scholarly journals Macroeconomic determinants of interest rate spreads in Ghana

2017 ◽  
Vol 8 (1) ◽  
pp. 76-88 ◽  
Author(s):  
Samuel Kwabena Obeng ◽  
Daniel Sakyi
Keyword(s):  
Interest Rate ◽  
Exchange Rate Volatility ◽  
Institutional Quality ◽  
Fiscal Discipline ◽  
Content Type ◽  
Distributed Lag ◽  
Short Run ◽  
Interest Rate Spreads ◽  
Macroeconomic Determinants ◽  
The Impact

Purpose The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013. Design/methodology/approach The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation. Findings The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run. Research limitations/implications The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads. Originality/value The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana.

Finance-institution-growth trilogy: time-series insights from South Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Clement Olalekan Olaniyi ◽  
Adebayo Adedokun
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Positive Impact ◽  
Institutional Quality ◽  
Empirical Examination ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

PurposeThis study examines the moderating effect of institutional quality on the finance-growth nexus in South Africa from 1986 to 2015.Design/methodology/approachThis study adopts unit root tests, cointegration test and autoregressive distributed lag (ARDL) model.FindingsThe findings reveal that institutional quality constitutes a drain to the growth benefits of financial development (FD) in South Africa in the short-run while FD and institutional quality converge to enhance growth process of the country in the long-run. Also, the threshold of institutional quality beyond which institution stimulates strong positive impact of finance on growth is estimated to be 6.42 on a 10-point scale.Practical implicationsThis study, therefore, suggests that institutional quality matters in the way FD influences economic growth in South Africa. Hence, stakeholders are encouraged to trace and block lapses and loopholes in the institutional framework guiding financial system in South Africa so as to maximize growth benefits of FD.Originality/valueThis study contributes to the extant studies by introducing a country-specific analysis into the empirical examination of how institutional quality influences the impact of FD on economic growth. Also, this study deviates from other studies by determining the threshold of institutional quality beyond which FD stimulates strong positive effect on economic growth in South Africa

Institutional quality and foreign direct investment in Ghana

2020 ◽  
Vol 30 (1) ◽  
pp. 109-122 ◽  
Author(s):  
Ibrahim Nandom Yakubu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Institutional Quality ◽  
Principal Component ◽  
Political Stability ◽  
Single Measure ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

Purpose This paper aims to investigate the impact of institutional quality on foreign direct investment (FDI) in Ghana for the period 1985-2016. Design/methodology/approach The study uses the autoregressive distributed lag (ARDL) approach to examine the relationship between institutional quality along with other controlled variables and FDI. Findings Evidence from the ARDL framework establishes a positive significant effect of institutional quality on FDI irrespective of the time horizon. The results also reveal a significant impact of inflation on FDI in both short and long run, while GDP per capita growth and trade are significant determinants only in the short run. Practical implications The study recommends the instigation of effective policies and strategies that seek to strengthen the quality of institutions, as this provides a conducive investment climate to attract FDI. Specifically, policies that are focused on promoting transparent legal regimes, regulatory reforms, non-corrupt institutions and political stability should be the precedence of policymakers. Originality/value In addition to being a pioneering work on the impact of institutional quality on FDI in Ghana, the main contribution of the study lies in its application of the principal component analysis to generate a single measure of institutional quality based on a number of institutional factors.

Foreign inflows and economic growth in Pakistan: some new insights

2020 ◽  
Vol 13 (3) ◽  
pp. 97-113
Author(s):  
Muhammad Tahir ◽  
Ahmad Ali Jan ◽  
Syed Quaid Ali Shah ◽  
Md Badrul Alam ◽  
Muhammad Asim Afridi ◽  
...  
Keyword(s):  
Economic Growth ◽  
Employment Level ◽  
Content Type ◽  
Significance Level ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
External Sources ◽  
The Impact

Purpose The purpose of this paper is to explore the contending role of important external inflows on the economic growth of Pakistan economy. The main purpose behind focusing on Pakistan is that it is receiving significant inflows from different international sources such as International Monetary Fund, World Bank and Asian Development Bank. Design/methodology/approach The study adopted the autoregressive distributed lag cointegration approach for the purpose of exploring the long-run cointegrating relationship among the variables. As Pakistan Government had been implementing some major liberalization policies during 1990s, data from 1976 to 2018 is used to estimate the specified models to reflect the impact of the surge of foreign inflows occurring from that time. In addition, error correction model is estimated for examining the short-run relationships. Findings The findings revealed the significant role played by different inflows in accelerating the economic growth. According to results, in the long run, all inflows, for example, Foreign direct investment (FDI), debt, official developdment assistance and remittances, have influenced significantly and positively the economic growth. The two control variables such as inflation and employment level included in the model have also played their expected role in the growth process. In the short run, some of the variables such as remittances, FDI and inflation rate have lost their significance level while for debt, aid and employment level, the signs of their coefficients become reversed. Practical implications Based on the findings, the study suggests the policymakers of Pakistan economy to liberalize the economy and attract more inflows from the external sources to accelerate economic growth. Originality/value To the best of the authors’ knowledge, this is the first comprehensive empirical study on the role of foreign inflows in the process of economic growth in the context of Pakistan economy.

scholarly journals Democracy, Globalization and Private Investment in Ghana

2017 ◽  
Vol 19 (1) ◽  
pp. 1-20 ◽  
Author(s):  
Samuel Kwabena Obeng ◽  
Linda Akoto ◽  
Felicia Acquah
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Public Investment ◽  
Civil Liberties ◽  
Trade Openness ◽  
National Income ◽  
Exchange Rate Volatility ◽  
Private Investment ◽  
Distributed Lag ◽  
Short Run

The article examines the effects of democracy and globalization on private investment in Ghana for the period 1980–2012, using the autoregressive distributed lag (ARDL) bounds test for cointegration and the error correction model (ECM). Two models are used. In Model 1, democracy is proxy by an index for institutional quality (Polity 2), while Model 2 uses an index for civil liberties as proxy for democracy. The results for Model 1 show globalization and public investment increase private investment, while exchange rate volatility and trade openness decrease private investment in both the long and short run. In addition, national income and interest rate reduce private investment in the short run. In the case of Model 2, credit to the private sector and public investment increase private investment, while exchange rate volatility and trade openness decrease private investment in both the long and short run. Finally, national income and interest rate reduce private investment in the short run. The findings and policy recommendations of the article provide vital information for policy implementation in Ghana.

scholarly journals Impact of Institutional Quality on Multilateral Aid in Nigeria

2021 ◽  
Vol 4 (4) ◽  
Author(s):  
Ezebuilo Romanus Ukwueze ◽  
Uchenna Casmir Ugwu ◽  
Ogochukwu Anastasia Okafor
Keyword(s):  
Institutional Quality ◽  
Bounds Testing ◽  
Development Indicators ◽  
Transparency International ◽  
Multilateral Aid ◽  
Distributed Lag ◽  
Use Of Resources ◽  
Long Run ◽  
Short Run ◽  
The Impact

The linkage between quality of institutions and economic performance of nations has generated a lot of interest among scholars, due to their influence on development of many countries and effective use of resources including foreign aid from multilateral organizations. Two strands of theories emerge on the institutions-multilateral aids nexus: those for benefits of aid to growth and development; and those for harms caused by aid. The research objective is to investigate the impact of institutional quality on multilateral aid in Nigeria. To do this, the study applied auto-regressive distributed lag (ARDL) bounds testing approach. Data for the study were sourced from the ICRG data, WGI data, QoG database, Transparency International, and World Development Indicators (WDI). The findings show that institutional quality variables do not have any influence on the multilateral aid in Nigeria, except the ‘independence of judiciary’ which appeared statistically significant. In the short-run analysis, the disequilibrium in the long-run equilibrium is corrected for in the next quarter period by about 25%; almost all the variables are statistically and significantly influencing multilateral aid. It is therefore recommended that donor agencies should consider other factors that negatively influence official development assistance (ODA) such as politics, location and colonial history.

Investigating the Impact of Exchange Rate Volatility, Inflation and Economic Output on International Trade of India

2020 ◽  
Vol 68 (2) ◽  
pp. 207-226
Author(s):  
Aastha Arora ◽  
Sarika Rakhyani
Keyword(s):  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Volatility ◽  
Goods And Services ◽  
Economic Output ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Trade Of Services ◽  
The Impact

Four models have been constructed separately for exports of goods, imports of goods, exports of services and imports of services to explore the impact of exchange rate volatility, inflation and economic output on India’s foreign trade. AutoRegressive Distributed Lag (ARDL) bounds test run on monthly data over the period of 2011–2020 reports that in the long run, growth in production positively impacts the trade in goods and services. Rise in level of prices negatively impacts the exports of goods. In the short run, a rise in volatility brings a decline in the imports of goods but in the long run, it has a positive impact on the exports of goods. Volatile exchange rate has no impact on trade in services. An increase in inflation in the short run leads to a rise in the imports of goods but brings a decline in the trade of services.

scholarly journals Institutional Quality and Tourism Growth Nexus in MENA Countries

2021 ◽  
Author(s):  
Isah Wada
Keyword(s):  
Financial Development ◽  
Positive Impact ◽  
Institutional Quality ◽  
Causality Test ◽  
Mena Countries ◽  
Distributed Lag ◽  
Real Gdp ◽  
International Tourist ◽  
Short Run ◽  
The Impact

The study critically examines the impact of institutional quality within foreign direct investment-financial development-international tourist arrival nexus for selected MENA countries. The dynamic pool mean group Autoregressive Distributed Lag (ARDL) model is employed for the empirical data analysis from 2012 to 2018. The findings reveal that institutional quality has a positive impact in FDI and real GDP model. Contrarily, it has adverse effect in the model of financial development and international tourist arrival overtime. Hence in the short-run, financial development and real GDP vary inversely moreover international tourist arrival and financial development varies directly. The multivariate panel causality test reveals 4 significant uni-directional causalities. The robust finding suggests institutional policy measures to enhance FDI and international tourist arrival, and the deepening of financial development to stimulate and enhance economic growth.

The Impact Of Unemployment And Interest Rate On Inflation In Sri Lanka

GIS Business ◽  
2018 ◽  
Vol 13 (4) ◽  
pp. 54-65
Author(s):  
S. Selvanayagam ◽  
A.M. M. Mustafa
Keyword(s):  
Sustainable Development ◽  
Interest Rate ◽  
Sri Lanka ◽  
Government Expenditure ◽  
Annual Data ◽  
Sri Lankan ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

Three major economic indicators such as Inflation, unemployment and interest rate have an important role in an economy in terms of sustainable development. The long-term progress of the Sri Lankan economy is destabilized. The linkage or the impact among these variables is very important for developing country such as Sri Lanka to overcome the destabilized hurdles. The study intends to investigate the impact of unemployment and interest rate on inflation in Sri Lanka. Also, this study was analyzed the short and long run relationship among the variables. Phillip’s relationship between the variables inflation and unemployment also was discussed in details. Fifty-three years of annual data for period of 1953- 2015 of the variables inflation, unemployment, interest rate, money supply (M2) and government expenditure used for the analysis. Parametric and non-parametric approaches have been employed in this study. The Autoregressive Distributed Lag (ARDL) model with co-integration technique has been employed to find the short and long run relationship of the variable. The statistical package EViews 9 and Microsoft excel were used for the analysis. The study reveals that unemployment is negatively impact on inflation in short and long run in Sri Lanka, which is statistically significance. Further, the study revealed that the Phillip’s relationship between inflation and unemployment exist in Sri Lankan economy. The interest rate is also negatively impact on inflation in short run and positively impact in long run. Results are statistically significance at 5% confidence level and theoretically expected. This study recommends that the relationship between the variables should be noted and utilized the Engine of growth concept in order to achieve sustainable development of Sri Lanka. Job opportunities to be extended further more. Further, the study suggests that using quarterly data to analysis this kind of time series will reflect relationship accurate.

Dynamism between selected macroeconomic determinants and electricity consumption in India

2019 ◽  
Vol 46 (6) ◽  
pp. 805-821 ◽  
Author(s):  
Rajesh Sharma ◽  
Pradeep Kautish
Keyword(s):  
Structural Break ◽  
Electricity Consumption ◽  
Electricity Demand ◽  
Data Series ◽  
Oil Consumption ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

Purpose By disentangling the impact of positive and negative shocks of GDP, FDI and oil consumption on electricity consumption, the purpose of this paper is to investigate whether this bifurcation significantly determines the level of electricity consumption in the short run and long run. Design/methodology/approach Using the recently developed nonlinear autoregressive distributed lag (NARDL) bounds approach, the study investigates the changes in the level of electricity consumption over a period of 1980–2015. The inclusion of a dummy variable for the possible structural break makes the electricity demand function more reliable. After checking the stationarity of data series, the study has employed the bounds test, which confirms the existence of the long run stability in the system. Further, using the VECM, the causality among the comprised variables has also been examined. Findings The findings confirm that not only the positive shocks but also the negative shocks in GDP have a positive and significant impact on electricity consumption in the long run. Similarly, the increased FDI has widened the scope of electricity consumption in the region, whereas the negative shocks’ impact is found negative in the long run. In comparison to GDP and FDI, the influence of the increased oil consumption on electricity demand is found negative and significant in India, which reveals that electricity acts as a significant substitute for oil consumption in the long run. Originality/value To the best of the literature evidences available, none of the studies in the past has examined electricity demand in an NARDL framework. The study may help in estimating the demand for electricity consumption comprehensively, as this approach captures the separate influence of favourable and unfavourable changes while determining the level of electricity consumption. This approach may be crucial for policy makers, especially in an energy importer country, such as India.

scholarly journals Is Exchange Rate Volatility An Important Determinant Of Tax Revenues? Evidence From Turkey

2021 ◽  
Author(s):  
Sinem Koçak Koçak
Keyword(s):  
Exchange Rate ◽  
Important Determinant ◽  
Exchange Rate Volatility ◽  
Tax Revenues ◽  
Distributed Lag ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
New Perspective ◽  
Macroeconomic Determinants

Is exchange rate volatility an important determinant of tax revenues? This study seeks, in the light of this question, empirical evidence on the relationship between volatility in exchange rates and tax revenues in the case of Turkey. Monthly data on exchange rate volatility, tax revenues, industrial production index and inflation rate for the period 2006:01-2019:12 are utilized for research purposes. The short-run and long- run dynamics between the variables are analyzed using the Autoregressive Distributed Lag (ARDL) model to shed some light on the macroeconomic determinants of tax revenues, with a new perspective considering exchange rate volatility. The results of the ARDL bounds test show that volatility in the exchange rate has a negative effect on tax revenues in the long-run, but positively in the short-run.

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