Do Size-dependent Tax Incentives Discourage Plant Size Expansion? Evidence from Panel Data in Indian Manufacturing

2021 ◽  
Vol 15 (4) ◽  
pp. 395-417
Author(s):  
K. V. Ramaswamy
Keyword(s):  
Panel Data ◽  
Small Firms ◽  
Policy Design ◽  
Threshold Value ◽  
Tax Incentives ◽  
Plant Size ◽  
Jel Classification ◽  
Indian Government ◽  
Econometric Tests ◽  
Additional Support

The article presents a new empirical application of the idea of threshold burden of tax incentives in India. The Indian government provided tax exemption to manufacturing units with sales turnover below a specified level over the years. The turnover threshold limit was US$1 million in 2009. Whether size-based tax rules incentivise firms to reorganise their production structure in order to stay below the threshold to take advantage of fiscal incentives is the key question addressed in this article. A significant factor that is widely believed to encourage small firms to stay small has been the tax incentives in the form of excise tax (turnover tax) exemptions below a specified value of sales each year. A key strategy followed by Indian firms to stay small and below the threshold has been product subcontracting or capacity subcontracting. We provide econometric evidence on this particular mechanism. The study is based on a unique unbalanced panel data of 29,213 manufacturing plants spanning the period 1999–2008 and a panel of 4,613 manufacturing firms covering the period 1990–2010. Average subcontracting intensity was found to be significantly higher in manufacturing establishments and firms with sales turnover below the ceiling level set by the tax rules. Econometric tests supported the hypothesis that establishments take advantage of tax incentives by staying below the threshold value of output. Econometric tests for a subgroup of domestic-market-oriented firms provide additional support to the hypothesis of threshold effects. These findings are relevant for policy design in developing and emerging economies. JEL Classification: O14, O17, L60, H32, H25

Using the R&D capitalisation choice to explain the scale benefits of R&D investment

2020 ◽  
Vol 45 (4) ◽  
pp. 579-606
Author(s):  
Hai Wu ◽  
Anne-Maree Thomas ◽  
Sue Wright
Keyword(s):  
Comparative Advantage ◽  
Small Firms ◽  
Tax Incentives ◽  
Jel Classification ◽  
Policy Implications ◽  
Large Firms ◽  
Accounting Choice ◽  
D Investment

This paper helps explain a ‘puzzle’ about the scale benefits of R&D investment: although larger firms are less efficient innovators, they spend more on R&D investment and earn more from R&D investment. We find evidence suggesting that large firms enjoy a comparative advantage investing in R&D projects with less chance of success, although they do not experience such scale benefits from R&D investments with more chance of success. We capture managers’ evaluation of the chance of success of an R&D investment using an accounting choice to capitalise or expense the R&D investment. Our results have policy implications for the design of efficient and equitable allocations of R&D tax incentives between large and small firms, and for the usefulness to investors of allowing discretion in the accounting treatment of R&D expenditures. JEL Classification: M41, M48

Dimensione e concentrazione dei gruppi bancari italiani nell'ultimo decennio

2009 ◽  
pp. 21-39
Author(s):  
Vittoria Cerasi ◽  
Lisa Crosato
Keyword(s):  
Mergers And Acquisitions ◽  
Size Distribution ◽  
Small Firms ◽  
Credit Rationing ◽  
Substitution Effect ◽  
Jel Classification ◽  
Steady Increase ◽  
Credit Supply ◽  
Market Shares

- The paper analyzes the change in the size distribution of Italian banking groups over the period 1999 to 2007 following a wave of M&As among large banks. Had this process increased the degree of concentration we would have expected greater credit rationing for small firms, given the central role of Italian banks in financing small firms. We measure this change through widely used measures of concentration on branches. First, we observe a steady increase in concentration that can be captured only by looking at the overall size distribution. Other measures do not perceive this change until the year 2007, when the very large banks merged. Second, by focusing on the banking groups that have been active players in M&As we do see a decline in concentration, since smaller players have caught up with the larger ones in terms of rate of size increase. This contrasts with the role of the new entries and the disappearance of banks following mergers, that has increased the dispersion of market shares. The implications are that: i) there is a credit termination risk due to the rise in active players' size, but ii) credit rationing may not occur due to a substitution effect in credit supply from new entries. Keywords: bank market structure; size distribution of banks; measures of concentration; credit rationing of SME; mergers and acquisitions Parole chiave: struttura dell'industria bancaria; distribuzione per dimensione delle banche; misure della concentrazione; razionamento del credito alle PMI; fusioni e acquisizioni Jel Classification: G21 - L11

scholarly journals Should Workers Care about Firm Size?

ILR Review ◽  
2008 ◽  
Vol 62 (1) ◽  
pp. 104-125 ◽  
Author(s):  
Ana Ferrer ◽  
Stéphanie Lluis
Keyword(s):  
Panel Data ◽  
Firm Size ◽  
Instrumental Variable ◽  
Small Firms ◽  
Wage Gap ◽  
Income Dynamics ◽  
Instrumental Variable Estimation ◽  
Direct Estimation ◽  
Monitoring Costs ◽  
Empirical Methodology

The authors analyze how firms of different sizes reward measured skills and unmeasured ability. The empirical methodology, based on nonlinear instrumental variable estimation, permits direct estimation of the returns to unmeasured ability by firm size. An analysis of panel data from the Canadian Survey of Labour and Income Dynamics for two periods, 1993–1998 and 1996–2001, reveals statistically significant differences between firms of different sizes. In particular, returns to unmeasured ability are higher in medium-sized firms than in either small firms or large firms. The authors find that the firm-size wage gap and the differential in returns to unmeasured ability between small and medium-sized firms is mainly explained by ability sorting. The fact that larger firms reward ability less than medium-sized firms is consistent with an explanation based on monitoring costs. When firms become “too large,” monitoring costs may prevent them from rewarding ability directly through wages.

scholarly journals Competition in the Indian Banking Sector: A Panel Data Approach

2019 ◽  
Vol 12 (3) ◽  
pp. 136 ◽  
Author(s):  
Zhiheng Li ◽  
Shuangzhe Liu ◽  
Fanda Meng ◽  
Milind Sathye
Keyword(s):  
Public Sector ◽  
Panel Data ◽  
Foreign Investment ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Indian Government ◽  
Banking Market ◽  
Bank Ownership ◽  
Policy Measures ◽  
Privately Owned

The paper aims to assess the level of competition in the Indian banking sector overall as well as within the three groups of banks: foreign owned, state owned (public sector), and privately owned. We use panel data for the period from 2005–2018. We found that the overall competition in the Indian banking sector is strong, although there are differences by type of bank ownership. The Indian banking market continues to be characterized by monopolistic competition. The various policy measures taken by the Indian government in recent years appear to have helped boost competition. A policy suggestion would be to further liberalize the banking sector for foreign investment.

Does the plant size–wage differential increase with tenure? Affirming evidence from German panel data

2015 ◽  
Vol 135 ◽  
pp. 9-11 ◽  
Author(s):  
Daniel Fackler ◽  
Thorsten Schank ◽  
Claus Schnabel
Keyword(s):  
Panel Data ◽  
Wage Differential ◽  
Plant Size ◽  
Differential Increase

scholarly journals KOMPETISI INDUSTRI PERBANKAN INDONESIA

2013 ◽  
Vol 15 (4) ◽  
pp. 417-439
Author(s):  
Ratna Sri Widyastuti ◽  
Boedi Armanto
Keyword(s):  
Panel Data ◽  
Market Structure ◽  
Banking Industry ◽  
Jel Classification ◽  
Foreign Bank ◽  
Banking Competition ◽  
Main Determinant ◽  
Competition Level ◽  
Regional Bank ◽  
Number Of Branches

This paper analyzes the competition level of banking industry, prior and after the introduction of Indonesian Banking Architecture (API). Using panel data, the result shows the competition of banking decreased after the introduction of API, with large tendency to monopoly or collusive olligopoly. For the bank with niche market such as regional bank and mix bank, the introduction of API did not affect much, while the competition level for foreign bank is the lowest one. Non price variable would be the main determinant on banking competition in the future, including number of branches, wage and credit volume. Keywords: banking competition, market structure, Indonesian Banking Architecture (API).JEL Classification: C23, D40, E44, E58, G21, L11

scholarly journals DETERMINANT OF CAPITAL RATIO: A PANEL DATA ANALYSIS ON STATE-OWNED BANKS IN INDONESIA

2014 ◽  
Vol 16 (4) ◽  
pp. 395-414 ◽  
Author(s):  
Pamuji Gesang Raharjo ◽  
Dedi Budiman Hakim ◽  
Adler Haymans Manurung ◽  
Tubagus Nur Ahmad Maulana
Keyword(s):  
Panel Data ◽  
Panel Data Analysis ◽  
Banking System ◽  
Interest Rate Risk ◽  
Jel Classification ◽  
Panel Data Regression ◽  
Structure State ◽  
Asset Growth ◽  
The Stability ◽  
Level Of Significance

Capital has an important role in maintaining safety of banks and in order to create a sound banking system. Banks are required to have a sufficient amount of capital, both to support its business expansion as well as a buffer to prevent any unexpected loss that banks might face and absorb losses arising from a variety of risks. Eventhough consists of four banks, State owned banks in Indonesia are catalystor for the banking industry in Indonesia. The failure of state-owned banks can affect the stability of Indonesian banking system. This study aims to study and analyze determinants of capital ratio of state-owned banks. Several variables have been used in previous studies to be used a proxy. The study applied panel data regression model. The capital ratio of state-owned banks is affected by asset growth (LNSIZE), equity to total liabilities ratio (EQTL), non performing loan (NPL), interest rate risk (IRR), and operational cost to operational revenue ratio (BOPO) on a different level of significance.  Keywords: Capital structure, state-owned commercial banks, panel data JEL Classification: C23; G21; G32

scholarly journals An empirical analysis of the influence of financialization on investment in Russia

2021 ◽  
Vol 7 (3) ◽  
pp. 233-249
Author(s):  
Dmitry S. Tretyakov ◽  
Ivan V. Rozmainsky
Keyword(s):  
Panel Data ◽  
Empirical Analysis ◽  
Small Firms ◽  
Crowding Out ◽  
External Financing ◽  
Fixed Assets ◽  
Financial Investments ◽  
Internal Funds ◽  
The Impact ◽  
Physical Investment

This paper tries to estimate the impact of financialization on fixed investment in Russia. The work is carried out by using panel data based on reports of non-financial publicly listed companies for 1999–2019. The study finds that financial expenses aimed at paying interest on external financing and paying dividends — that is, focusing on shareholder value, and hence decreasing the internal funds of companies, reduce real investments. Financial incomes have shown the crowding-out effect for large companies. Financial incomes as additional “free” funds in large companies are not perceived as an opportunity to accumulate fixed assets. Managers prefer to increase ­financial investments instead of real ones. In small and medium-sized companies, financial incomes, however, drive the growth of physical investment. This is because small firms, at a particular stage in their lives, find it more profitable to invest in their own growth. The results from the general sample, without dividing by size, indicate that financialization in Russia clearly reduces real investment.

scholarly journals GLOBAL CRUDE OIL PRICE AND DOMESTIC FOOD COMMODITY PRICES: EVIDENCE FROM INDONESIA

2020 ◽  
Vol 14 (1) ◽  
pp. 95-120
Author(s):  
Tiara Kencana Ayu
Keyword(s):  
Panel Data ◽  
Crude Oil ◽  
Local Food ◽  
Price Change ◽  
Commodity Prices ◽  
Oil Prices ◽  
Jel Classification ◽  
Crude Oil Prices ◽  
The Impact ◽  
Food Commodity

Abstrak Penelitian untuk menganalisis hubungan antara harga minyak dunia dan harga komoditi pangan di pasar domestik masih jarang ditemukan. Dengan membuat Model Panel Data dari 34 provinsi di Indonesia pada tahun 2010-2017, penelitian ini bertujuan untuk menginvestigasi pengaruh perubahan harga minyak dunia terhadap beberapa harga komoditi pangan lokal (kedelai,import, kedelai lokal, beras lokal, dan jagung lokal). Hasil penelitian ini mengindikasikan bahwa harga minyak dunia dapat memengaruhi harga pangan lokal di Indonesia melalui tingginya biaya pengiriman pada aktivitas impor. Selain itu, harga komoditi pangan dunia juga terbukti dapat memengaruhi harga seluruh komoditi pangan lokal yang diteliti, yang mengimplikasikan bahwa harga komoditi pangan di Indonesia dipengaruhi oleh kondisi pasar internasional. Hasil penelitian ini memberikan masukan bagi pembuat kebijakan di Indonesia untuk mempertimbangkan perubahan harga minyak dunia dan harga komoditi global dalam menstabilkan harga komoditi lokal di Indonesia, terutama komoditi yang diimpor.   Abstract Globally, studies examining the nexus between global crude oil prices and food commodity prices in domestic markets are scant. Employing a panel data model of 34 provinces in Indonesia from 2010 - 2017, this study investigates the impact of global crude oil’s price change on some local food commodity prices (imported soybean, local soybean, local rice, and local maize). Previous studies found that local food commodity prices in some countries were not affected by global crude oil prices; however, this study, by controlling other factors which could affect local commodity prices, finds different results. This study’s findings indicate that global crude oil prices could affect Indonesia’s local commodity prices due to higher shipping costs in import activity. In addition, global commodity prices are also proved to affect all commodities examined in this study, which implies that local food commodity prices in Indonesia are influenced by the international market. This study provides input to policymakers in Indonesia to consider the movement of global crude oil prices and global commodity prices in stabilizing local food commodity prices in Indonesia, especially the imported commodities. JEL Classification: F15, O13, Q11

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