Determining illicit financial outflows from sixty developing countries

2019 ◽  
Vol 11 (1) ◽  
pp. 62-81
Author(s):  
Matiur Rahman ◽  
Muhammad Mustafa ◽  
Lonnie Turpin
Keyword(s):  
Developing Countries ◽  
Political Stability ◽  
Content Type ◽  
Vector Error Correction ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Domestic Savings ◽  
Corruption Perception ◽  
Random Fluctuations ◽  
Long Run Equilibrium

PurposeThis paper aims to empirically explore the effects of globalization, corruption perception, political stability, macroeconomic vulnerability and gross domestic savings on illicit financial outflows of 60 developing countries from 2004 to 2013.Design/methodology/approachPedroni’s heterogeneous panel data methodology for co-integration is applied. Panel unit root tests reveal non-stationarity of each variable in level, and a battery of seven panel co-integration tests largely confirm long-run equilibrium relationship among the variables under study.FindingsThe panel vector error correction model estimates show that variables tend to converge toward long-run equilibrium at a very slow pace amid some short-term random fluctuations. At the same time, political stability reduces illicit financial outflows.Originality/valueThere are enhancing impacts of globalization, corruption perception, macroeconomic vulnerability and domestic gross savings on illicit financial outflows. Political stability dampens such outflows. To the authors’ knowledge, such studies are either very scant or non-existent.

Determinants of capital structure; a sector-level analysis for Indian manufacturing firms

2020 ◽  
Vol 69 (5) ◽  
pp. 1033-1060 ◽  
Author(s):  
Ajaya Kumar Panda ◽  
Swagatika Nanda
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Regression Models ◽  
Panel Cointegration ◽  
Manufacturing Firms ◽  
Content Type ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Long Run Equilibrium ◽  
Non Parametric

PurposeThe purpose of this paper is to empirically analyze the determinants of capital structure and their long-run equilibrium relationships with firm-specific and macroeconomic indicators for Indian manufacturing firms.Design/methodology/approachThe study is conducted using the panel semi-parametric and non-parametric regression models to identify the key determinants of capital structure. Panel cointegration models are also employed for analyzing the long-run equilibrium association of capital structure with its determinants.FindingsThe study finds that each manufacturing sector has unique determinants of capital structure. The debt level is significantly affected by asset tangibility, growth opportunity, effective tax rate, non-debt tax shield, cash flow, profitability, firm size, foreign investment, government borrowing, economic growth, and interest rate. All these firm-specific and macroeconomic variables have strong long-run equilibrium relationship with capital structure as a whole.Practical Implication of the StudyThe study analyzes the determinants of capital structure for eight manufacturing sectors of India, which helps firm managers and policy-makers to identify appropriate factors that maximize firm value. The sector-specific features of firms may lead to a new path with regard to corporate governance and ownership structure to enhance stakeholder's satisfaction.Originality/valueThe use of semi-parametric and non-parametric panel regression models to analyze the determinants of capital structure, and the use of panel cointegration approach to explore the long-run equilibrium relationship between the determinants and its factors are the unique contributions of the present research.

scholarly journals An analysis of IT software and service exports from India

2020 ◽  
Vol 4 (1) ◽  
pp. 3-25
Author(s):  
Manzoor Hassan Malik ◽  
Nirmala Velan
Keyword(s):  
Human Capital ◽  
Exchange Rate ◽  
Error Correction ◽  
Content Type ◽  
Long Run ◽  
External Demand ◽  
Equilibrium Relationship ◽  
Short Run ◽  
The Given ◽  
Long Run Equilibrium

PurposeThe aims of the paper are to investigate IT software and service export function for India. First, cointegration tests have been used to investigate the long-run equilibrium relationship of the given variables. Second, long-run coefficients and associated error correction mechanism are estimated.Design/methodology/approachAnnual time series data on IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index have been used for the present study during the period 1980–2017. The data are collected from the National Association of Software and Service Companies (NASSCOM), Planning Commission of India, University Grants Commission (UGC) of India, real effective exchange rate (REER) database and World Bank development indicators. Auto regressive distributed lag (ARDL) model is used to analyze both short-run and long-run dynamic behaviour of economic variables with appropriate asymptotic inferences.FindingsResults of the analysis show the stable long-run equilibrium relationship among the given variables. It is found that external demand, exchange rate, human capital and openness index have a substantial long-run impact on the IT software and service exports. We also found that the coefficient of error correction term is negative and significant at 1% of the level of significance, which confirms the existence of stable long-run relationship which means adjustment will take place when there is a short-run deviation to its long-run equilibrium after a shock.Research limitations/implicationsThere may be other determinants of software and service exports apart from those considered by the present study. Due to the non-availability of data, the study considers only important determinants that determine the software and service exports in India. The IT exports are an emerging and dynamic field of economic activity and the rate of change is so rapid that the relevance of individual factors may change over time. The study period is also limited to available data.Practical implicationsThe paper has implications for achieving sustainability in IT software and service exports growth. It is recommended that policies directed at improving the performance of IT software and service exports should largely consider the long-run behaviour of these variables.Originality/valueThis paper focuses on originality in the analysis of the relationship among the given variables including IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index in India. All the work has been done in original by the authors, and the work used has been acknowledged properly.

Long-run dynamics between CFP and CSP in the GCC banking sector: estimation of non-stationary heterogeneous panels allowing for cross-sectional dependence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ismail Ben Douissa ◽  
Tawfik Azrak
Keyword(s):  
Financial Performance ◽  
Granger Causality ◽  
Banking Sector ◽  
Social Performance ◽  
Content Type ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Corporate Social ◽  
The Relationship ◽  
Long Run Equilibrium

Purpose Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little research has been done to investigate the long-run dynamics between these two constructs. The purpose of this paper is to enrich the CFP–CSP literature by estimating the long-run equilibrium relationship between financial performance and social performance in the banking sector in the Gulf Cooperation Council countries over the period 2009–2019. Design/methodology/approach The paper adopts an approach that is primarily used in financial economics: first, the authors perform panel long-run Granger causality following Canning and Pedroni’s procedure to indicate the direction of the causal relationship. Second, the authors estimate an error correction model using Chudik and Pesaran’s (2015) dynamic common correlated effects mean group estimator to determine the sign of the relationship. Findings The present research findings prove the existence of a long-run equilibrium relationship between CFP and CSP, while indicating at the same time that panel Granger causality runs positively from CSP to CFP, which means that changes in CSP produce lasting changes in CFP. Practical implications The findings of the paper would guide strategists to build fit for purpose corporate social responsibility (CSR) strategies in their firms and establish a continuous investment in CSR activities in the long run rather than harshly investing in CSR activities in the short run. Originality/value To the best of the authors’ knowledge, this paper is the first one to address heterogeneity in long-run Granger causality tests to estimate the relationship between CSP and CFP.

An econometric study of energy consumption, carbon emissions and economic growth in South Asia: 1972-2009

2014 ◽  
Vol 11 (3) ◽  
pp. 182-195 ◽  
Author(s):  
Harishankar Vidyarthi
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
South Asia ◽  
Carbon Emissions ◽  
Content Type ◽  
Energy Mix ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run ◽  
Long Run Equilibrium

Purpose – The purpose of this paper is to empirically examine the relationship between energy consumption, carbon emissions and economic growth for a panel of five South Asian economies namely India, Pakistan, Bangladesh, Sri Lanka and Nepal over the period 1972-2009 within multivariate framework. Design/methodology/approach – The study uses Pedroni cointegration and Granger causality test based on panel vector error correction model to examine long-run equilibrium relationship and direction of causation in short run and long run between energy consumption, carbon emissions and economic growth in South Asia. Findings – Cointegration result indicates the long-run equilibrium relationship between economic growth, energy consumption and carbon emissions for panel. Causality results suggest that bidirectional causality exist between energy consumption-GDP, and unidirectional causality from carbon emissions to GDP and energy consumption in long run. However, energy consumption causes carbon emissions in short run. Practical implications – Implementing energy efficiency measures and reducing dependence on fossils fuels by scaling up carbon free energy resources like nuclear, renewables including hydropower in energy mix is necessary for sustainable and inclusive growth in the region. Originality/value – South Asia economies need to sacrifice economic growth for reducing the carbon emissions in long run if the region dependence on fossils fuels including coal, oil and natural gas in energy mix continues at same pace.

scholarly journals Identification of macroeconomic determinants for diversification and investment strategy for Islamic unit trust funds in Malaysia

2018 ◽  
Vol 13 (4) ◽  
pp. 653-675 ◽  
Author(s):  
Anwar Hasan Abdullah Othman ◽  
Hasanuddeen Abdul Aziz ◽  
Salina Kassim
Keyword(s):  
Investment Strategy ◽  
Economic Policies ◽  
Content Type ◽  
Vector Error Correction ◽  
Macroeconomic Variables ◽  
Trust Funds ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Unit Trust ◽  
Macroeconomic Determinants

Purpose The purpose of this paper is to investigate the role of selected macroeconomic variables in influencing the movement of net asset value (NAV) of the Islamic unit trust funds (UTFs) in Malaysia. In efforts to arrive at more enriching findings, the UTFs are further categorised into equity, bond, balanced, fixed, mixed, money market and feeder funds. Design/methodology/approach The study adopts the vector autoregression framework (Johansen and Juselius (1990), cointegration test and vector error correction model to analyse the relationship between the macroeconomic variables and the NAVs of the various type of funds. Findings The study shows that there is a significant long-run equilibrium relationship between the macroeconomic variables and the NAV of all Islamic UTFs in Malaysia. Despite of this, the findings show that different funds have different responses to the movements of the macroeconomic variables. Practical implications The results of the study are of significant importance to the various stakeholders in the Islamic UTF industry. Investors benefit in terms of getting the inputs on their investment decisions as to whether to buy, hold or sell fund units within their investment portfolio in the long run, along with building their optimal portfolio diversification investment strategy, especially in reallocating their assets distribution between the various types of funds in the UTFs industry. For the policy-makers, the findings of the study may assist them in evaluating the suitability of the existing economic policies as to whether they positively or negatively contribute to the development of the Islamic UTFs. Originality/value This paper fulfils the need to understand how unit-holders can strategise and diversify their portfolio investments in the Malaysian Islamic UTFs industry based on detailed understanding and knowledge derived from rational and scientific inputs.

Structural change and economic growth in selected emerging economies

2015 ◽  
Vol 14 (2) ◽  
pp. 98-116 ◽  
Author(s):  
Muhamed Zulkhibri ◽  
Ismaeel Naiya ◽  
Reza Ghazal
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Panel Cointegration ◽  
Growth Equation ◽  
Content Type ◽  
Long Run ◽  
Equilibrium Relationship ◽  
The Impact ◽  
The Relationship ◽  
Long Run Equilibrium

Purpose – This paper aims to investigate the relationship between structural change and economic growth for a panel of four developing countries, namely, Malaysia, Nigeria, Turkey and Indonesia over 1960-2010. Design/methodology/approach – The study extent the growth equation by incorporating degree of openness, labour and investment and construct structural change indices – modified Lilien index and the norm of absolute values. It utilizes the recently developed panel cointegration techniques to test and estimate the long-run equilibrium of the growth equation. Findings – The results confirm that structural change and economic growth are cointegrated at the panel level, indicating the presence of long-run equilibrium relationship. However, the impact of structural change on economic growth seems to be small and evolve slowly. Originality/value – The findings indicate the need for policymakers to identify the binding constraints that impede growth and the importance of institutionalize policy to encourage investment in productive sectors.

Transparency and foreign direct investment into Sub-Saharan Africa

2014 ◽  
Vol 5 (2) ◽  
pp. 146-159 ◽  
Author(s):  
Olusegun Felix Ayadi ◽  
Solabomi Ajibolade ◽  
Johnnie Williams ◽  
Ladelle M. Hyman
Keyword(s):  
Multinational Corporations ◽  
Sub Saharan Africa ◽  
Host Countries ◽  
African Countries ◽  
Content Type ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Sub Saharan ◽  
Long Run Equilibrium

Purpose – The financial economics literature points to the likelihood that transparency affects the inflows of direct foreign investments. The purpose of this paper is to examine the relationship between degree of transparency in an economy and the level of foreign direct investment (FDI) inflows using cross-section and time series data from 13 Sub-Saharan African countries from 1998 through 2008. Design/methodology/approach – The paper employed a panel unit root and panel cointegration tests to data from 13 Sub-Saharan countries from 1998 through 2008. The long-run equilibrium relationship is estimated by the fully modified ordinary least squares (FMOLS) method. The cointegration framework employed in this study accounts for individual as well as time effects by adjusting for potential heterogeneity and serial correlation existing in the data panel. Findings – The results imply that the level of transparency and size of FDI inflows into Sub-Saharan Africa have a long-run equilibrium relationship. Research limitations/implications – The role of multinational corporations in increasing the levels of corruption in host countries is supported in this study. Practical implications – The role of multinational corporations in contributing to the absence of transactional transparency in host countries is supported in this study. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions should be endorsed by African countries. African countries should make efforts to transform their domestic political and economic environments in order to enhance transparency and allow rule of law to apply. Originality/value – This paper is the first to empirically test the aforementioned long-run equilibrium relationship by isolating the role of transparency in international capital flows.

Financial malpractices and stock market development in Nigeria

2014 ◽  
Vol 21 (3) ◽  
pp. 336-354 ◽  
Author(s):  
Ade Thompson Ojo ◽  
Olusegun Felix Ayadi
Keyword(s):  
Stock Market ◽  
Structural Break ◽  
Content Type ◽  
Stock Market Development ◽  
Market Capitalization ◽  
Stunted Growth ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Long Run Equilibrium ◽  
Stock Market Capitalization

Purpose – The purpose of this paper is to investigate if the prevalence of corruption and other unwholesome financial practices in Nigeria contributed substantially to the stunted growth of the capital market in general, and the stock market in particular. Design/methodology/approach – The paper employed Gregory–Hansen cointegration approach to test the long-run equilibrium relationship between the occurrence of predatory banking practices and stock market capitalization in Nigeria. Findings – There exists a long-run equilibrium relationship between bank fraud and stock market capitalization but with a structural break in 2005. Practical implications – There is an urgent need to overhaul and re-assess from time to time the existing systems of internal checks and controls in banks, as well as other financial institutions in Nigeria. Originality/value – This paper is the first to empirically test the long-run equilibrium relationship between bank fraud and stock market capitalization in Nigeria.

Does educational progress impact energy consumption? A causality test for India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Soumen Rej ◽  
Barnali Nag
Keyword(s):  
Energy Consumption ◽  
Energy Supply ◽  
Causality Test ◽  
Content Type ◽  
Vector Error Correction ◽  
Educational Advancement ◽  
Long Run ◽  
Short Run ◽  
Development Goals ◽  
Per Capita

Purpose Both energy and education have been positioned as priority objectives under the itinerary of UN development goals. Hence, it is necessary to address the implicit inter relationship between these two development goals in the context of developing nations such as India who are trying to grow in both per capita income and socio economic factors whilst struggling with the challenges of a severe energy supply constrained economy. Design/methodology/approach In the present study, the causal relationship between energy consumption per capita and education index (EI) as a proxy of educational advancement is investigated for India for 1990–2016 using the Johansen-Juselius cointegration test and vector error correction model. Findings The empirical results infer although energy consumption per capita and EI lack short run causality in either direction, existence of unidirectional long run causality from EI to per capita energy consumption is found for India. Further, it is observed that energy consumption per capita takes around four years to respond to unit shock in EI. Research limitations/implications The findings from this study imply that with the advancement of education, a rise in per capita energy consumption requirement can be foreseen on the demand side, and hence, India’s energy policy needs to emphasize further its sustainable energy supply goals to meet this additional demand coming from a population with better education facilities. Originality/value The authors hereby confirm that this manuscript is entirely their own original study and not submitted elsewhere.

scholarly journals Investigating Gold Investment as an Inflationary Hedge

2018 ◽  
Vol 7 (1) ◽  
pp. 30-41 ◽  
Author(s):  
Narinder Pal Singh ◽  
Navneet Joshi
Keyword(s):  
Consumer Price Index ◽  
Wald Test ◽  
Indian Culture ◽  
Vector Error Correction ◽  
Fund Managers ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Portfolio Managers ◽  
Long Run Equilibrium

Gold and Indian culture have been sharing an age-old association. India is one of the top two consumers of gold. Gold is the most popular investment avenue because of its ability to provide liquidity. The average monthly price however has grown by 1,588 percent over the whole period from 1979 to 2017 (June). In this article, we intend to investigate gold as an investment to hedge against inflation. The sample period to study the relationship between gold and inflation is 2011–2017 (March). To analyze long-run equilibrium between gold and inflation (consumer price index [CPI]), Johansen’s cointegration approach has been used. The short- and long-run causality between gold and inflation has been studied using vector error correction model (VECM) and Wald test. The results of cointegration indicate that gold and CPI series are cointegrated and bear long-run equilibrium. Both VECM and Wald test results indicate that there is only long-run causality between CPI and gold prices. However, in short run these variables do not show any causality. Thus, we infer that gold investment can be used as hedge against Inflation. The findings of this research have got direct implications for retail investors, portfolio managers, treasury and fund managers, government, and commercial traders.

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