Unbalanced Panel Data Research Articles

Does digital infrastructure construction impact urban carbon emission reduction? Evidence from China's smart city construction.

As the cornerstone of the digital economy, the construction of digital infrastructure plays a crucial role in promoting China's high-quality economic growth.. Against the backdrop of the "dual-carbon" goals, the development of digital infrastructure will provide new momentum for carbon emissions reduction in urban areas. This study utilizes unbalanced panel data from 277 prefecture-level cities in China between 2008 and 2019, treating the smart city construction as a quasi-natural experiment, to systematically evaluate the impact of the pilot construction of smart city on urban carbon emissions intensity. The research findings reveal that the construction of the smart city has significantly contributed to the reduction of urban carbon emissions intensity, indicating that digital infrastructure contributes to urban carbon emission reduction. The reduction of carbon emissions resulting from smart city construction is particularly significant in the East and Central regions., as well as regions with high financial development levels, regions with high human capital levels and non resource-based cities. The construction of the smart city primarily achieves the reduction of urban carbon emissions intensity through two main pathways: improving the penetration rate of digital infrastructure and enhancing technological innovation capability. Therefore, this study recommends that local governments strengthen the integration and penetration of digital infrastructure with traditional industries, foster urban innovation vitality, and accelerate the transformation towards green and low-carbon cities.

The chained difference-in-differences

This paper studies the identification, estimation, and inference of long-term (binary) treatment effect parameters when balanced panel data is not available, or consists of only a subset of the available data. We develop a new estimator: the chained difference-in-differences, which leverages the overlapping structure of many unbalanced panel data sets. This approach consists in aggregating a collection of short-term treatment effects estimated on multiple incomplete panels. Our estimator accommodates (1) multiple time periods, (2) variation in treatment timing, (3) treatment effect heterogeneity, (4) general missing data patterns, and (5) sample selection on observables. We establish the asymptotic properties of the proposed estimator and discuss identification and efficiency gains in comparison to existing methods. Finally, we illustrate its relevance through (i) numerical simulations, and (ii) an application about the effects of an innovation policy in France.

Banking competition in Indonesia: does Fintech lending matters?

PurposeThis paper aims to examine how the rise of financial technology (Fintech) lending affects bank competition. Moreover, this study also identifies the structure of Indonesian commercial banking sector and the different behaviour of competition among bank groups (based on their size, type and ownership) and the joint impact of COVID-19 due to the rise of Fintech lending.Design/methodology/approachUsing an unbalanced panel data set of 118 commercial banks in Indonesia over the period 2018–2022, both static panel and 2SLS/IV data analysis were used and found that random effect model is the best model.FindingsThe results show that the Indonesian commercial banking sector can be considered as monopolistic competition. Moreover, using the Lerner index reveals that the entry of the Fintech lenders increases bank competition. Furthermore, there were different responses to the impact of Fintech lending on bank competition among state-owned banks, private banks, regional development banks and foreign banks. Greater efficiency and stability lead to greater market power. In the meantime, higher level of asset growth, capitalisation and cost-to-income ratio increase the competition. Lastly, higher bank credit growth and lower inflation boost overall bank competitiveness.Practical implicationsThis study highlights some policy recommendations for commercial banks to be aware of the coming of Fintech lenders because they have started to increase the market competition. The government should create a more collaborative ecosystem between banks and Fintech lending to anticipate unhealthy competition.Originality/valueThis study will contribute to the literature by expanding the determinants of bank competition by considering the rise of Fintech lending in the market.

CEO cultural and financial backgrounds and corporate innovation

This study explores the relationship between CEO cultural and financial background and corporate innovation based on a comprehensive sample of China's A-share listed companies from 2012 to 2022. Utilizing an unbalanced panel data set of 2317 firms, this study employs empirical models to test the effect of CEOs' cultural and financial backgrounds on innovation outcomes. The findings highlight the important role of CEO cultural traits, particularly diversity, in enhancing corporate innovation performance. In addition, CEOs’ financial knowledge significantly amplifies the positive relationship we identified. This study provides valuable insights to practitioners by mapping the relationship between CEO background and innovation outcomes.

India’s Banking Market Structure: Impact Assessment of Bank Consolidation

The present study aims to extend the existing literature on measuring competition by including recent bank consolidation in India. Unlike existing literature, the study goes in-depth to account for the asymmetric behavior of bank competition owing to ownership, size, scale, efficiency, and pre/post-global financial crisis. The study takes the unbalanced panel data of Indian banks from 1995-2021 and utilizes the nonstructural approaches- Lerner Index, PRH statistic, and Boone Indicators to measure the bank competition. The study finds the asymmetric level of competition across ownership, size, profitability, and inter-temporal- before and after the global financial crisis. It finds that the smallest banks experienced lower competition during 2006-2021, whereas the largest banks behaved competitively. Similarly, the lowprofit banks have noted a higher level of competition than the high-profit-making banks, indicating the role of structure in bank performance. The less efficient banks have reported higher competition. Using PRH statistics, it was found that the Indian banking industry experiences monopolistic competition. The findings hail that the private sector banks and more extensive holdings are exhibiting a higher level of competition compared to the public sector banks. For the Boone indicator, the study finds a modest level of competition in line with the World Bank's estimation.

Exploring the Impact of Sustainable Economic Growth and Financial Development to Instigate Entrepreneurial Activities for Global Sustainability

Entrepreneurship stands out in the diverse range of human pursuits, characterized by bold aspirations, steadfast determination, and a transformative mindset. This is the place where hurdles are transformed into bridges, uncertainties drive invention, and fear is replaced by bold jumps. Entrepreneurs use transmutation to convert ordinary things into extraordinary ones, creating paths to growth and sparking positive impact for everyone. This study aims to find the impact of economic growth, trade openness, and human capital on entrepreneurial activities. The study uses Ordinary Least Square (OLS), Fixed Effects (FE), and Generalized Methods of Movement (GMM) estimation techniques to the annual unbalanced panel data of 217 countries from 1999 to 2022. The findings of this study show that economic growth instigate entrepreneurial activities. The GMM results from the table of baseline results show that one-unit change in economic growth brings 0.030 units positive and significant change in new business density which indicates that higher economic growth rate is connected with a higher rate of entrepreneurial activities. It demonstrates that the level of entrepreneurial activities in different economies around the world grows as the economic growth of those economies increases. On the other hand, the results of GMM show that the one-unit change in interaction terms of financial development with economic growth show 0.332 units positive and significant change entrepreneurial activities. These findings indicate that financial development plays an essential moderating role in instigating entrepreneurial activities. The study provides guidance to the individuals, institutions, policymakers, researchers and all the stakeholders who want to take initiatives for business activities.

How ESG performance affects maturity mismatches between investment and financing: Evidence from Chinese A-share listed companies

This study investigates the relationship between environment, society, and governance (ESG) performance and maturity mismatches between investment and financing based on unbalanced panel data from Chinese listed companies. The results suggest that ESG performance significantly reduces the potential for maturity mismatch between corporate investment and financing and that the ESG activities of Chinese enterprises are consistent with the principles of responsible investment. Specifically, society and governance performance significantly reduces maturity mismatch, while environmental performance exerts an insignificant effect. Enterprises with high ESG performance prefer long-term debt financing structures, and they also have increased trade credit and endogenous financing. In addition, investment efficiency and innovative investment are beneficial for ESG performance to promote the long-term transformation of debt maturity structures. Finally, ESG performance is more effective in reducing maturity mismatch caused by environmental policy and COVID-19.

Price effects of residents' consumption carbon emissions: Evidence from rural and urban China

Price policy applied to specific products may mitigate consumption carbon emissions (CCE). Nevertheless, the extent to which price effects, such as carbon taxes, differ across income groups and between rural and urban areas in China remains uncertain. With unbalanced provincial panel data from 1999 to 2020, we estimated the demand elasticities of eight major groups of consumer goods and services across income groups separately in rural and urban areas of China, using the Quadratic Almost Ideal Demand System (QUAIDS) and the Exact Affine Stone Index Implicit Marshallian demand system (EASI) in this study. The estimated price elasticities were then used to predict the impact of different price policies on CCE. The results show that taxing the wealthiest individuals and subsidizing the poorest individuals in both rural and urban areas have a beneficial impact on the reduction in CCE. Moreover, expanding transfer payments can further facilitate reductions in CCE. Our findings suggest that achieving CCE equality can be realized through intra-urban and intra-rural transfers, as well as urban-rural transfers achieved by taxing urban residents and subsidizing rural residents.

Empirical analysis of the impact of China’s carbon emissions trading policy using provincial-level data

Investigating the impact of carbon emissions trading policy and elucidating the underlying mechanisms are crucial for enhancing policy effectiveness and refining related systems. This study examines the impact of carbon emissions trading policy by constructing a difference-in-difference model utilizing unbalanced panel data from China’s provinces spanning the period from 2005 to 2019. Additionally, a mediating effect model is employed to delve into the underlying mechanisms. The key findings are as follows: Firstly, the implementation of carbon emissions trading policy has a notable inhibitory impact on carbon emissions. Secondly, both the upgrading of industrial structure and the reduction of energy intensity play mediating roles in carbon emissions reduction. However, the development of clean energy industries does not exhibit a significant mediating effect. In conclusion, this study offers policy recommendations aimed at facilitating carbon reduction. These include enhancing the market-based trading mechanism for carbon emissions, optimizing and upgrading industrial structures, fostering innovation in green and low-carbon technologies, and promoting the development and utilization of clean energy.

Oil price volatility and changes in corporate debt: An empirical study in the Indian landscape

Changes in crude oil prices affect corporate debt position. This study investigates the association between changes in debt and crude oil price volatility in nonfinancial, BG, and SA firms in India. We use financial variables, crude oil prices, and macroeconomics data from 2004 to 2020 for 16,452 firm-years and this study employs unbalanced panel data and utilizes different empirical methodologies, including the generalised method of moments (GMM) estimator, to test the stated hypotheses. The results reveal that the debt position and the crude oil price volatility significantly have different effects on business group (BG) and stand-alone (SA) firms. Crude oil price volatility is positively related to changes in the debt position. The effects of the financial variables also significantly differ for the BG and SA firms. Finally, firms change their debt position in the positive or negative direction based on the fluctuations in crude oil prices. Policy implications have also been provided.

Impact of Trade Liberalisation and MSME Classification on Productivity of Indian Manufacturing Firms

This article examines the effects of tariff and non-tariff reductions on firm-level productivity of large as well as Micro, Small and Medium Enterprises (MSMEs) in India’s manufacturing sector for the 1999–2009 period. We calculate input and final goods tariffs, effective rates of protection and non-tariff barriers (NTBs) for broad product groups using information from India’s Exim Policy of 1997–2003 and 2004–2009 to examine this impact. We use a balanced as well as unbalanced firm-level panel data set, while accounting for firm, industry, state and time-specific factors. By using fixed effect models and Heckman’s two-step estimation procedure, we find that trade liberalisation is associated with improved firm-level productivity for large firms but not in the case of MSMEs. We posit that this might be due to the relative disadvantages that Indian MSMEs face which prevent them from benefiting from trade liberalisation. We also find that productivity gains arising from the sourcing of imported inputs have been greater than those arising from increased product competition and that NTB liberalisation has had a greater impact compared to tariff liberalisation on firm-level productivity. Changes in MSME legislation and the classification of firms are also found to have a bearing on firm performance. Our study contributes to the literature by confirming the need to focus specifically on constraints faced by MSMEs if they are to benefit from trade liberalisation. It highlights the importance of liberalising trade in intermediates as well as the role of MSME classification in enabling productivity gains. JEL Codes: L6, D24, L1, F13

Sustaining and Stabilizing During Covid-19: Effective Management of Bank Financial Behavior through Digital Financial Inclusion

Digital financial inclusion is critical for achieving higher economic growth, sustainable development, and a more financially inclusive nation. Additionally, digital financial inclusion is vital for stabilizing the Islamic banking industry during the COVID-19 epidemic, leveraging its resistance to financial shocks, and fostering financial inclusiveness. Islamic banks are usually considered because of their significant ability to counter financial crises and their prominent contribution to financial landscape. This study investigated the digital financial inclusion and Islamic banking stability nexus using unbalanced panel data from 65 Islamic banks from six countries from 2010 to 2021. This study uses a GMM approach and a Z score. The finding implies that the default risk of the banks in the analyzed area is reduced due to the increased stability of Islamic banking brought about by the broader application of digital financial inclusion. Digital financial inclusion is more strongly correlated with banks' financial soundness. Access to banking services, made possible by digital financial inclusion, also dramatically improves banking stability and makes banks more resilient. Moreover, incorporating digital financial inclusion into Islamic banking promotes inclusive economic development, which may help the industry weather crises like the present COVID-19 epidemic. This study lays out the policy implications that increasing bank stability, bolstering financial literacy, and combining digital financial inclusion with other strategies to keep banks viable.

Is tourism conducive to green growth? An investigation of the role of tourism-based economic expansion in the nexus of leisure tourism and business tourism

PurposeThe gradual expansion of the tourism sector is raising concerns about whether tourism-based economies are conducive to supporting green growth. Hence, the current study aims to analyze the direct impact of tourism motives on green growth along with the indirect impact of tourism-based economic expansion while controlling for country risk and renewable energy.Design/methodology/approachAn unbalanced panel data for a sample of 21 countries comprising OECD and non-OECD economies are employed for the analysis.FindingsRegression results reveal that leisure tourism (LT) significantly and positively influences CO2 intensity compared to business tourism (BT). Propensity score matching results show that the most traveled tourist destinations contribute more to CO2 intensity than those less traveled. Mediation analysis by employing Baron and Kenny’s three-step regression, Sobel’s test and Monte Carlo test shows that tourism-based economic expansion significantly mediates between the nexus of LT and CO2 intensity.Practical implicationsResults of the study provide useful practical implications for sustainable economy and green growth. It recommends to mitigate the challenges of LT, reducing the negative impact and to harness the potential of BT, enhancing the positive influence, through various policies and practices.Originality/valueThis study is the first to examine the impact of LT and BT on green growth, to explore the role of destination popularity and the mediating role of tourism-based economic expansion in this relationship.

Role of R&D Investment on Future Performance: Evidence From Malaysian Companies

R&D Investment is an issue that is still interesting in business research today because it constantly explores company development in terms of technology and innovation. Our study intends to investigate the impact of R&D investment on Malaysian company performance in the future. This empirical study uses company financial statement data accessed via the OSIRIS database. The sample is a non-financial company in Malaysia from 2003 to 2019. This study evaluates The hypothesis using unbalanced panel data regression on 460 company years of observation. Our findings indicate that R&D investments have a degrading impact on the performance of Malaysian companies in the future. These findings indicate that companies in developing countries such as Malaysia have yet to give special attention to investing in R&D as the main business strategy.

Estimating the productivity of US agriculture: The Fisher total factor productivity index for time series data with unknown prices

AbstractIn this paper, we propose a straightforward way to estimate the Fisher ideal total factor productivity (TFP) index (FI) in cases where price information is unavailable, using ‘shadow prices’ derived from data envelopment analysis (DEA). A Monte Carlo experiment shows that the shadow price Fisher ideal TFP index (SPFI) can effectively estimate the ‘true’ FI with relatively small (and stable) errors. The empirical application to the US agriculture sector (1948–2017) further suggests that the SPFI is a (superior) alternative to the traditional Malmquist DEA, especially in dealing with unbalanced panel or time series data when price data are unknown.

Do Intra-industry Peer Effects Influence the Debt Financing Policy of Companies Listed in Thailand?

Rational imitation of financial policies, namely peer effects, was documented to prevail among firms within an industry in both developed and top emerging economies. Lacking evidence from medium-sized emerging Asian countries, this study examined intra-industry peer effects, i.e., imitation, on debt financing at Thai listed companies. The sample consisting of the firms listed on the Stock Exchange of Thailand (SET) during the years 2001–2018 was incorporated to discover those effects. Numerous databases associated with the SET (e.g., SETSMART) and the firms’ websites were used to collect financial numbers. With 6,058 firm-year observations, unbalanced panel data was then analyzed by using the random-effects and fixed-effects ordinary least squares models as well as the two-stage least squares regression. The main findings show that a focal firm imitates the long-term debt financing of its industry peers. Using the instrument approach to address endogeneity, the key results are confirmed. Peers’ equity shock as the instrumental variable decreases their financing with debt, subsequently lowering debt levels at a focal firm. This mimicking was operated through peer action, not peer character, i.e., performance. In additional tests, severe market competition was found to strengthen the uniformity of decision-making on debt finance among industry peers. Meanwhile, the high cost of information embedded in innovation-driven businesses has not been found to both promote and reduce peer effects on debt finance. Including the extra control variables at firm-specific levels, the key results remain robust. This study highlights a vein of social learning theory and competition-based theory in discussing herding behaviors toward all member firms in a certain industry. The conclusions enrich the literature on peer effects on debt finance policy.

Market power, human capital efficiency and bank performance in Kenya

PurposeThe study evaluates the influence of human capital efficiency (HCE) and market power on bank performance.Design/methodology/approachThe study employs two measures of bank performance: profitability and stability. Unbalanced panel data of 35 banks operating in Kenya for 2005–2020 collected from published financial statements is utilized. The study employs the feasible generalized least squares (FGLS) method in the analysis and the two-step system generalized method of moments (GMM) for robustness check.FindingsThe study affirms an inverted U-shaped relationship between market power and bank performance. The effect of market power on bank profitability is enhanced when a bank has highly efficient human capital. Further, HCE significantly impacts bank stability for banks with low HCE. Interestingly, a further increase in HCE narrows the net interest margins for banks with high HCE, conferring welfare benefits to customers as interest rate spreads shrink.Practical implicationsThis study provides important insights into the role of human capital in bank performance. First, banks ought to invest in promoting HCE through training and development. As regulators root for bank consolidation, attention to HCE is imperative for fostering profitability and stability.Originality/valueThe study fills an essential gap in the literature by evaluating the effect of firm-level market power on bank performance in an emerging market. We adopt a novel stochastic frontier estimator to generate the Lerner index. Further, this is the first study known to the authors to evaluate the effect of market power on bank performance in the context of human capital efficiency variations.

Heterogeneity measurement of the impact of the rural land three rights separation policy on farmers’ income based on DID model

IntroductionAs is well known, the policy of separating three rights is another important milestone in China’s land system reform. This policy has been in effect for 10 years and is of great significance to the livelihoods of rural families. In the implementation of policies, some farmers have obtained more land management rights, but some farmers have temporarily lost their land management rights. Existing research has shown that there is no consensus on the effect rural land three rights separation on increasing farmers’ income, especially in terms of heterogeneity research, which is more scattered.MethodsWe will use the latest national fixed observation point data from the Ministry of Agriculture and Rural Affairs from 2011 to 2020, as well as data from Peking University Treasure Database, West Lake Law Library Database, China Statistical Yearbook, and China Rural Statistical Yearbook. This paper matched the unbalanced panel data of 9,846 rural household samples from 30 provinces except Hong Kong, Macao, Taiwan and Xizang, and conducted an empirical study using the multi time point DID method.ResultThe overall result shows that the policy of three rights separation of rural land can improve the income of farmers, and the impact is more obvious after the promulgation of relevant laws. From the perspective of farmers’ heterogeneity, farmers with more training, food crop planting farmers, and farmers with relatively large land scales are more significantly affected by the policy’s income increase effect.DiscussionScholars have yet to find a good explanation for how the rural land three rights separation affects farmers’ income. In this article, it appears that the three rights separation policy has promoted the increase of farmers’ income through intermediary mechanisms such as investment level, credit level, and non-agricultural employment level.

Determinants of Corruption in ASEAN Countries

This paper investigates the economic, institutional, and social determinants of corruption in ASEAN countries using unbalanced panel data over the period of 1996–2022. ASEAN has 10 countries, such as Brunei Darussalam, Cambodia, Indonesia, Lao People's Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Corruption is measured by the Corruption Perception Index published by Transparency International. Determinants of corruption are expected to be foreign direct investment, gross domestic product per capita growth, inflation, political stability, regulatory quality, and internet usage, based on the literature review. The empirical results show that increasing foreign direct investment, political stability, and regulatory quality in ASEAN countries can reduce corruption significantly, whereas internet usage is found to have a slightly significant positive effect on corruption. However, gross domestic product per capita growth and inflation are not determinants of corruption in ASEAN countries.

Investigating the factors affecting the PISA-based test performance of Asian students

Purpose ― This study investigates the factors affecting the learning outcomes of Asian students. Methods ─ The effects of both educational inputs and economic and socioeconomic variables on the PISA scores of 10 Asian countries (Hong Kong, Indonesia, Japan, Singapore, Macau, Korea, Turkey, Israel, Qatar, and Thailand) for the years 2006, 2009, 2012 and 2015 were examined using unbalanced panel data. Findings ─ The results show that country-level economic factors strongly affect academic achievement. Furthermore, country-level economic factors dominate the other explanatory factors in the numerical and statistical sense. Implication ─ The findings provide valuable information for educators, policymakers, and researchers aiming to develop efficient educational strategies to improve educational quality. Furthermore, the results offer policy suggestions for addressing factors that impact the quality of education both at the national and international levels.Originality ─ This research enhances the current body of knowledge by investigating how economic and socioeconomic variables affect students' math, science, and reading performance, particularly emphasizing Asian countries.