How IFRS influence the relationship between the types of FDI and economic growth

2019 ◽  
Vol 21 (1) ◽  
pp. 60-76
Author(s):  
Orhan Akisik ◽  
Mzamo P. Mangaliso
Keyword(s):  
Economic Growth ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
African Countries ◽  
Content Type ◽  
Development Indicators ◽  
Country Level ◽  
Greenfield Investments ◽  
World Governance Indicators

Purpose The purpose of this paper is to examine the relationships between International Financial Reporting Standards (IFRS), types of foreign direct investment (FDI) – greenfield investments (GFIs) and mergers and acquisitions (M&As) – and economic growth in 49 African countries between 2003 and 2017. Design/methodology/approach In the study, panel data fixed effects and generalized method of moments estimation techniques are used in order to test the hypotheses. Findings Using country-level data obtained from the World Development Indicators, The United Nations Conference on Trade and Development and World Governance Indicators websites, the authors find that IFRS and the types of FDI are significantly related to economic growth. Moreover, our results provide evidence that the effect of GFIs and M&As on growth is influenced by IFRS positively. Research limitations/implications With a handful of exceptions, most African countries do not have active stock markets. Therefore, the authors were unable to determine the effect of capital markets on growth. Practical implications FDI has the potential to contribute to economic growth and quality of life. Our findings suggest that policymakers should create incentives for attracting FDI and effective enforcement of IFRS in order to unleash the benefits of FDI on their economies. Originality/value The study provides important insights into the effects of types of FDI on the economic growth of African countries and into the role that IFRS play on this relationship.

scholarly journals Effect of economic growth on employment in Sub-Saharan Africa.

2021 ◽  
Vol 16 ◽  
pp. 28-41
Author(s):  
Francis Kamau Ndung’u ◽  
Professor Niu Xiongying
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Secondary Data ◽  
Sub Saharan Africa ◽  
Economic Sectors ◽  
African Countries ◽  
Total Employment ◽  
Development Indicators ◽  
Domestic Capital ◽  
Sub Saharan

The study aimed at investigating the effect of economic growth on employment in Sub-Saharan African. The study employed secondary data that was sourced from the World Bank, World development indicators and FAOSTAT covering 30 Sub Saharan African Countries for the period 1990 to 2015. The study employed the traditional neo-classical aggregate production function in its estimation of the regression results. The panel data obtained was analysed using the STATA software program. Hausman test was used and it determined that fixed effects estimation was preferred to random effects estimation and therefore fixed effects regression was used during the analysis. Empirical results on effect of economic growth on employment established that total employment, women in employment and men in employment statistically and significantly influenced economic growth and on the other hand economic sectors which comprised of domestic capital, imports, exports and services sectors statistically and significantly influenced economic growth.

Impact of non-oil sectors on GDP/capita in selected African countries: evidence from panel analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Oluyemi Theophilus Adeosun ◽  
Isaac Idris Gbadamosi
Keyword(s):  
Economic Growth ◽  
Panel Data Analysis ◽  
Secondary Data ◽  
African Countries ◽  
Causality Test ◽  
Content Type ◽  
Development Indicators ◽  
Agriculture Industry ◽  
Integration Test ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact or contribution of non-oil sectors on economic growth (GDP/capita) of some selected African countries using panel data analysis.Design/methodology/approachThe paper focused on secondary data for the period 1991–2019 for macro parameters, including agriculture, industry, export and service, and GDP/capita received from World Development Indicators (WDI). Panel unit root tests like Levin, Lin and Chu test and Im, Pesaran and Shin test, Johansen co-integration test, Granger causality test and an error correction model were also applied to the data for analysis.FindingsThe study reveals no causality from agriculture to economic growth, which implies most of the African countries (used in this study) have neglected agriculture as a source of economic growth. The industry independent variable was of no effect on these countries’ economic growth, whereas the findings reveal that industry has causality on economic growth. Economic growth has no causality on the industry, which means the industry is not contributing to economic growth. The study also shows no causality from export and service to economic growth, but a causality runs from economic growth to export and service.Originality/valueThe paper examines the contribution of the non-oil sectors to economic growth in selected African countries.

scholarly journals The impact of Islamic banking model and Islamic financial development on bank performance: evidence from dual banking economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tanveer Ahsan ◽  
Muhammad Azeem Qureshi
Keyword(s):  
Financial Development ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Country Level ◽  
Conventional Banks ◽  
The Impact

Purpose The purpose of this study is to develop an Islamic Banking Index representing the Islamic banking model and to investigate its impact on the performance of Islamic and conventional banks. This study also analyzes the impact of Islamic financial development on bank performance. Design/methodology/approach The authors collected the data from 23 countries for the period from 2010 to 2018 and developed a composite Islamic Banking Index. The authors applied the generalized method of moments on 3,542 bank-year observations for both Islamic and conventional banks to analyze the impact of the Islamic Banking Index on bank performance. The results of the study are robust to time-fixed effects, country-level time-varying factors and endogeneity issues. Findings The authors found that Islamic Banking Index positively contributes to the return on assets (ROAit) of Islamic banks only. This impact becomes highly significant in countries with comparatively higher Islamic financial development. This finding suggests that the Islamic financial development in a country provides a supportive operating environment to Islamic banks and increases their performance. The authors also found that Islamic Banking Index positively contributes to the return on equity (ROEit) of both types of banks. Practical implications The authors argue that moving away from interest-based products and focusing more on diversified portfolios can boost the performance of both types of banks without increasing their risk levels. Originality/value To the best of the authors’ knowledge, this is the first study that develops a composite Islamic Banking Index based on differentiating factors of the Islamic banking model and investigates the impact of Islamic Banking Index and Islamic financial development on bank performance.

scholarly journals The role of finance in inclusive human development in Africa revisited

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Simplice Asongu ◽  
Rexon Nting
Keyword(s):  
Human Development ◽  
Financial Development ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
African Countries ◽  
Content Type ◽  
Credit Bureaus ◽  
Public Credit ◽  
Private Credit

PurposeThis study aims to investigate the direct and indirect linkages between financial development and inclusive human development in African countries.Design/methodology/approachThe study employs a battery of estimation techniques, notably: two-stage least squares, fixed effects, generalized method of moments and Tobit regressions. The dependent variable is the inequality adjusted human development index. All dimensions of the Financial Development and Structure Database of the World Bank are considered.FindingsThe main finding is that financial dynamics of depth, activity and size improve inclusive human development, whereas the inability of banks to transform mobilized deposits into credit for financial access negatively affects inclusive human development.Practical implicationsPolicies should be tailored to improve mechanisms by which credit facilities can be provided to both households and business operators. Surplus liquidity issues resulting from the inability of banks to transform mobilized deposits into credit can be resolved by enhancing the introduction of information sharing offices (like public credit registries and private credit bureaus) that would reduce information asymmetry between lenders and borrowers.Originality/valueThis study complements the extant literature by assessing the nexus between financial development and inclusive human development in Africa.

Convergence and determinants of anti-corruption disclosure among extractive firms in Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
King Carl Tornam Duho ◽  
Cletus Agyenim-Boateng ◽  
Emmanuel Tetteh Asare ◽  
Joseph Mensah Onumah
Keyword(s):  
Fixed Effects ◽  
Academic Community ◽  
Global Reporting Initiative ◽  
Special Focus ◽  
African Countries ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
High Prevalence ◽  
National Enterprise

Purpose The purpose of this study is to examine the convergence and determinants of anti-corruption disclosures of extractive firms in Africa. Design/methodology/approach The study uses an unbalanced panel data of 27 firms operating in 5 African countries covering the period 2006 to 2018. Corporate data is collected from the global reporting initiative (GRI) database. The study uses an index to measure overall disclosure and individual items are coded as binary. The study uses fixed effects, panel logistic and panel-corrected standard error regression, depending on the type of dependent variable used. Findings The results indicate that the determinants of anti-corruption disclosure are membership in the United Nations global compact (UNGC) and Extractive Industry Transparency Initiative, multi-national enterprise status, corruption perception index and human development index (HDI). Specifically, UNGC membership and multi-national status enhance the disclosure on corruption analysis. Countries with a high prevalence of corruption tend to disclose more on corruption analysis. Disclosure on corruption training is high among firms that are UNGC signatories, countries with a high HDI and countries with a high prevalence of corruption. There is a weak effect of firm-level, industry-level and country-level factors on disclosures on corruption response. Research limitations/implications The study provides insights on the use of GRI 205: Anti-Corruption, which has relevant implications for practitioners, policymakers and the academic community. Originality/value This study is premier in exploring anti-corruption disclosure with a special focus on extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence among the firms.

Financial liberalization and economic growth

2015 ◽  
Vol 42 (2) ◽  
pp. 207-223 ◽  
Author(s):  
Thiago Henrique Carneiro Rios Lopes ◽  
Cleiton Silva de Jesus
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Fixed Effects ◽  
Financial Integration ◽  
Generalized Method Of Moments ◽  
Capital Account ◽  
Capital Account Liberalization ◽  
Content Type ◽  
Positive Effect ◽  
Interactive Variable

Purpose – The purpose of this paper is to ascertain whether countries benefit from capital account liberalization in more democratic contexts. Design/methodology/approach – The authors used the follow methodologies in this paper: Pooled OLS, panel data with fixed effects and generalized method of moments. The empirical exercises were conducted for both a large sample and a smaller group of developing countries. Given the characteristics of the variables used in the standard model, the main conclusions were obtained from an estimation that took into account the presence of fixed effects and endogeneity. Findings – Considering a sample of 77 countries, the authors were able to ascertain that capital account openness has a positive effect on economic growth only in highly democratic countries. When the same estimates are carried out with a more restricted sample, composed of 50 developing countries, the results are more pessimistic. In this case, capital account openness has a negative and significant effect, although being more democratic is not sufficient in itself to reap the benefits of financial integration. Research limitations/implications – The results obtained in this paper are limited to the number of observations and the period analysed. Furthermore, the conclusions need to be confirmed by a test of robustness, which should be conducted in future works; such works could make use of other democracy indicators and other instruments. Originality/value – The innovation of the work, in comparison to those the authors consulted, resides in its testing, through an interactive variable, whether the effect of capital openness on economic growth depends on level of democracy.

The impact of China's trade, aid and FDI on African economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Derrick Anquanah Cudjoe ◽  
He Yumei ◽  
Hanhui Hu
Keyword(s):  
Economic Growth ◽  
Manufacturing Industry ◽  
Manufacturing Sector ◽  
Generalized Method Of Moments ◽  
Marginal Effect ◽  
African Countries ◽  
Content Type ◽  
Long Run ◽  
Per Capita ◽  
The Impact

PurposeThis study examines the impact of China’s trade, aid and foreign direct investment (FDI) on the economic growth of Africa.Design/methodology/approachOur study covered 41 countries in Africa, cutting across the western, eastern, central, southern and northern sub-regions. The study adopted the dynamic system generalized method of moments (SGMM), feasible generalized least squares (FGLS) and Dumitrescu–Hurlin Panel Granger causality techniques for estimations.FindingsOverall, FDI, trade and aid from China have a nonlinear relationship with Africa’s economic growth. The findings reveal a key novelty in that the marginal effect on real per capita GDP increases when China’s FDI interacts with the manufacturing sector in Africa. These findings are robust to long-run estimations.Research limitations/implicationsGiven that we have examined the short-and long-run symbiotic effects of China’s FDI and Africa’s manufacturing sector and China’s aid and Africa’s manufacturing sector, more studies are warranted in this area, particularly to produce further empirical evidence of these findings. Moreover, future work could focus on investigating the country-specific effects of China’s trade, China’s FDI and China’s aid on real GDP per capita in each African country as our results reflect within-country elasticities.Originality/valueThis study provides new evidence on the impact of China’s trade, aid and FDI on the growth of African economies. To the best of our knowledge, this is the first study to empirically explore the long-run effects of China’s trade, FDI and aid on economic growth in African countries. This study also tests the claim of the displacement of Africa’s manufacturing industry by its Chinese counterparts.

Re-examining the government expenditure–growth nexus in ECOWAS countries

2020 ◽  
Vol 36 (4) ◽  
pp. 277-301 ◽  
Author(s):  
Olumide Olusegun Olaoye ◽  
Monica Orisadare ◽  
Ukafor Ukafor Okorie ◽  
Ezekiel Abanikanda
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Institutional Environment ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Government Expenditure ◽  
Institutional Quality ◽  
Empirical Modeling ◽  
African Countries ◽  
Content Type

PurposeThe purpose of this study is to investigate the effect of government expenditure on economic growth in 15 Economic Community of West African States (ECOWAS) countries over the period of 2005–2017. More precisely, this paper investigates whether institutional environment influences the effect of government spending on economic growth.Design/methodology/approachThis study adopts the generalized method of moments-system method of estimation to address the problem of dynamic endogeneity inherent in the relationship. Similarly, unlike previous studies which assume that the disturbances of a panel model are cross-sectionally independent, we account for cross-section dependency and cross-country heterogeneity inherent in empirical modeling using Driscoll and Kraay's nonparametric covariance matrix estimator, adjusted for use with both balanced and unbalanced panels along with Monte Carlo simulations.FindingsThe authors find that though, government spending has a positive impact on economic growth but the level of institutional quality adversely affect that positive impact. This suggests that the institutional environment in ECOWAS countries is a drag and not a push factor for government fiscal operations and/policies. Thus, the results provide empirical evidence that there is a conditional relationship between government spending and economic growth in African countries. That is, the effect of government spending on economic growth is dependent on the quality of institutions. Lastly, these findings suggest that in order for government spending to contribute to economic growth, African countries must develop a strong institutional environment.Originality/valueUnlike previous time series studies for African countries which concentrated on the two variable case, we include institutional quality as a third variable to underline the potential importance of institutional quality for economic growth in ECOWAS countries.

Government spending shocks and economic growth: additional evidence from cyclical behavior of fiscal policy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olumide Olusegun Olaoye ◽  
Ukafor Ukafor Okorie ◽  
Oluwatosin Odunayo Eluwole ◽  
Mahmood Butt Fawwad
Keyword(s):  
Economic Growth ◽  
Business Cycle ◽  
Government Spending ◽  
Generalized Method Of Moments ◽  
The State ◽  
Fiscal Policies ◽  
Asymmetric Effect ◽  
Content Type ◽  
Spending Shocks ◽  
The Business Cycle

PurposeThis study examines the asymmetric effect of government spending on economic growth in Nigeria over the period 1980–2017. Specifically, this study investigates whether the response of economic growth to government spending shocks differs according to the nature of shocks on them. In addition, the authors examine whether the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Design/methodology/approachThe study adopts the linear fiscal reaction function in addition to the nonlinear regression model of Hatemi-J (2011, 2012), Granger and Yoon (2002), which allows us to separate negative shocks from positive shocks to government spending. Similarly, the authors adopt the generalized method of moments (GMM) techniques of Hansen (1982) to account for simultaneity and endogeneity problems inherent in dynamic model.FindingsThe authors’ findings reveal that there is evidence of asymmetry in the government spending–economic growth nexus in Nigeria over the period of study. Specifically, the authors find that the response of economic growth to government spending shocks differs according to the nature of shocks on them. More specifically, the study established that the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Originality/valueUnlike the traditional method of modeling asymmetry, which adopts the simple inclusion of a squared government spending term or by the inclusion of a cubic government spending term, the model adopted in this study allows us to model shocks and show how the responses of economic growth to government expenditure differ according to the nature of shocks on them.

The relationship between knowledge-based economy and fraudulent financial reporting

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abbas Koolivand ◽  
Mahdi Salehi ◽  
Meysam Arabzadeh ◽  
Hassan Ghodrati
Keyword(s):  
Financial Markets ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Fraudulent Financial Reporting ◽  
Content Type ◽  
Knowledge Based ◽  
Robust Testing ◽  
Knowledge Based Economy ◽  
The Relationship

Purpose This paper aims to assess the relationship between a knowledge-based economy and fraudulent financial reporting. Design/methodology/approach The study is descriptive-correlation based on published information from enlisted firms on the Tehran Stock Exchange during 2013–2019 with a sample of 178 firms (1,246 observations). The method used for hypothesis testing is linear regression using the panel data. Findings The results show that a knowledge-based economy is associated negatively and significantly with financial reporting. Moreover, robust testing has also examined the hypotheses (including fixed effects, OLS and t + 1) that confirmed the study’s preliminary results. Originality/value As the study was carried out in the emergent financial markets, like Iran, to figure out the relationship between knowledge-based economy and financial reporting, it can provide helpful information for the practitioners in this field.

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