The Nonlinear Impact of Institutional Quality on International Reserves: International Evidence

2021 ◽  
Author(s):  
Chee-Hong Law ◽  
Siew-Voon Soon ◽  
K. U. Ehigiamusoe
Keyword(s):  
Method Of Moments ◽  
Nonlinear Effect ◽  
Quality Index ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
International Reserves ◽  
International Evidence ◽  
Marginal Effects

This paper investigates the nonlinear effect of institutional quality on the holding of international reserves by applying the two-step system generalized method of moments on data consisting of 67 countries from 1996 to 2016. The hypothesis is that the association between institutional quality and international reserves has an inverted U pattern. The coefficient sign of the institutional quality and its square term supports the hypothesis. Besides, the marginal effects suggest that the higher the institutional quality index, the lower the demand for reserves. The outputs indicate the importance of good institutional quality in reducing the overdependence on international reserves.

scholarly journals Technology Import and China's Innovation Capability: Does Institutional Quality Matter?

2020 ◽  
pp. 93-104
Author(s):  
Haitao Wu ◽  
Siyu Ren ◽  
Guo Xie
Keyword(s):  
Linear Regression ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Ordinary Least Squares ◽  
Three Dimensions ◽  
Quality Level ◽  
Innovation Capability ◽  
Regional Innovation ◽  
Technology Import

With the rapid growth of China's economy, technology import plays a crucial role in enhancing regional innovation capability. Based on inter-provincial panel data from 2007 to 2016, this paper uses three benchmark linear regression models of Ordinary Least Squares (OLS), Difference-Generalized Method of Moments (DIFF-GMM), and System-Generalized Method of Moments (SYS-GMM) to explore the improvement of China's regional innovation capability by technology import. Then, the regional institutional quality level is measured from the three dimensions of politics, economy, and law, and the two-step difference GMM threshold panel model is used to analyze the effect of technology import on regional innovation capability under different institutional quality conditions. The results show that: (1) In the benchmark linear regression model, technology import has a significant role in promoting regional innovation capability. (2) With the rise of regional corruption, the quality of political institution declines, and the promotion effect of technology import on regional innovation ability is weakened. (3) The improvement of the marketization level and intellectual property protection level strengthen the role of technology introduction in promoting regional innovation capability. On the contrary, in regions with low economic and legal institutional quality, technology import has no significant impact on regional innovation capability.

FINANCIAL INCLUSION, INSTITUTIONAL QUALITY AND FINANCIAL DEVELOPMENT: EMPIRICAL EVIDENCE FROM OIC COUNTRIES

2021 ◽  
pp. 1-28
Author(s):  
MINHAJ ALI ◽  
MUHAMMAD IMRAN NAZIR ◽  
SHUJAHAT HAIDER HASHMI ◽  
WAJEEH ULLAH
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Financial Inclusion ◽  
Moderation Effect ◽  
The Relationship ◽  
Unique Study

This unique study examines the moderation effect of institutional quality (IQ) on the relationship between financial inclusion (FI) and financial development (FD) of 45 Organization of Islamic Cooperation (OIC) countries. For empirical analysis, panel data are used for the period 2000–2016. We use the Arellano–Bond generalized method of moments (GMM) and two-stage least-squares (2SLS) method in our estimations to draw multidimensional results. The empirical results confirm the significant positive relationship between FI, IQ and FD. Interestingly, we find that IQ moderates FI and has a significant positive impact on FD. Our findings are robust to alternative econometric specifications of FI, IQ and FD. Therefore, policymakers must sensibly understand the pivotal role of FI and IQ in establishing sustainable future development of OIC countries.

scholarly journals The joint impact of infrastructure and institutions on economic growth

2020 ◽  
Vol 16 (4) ◽  
pp. 481-502
Author(s):  
Yitagesu Zewdu Zergawu ◽  
Yabibal M. Walle ◽  
José-Manuel Giménez-Gómez
Keyword(s):  
Economic Growth ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Explanatory Variables ◽  
Interaction Terms ◽  
Large Panel ◽  
Simple Growth ◽  
Moments Estimators

AbstractThis paper examines the joint impact of infrastructure capital and institutional quality on economic growth using a large panel dataset covering 99 countries and spanning the years 1980–2015. The empirical strategy involves estimating a simple growth model where, in addition to standard controls, infrastructure, institutional quality, and their interaction are included as explanatory variables. Potential endogeneity concerns are addressed by employing generalized method of moments estimators that utilize internal instruments. We find that the interaction terms between infrastructure capital and institutional quality show a positive and significant impact on economic growth. These results are robust to a variety of alternative specifications and institutional quality measures. Hence, our results suggest that maximizing returns from infrastructure capital requires improving the quality of institutions.

scholarly journals ISLAMIC BANKING DEVELOPMENT AND FINANCIAL INCLUSION IN OIC MEMBER COUNTRIES: THE MODERATING ROLE OF INSTITUTIONS

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Kabiru Kamalu ◽  
Wan Hakimah Binti Wan Ibrahim
Keyword(s):  
Cross Section ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Causality Test ◽  
Banking Development ◽  
Moderating Role

This study argues that the effect of Islamic banking development on financial inclusion is enhanced when there exist better quality institutions. A cross section dependency test, cointegration test, causality test, and system GMM (generalized method of moments) are applied to achieve this objective. Employing panel data from 30 Organisation of Islamic Cooperation (OIC) member countries over the period 2013-2018, the analysis suggests that Islamic banking promotes financial inclusion. Furthermore, it documents evidence which suggests negative and significant coefficients of the interaction between Islamic banking development and institutional quality.  This means that Islamic banking development works well in promoting financial inclusion in countries with low institutional quality. 

Using information from singletons in fixed-effects estimation: xtfesing

2020 ◽  
Vol 20 (4) ◽  
pp. 965-975
Author(s):  
Laura Magazzini ◽  
Randolph Luca Bruno ◽  
Marco Stampini
Keyword(s):  
Panel Data ◽  
Method Of Moments ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Panel Data Regression ◽  
Data Regression ◽  
Method Of Moments Estimator ◽  
Fixed Effects Estimation

In this article, we describe the xtfesing command. The command implements a generalized method of moments estimator that allows exploiting singleton information in fixed-effects panel-data regression as in Bruno, Magazzini, and Stampini (2020, Economics Letters 186: Article 108519).

Does Bank Profitability Stimulate Economic Growth in the Arab Region?

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Omar Ghazy Aziz
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Arab Countries ◽  
Return On Assets ◽  
Bank Profitability ◽  
Arab Region ◽  
Return On Equity ◽  
The Impact

AbstractThis study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result.

Assessing the bank profitability in the MENA region

2014 ◽  
Vol 7 (3) ◽  
pp. 305-332 ◽  
Author(s):  
Rim Ben Selma Mokni ◽  
Houssem Rachdi
Keyword(s):  
Method Of Moments ◽  
North Africa ◽  
Banking Sector ◽  
Middle Eastern ◽  
Generalized Method Of Moments ◽  
Mena Region ◽  
Bank Profitability ◽  
Content Type ◽  
Conventional Banks ◽  
Econometric Technique

Purpose – Which of the banking stream is relatively more profitable in Middle Eastern and North Africa (MENA) region? Design/methodology/approach – The empirical study covers a sample of 15 conventional and 15 Islamic banks for the period 2002-2009.The authors estimate models using the generalized method of moments in system, of Blundell and Bond (1998). They exploit an up-to-date econometric technique which takes into consideration the issue of endogeneity of regressors to evaluate the comparative profitability of Islamic and conventional banks in the MENA region. Findings – Empirical analysis results show that the determinants’ significance varies between Islamic and conventional banks. Profitability seems to be quite persistent in the MENA region reflecting a higher degree of government intervention and may signal barriers to competition. Originality/value – The main interest is to develop a comprehensive model that integrates macroeconomic, industry-specific and bank-specific determinants. The paper makes comparison of the performance between two different banking systems in the MENA region. The authors consider a variable crisis to gain additional insights into the impacts of the financial crisis on MENA banking sector.

Exploring the nonlinear effect of size on profitability: evidence from an insurance brokerage industry in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richard Angelous Kotey ◽  
Richard Akomatey ◽  
Baah Aye Kusi
Keyword(s):  
Nonlinear Effect ◽  
Emerging Market ◽  
Empirical Studies ◽  
Random Effect ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Growth Strategies ◽  
Content Type ◽  
And Performance ◽  
Brokerage Firms

PurposeThis study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.Design/methodology/approachThis study employs a panel dataset of 64 Ghanaian insurance brokerage firms spanning 2011–2015. Static [ordinary least squares (OLS), fixed effect and random effect and dynamic (two-step generalized method of moments (GMM))] estimation techniques are employed to analyze the data.FindingsThe study finds the existence of both economies and diseconomies of scale and scope theories in the Ghanaian insurance brokerage industry confirming the existence of nonlinear nexus between size and performance. This finding is consistent for both stakeholder and shareholder profit performance. Thus, the results show that size improves profitability of insurance brokerage firms, but beyond a certain threshold, the relationship turns negative as size negatively affects profitability.Practical implicationsThe research findings have implications for both policy and research; the study recommends that Ghanaian brokerage managers should understand that not all growth is good and exercise a duty of care when applying growth strategies by monitoring size effect on performance so as not to go beyond the inflection point. Further research can be done to examine this effect in other contexts, timeframes and jurisdictions.Originality/valueThis research is unique in that it employs a panel dataset consisting of 96% of insurance brokerage firms in Ghana whilst employing both static and nonstatic regression models to examine the effect of size. The research analysis adopted is robust, and the findings are significant. Also, the lack of empirical studies on the operations and dealings of auxiliary institutions such as the insurance brokerage firms adds value to this research.

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