Financial constraints, bank concentration and SMEs: evidence from Pakistan

2015 ◽  
Vol 32 (4) ◽  
pp. 503-524 ◽  
Author(s):  
Abubakr Saeed ◽  
Muhammad Sameer
Keyword(s):  
Financial Constraints ◽  
Market Competition ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Financial Reforms ◽  
Content Type ◽  
Financial Firms ◽  
The Impact ◽  
Bank Concentration

Purpose – This paper aims to empirically investigate the impact of bank market concentration of financial constraints on firm investment. Design/methodology/approach – This analysis is based on cross-industries panel of 368 listed Pakistani non-financial firms over the period of 2001-2009. Further, the Generalized Method of Moments estimation technique has been used to estimate the dynamic panel data model. Findings – By applying a dynamic panel analysis, it was found that small- and medium-sized enterprises (SMEs) are financially constrained in the credit market. The main finding indicates that reduction in bank concentration eases financing constraints, and this effect is more pronounced for SMEs. In addition, while testing the firm opacity in this context, results reveal that opaque firms are more financially constrained, and bank market competition is less favourable to the firms with greater opacity. Originality/value – The results, first, assess the efficacy of ongoing financial reforms in Pakistan and, second, offer implications for other economies that exhibit financial development similar to that of Pakistan.

The influence of board social capital on corporate social responsibility reporting

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nuria Reguera-Alvarado ◽  
Francisco Bravo-Urquiza
Keyword(s):  
Social Capital ◽  
Resource Dependence ◽  
Generalized Method Of Moments ◽  
Gender Diversity ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Csr Reporting ◽  
Multiple Directorships ◽  
The Impact ◽  
Board Social Capital

PurposeThe main objective of this paper is to analyze the influence of multiple directorships, as a critical component of board social capital, on CSR reporting. This study also explores the moderating effect of certain board attributes on multiple directorships.Design/methodology/approachThe authors’ sample is composed of Spanish listed firms in the Madrid Stock Exchange for the period 2011–2017. A dynamic panel data model based on the Generalized Method of Moments (GMMs) is employed.FindingsRelying on a resource dependence view, the authors’ results highlight an ambiguously positive association between multiple directorships and the level of CSR reporting. In particular, this relationship is positively moderated by both board size and gender diversity.Research limitations/implicationsThese findings contribute to academic debates concerning the value of board members intellectual capital. In particular, the authors emphasize the importance of board social capital, as well as the need to consider the context in which directors make decisions.Practical implicationsThis evidence may prove helpful to firms when configuring the board of directors, and for regulators and professionals when refining their legislations and recommendations.Originality/valueTo the best of the authors' knowledge, this is the first study that empirically analyzes the impact of an important element of board social capital, such as multiple directorships, on CSR reporting, which has become crucial in financial markets.

Merton-type default risk and financial performance: the dynamic panel moderation of firm size

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Mushafiq ◽  
Syed Ahmad Sami ◽  
Muhammad Khalid Sohail ◽  
Muzammal Ilyas Sindhu
Keyword(s):  
Financial Performance ◽  
Firm Size ◽  
Default Risk ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Content Type ◽  
Nonfinancial Firms ◽  
The Relationship

PurposeThe main purpose of this study is to evaluate the probability of default and examine the relationship between default risk and financial performance, with dynamic panel moderation of firm size.Design/methodology/approachThis study utilizes a total of 1,500 firm-year observations from 2013 to 2018 using dynamic panel data approach of generalized method of moments to test the relationship between default risk and financial performance with the moderation effect of the firm size.FindingsThis study establishes the findings that default risk significantly impacts the financial performance. The relationship between distance-to-default (DD) and financial performance is positive, which means the relationship of the independent and dependent variable is inverse. Moreover, this study finds that the firm size is a significant positive moderator between DD and financial performance.Practical implicationsThis study provides new and useful insight into the literature on the relationship between default risk and financial performance. The results of this study provide investors and businesses related to nonfinancial firms in the Pakistan Stock Exchange (PSX) with significant default risk's impact on performance. This study finds, on average, the default probability in KSE ALL indexed companies is 6.12%.Originality/valueThe evidence of the default risk and financial performance on samples of nonfinancial firms has been minimal; mainly, it has been limited to the banking sector. Moreover, the existing studies have only catered the direct effect of only. This study fills that gap and evaluates this relationship in nonfinancial firms. This study also helps in the evaluation of Merton model's performance in the nonfinancial firms.

scholarly journals Asymmetric targeting of corporate cash holdings and financial constraints in Pakistani firms

2019 ◽  
Vol 26 (1) ◽  
pp. 76-97
Author(s):  
Ghulam Ayehsa Siddiqua ◽  
Ajid ur Rehman ◽  
Shahzad Hussain
Keyword(s):  
High Speed ◽  
Financial Constraints ◽  
Generalized Method Of Moments ◽  
Cash Holdings ◽  
Optimal Level ◽  
Dynamic Panel Data ◽  
Asymmetric Adjustment ◽  
Content Type ◽  
Listed Firms ◽  
Target Firms

Purpose The purpose of this paper is to investigate the asymmetric adjustment of cash holdings in Pakistani firms for above and below target firms. Design/methodology/approach The study employs generalized method of moments (GMM) to investigate the adjustment of cash holdings. Findings The study found that the firms which hold cash above the optimal level of cash holdings have higher speed of adjustment than the firms which hold cash below the optimal level. Financially constrained (FC) firms also adjust their cash holdings faster than financially unconstrained (FUC) firms but high speed of downward adjustment does not remain persistent after financial constraints are controlled. Findings of this study reveal this asymmetric adjustment in above and below target firms and extend these results in FC and FUC Pakistani listed firms, respectively. Research limitations/implications The conclusion of this study has been derived under certain limitations. There is a vast space to extend this study in different dimensions. Firms operating in capital-intensive industries may provide different results for financial constraints because their policy designing would be quite different from other firms. Originality/value This study contributes to cash holdings research in Pakistan by exploring the adjustment behavior of cash holdings across Pakistani non-financial firms using econometric modeling. Downward adjustment rate is supposed to be higher than upward adjustment rate and this rate is tested using dynamic panel data model. Similarly, it is inferred that this relationship holds for above target firms even after including the financial constraints in the presented model.

scholarly journals The Role of Urbanization Rate in the Relationship between Air Pollution and Health Expenditures: A Dynamic Panel Data Approach

2015 ◽  
Vol 53 ◽  
pp. 68-72 ◽  
Author(s):  
Maryam Fattahi
Keyword(s):  
Air Pollution ◽  
Generalized Method Of Moments ◽  
Health Expenditures ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Public And Private ◽  
Urbanization Rate ◽  
The Impact ◽  
The Relationship

One of the available challenges in areas of health economics is identification of the effective factors on health expenditures. Air pollution plays important role in the public and private health expenditure but most studies have ignored the role of this category in explanation of health expenditures. On the other hand, the impact of air pollution on health expenditures is influenced by several factors. This study intends to investigate the effect of air pollution on public and private health expenditures and to identify the urbanization rate factor affecting the relationship between air pollution and public and private health expenditures. Scope of the present study is developing countries over period of 1995-2011. We used a dynamic panel and Generalized Method of Moments method. The empirical results indicate that air pollution has positive and significant effect on public and private health expenditures. Also, the results imply that urbanization rate affecting the relationship between air pollution and health expenditures that urbanization rate plays a reinforcing role.

Corporate cash flow and dividends smoothing: a panel data analysis at Bursa Malaysia

2015 ◽  
Vol 13 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Apedzan Emmanuel Kighir ◽  
Normah Haji Omar ◽  
Norhayati Mohamed
Keyword(s):  
Panel Data ◽  
Cash Flow ◽  
Panel Data Analysis ◽  
Generalized Method Of Moments ◽  
Cash Flows ◽  
Payout Policy ◽  
Free Cash Flow ◽  
Content Type ◽  
Financial Firms ◽  
The Impact

Purpose – The purpose of this paper is to contribute to the debate and find out the impact of cash flow on changes in dividend payout decisions among non-financial firms quoted at Bursa Malaysia as compared to earnings. There has been renewed debate in recent finance and accounting literature concerning the key determinants of changes in dividends payout policy decisions in some jurisdictions. The conclusion in some is that firms base their dividend decisions on cash flows rather than published earnings. Design/methodology/approach – The research made use of panel data from 1999 to 2012 at Bursa Malaysia, using generalized method of moments as the main method of analysis. Findings – The research finds that Malaysia non-financial firms consider current earnings more important than current cash flow while making dividends payout decisions, and prior year cash flows are considered more important in dividends decisions than prior year earnings. We also found support for Jensen (1986) in Malaysia on agency theory, that managers of firms pay dividends from free cash flow to reduce agency conflicts. Practical implications – The research concludes that Malaysian non-financial firms use current earnings and less of current cash flow in making changes in dividends policy. The policy implication is that current earnings are dividends smoothing agents, and the more they are considered in dividends payout decisions, the less of dividends smoothing. Social implications – If dividends smoothing is encouraged, it could lead to dividends-based earnings management. Originality/value – The research is our novel contribution of assisting investors and government in making informed decisions regarding dividends policy in Malaysia.

Agency problems and the value of advertising expenditures in an emerging market: role of product market competition

2020 ◽  
Vol 46 (9) ◽  
pp. 1123-1143
Author(s):  
Omar Farooq ◽  
Zakir Pashayev
Keyword(s):  
Positive Impact ◽  
Emerging Market ◽  
Market Competition ◽  
Agency Problems ◽  
Product Market ◽  
Product Market Competition ◽  
Content Type ◽  
Financial Firms ◽  
The Impact

PurposeThis paper documents the impact of product market competition on the value of advertising expenditures.Design/methodology/approachThe authors use the data for non-financial firms from India and the pooled regression procedure to test their arguments during the period between 2009 and 2018.FindingsThe results show that advertising expenditures of firms operating in sectors with relatively high competition are more valuable than advertising expenditures of firms operating in sectors with relatively low competition. The results of the study are robust across various proxies of advertising expenditures and firm performance. Furthermore, the results also show that the positive impact of product market competition on the value of advertising expenditures is confined only to firms that already have lower agency problems.Originality/valueThe results of the study highlight the importance of product market competition on the value of advertising expenditure in the emerging market setting, where agency problems are supposed to be high.

Does higher educational attainment imply less crime? Evidence from the Indian states

2020 ◽  
Vol 48 (1) ◽  
pp. 133-165
Author(s):  
Bijoy Rakshit ◽  
Yadawananda Neog
Keyword(s):  
Educational Attainment ◽  
Tertiary Education ◽  
Dynamic Panel Data ◽  
Crime Rates ◽  
Economic Crime ◽  
Dynamic Panel ◽  
Indian States ◽  
Content Type ◽  
The Impact

PurposeThe primary purpose of this paper is to empirically investigate the impact of educational attainment on crime rates across 33 Indian states over the period 2001 to 2013. This paper also examines the role of various macroeconomic, socio-economic and demographic factors in determining the variation of crimes in India.Design/methodology/approachFirst, this paper provides a representative theoretical model and discusses the possible relationship between crime and education. Second, the paper applies a dynamic panel data (DPD) model to extract more precise, unbiased and reliable estimates of the effect of education in abating different crime rates. The main advantage of using the dynamic panel model is to address the problem of endogeneity in some regressors and capture the time persistent effect of education on crime.FindingsEmpirical findings reveal that a 1% increase in gross enrolment ratio leads to the reduction of total crime by 8%. However, a unique finding identifies a positive association between tertiary education and economic crime. This finding further goes against the general belief that criminals tend to be less educated than non-criminals.Practical implicationsThis paper recommends that instead of punishment and mandatory law enforcement for offenders, increase in government expenditure and different educational attainment ratios can go a long way to combat crime in India, which has posed a serious threat to the stability of society. Furthermore, utilizing the information on offenders' educational attainment in examining the crime rates can be a future research agenda for policymakers.Originality/valueThis study contributes to the empirical debate of ‘crime-education nexus’ by examining the role of education on crime in India. This study is the first of its kind that focuses on the aspects of crime and education more recently and investigates the relationship between crime and education due to the recent changes in educational attainment ratios and crime rate.

Does debt heterogeneity impact firm value? Evidence from an emerging context

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amit Tripathy ◽  
Shigufta Hena Uzma
Keyword(s):  
Firm Value ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Debt Financing ◽  
Bank Debt ◽  
Content Type ◽  
Indian Context ◽  
Long Run ◽  
The Impact

PurposeThe present paper attempts to explain the impact of debt diversification and various debt financing sources on firm value. The paper also aims to address the long-run causality of various factors affecting firm value.Design/methodology/approachThe study employs a dynamic panel data model for a sample of 233 listed firms from 2010 to 2019. Two-step generalized method of moments (GMM) is devised to study the impact of firm-specific factors on firm value.FindingsThe study establishes a negative impact of debt diversification on firm value. Further, the results also signal how the choice of debt instruments has a heterogeneous effect on firm value. Non-bank debt leads to a discount in firm value, while bank debt has no effect on firm value. The long-run determinants of firm value are debt ratio, tangibility and liquidity.Research limitations/implicationsThe findings of the study would aid the mangers in making informed decisions regarding the debt financing structure. Too much reliance on non-bank debt instruments leads to a negative impact on firm value. Therefore careful evaluation is necessary before accessing multiple debt sources.Originality/valueDebt heterogeneity is globally established; however, its presence in the Indian context has not been validated extensively. The study not only validates the existence of debt diversification but also investigates how individual debt instruments affect firm value that is yet to be examined in the Indian context.

The role of technical efficiency, market competition and risk in the banking performance in G20 countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yaoteng Zhao ◽  
Supat Chupradit ◽  
Marria Hassan ◽  
Sadaf Soudagar ◽  
Alaa Mohamd Shoukry ◽  
...  
Keyword(s):  
Technical Efficiency ◽  
Economic Performance ◽  
Banking Sector ◽  
Market Competition ◽  
Generalized Method Of Moments ◽  
Content Type ◽  
Banking Institutions ◽  
Sector Performance ◽  
The Impact ◽  
Risk Element

PurposeRecently, the financial sector has faced significant challenges regarding the market competition, its technical efficiency and risk factors around the globe and gain recent researchers' intentions. Thus, the present study aims to examine the impact of technical efficiency, market competition and risk in banking performance in Group of Twenty (G20) countries.Design/methodology/approachData have been obtained from the World Development Indicator from 2008 to 2019. For analysis purpose, random effect model and generalized method of moments (GMMs) have been executed using Stata.FindingsThe results revealed that market competition and banks' capital efficiency have a positive impact on banking performance, while banks' lending efficiency and non-performing loans have a negative association with the banking sector performance of G20 countries. These outcomes provide the guidelines to the regulators that they should formulate the effective policies related to the lending practices and non-performing loans that could improve the banking sector performance worldwide.Research limitations/implicationsThe study has examined only three economic factors like the technical efficiency rate, market competition and risk element, and their influences on banking institutions' operational and economic performance. But the analysis has proved that except these factors, several factors affect banking institutions' operational and economic performance. Thus, future scholars recommend they analyze all the banking sector areas, pick more factors and enlighten their operational and economic performance influences. Moreover, the author of this article has chosen a particular source for collecting data to meet his study's objective. Only a single piece of software has been applied to analyze data; thus, the data collected for this paper may be incomplete, lack accuracy and reliability. Therefore, the future authors are recommended to use multiple sources to collect data and its analysis to ensure the comprehension, completeness and accuracy.Originality/valueLast but not least, this study with the evidences from the banking sector of G20 countries tries to show on the banking management how the risk element matters in the banking sector in an economy. It makes it clear in which areas the banking institutions may be exposed to the risks, and how much sever different kinds of risks may be. Thus, it motivates the management to set a body of persons within the organization to monitor the risks, to try to avoid them and to overcome the problems created by these risks events.

INTANGIBLE DETERMINANTS OF MARKET VALUE IN THE NEW ECONOMY: A DYNAMIC PANEL DATA ANALYSIS OF THE INDIAN SOFTWARE INDUSTRY

2009 ◽  
Vol 54 (03) ◽  
pp. 379-398 ◽  
Author(s):  
SUPRIYO DE
Keyword(s):  
Panel Data ◽  
Intangible Assets ◽  
Software Industry ◽  
Generalized Method Of Moments ◽  
Market Value ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Market Values ◽  
Software Firms ◽  
The Impact

Intangible assets like human capital and organization capital have driven the success of India's software industry. This article analyzes the impact of intangible assets on the market value of Indian software firms using a dynamic panel data model. Measures of tangible and intangible assets are constructed using firm-level panel data. The estimation technique uses system generalized method of moments (GMM) and minimum distance estimation (MDE). This methodology accounts for unobserved firm heterogeneity, endogenous explanatory variables and persistent variables. The results conclusively show that intangible assets have a significant impact on market values of Indian software firms.

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