Do audited firms have a lower cost of debt?

The purpose of this study is to investigate if audited financial statements add value for firms in the private debt market. Using an instrumental variable method, we find that firms with audited financial statements, on average, save 0.47 percentage points on the cost of debt compared to firms with unaudited financial statements. We also find that using the big, well-known auditing firms does not yield any additional cost of debt benefits. Lastly, we investigate if there are industries where alternative sources of information make auditing less valuable in reducing the cost of debt. Here, we find that auditing is less important in lowering cost in one industry, agriculture, where one lender has a 74% market share and a 100-year history of lending to firms within that industry. As such, it seems that lenders having high exposure to a certain industry might act as an alternative to auditing in reducing the information asymmetry between the firm and the lender.

Competition and physician-induced demand in a healthcare market with regulated price: evidence from Ghana

Using panel data of administrative claims spanning 36 months (2017–2019) and an instrumental variable method, this study examines whether physician-induced demand for hypertension disease care exists in Ghana’s healthcare system where price is regulated, and there is no co-payment. We find that an increase in competition—measured as a high doctor-to-population ratio at the district level—leads to an increase in the number of physician visits, suggesting physician-induced demand exists, and that effects are greater for large hospitals and public health providers. This result is further supported by alternative measures and specifications showing that physicians’ revenue from medication and gross revenue increase as the physician density increases. These pattern suggest that physicians in high density areas, faced with a decrease in number of patients per physician, make up for the decline in income by inducing more patient visits.

The Nexus between Digital Finance and Economic Development: Evidence from China

In the context of the digital economy and based on the characteristics of digital financial development in China, this paper investigates the effect of digital finance on economic growth and explores its influencing mechanism. A panel econometric model, mediating effect model, and instrumental variable method were employed to evaluate yearly data from 30 provinces of China from 2011 to 2018. The results show that the development of digital finance has significantly driven economic growth, which is quantitatively robust after the selection of historical data as instrumental variables and other robustness tests. A heterogeneity analysis proved that provinces in the central and western regions, which have a lower urbanization rate and lower physical capital, more clearly embody the facilitating impacts of digital finance on economic growth compared to their counterparts in other regions. Further analysis found that the development of digital finance has spurred the liberation of regional entrepreneurship, which in turn promoted economic growth—that is, there is an entrepreneurial channel by which digital finance could boost economic growth.

Should There Be Industrial Agglomeration in Sustainable Cities?: A Perspective Based on Haze Pollution

Haze pollution is a problem that cannot be ignored in the process of building sustainable cities, and while shifting industrial enterprises can solve the problem at the root, it is not conducive to the sustainable development of urban economies. This paper discusses the role of industrial agglomeration on urban pollution amelioration (haze pollution) using a sample of 253 prefecture-level cities in China. The highlight of this paper is the study of economic and environmental factors in the development of sustainable cities in the same framework and a series of econometric treatments that greatly increase the accuracy of the empirical evidence. Research intuitively shows that China’s haze pollution is clustered in spatial distribution and is spatially heterogeneous in concentration. With the passage of time, haze pollution has a tendency to move from an H–H concentration area to an L–L concentration area. The regression results show that an increase in the scale of local industrial agglomeration will lead to a decrease in local haze pollution; but an increase in the scale of local industrial agglomeration will lead to an increase in haze pollution in adjacent areas. Industrial agglomeration has significant spatial spillover effects, which are spatially heterogeneous. In addition, spillover effects between regions are greater than those within regions. After replacing the spatial weight matrix and controlling the endogenous problem using the instrumental variable method, the conclusion is still robust.

Determination of Climate Factors in Flood and Drought Disaster in Indonesia using Instrumental Variable (IV) Methods

Located in the Southeast Asia region, Indonesia has rainy and dry seasons. In the rainy and dry seasons that occur in Indonesia, often causes many problems in various business sectors and community activities, including floods and droughts. It is known that the disaster will have an impact on material and non-material losses. This study uses climate data and disaster data at the village level to determine the effect of rainfall on disasters. This study uses the instrumental variable method because the model has endogeneity problems. The study results concluded that increased rainfall had a positive impact on flood disasters with a coefficient of 0.003038. Simultaneously, rainfall also impacted drought with a coefficient of -0.000377. Variables in the regression model that are formed can explain 1.74 percent of the flood disaster and 0.59 percent of the drought disaster. These results indicate that most of the other variables can influence flooding and drought. Through this research, it is known that rainfall for floods and droughts is quite significant. Therefore, government and community efforts are needed to anticipate similar disasters.

The effect of rainfall on the spread of malaria in Indonesia

Background: Indonesia's territory consists of a large number of islands stretching from Sabang to Merauke. This condition causes different levels of development between regions. The eastern region of Indonesia is relatively slow when compared to the western region. This has resulted in the eastern region being in pristine condition and filled with forests. The climate in eastern Indonesia tends to be humid, resulting in high development of the female Anopheles mosquito, the cause of malaria.Methods: The use of the instrumental variable method is necessary, because the model has endogeneity problems. The data used in this study comes from the results of the 2018 Podes data and climate data.Results: The results of this study indicate that rainfall affects the number of malaria incidents and has a positive impact on mortality due to malaria, with coefficients of 0.0000779 and 0.0000142, respectively.Conclusions: Education is needed for the community to minimize malaria, which often occurs, generally in the Papua region. Through health promotion, it is hoped that the community will be able to live cleanly and healthily, as well as change their behavior in life, considering that the area is vulnerable to malaria.