Unbalanced Panel Data Research Articles

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.

The effect of United States commercial airport rate-setting methods on airport bond ratings

PurposeA major source of external funding for US airports comes from issuing municipal bonds. Credit rating agencies evaluate the bonds using multiple factors, but the judgments behind the ratings are not well understood. This paper examines if airport rate-setting methods affect the bond ratings of US airports.Design/methodology/approachUsing a set of unbalanced panel data for 58 hub airports from 2010 to 2019, we examine the effect of the rate-setting methods and other airport characteristics on Fitch’s airport bond rating.FindingsWe find that compensatory airports consistently receive a very high bond rating from Fitch. The probability of getting a very high Fitch rating increases by ∼28 percentage points for a compensatory airport. Additionally, the probability of getting a very high rating is about 33 percentage points higher for a legacy hub.Research limitations/implicationsThe study uses Fitch bond ratings. Future studies could examine if S&P’s and Moody’s ratings are also influenced by airport rate-setting methods and legacy hub status.Practical implicationsThe results uncover the linkage between bond ratings and their determinants for US airports. This information is important for investors when assessing airport creditworthiness and for airport operators as they manage capital project financing.Originality/valueThis is the first study to evaluate the effects of rate-setting methods on airport bond rating and also the first to document a statistically significant relationship between airports’ legacy hub status and bond ratings.

Impact of corruption control, free information flow, and ICT infrastructure on China's outward foreign direct investment

ABSTRACT This study examines the interplay between corruption control, Information and Communication Technology (ICT) infrastructure, and free information flow, assessing their collective influence on China's Outward Foreign Direct Investment (OFDI). Based on unbalanced panel data on China's OFDI flows to 182 countries from 2005 to 2020, we find that improved corruption control measures and advanced ICT infrastructure in host countries significantly increase China's OFDI. Furthermore, a more robust information flow, facilitated by e-participation and a free press in the host country, enhances the positive influence of corruption control measures on attracting China's OFDI. Importantly, the beneficial effect of corruption control on China's OFDI is amplified when the host country has well-developed ICT infrastructure that supports e-participation. By elucidating the complex interplay between institutions, ICT, and international business activities, this study contributes novel insights into the understanding of ICT's role in socioeconomic development, particularly in the context of foreign investment.

Determinant of Probability of Indian Listed Commercial Bank

This study investigates the determinants of profitability among commercial banks in India over the period from 1999 to 2022, utilizing unbalanced panel data comprising 108 banks. By examining both internal bank-specific characteristics and external macroeconomic factors, we assess how these variables impact profitability across different types of banks. Our findings suggest that liquidity conditions, as measured by the loan-to-asset ratio, do not significantly affect profitability. However, credit risk, represented by the ratio of loan loss provisions to total loans, demonstrates a positive relationship with profitability for foreign and private banks. Diversification has conflicting effects on profitability, with SBI & Associates banks and public banks benefiting from it, while new private banks experience negative impacts. The influence of overhead costs on profitability varies across bank types, positively impacting return on equity for all banks and foreign banks, but negatively affecting return on equity for public banks. Conversely, it positively impacts return on assets for all banks but negatively impacts return on assets for private banks. Capital strength exhibits a negative association with profitability across all banks and a positive association for public banks, with inconclusive results for private banks. Bank size does not show a significant relationship with profitability across all bank types. Regarding macroeconomic factors, while indicators like money supply growth and inflation do not significantly impact return on equity, they positively influence return on assets, albeit with variations across ownership types. In conclusion, this study highlights the complexity of factors influencing bank profitability in India and underscores the importance of tailored management strategies to navigate these complexities effectively.

Assessing the Impact of Regional Integration Strategies on the Development of Urban Green Economies: A Study Based on an Empirical Analysis of Ten Major Urban Agglomerations

Green development represents a critical pathway to achieving high-quality growth. From a regional perspective, examining the impact of regional integration on urban green economic development holds significant importance. This study leverages a quasi-natural experiment of regional integration strategy implementation, utilizing unbalanced panel data from China’s ten major urban agglomerations and non-agglomeration cities from 2003 to 2022. Employing a multi-period difference-in-difference approach, we empirically assess the policy effects of regional integration strategies on urban green economic development. We further analyze the heterogeneity of policy effects in terms of the geographic areas, urban agglomeration scales, and development driving models of the cities under study. Lastly, we use a moderating effect model to explore the mechanisms through which regional integration strategies impact urban green economic development. The research results are helpful for promoting urban green economy development through a regional integration strategy.

How Climate Change Affects Labor Mobility: Empirical Evidence from the CLDS

ABSTRACT Regional climate conditions have become a key factor that is exacerbating the process of China’s labor spatial mobility. In contrast to previous research based on mixed cross-sectional data and floating population sample selection, this study uses unbalanced panel data from the China Labor Force Dynamic Survey (CLDS) from 2014 to 2018 and a regional temperature dataset to examine the impact of climate change on inter-provincial and municipal labor mobility outflow from the perspective of local household registration, and further investigates regional reallocation and stock effects of labor related to climate change. The findings reveal four relevant results. First, after eliminating the influence bias of individual fixed effects, the labor force outflow effect of climate change across regions is significantly smaller than that found in previous research, at only one-fifth of existing research conclusions. Second, the mechanism analysis shows that temperature can affect labor mobility through individual health, happiness and government environmental regulation. Third, the impact of climate change on labor mobility has significant heterogeneity. Labor flows from underdeveloped regions to developed areas and from the central and western regions to the eastern region, and climate change has a greater impact for workers with higher education levels. In addition, climate change has a greater impact on workers with higher family incomes and family age structures. Fourth, the impact of climate change on labor mobility exhibits temperature-based threshold effects. This study provides a new perspective for understanding the impact of climate change on labor mobility, offering valuable policy support for guiding the rational flow of labor and urban managers’ formulation of strategically targeted measures.

Relationship between the implementation of formal board processes and structures and financial performance: the role of absolute family control in Colombian family businesses

PurposeWe investigate the effect of the adoption of formal board structure and board processes on firm performance in Colombian family firms, in a context where firms can choose specific aspects of board structure and processes. We deploy insights from the behavioral governance perspective to develop arguments about how family businesses may choose board elements based on their degree of control over the firm (absolute control or less), and its effect on firm performance.Design/methodology/approachWe use an unbalanced data panel of 404 firm-year observations. The data was obtained from the annual financial and corporate governance reports of 62 Colombian stock-issuing firms for the period 2008–2014 – due to change in regulation, data could not be added beyond 2014. Panel data technique with random effects was used.FindingsThe results show that board structure is positively associated with financial performance, however, this relationship is negative in businesses where family has absolute control. We also found that there is a negative association between board processes and performance, but positive association in family-controlled businesses.Originality/valueOur research contributes to research streams on effects of family control in firm choices and on the interactive effect of governance choices and institutional context and more generally how actors interact (rather than react) with their institutional context.

Geographic dispersion, tax administration and corporate tax burden: evidence from China

PurposeFrom the perspective of local government tax administration, the impact of geographic dispersion on the corporate tax burden is investigated in this paper.Design/methodology/approachUsing unbalanced panel data with a sample of listed companies from 2003 to 2020 in China, this paper focuses on the effect of geographic dispersion on corporate tax burden and the mechanisms.FindingsIt is found that corporate tax burden is positively related to geographic dispersion. It is also found that geographic dispersion affects the corporate tax burden by increasing the effort of local government tax administration. In addition, the relation between geographic dispersion and corporate tax burden is more pronounced for local SOEs prior to the implementation of Golden Tax Project III and in cases where local governments face stronger financial pressure to obtain revenue.Originality/valueThis study has important implications for the promotion of the coordinated development of the regional economy, as well as the legalization, modernization and informatization of tax administration.

Competition, regulation, and systemic risk in dual banking systems

This study investigates the impact of competition and banking regulation on the systemic risk of Islamic Banks (IBs) and Conventional Banks (CBs). Utilizing a random effects panel model with robust errors and an unbalanced panel data set encompassing 80 IBs and 204 CBs from 17 emerging market countries spanning 2000 to 2019, we show that the lack of competition increases systemic risk exposure, which may stem from the interconnection channels and the individual bank risk contributions. Interestingly, this effect is not significantly different between IBs and CBs. Our results also reveal a non-linear relationship between competition and systemic risk. Specifically, greater competition leads to increased systemic stability, but beyond a certain threshold, higher competition exacerbates banks' systemic risk. Additionally, we find that larger banks are more vulnerable to systemic risk, and the lack of competition worsens this vulnerability. We also show that banks with greater market power after the GFC are more exposed to systemic risk.

Exploring the nexus between corporate digitalisation and environmental sustainability: The moderating role of slack resources

This paper investigated if high digitalisation exposure allows companies to reduce their environmental impacts. Further, the study also deepened the critical role of available slack resources by analysing their possible moderating effects on the relationship between the firm's higher digitalisation exposure and environmental performance. Adopting the unbalanced panel data approach, the authors performed 5 years fixed-effects regression analysis on a sample of 5,481 non-financial listed companies' data derived from the Refinitiv ESG universe, as well as considering the annual constituents lists of the STOXX® Global Digitalisation index. Findings showed digitalisation positively affects specific environmental performance. Moreover, results highlighted that available slack resources negatively moderate the relationship between the firms' higher digitalisation exposure and the sustainable management of resources in internal business and procurement processes. Accordingly, slack resources could stress the profit maximisation logic penalising corporate sustainability.

How does digital transformation affect the profitability of rural commercial banks?

Under the impact of the business sinking of large commercial banks and the cross-border competition of fintech companies, digital transformation has become a strategic priority for rural commercial banks. However, can digital transformation improve the profitability of rural commercial banks (PORCB)? This aspect has not been thoroughly examined in academic literature. This study utilizes unbalanced panel data from 54 Chinese rural commercial banks spanning from 2010 to 2021. The Peking University Commercial Bank Digital Transformation Index is employed to gauge the extent of digital transformation, while ordinary least squares estimation is used to examine its effect on the profitability of rural commercial banks and elucidate its underlying mechanisms. The findings show that: (1) Digital transformation can significantly improve the PORCB. (2) Digital transformation improves the PORCB by enhancing asset quality, operating efficiency and risk-taking. (3) The profitability-enhancing effect of digital transformation is more pronounced among rural commercial business banks with larger assets and lower equity concentration, as well as among state-owned rural commercial banks. This paper's findings represent a novel investigation into the correlation between digital transformation and the profitability of rural commercial banks. They offer a theoretical foundation and empirical evidence for future studies examining the economic implications of bank digital transformation, and offer valuable insights for enhancing the digitalisation of rural banks.

Market Concentration, Bank Characteristics, Macroeconomic Conditions, and Indonesian Islamic Bank Financing

As the latest player in the banking market in Indonesia, Islamic banks are not as experienced as their counterpart conventional banks. In addition, the types of Islamic bank financing (loans) are different from conventional bank loans. Our work investigates the determinants of Islamic bank financing in Indonesia. Our concern variables are market concentration, bank fundamentals, and macroeconomic conditions, including Covid-19. This study examines all Islamic banks in Indonesia from 2015 to 2020 using quarterly data. Our data set is 724 observations with unbalanced panel data. We employ the dynamic panel data using the two-step system GMM that is more robust than two-step difference GMM. Market concentration encourages financing. Profitability, bank size, and financing loss provision also enhance financing. However, a high degree of risk aversion and inefficiency reduces financing. Furthermore, Islamic bank financing also depends on macroeconomic conditions. Economic upturns strengthen financing. Strong bank fundamentals, particularly bank size, are the key to success for Islamic bank financing. The results draw an important practical implication. Large Islamic bank is a necessary condition to compete with a conventional bank. Accordingly, the spin off policy of Islamic bank windows to full-fledged Islamic bank should be implemented immediately.

ESG controversies, corporate governance, and the market for corporate control

ABSTRACT Capitalizing on a unique measure of takeover vulnerability, we examine how the takeover market, which is widely regarded as a crucial instrument of external governance, influences environmental, social, and governance (ESG) controversies. This paper is the first to investigate how corporate control markets are influenced by the market for corporate control. The sample consists of unbalanced panel data from 6,236 firm-year observations during 2002–2014. We use Propensity Score Matching (PSM) and Instrumental Variable (IV) analyses to address potential endogeneity, and entropy-balancing approach to address the issue of observable selection. The results show that the disciplinary mechanism associated with the takeover market compels managers to take actions that benefit shareholders, thus avoiding ESG controversies. An increase in takeover susceptibility by one standard deviation resulted in a 10.12% decline in controversial activities. Furthermore, we find that firm profitability drops, and risk increases substantially in response to ESG controversies.

Collaborative research in healthcare: uncovering the impact of industry collaboration on the service innovativeness of university hospitals

AbstractIn the face of the challenges of rising demand and increasing economic pressure, medical service innovations and university hospitals are becoming increasingly important as cornerstones for the continuous development of medical care. Simultaneously, increasing technological complexity, scarce funding, and resource-intensive technology development are forcing university hospitals to open up their internal innovation processes. Numerous studies have highlighted the beneficial effects of cross-sectoral collaboration on the innovation performance of industrial entities, while neglecting the perspective of academic institutions. The impact of industry collaborations on the service innovativeness of university hospitals in particular has not been addressed in previous research. Although the potential for nonlinear effects of university-industry collaborations has been discussed in research, adequate evidence, particularly in the healthcare context, has not been provided. Therefore, this study addresses the questions: (1) What is the impact of university-hospital-industry collaboration (UHIC) on the service innovativeness of university hospitals? (2) Can a nonlinear relationship between UHIC and university hospitals' service innovativeness be empirically verified? The hypotheses are tested based on an unbalanced panel data set, which combines three distinct data sources and comprises annual observations from 2011 until 2019 of all German university hospitals. The findings indicate that the UHIC intensity has a positive effect on university hospitals’ service innovativeness with a one-year time lag. Furthermore, a negative quadratic UHIC effect was found. In doing so, this study complements existing research and opens the black box by uncovering the downside of cross-sectoral collaboration for a more complete understanding of the underlying dynamics of this growing area of research, with a particular focus on university hospitals.

IMPACTO DO PROGRAMA DE MODERNIZAÇÃO DA GESTÃO DO FUTEBOL E RESPONSABILIDADE FISCAL NO DESEMPENHO FINANCEIRO E ESPORTIVO DOS CLUBES BRASILEIROS

The professionalization of football in Brazil has heightened interest in the financial management of clubs, prompting the Brazilian government to establish the Financial Responsibility and Modern Management Program for Football (PROFUT). Hence, our research investigates the impact of adherence to PROFUT on the financial and sporting performance of football clubs in Brazil. We gathered accounting and sports performance data from 58 football clubs participating in the first, second, and third divisions of the Brazilian football championship. This data was sourced from the clubs’ official websites and the Brazilian Football Confederation website. The collected data underwent unbalanced panel data regression analysis using the differences in differences estimator. As regards financial performance, the findings suggest that PROFUT participation increased clubs’ total revenue and the specialization of their revenue structures. However, no impact was observed on indebtedness, undermining the program’s intent to reduce clubs’ liabilities. Furthermore, the results indicate that adherence to the program could potentially diminish a club’s sporting performance, implying that managers seem unable to balance financial health with on-field results effectively. This study ventures beyond investigating clubs’ revenue to examine underlying structural factors. Furthermore, it employs an innovative estimator in the context of financial and sports performance in Brazilian football clubs, particularly in relation to PROFUT regulations. Thus, this empirical research carries significant practical implications for directors and managers associated with football clubs and entities. It can guide regulatory bodies’ strategic decisions, policy formulation, and inspection procedures.

How firms position and perform in global value chains with financial frictions: evidence from China

ABSTRACT This article clarifies the relationship between financial frictions, production line position and firm-level performance in China. We develop a stylized model in a partial equilibrium setting and incorporate financial frictions into the sequential production of firms. We use a sample of unbalanced panel data ranging from 19,929 firms in 2000 to 61,109 firms in 2013, by merging China’s Customs Dataset, Chinese manufacturing firm dataset and global input-output tables between 2000 and 2013. In the presence of lower financial constraints, we find that: first, the firm’s span of production stages becomes wider by its imports becoming more upstream and its exports becoming more downstream, and its average position becomes relatively downstream; Second, it tends to decrease debt financing relative to equity financing and obtains higher profits.

The impact of fintech peer-to-peer lending and Islamic banks on bank performance during COVID-19

This study delves into the influence of Peer-to-Peer (P2P) Fintech lending on bank performance in Indonesia, with a specific focus on its effects on Islamic banks both before and during the COVID-19 pandemic. Employing a fixed-effects model, unbalanced panel data from 121 banks, including 16 Islamic banks, were analyzed. The findings unveil a significant and positive impact of growth loan disbursement to borrowers from P2P lending on bank performance, particularly in terms of return on assets. Additionally, Islamic Banks exhibit a significant and favorable effect on overall bank performance. Conversely, the joint interaction between P2P lending and Islamic Banks demonstrates a negative and significant influence on Islamic bank performance, suggesting that while P2P lending may benefit conventional banks, it adversely affects Islamic banks. Furthermore, this negative impact is exacerbated during the COVID-19 period. These outcomes underscore the importance of collaboration or strategic alliances between P2P lending platforms and Islamic banks, particularly in the context of the COVID-19 pandemic.

Fintech dividend: How would digital financial services impact income inequality across countries?

Discrimination and marginalization in the financial services provided by traditional intermediaries are often cited as one of the main causes of persistent income inequality across socioeconomic groups in many countries. Whether Fintech eliminates such prejudice and exclusion and promotes equitable income distribution is unclear. This paper examines the impact of Fintech digital financial services on income inequality. Using a two-step generalized methods-of-moments (GMM) estimator, we analyze unbalanced panel data from 65 countries spanning the years 2013–2019. Drawing on the most recent data available on the actual transaction volume of Fintech digital financial services, we generate evidence at the level of specific service segments. We find that Fintech digital lending and digital capital-raising services are significantly and negatively associated with income inequality. Furthermore, our results from mechanism analysis suggest that Fintech mainly impacts income inequality by improving the accessibility and efficiency of financial services. Overall, our findings imply that promoting Fintech is critical to improving financial inclusion and alleviating income disparity.

Technical efficiency in the Malaysian electric and electronic manufacturing industry: A stochastic frontier analysis approach

This study measured the level of technical efficiency (TE) that exerted a significant impact on the Malaysian electric and electronic manufacturing industry, which consists of 13 sub-industries, from 2010 to 2015. Unbalanced panel data from 1880 firms was obtained from the Department of Statistics Malaysia. We used stochastic frontier (SFA) analysis with the transcendental logarithmic approach to estimate the empirical analysis parametric. The maximum likelihood estimated regression of the SFA parameters revealed a high total average TE of 0.944%. Both the manufacturing sub-industries for communications equipment (MSIC 263) and irradiation, electromedical, and electrotherapeutic equipment (MSIC 266) demonstrated the highest average TE value and consistency (0.989%). The consumer electronics manufacturing sub-industry (MSIC 264) yielded a notably lower TE level (0.846%). Changes in TE for all industries were monitored via standard deviation analysis. The low standard deviation (SD) for MSIC 263, 271, and 275 indicated continuous progress and demands for these industries, while the higher SD for MSIC 264, 266, 272, and 273 pointed out major changes that happened within the period. The findings demonstrated that studies on the TE levels indicate that the E&E manufacturing industry has highly expended and continuous efforts to update technologies and human capital innovations. Therefore, the practical implication is to achieve Sustainable Development Goal 9 for sustainable industrialization and fostering innovation by 2030.