agriculture.

Influence of socio-economic variables and extension inhibitors on food sovereignty in Akwa Ibom State, Nigeria

This study assessed the influence of socio-economic variables and extension inhibitors on food sovereignty in Akwa Ibom State, Nigeria. This study identified and proffered solutions to extension inhibitors to food sovereignty. A multi-stage sampling technique was used to select one hundred and twenty respondents used for the study. Data analysis comprised the use of percentages, frequency, means and Tobit regression model. The result of the socio-economic characteristics of the respondents showed that 27.50% of the respondents were from 41 and more years of age, while 25.00% were within the age range of 31 to 40 years. 8.33% of them were in the age brackets of 20 to 30 years. Majority of the farmers were very strong, agile and could adopt extension teaching methods easily. About 49.17% of the respondents were at tertiary level of education, while 23.32% had primary level of education. The result showed the mean (x ̅) response rate of extension inhibitors on food sovereignty as follows; inadequacy of funds (x ̅ = 4.65), use of poorly trained personnel (x ̅ = 4.04), ineffective research extension linkage (x ̅ =4.21), lack of evaluation (x ̅ = 4.422), poor policy (x ̅ = 4.04) among other factors. The hypothesis showed that gender, marital status and farm size were positive and significant at 1% level of probability. The result of the HO1, showed that any increase in farm size led to a corresponding increase in the probability and intensity of extension inhibitors on food sovereignty in the study area. Also, the coefficient of education was positively signed but not significant. This showed that education though very important but had no severe influence on the extension inhibitors. In the result, there was significant relationship between socio-economic variables and extension inhibitors on food sovereignty in the study area. The study concluded that some of the inhibitors of extension on food sovereignty are; inadequate funding, lack of extension service evaluation on food sovereignty situations, ineffective research extension linkage and use of poorly trained personnel. The study also concluded that majority of the farmers are of age and well educated to positively influence extension inhibitors with the view to improving food sovereignty situations in the study area. It was recommended that women being the majority in the study area should be involved in extension activities and evaluation, with a view to improving on food sovereignty. Key words: Akwa Ibom, Extension, Food Sovereignty, Influence, Inhibitors, Socio-economic and Variables

Cultural Industry Agglomeration and Carbon Emission Performance: Empirical Analysis Based on 276 Cities in China

This study investigated the influence of cultural industry agglomeration on the energy carbon emission performance (CEP). Based on panel data from 276 cities in China, we used the Super-SBM model to measure the CEP. We then used the Tobit regression model to calculate the influence coefficient of cultural industry agglomeration and eight control variables on the CEP and analyzed the complex effects of cultural industry agglomeration on the CEP. The results showed that there is the phenomenon of “diseconomies of agglomeration” in cultural industry agglomeration, which cannot improve the CEP. For each unit of cultural industry agglomeration increase, the CEP decreases by 0.055; however, this phenomenon is not linear. Further research showed that the effects of cultural industry agglomeration showed a trend from good to inferior in the order of east, central, and west and did not improve with time. Finally, we used the panel quantile regression model and found that as the CEP levels rise, the negative impact of cultural industry agglomeration improves. Our research results show that strengthening the technical level to promote the upgrading of the cultural industry is the best way to achieve sustainable development. Governments at all levels should pay attention to the emission reduction potential of cultural industry agglomeration under high CEP levels and strengthen the benign agglomeration of the cultural industry.

Intensity of Adoption of Improved Malt Barley Production Technologies in Ethiopia: A Case Study in Oromia Region

Improved malt barley production technology packages are not yet widely adopted in Ethiopia. Stakeholders, including brewers, malt factories, research institutes, and farmer-based organizations, have been collaborating and promoting new malt barley production technologies in order to boost the intensity of acceptance. The aim of this study was to find out the intensity of improved malt barley production technologies adoption in Arsi zones, Oromia region, Ethiopia. A stratified random sampling approach with multiple stages was employed to collect primary data from 384 malt barley household heads. The data was analyzed using descriptive statistics, and the intensity of adoption of improved malt barley production technologies was determined using an econometric Tobit regression model. The findings specified that the most adopted improved malt barley variety was Traveler (47.92%), which was followed in descending order by Iboni (14.58%), Sabini (9.38%), Grace (5.47%), Holker (4.43%), and 18.23% unnamed varieties. The Tobit model result also depicted that the intensity to which improved malt barley varieties adopted were affected by, taking into account factors including contract farming involvement, cooperative membership, off-farm income, size of livestock holdings, access to training, and mobile ownership. Enhancing farmers’ knowledge of the advantages of contract farming, income diversification, and mobile phone-based information delivery are among the many ways to support access to and accelerate the adoption of improved malt barley technology in the research area and beyond.

Smallholders’ willingness to pay for ZM-GrowTM foliar fertilizer in Dangla District of Northwestern Ethiopia

ABSTRACT Using primary data collected from 389 sample households in Dangla district, Amhara region of Ethiopia, this study examined smallholder farmers’ willingness to pay for ZM-GrowTM foliar fertiliser. The study employed the Tobit model to estimate the determinants of the maximum willingness to pay and a seemingly unrelated bivariate probit model to estimate the mean willingness to pay for foliar fertiliser. The results of the Tobit regression model showed that the education level of the farm household, total annual income, access to credit service, access to agricultural extension service, perception about fertiliser, and cost of the existing fertiliser have a positive and significant effect on farm households’ willingness to pay. On the other hand, the age of farm households, availability of labour, and initial bid price have negative and significant effect on farm households’ willingness to pay for ZM-GrowTM foliar fertiliser. The mean willingness to pay for ZM-GrowTM foliar fertiliser, estimated using the seemingly unrelated bivariate probit model, was 121.16 birr/litre (2.75 USD/litre). The corresponding mean willingness to pay amount estimated from an open-ended format was 161.105 Birr/litre (3.65 USD/litre). The results suggest that foliar fertilisers could be good alternatives to the existing fertilisers and its adoption can be further facilitated through improved access to knowledge and finance/credit.

DETERMINANTS OF FARMER’S PERCEPTION OF PROSTEPHANUS TRUNCATUS (HORN) DAMAGES AND LOSSES ON STORED MAIZE IN TOGO AND BENIN (WEST AFRICA)

Prostephanus truncatus is one of the most damaging post-harvest pests of stored maize in Africa. Research Institutions disseminated Various control strategies during the 1990s in West Africa with significant results. What is farmers’ perception of this pest in decades after those control strategies? This study aimed to assess determinants of farmers’ perception of current damages and losses caused by Prostephanus truncatus on stored maize in southern of the two countries (Benin and Togo). 300 maize farmers (150 from Togo and 150 from Benin) were randomly selected from 10 villages per country. Descriptive statistics were used in addition to Logit and Tobit regression analysis. The results showed that 38% of farmers (35% in Togo and 41% in Benin) still perceive Prostephanus truncatus as the most damaging pest of stored maize. Logit's results showed that factors influencing farmers’ perception of Prostephanus truncatus were group membership, contact with extension agents, and period of maize harvesting. The results from the Tobit regression model showed that factors such as the maize variety, the form of maize storage (with husk), and the storage period influence the extent of damage and loss caused by Prostephanus truncatus. Farmers still perceive Prostephanus truncatus as the main post-harvest pest causing high damage and losses on maize. It is recommended that further dissemination of maize storage technology to reduce postharvest losses.

Health utilities of patients with epilepsy in a Canadian population.

Health state utilities are required to obtain quality adjusted life years, a common metric that informs clinical decision-making at individual, group, and health policy levels. Health state utilities are different from health-related quality of life, and their distribution across patients with epilepsy, as well as the factors that impact them, have not been studied in depth. We aimed to describe the distribution of health state utilities in people with epilepsy and the impact of different combinations of clinical and demographic factors on health state evaluation. We performed a retrospective analysis of patients' data prospectively collected in the Calgary Comprehensive Epilepsy Program registry. Patient-reported health state utilities were measured using the 5-level EuroQol 5-Dimension scale (EQ-5D-5L) completed at their initial assessment. EQ-5D-5L index scores were derived via the time trade-off approach based on Canadian norms, and their distribution across different health states and patient characteristics was obtained. The Tobit regression model was used to evaluate the determinants of EQ-5D-5L index scores. Of 1446 patients included in this analysis, 724 (50.5%) were female. The median (interquartile range) Canada-normed EQ-5D-5L index score was .87 (.71-.91). Patients with significantly lower health utilities were more likely to be female (p = .008), to be older (p = .034), to be unmarried (p = .013), to have failed to achieve 1-year seizure freedom (p < .001), to have no postsecondary education (p = .028), to be depressed (p < .001), to have antiseizure medication side effects (p = .001), to be unemployed (p < .001), and to be unable to drive (p < .001). A look-up table of health utilities based on combinations of clinical-demographic characteristics was produced. Health utility estimates for combinations of different health states in people with epilepsy attending specialty clinics are now available. These can help guide clinical decision-making in routine clinical practice, economic evaluations of treatment interventions, and health care policies.

Does livelihood diversification improve food security among rural households?: evidence from Ghana

ABSTRACT Livelihood diversification (LD) is crucial for rural households due to increasing climate variability and declining farm incomes in the global south. Literature has extensively documented the benefits of LD in emerging economies. However, there is still a gap in the econometric evidence of LD on the food security of rural households in Ghana. This study addresses this gap by examining the factors that influence LD using the Ghana Living Standards Survey (GLSS 7) data collected from 133 rural households in Northern Ghana. Results from the censored Tobit regression model, multiple linear regression, and Simpson Diversification Index (SDI) indicated that diversification averaged 0.313 and ranged from 0.000 to 0.709 (zero to 70.9%). Total food expenditures (TFE) measured as a proxy of food security declined at low levels of diversification. Beyond the diversification level of 0.480, total food expenditure increased steadily. The findings revealed that only 24.6% of the households had diversification scores higher than the turning point of 0.480. The Tobit model also showed that remittance income, technical education, household size, marital status, access to extension services, and ownership of mobile phones were significant drivers of LD. The findings have demonstrated that LD improves food security in rural Ghana.

Climate and Land Use Change Pressures on Food Production in Social-Ecological Systems: Perceptions from Farmers in Village Tank Cascade Systems of Sri Lanka

Climate and land use change pressures are critical to food production in Social-Ecological Systems (SESs). This study assessed farmers’ perceptions of the pressures of climate and land use changes alongside their impacts on food production in Mhahakanumulla Village Tank Cascade System (MVTCS), a SES maintained by traditional agricultural land use systems in the dry zone of Sri Lanka. This study used both rating and ranking scale questions to quantify farmers’ perceptions. The tobit regression model was employed to evaluate how farmer perception was influenced by socio-economic factors. The results showed that most of the farmers had experienced that the climate of the MVTCS area had changed over time, and they perceived variability of rainfall patterns as the most prominent and influential climate change. The increased cost of production, wildlife damage, and land degradation were ranked by the farmers as the most impactful factors of food production due to climate change. The farmers rated deforestation and land clearing as the most influential and impactful changes in land use, while wildlife damage and land degradation ranked as the highest impacts on food production due to land use changes. Among the socio-economic determinants, training and income/profit positively influenced farmer perceptions of the severity of both climate and land use change. The level of farmer’s adaptation to climate change had a negative association with their perception of the severity of climate change. Household size negatively influenced the perceptions of the severity of climate change while positively influencing perceptions of land use change impacts. Among the spatial determinants, farm size and downstream locations of MVTCS positively influenced perceptions of the severity of both climate and land use change. Thus, the effectiveness of adaptation strategies towards climate and land use change pressures depends on how well they are understood by the farmers. The study findings provide helpful insights for formulating localized land use policies and climate change adaptation strategies in these globally important landscapes with a combination of both top-down and bottom-up approaches.

Examining the Reciprocal Association Between Worry and Sleep: Disaggregating Between- and Within-Person Effects

Studies investigating the reciprocal association between worry and sleep have yielded mixed findings and suffered from methodological limitations. The purpose of this study was to assess the reciprocal association between worry and various indices of sleep (i.e., sleep onset latency [SOL], total sleep duration [TSD], sleep quality [SQ], and morning lingering [ML]). In a longitudinal daily assessment study, participants (N = 182) completed a sleep diary and a measure of worrisome thinking three times per day for 7 days. We used linear mixed effects models to examine worry predicting sleep, and Tobit regression models to examine sleep predicting worry, and controlled for previous day report of the outcome variable and person- and day-level effects. Results indicate that greater person-level worry, but not day-level worry, was significantly associated with longer SOL, worse SQ, and longer ML. Furthermore, greater person-level SOL, TSD, and ML was associated with greater worry, and greater person-level SQ was associated with less worry. Finally, we found that shorter day-level TSD and lower day-level SQ was associated with greater next-day worry. These findings support a reciprocal person-level association between worry and sleep (except for TSD), and a unidirectional day-level association between TSD and SQ as predictors of worry.

ECONOMIC EFFICIENCY OF GROUNDNUT PRODUCTION IN KANO STATE, NIGERIA

The study examined the economic efficiency of groundnut production in Kano State, Nigeria. Using a simple random sampling, two hundred and sixty-seven (267) farmers were selected and interviewed from nine communities, under the three selected LGAs from the study area. Descriptive statistics, DEA, as well as Tobit regression model were used for data analysis. The result of the Data Envelopment Analysis (DEA) reveals that the farmers were operating below the optimum frontier with average Technical Efficient (TE), Allocative Efficiency (AE) and Economic Efficiency (EE) scores was 0.265, 0.371 and 0.098 respectively, with the GM enterprise having a higher mean TE score of (0.7654). All the inefficiency variables met a prior expectation with positive coefficients except age and level of education. This indicates that increase in age and years of schooling have minimal effect in reducing the farmers’ inefficiency in groundnut production. Four out of the eight fitted inefficiency variables were significant at 10%, while three at 5%, but the extension contact was not significant. It was thus concluded that even though groundnut production enterprise is a profitable one, groundnut farmers in the study area were both technical and allocative inefficient. It was therefore recommended that farmers should be encouraged through extension to adopt new available technologies and improved varieties which will help improve both their technical and cost efficiency thereby widen their margin gaps.

Determinants of Sustainable Tourism Efficiency: Evidence from East European Countries

Objective: In the first step, this paper aims to evaluate the tourism efficiency in East European Countries and later to identify factors that can determine the international tourism development in this European Region. Theoretical Framework: This study considers the impact of tourism demand on economic productivity (efficiency), with a particular focus on the role of sustainable tourism in driving economic development. Method: An input-oriented Data Envelopment Analysis model with a constant return to scale was applied for 6 years from 2014 to 2019 focusing on 22 countries in the area (except Kosovo due to lack of data) to estimate efficiency scores for each country. In the second stage, a Tobit Regression Model was used to stress the role of some characteristic factors influencing the efficiency of the international tourism industry. Findings: This study points out the greater attention of public and private institutions toward sustainability tourism (SDG target 8.9) associated with some factors such as environmental pollution (SDG target 3.9), friendly environment urbanization (SDG 11), educational level of the population (SDG 4), and tourism seasonality. Research implications: The study indicates that most East European Countries run inefficiently. Productivity is low, and efficiency needs to be improved in terms of capital- and labor production implementing consistently sustainable development principles.

Religious practices, fasting, and individuals’ trading behavior: a natural experiment

Purpose This study aims to investigate the effect of seasonality caused by fasting as a religious practice on trading activity. Design/methodology/approach The authors use an unbiased sample of daily trading by individuals and institutions on the Boursa Kuwait. The authors use panel data on trading activities and Tobit regression models to examine the effect of Muslims’ religious practice of fasting during the holy month of Ramadan on trading behavior. Findings The authors find that during the holy month of Ramadan, Muslims’ religious practice of fasting leads to a decline in the frequency of both overall stock market trading and the ratio of individual trading volume to total trading volume. The authors find a significant decrease in individual buy-side trading as a proportion of total trading volume and simultaneously a significant increase in institutional buy-side trading. Practical implications This study’s findings have important implications for the main players in stock markets of countries with a Muslim majority. Market-makers should be aware of the significant increase in the proportion of institutional buy-side trading volume to total trading volume to minimize the cost of trading with better-informed traders (adverse selection). Originality/value To the best of the authors’ knowledge, this is the first study that investigates individuals’ trading activity during Ramadan.