Dynamic interactions between stock markets and the real economy

2016 ◽  
Vol 11 (4) ◽  
pp. 715-746 ◽  
Author(s):  
Nikiforos T. Laopodis ◽  
Andreas Papastamou
Keyword(s):  
Economic Development ◽  
Stock Market ◽  
Methodological Approach ◽  
Financial System ◽  
Cointegration Analysis ◽  
Policy Implications ◽  
Real Economy ◽  
Dynamic Interactions ◽  
Content Type ◽  
The Real

Purpose The purpose of this paper is to re-examine the relationship between a country’s aggregate stock market and general economic development for 14 emerging economies for the period from 1995 to 2014. Design/methodology/approach The methodological approach of the paper is multifold. First, the authors use cointegration analysis to determine the simple dynamics among the variables. Second, the authors utilize vector autoregression analysis to study the dynamics among the variables for the 14 countries. Third, the authors employ panel analysis to determine common variations among the variables and across countries. Findings When examining the linkage between the stock market and economic development, proxied by gross domestic product growth or with gross fixed capital formation growth, the authors did not find a meaningful relationship between them. However, when the authors included additional control variables strong, dynamic interactions between the two magnitudes surfaced. Specifically, it was found that the stock market is positively and robustly correlated with contemporaneous and future real economic development and, thus, it directly contributed to a country’s economic development either through the production of goods and services or the accumulation of real capital. Thus, it can be inferred that the stock market alone is not capable of boosting economic development in these countries unless being part of a comprehensive financial system (which includes banks) as well as investment in real capital. Research limitations/implications The policy implications are clear. Government authorities must recognize that the stock market alone is not a driver of economic development and that a sound, efficient financial system (which includes banks) must be present in order to contribute and foster economic development. Originality/value The study is original in the sense that it examines various financial and economic variables to determine the degree of (or dynamic interactions among) the stock market and the real economy for each and all emerging markets in the sample.

scholarly journals Transformation of the Banking Sector of Ukraine: Reasons and Consequences

2017 ◽  
Vol 1 (13) ◽  
pp. 33-48
Author(s):  
Myroslava Khutorna
Keyword(s):  
Economic Development ◽  
Banking Sector ◽  
Financial System ◽  
Market Concentration ◽  
The Other ◽  
Real Economy ◽  
The Real ◽  
Other Hand ◽  
The One

This paper is devoted to the consideration of the preconditions and results of the banking sector of Ukraine transforming, its influence on the sector’s productivity, stability and significance for the real economy. It’s grounded that banking sector of Ukraine has seriously weakened its potential for the economic development stimulation. On the one hand, due to the banking sector clearance from the bad and unscrupulous banks the system has become much more sensitive to the monetary instruments and its state is going to be more predictable and better controlled. But on the other hand, massive banks’ liquidations have caused the worsening of the confidence in financial system and radical increasing of the market concentration the highest degree of which is observed in the householders’ deposit market.

scholarly journals Islamic banking’s contribution to the Malaysian real economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ibrahim Musa Gani ◽  
Zakaria Bahari
Keyword(s):  
Banking Sector ◽  
Causal Effect ◽  
Financial System ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Real Economy ◽  
Data Set ◽  
Content Type ◽  
The Real ◽  
Banking Development

Purpose Malaysia is one of the fastest-growing Asian economies with a properly designed and developed Islamic financial system. This unique feature of the Malaysian economy made it an important case study, and the purpose of this study is to assess for the dynamic contribution of Islamic finance to the growth of the real economy. Design/methodology/approach The study uses a quarterly data set of 20 years analysed via the autoregressive distributive lag bounds test approach to cointegration. Findings The results in the short-run show a non-significant relationship between Islamic banking indices and the real economy. However, in the long-run, financing and deposits of Islamic banks are favourable and contribute significantly to the growth of the Malaysian economy. There was an accumulation of meaningful and wide-ranging investment over the period of the study and productivity of capital was also extra-efficient. The direction of causality is found to be bidirectional between Islamic banking deposits and Malaysian gross domestic product (GDP), but there is a weak causal effect from Islamic banking financing to GDP. Research limitations/implications Malaysia has a dual financial system (conventional and Islamic) and both can affect its real economy. This research is limited to Islamic banking’s effects on Malaysian economic growth. The research also limits the scope and coverage for 20 years, from 1998 to 2017 to cover the years for which data is available for all the variables used in the study. Practical implications The results confirm that the Islamic banking sector in Malaysia is performing well in carrying out its major function of financial intermediation, which is the pooling and channelling of funds to productive investment activities. Consequently, the fact that Malaysia excels in Islamic finance is not a fluke. It is because of the effective performance of Islamic financial institutions in the country. Furthermore, Malaysian authorities are doing their level best in promoting Islamic financial activities. Originality/value The study fulfills the need to uncover the relationship between the Islamic financial system and the real economy in Malaysia. It differs from other studies as it uses the most recent available data, introduces new variables and identifies the channel by which Islamic banking development transmits growth.

Methodological approaches to assessing the digitalization scale in types of economic activity in the region and the potential of digital technologies for the real economy

2021 ◽  
Vol 17 (8) ◽  
pp. 1519-1541
Author(s):  
Vitalii V. PECHATKIN ◽  
Liliya M. VIL'DANOVA
Keyword(s):  
Methodological Approach ◽  
Import Substitution ◽  
Digital Technologies ◽  
Industrial Sector ◽  
Digital Transformation ◽  
Real Economy ◽  
Economic Activities ◽  
The Real ◽  
Industrial Enterprises ◽  
Methodological Approaches

Subject. As digital technologies spread across all industries, active processes of digital transformation need to be managed both nationally and regionally. Assessing the extent of digitalization across types of economic activities is the key issue for setting up the socio-economic development strategy of the region and evaluating its efficiency. Objectives. The study is aimed to formulate and test methodological approaches to assessing the digitalization in types of economic activities and the potential of digital technologies for the real economy. Methods. The study relies upon the dialectical method, systems approach, questionnaires, expert approach, interpretation of empirical facts through tables, etc. Results. We devised a methodological approaches to assessing the extent of digitalization in types of economic activities across regions. The approach combines the quantification and evaluation of the process and helps determine the extent of local digital transformation at the regional level. We devised and tested the methodological approach to rating digital technologies, which have the high potential for raising the competitiveness and resilience to competition of the industrial sector in the Russian regions. As opposed to the existing approaches, the approach accounts for the current scale of digital technologies in the national economy, the potential for growth in the demand and supply in the domestic and foreign markets, and the potential for import substitution with respect to foreign technologies and products. Conclusions and Relevance. What makes the proposed methodological approaches more preferable is that they help assess not only the extent of digitalization in types of economic activities and the predominance of certain types in industrial enterprises, but also determine their potential for import substitution in terms of digital security.

The analysis of debt levels in public firms: an international evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rajesh Pathak ◽  
Ranjan Das Gupta ◽  
Abhinav Jalali
Keyword(s):  
Economic Development ◽  
Methodological Approach ◽  
Developed Countries ◽  
Tobit Regression ◽  
Content Type ◽  
Public Firms ◽  
Law System ◽  
Legal Principles ◽  
Developed Nations ◽  
Debt Levels

PurposeThis study investigates if the widely held predictors of corporate leverage exhibit predictive consistency through times and across countries amidst country heterogeneities such as legal principles, state of economic development and protection of investors’ rights.Design/methodology/approachWe employ financial data for 3,197 unique firms from eight emerging and ten developed countries during the years 2001–2017 and use Tobit regression models, a two-step Fama−MacBeth(1973) regression and panel data regression techniques in order to ensure the robustness of estimates.FindingsWe find that firms in the civil French law system exhibit the highest average of a debt (around 27%), whereas firms based in high investors’ protection environment and in developed nations borrow significantly less than their counterparts. Furthermore, among predictors, including a firm's payout ratio, it returns on equity and the cash ratio except the P/B ratio have varying predictability for a corporate debt when firms are classified based on law systems, investors’ rights and the economic scenarios. The crisis period significantly affects the relationship of debt levels with legal systems, investors’ rights and economic development scenario. The author’s estimates are robust to alternate analysis.Originality/valueThis study is unique in its methodological approach and involves a considerably large number of countries and a longer study period for the results to be more generalizable compared to other existing studies.

Real effects of real estate: evidence from unemployment rates

2020 ◽  
Vol 37 (4) ◽  
pp. 605-623
Author(s):  
Can Dogan ◽  
John Can Topuz
Keyword(s):  
Real Estate ◽  
Housing Prices ◽  
Real Economy ◽  
Residential Real Estate ◽  
Content Type ◽  
Unemployment Rates ◽  
The Real ◽  
Real Estate Price ◽  
Real Effects ◽  
Real Estate Prices

Purpose This paper aims to investigate the relationship between residential real estate prices and unemployment rates at the Metropolitan Statistical Area (MSA) level. Design/methodology/approach This paper uses a long time-series of MSA-level quarterly data from 1990 to 2018. It uses an instrumental variable approach to estimate the effects of residential real estate prices on unemployment rates using the geography-based land constraints measure of Saiz (2010) as the instrument. Findings The results show that changes in residential real estate prices do not have a causal effect on unemployment rates in the same quarter. However, it takes 9-12 months for an increase (decrease) in real estate prices to decrease (increase) unemployment rates. This effect is significant during both pre- and post-financial crisis periods and robust to control for the economic characteristics of MSAs. Research limitations/implications This paper contributes to the emerging literature that studies the real effects of real estate. Particularly, the methodology and the findings can be used to investigate causal relationships between housing prices and small business development or economic growth. The findings are also of interest to policymakers and practitioners as they illustrate how and when real estate price shocks propagate to the real economy through unemployment rates. Practical implications This study’s findings have important implications for academics, policymakers and investors as they provide evidence of a snowball effect associated with shocks to real estate prices: increasing (decreasing) unemployment rates following a decrease (increase) in real estate prices exacerbates the real estate price movements and their economic consequences. Originality/value This paper analyzes a significantly longer period, from 1990 to 2018, than the existing literature. Additionally, it uses the MSA-level land unavailability measure of Saiz (2010) as an instrument to explore the effects of residential real estate prices on unemployment rates and when those effects are observed in the real economy.

Testing the stationarity and convergence of CO2 emissions series in MENA countries

2019 ◽  
Vol 13 (4) ◽  
pp. 977-990 ◽  
Author(s):  
Cosimo Magazzino
Keyword(s):  
Time Series ◽  
Unit Root ◽  
Policy Implications ◽  
Real Economy ◽  
Cross Sectional ◽  
Close Link ◽  
Content Type ◽  
Mena Countries ◽  
Energy Environment ◽  
Per Capita

Purpose This study aims to investigate the stationarity and convergence of CO2 emissions series in MENA countries. The stationarity and unit root properties of per capita carbon dioxide (CO2) emissions series are explored by an increasing amount of studies, which use different methodologies. Examining the time series properties of energy and environmental series is crucial for both researchers and the policymakers, given the close link between energy, environment and the real economy. In fact, if energy exhibits the presence of a unit root, this suggests that this series does not revert to its equilibrium level after being hit by a shock. Design/methodology/approach The contribution of this work is twofold. First, to the author’s knowledge, a very little attention has been paid to the topics of stationarity and convergence of CO2 emissions in the case of Middle East and North Africa (MENA) member states, especially in a panel context. Convergence analyses of CO2 emissions for MENA countries can improve the knowledge of energy and environmental scenario of the area, giving some ideas for appropriate future policies. Second, this is the first study that jointly analyzed time series and panel data properties of emissions series for these countries. Findings The author finds that relative per capita CO2 emissions in the 19 MENA countries are a mixture of I(0) and I(1) processes and there is a weak evidence to support the stationarity of CO2 emissions. After having verified the presence of cross-sectional dependence in the series, the panel unit root tests in presence of cross-section dependence show strong evidence in favor of non-stationarity. In addition, after performing tests for ß-convergence, it is also found that per capita CO2 emissions are converging on average in 11 out of 19 sample’s countries, while s-convergence analysis reveals that the variance of per capita CO2 emissions decreased over time, which is an indication of convergence. Originality/value Important policy implications emerge from the empirical results. Sustainable environmental and energy policies rely heavily on the CO2 series’ properties. In this regard, determining whether shocks to CO2 emissions are permanent or transitory is important for setting feasible goals for sustainable environmental policies. Given that per capita CO2 emissions are essentially associated with a quality of life, the issues of their reduction have been the leading agenda in energy and environmental management over the past two decades.

Estimation of procurement costs incurred by public customers: a case study of a Russian region

2018 ◽  
Vol 18 (1) ◽  
pp. 68-87
Author(s):  
Andrei Yakovlev ◽  
Olga Balaeva ◽  
Andrey Tkachenko
Keyword(s):  
Public Procurement ◽  
Methodological Approach ◽  
Policy Implications ◽  
Cost Evaluation ◽  
Content Type ◽  
Russian Region ◽  
Procurement Cost ◽  
Procurement System ◽  
The Cost

Purpose This paper aims to measure the cost of procurement because public procurement procedures prescribed by legislation not only enhance transparency and competition but also entail certain transaction costs for both customers and suppliers. Design/methodology/approach These costs are important to the efficiency of the procurement system. However, very few previous studies have focused on estimating procurement costs. This paper proposes a methodology for public procurement cost evaluation. Findings This paper shows how procurement costs can be calculated using a formalized survey of public customers. This methodology was tested with a representative group of public customers operating in one region of the Russian Federation. Originality/value The authors formulate the policy implications of this paper, as they relate to the improvement of public procurement regulations and argue that this methodological approach can be applied in other developing and transitioning economies.

Examining financial needs of banking customers for product development in Islamic banking in Indonesia

2019 ◽  
Vol 12 (5) ◽  
pp. 712-726 ◽  
Author(s):  
Aimatul Yumna
Keyword(s):  
Product Development ◽  
Primary Data ◽  
Islamic Banking ◽  
Life Cycle Approach ◽  
Real Economy ◽  
Structured Interviews ◽  
Content Type ◽  
The Real ◽  
Financial Products ◽  
Qualitative Approaches

Purpose This study aims at product development in Syariah banking, using the theory of Pyramid of Maslahah. Product development are important aspects of Islamic banking to realize Maqasid Al Shariah and to better serve the real economy. Design/methodology/approach To understand the needs of the customers, this study uses qualitative approaches and collects primary data from semi-structured interviews of 25 banking customers in Indonesia. Findings The study found that the group of respondents who have similar characteristics in age, marital status and number of kids tend to have similar financial needs. Some of the needs that have not been fulfilled by Sharia banking are the needs for investment in banking products, the needs for pension plan products and the needs for travelling-related financial products. Practical implications This study proposed that Islamic banking should provide financial products that cater to three needs of the society, including the needs for necessities/essentials (daruriyat), the needs of complementary requirements (hajiyyat) and the needs for beautifications or embellishments (tahsiniyat), to be able to better serve the real economy. Originality/value Financial needs and the life cycle approach can be used for product development in banking industry. However, this approach has not been widely used for consideration in the development of Sharia banking products in Indonesia. This study provides some novelty in Islamic banking customer behavior, especially in understanding financial needs based on the theory of Pyramid of Maslahah.

Adaptive reuse: a review and analysis of its relationship to the 3 Es of sustainability

Facilities ◽  
2017 ◽  
Vol 35 (3/4) ◽  
pp. 138-154 ◽  
Author(s):  
Rayman Mohamed ◽  
Robin Boyle ◽  
Allan Yilun Yang ◽  
Joseph Tangari
Keyword(s):  
Economic Development ◽  
Adaptive Reuse ◽  
Methodological Approach ◽  
Positive Interactions ◽  
Equity Issue ◽  
Content Type ◽  
Policy Interventions ◽  
The Usa ◽  
Private And Public ◽  
Pertinent Information

Purpose There is a resurgence in the adaptive reuse of buildings. However, there is a lack of literature that pulls all the strands of adaptive reuse together. Furthermore, despite claims that it is motivated by the 3 Es of the sustainability triangle, the authors could find no research that critiques adaptive reuse from this perspective. The purpose of this study is to review the literature to collect pertinent information in a single place and to critically examine whether adaptive reuse incorporates the 3 Es of sustainability. Design/methodology/approach The methodological approach of this study is a literature review and a critical analysis of the practice of adaptive review. Findings Adaptive reuse is concentrated at the environment and economic development corners of the sustainability triangle. There are positive interactions along this edge. The authors attribute this to the fact that the same actors – the private and public sectors – are located at both corners of the triangle, and they have shared interests. This is different from the wider sustainability literature, where major actors at each corner are different and tensions along each edge are resolved through mediation. In adaptive reuse, there are no actors at the equity corner of the triangle, and there are minimal attempts to address concerns along the equity–environment and equity–economic development edges of the triangle. Research limitations/implications This study focuses on the USA. Practical implications This study suggests policy interventions that address the equity issue in adaptive reuse. Originality/value This is the first study to provide a succinct review of contemporary adaptive reuse and that places the practice within the framework of the 3 Es of sustainability.

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