Estimating the Long-Run Determinant of the Efficiency of the Stock Market in India

2017 ◽  
Vol 13 (1-2) ◽  
pp. 70-80 ◽  
Author(s):  
Amit Kumar Singh ◽  
Neha Nainwal
Keyword(s):  
Stock Market ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
Money Markets ◽  
Speed Of Adjustment ◽  
Goods And Services ◽  
Long Run ◽  
The Government ◽  
Market Capitalisation ◽  
The Impact

One of the prominent views is that development in a stock market has a positive impact on economic growth. The role of the stock market becomes important as it leads to capital formation in an economy which is used for producing goods and services in it, leading to growth in the real sector. However, it is only possible if the stock market is efficient enough to mobilise saving from a deficit spender unit to a surplus spender unit. Therefore, our study proposes to estimate the determinant of stock efficiency with the help of a fully modified ordinary least-squares model. The result of the analysis indicates that although both the risk-free interest rate and market capitalisation have a positive and significant impact on stock return, the impact of market capitalisation is larger. In terms of dynamic analysis, the error correction model shows that the speed of adjustment is around 50 per cent or time taken for re-establishing the long-run equilibrium is about two years. As market capitalisation is one of the important determinants of the efficiency of a stock market, the government should bring new reforms in the capital and money markets so that new financial innovations can be introduced in the market. Simultaneously, the regulation should be made to provide higher protection to the investor which further helps them to increase their confidence in the market.

scholarly journals Determinants of Credit Risk in the Banking Sector of Ghana: A Panel Co-integration Approach

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Thomas Appiah ◽  
Frank Bisiw
Keyword(s):  
Credit Risk ◽  
Least Squares ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
High Rate ◽  
Long Run ◽  
Integration Techniques ◽  
The Government ◽  
The Impact

The economic development of any nation hinges on the health of its financial system. In recent years, the health of the Ghanaian Banking sector has been affected severely as a result of high levels of non-performing loans (NPLs), which has been identified as a major threat to the overall profitability and survival of banks. To minimize the impact of NPLs on the financial sector, key stakeholders such as the government, bank officials and regulators are working hard in that regard. However, any policy response aimed at dealing with the high rate of non-performing loans first requires the understanding of the underlying determinants of NPLs. Against this backdrop, this paper apply panel co-integration techniques to investigate the determinants of credit risk (NPLs) in the banking sector of Ghana.  We use NPL as a proxy to measure credit risk and assess how it is influenced by macroeconomic and bank-specific factors. A balanced panel data of 16 universal banks in Ghana from 2010 to 2016 has been analyzed using Panel co-integration techniques such as Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS). Our result shows that growth in the economy, measured by Gross Domestic Product (GDP) has significant influence on the NPLs of banks in the long-run. The results further revealed that capital adequacy, profitability and liquidity of banks are significant predictors of NPLs. However, our results suggest that bank size, inflation and interest rate have statistically insignificant influence on the NPLs of Ghanaian banks. The study recommend, among others, that whereas it is important for government and policymakers to work to improve macroeconomic outcomes, banks should also improve their capital adequacy, profitability, and efficiency position as these bank-specific interventions could significantly improve credit quality and minimize NPLs.

scholarly journals Impact of Petroleum on SMEs Growth in Nigeria.

2014 ◽  
Vol 2 (2) ◽  
Author(s):  
Sam Tende ◽  
Ezie Obumneke
Keyword(s):  
Positive Impact ◽  
Unit Root Test ◽  
Petroleum Products ◽  
Goods And Services ◽  
Petroleum Price ◽  
The Government ◽  
Petroleum Refineries ◽  
Private Investors ◽  
Log Linear ◽  
The Impact

The study undertakes an empirical research on the impact of petroleum on small and medium scale enterprises (SMEs) development in Nigeria. The log linear error correction model was adopted to examine how petroleum price (PP), Imported petroleum (IMP) and domestically produced petroleum (DPP) had impacted on Nigeria’s SMEs. Unit root test was carried out on each of the variables to determine their level of stationarity. They were however found stationary after first difference (that is, they are all integrated of order one (I(1)), then it was safe to proceed with Johansen Cointegration Test. The integrated variables were then used for the regression analysis. The cointegration result showed that the variables used in the model have a long term, or equilibrium relationship between them. It was observed that from the analysis that PP and IMP were found to be statistically insignificant and both had negative relationships with SMEs development Nigeria, while DPP had a positive impact and is statistically significant. Due to the underproduction of the Nigerian petroleum refineries, the government had to resort to importation of the shortfall which also has its cost implications on its sales and distribution. Local manufacturers and farmers had to pay more for transporting their goods and services to the markets. Incessant price hikes of petroleum products have led to crisis and industrial actions led by some pressure groups in Nigeria which has caused distortion in the SMEs activities of Nigeria overtime The study thus recommends that the down-stream oil need to be deregulated to allow private investors come in to build in more refineries so as to produce the petroleum at a relatively lower cost to propel the growth of SMEs in the country.

scholarly journals The Impact of Bank Credits on the Manufacturing Sector in Nigeria (1980-2015)

2019 ◽  
pp. 1-18
Author(s):  
Otubu, Osaretin Paul
Keyword(s):  
Error Correction ◽  
Granger Causality ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Error Correction Model ◽  
Ordinary Least Squares ◽  
Causality Test ◽  
Correction Model ◽  
The Government ◽  
The Impact

The study examined the impact of bank credits on the manufacturing sector in Nigeria from 1980 to 2015. The broad objective of the study is to examine the impact of bank credits on the manufacturing sector in Nigeria between 1980 and 2015. The econometrics methods of ordinary least squares, co-integration, error correction model and granger causality test were used as the main analytical tools. From the estimated error correction model, we found that bank credits to the manufacturing sector had a positive impact on the manufacturing sector output. Government expenditure, gross capital formation and tertiary school enrolment conforms to apriori expectation. A bank credit was found to be necessary for influencing or boosting manufacturing sector output. In addition, the granger causality result reveals that there is causal relationship between bank credits and manufacturing sector output in Nigeria. It is therefore recommended that the cost of borrowing should be reduced, and relevant authorities should maintain a sustained effort aimed at making sure that banks strictly comply with the credit concession granted to the manufacturing sector, and the government should provide social amenities and conducive environment for industrialization.

Pengujian Resiko Redenominasi terhadap Nilai Tukar Rupiah

Owner ◽  
2021 ◽  
Vol 5 (2) ◽  
pp. 620-630
Author(s):  
Abdul Holik
Keyword(s):  
Exchange Rate ◽  
Inflation Rate ◽  
Positive Impact ◽  
Credit Default Swap ◽  
Economic Agents ◽  
Long Run ◽  
Short Run ◽  
The Exchange Rate ◽  
The Government ◽  
The Impact

The redenomination is a breakthrough policy to induce stabilization because making transactions easier among the economic agents. This quantitative research aims to find the properness of the redenomination policy in Indonesia. The focus of this research is to analyze the impact of redenomination risk on rupiah exchange rate performance. It is conducted from April 1st, 2015 until May 9th, 2016. The method of analysis used here is VECM (Vector Error Correction Model) to find relation reciprocally among the three variables: CDS (Credit Default Swap) as a proxy for redenomination risk, exchange rate, and sovereign yields. Based on the result, we find that there are negative impacts in the long-run and short-run from redenomination risk on the rupiah exchange rate. Meanwhile, the sovereign yield has a positive impact on the rupiah exchange rate in the long run. In the short run, the exchange rate has a positive impact on redenomination, as well as on sovereign yield. The sovereign yield also has a positive effect on the exchange rate, as well as on the redenomination risk. But there is no impact of redenomination risk on the sovereign yield. From this finding, we should suggest that redenomination is a not proper decision yet. It is because the weakness of rupiah after its implementation due to sentiment of over-confidence among the economic agents sometimes triggers uncontrollable and high inflation rate. For the successful policy, previously the government should take action to reduce the inflation rate.

scholarly journals FOREIGN CAPITAL INFLOWS AND MANUFACTURING SECTOR GROWTH IN NIGERIA

2021 ◽  
Vol 25 ◽  
pp. 235-260
Author(s):  
Idris Ahmed Sani ◽  
Ajengbe Abidemi Samuel ◽  
Wada Emmanuel Ome
Keyword(s):  
Gross Domestic Product ◽  
Foreign Capital ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Capital Inflows ◽  
Domestic Product ◽  
Long Run ◽  
Foreign Capital Inflows ◽  
The Government ◽  
The Impact

The study examined the impact of foreign capital inflow on manufacturing sector growth in Nigeria using time series data from 1986 to 2019. The study specifically sought to examine the causal relationship between foreign capital inflows and the growth of the manufacturing sector in Nigeria in the long run The study employed the Autoregressive Distributed Lag (ARDL) estimation technique to account for the impact of foreign capital inflows on the manufacturing sector growth in Nigeria. The study utilized the Contribution of Manufacturing Sector to Gross Domestic Product (MGDP) as proxy for manufacturing sector growth. Manufacturing sector growth was the dependent variable while foreign direct investment (FDI), foreign portfolio investment (FPI) and foreign Aid (FOA) were the independent variables, and were regarded as proxies for foreign capital inflows. The study results revealed that foreign capital inflows through the FDI had a significant positive impact on contributions of the manufacturing sector to gross domestic product (GDP). The study also revealed that foreign capital inflows through the FPI had a significant positive impact on contributions of the manufacturing sector to the GDP. The study further revealed that foreign capital inflows through the FOA had a significant positive impact on contributions of the manufacturing sector to the GDP. Based on these findings, the study has recommended that the Nigerian government should promote foreign capital inflows through the FDI in order to achieve the desired level of manufacturing sector growth in the country’s economy in the long run. The government should also encourage foreign capital inflows through the FPI in order to attain the desired level of manufacturing sector growth in the Nigerian economy. Finally, the government should also support foreign capital inflows through the FOA in order to attain the desired level of manufacturing sector growth in the Nigerian economy in the long run.

scholarly journals THE IMPACT OF SECURITIES MARKETS ON ECONOMIC GROWTH IN ZIMBABWE

2020 ◽  
Vol 7 (3) ◽  
pp. 155-169
Author(s):  
Wilford Mawanza ◽  
Nkululeko Mpofu ◽  
Silethemba Nyoni
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
Securities Markets ◽  
Least Squares Regression ◽  
Likelihood Estimator ◽  
Main Method ◽  
Endogenous Growth Model ◽  
Market Capitalisation ◽  
The Impact

The paper examines the impact of securities exchange on economic growth in Zimbabwe for the period 1980 to 2017. The study adopted the endogenous growth model on which magnitude and fluidity of securities were deemed to be the main drivers of the economy. The ordinary least squares regression technique was applied as the main method of analysis and as the maximum likelihood estimator. The findings of the study showed that securities exchange has blended impacts on economic expansion. It was observed that the market size (market capitalisation) and foreign direct investment (FDI) have a significant positive impact on the economic growth.

scholarly journals The Impact of Environmental Regulation on Technological Innovation of Resource-Based Industries

2020 ◽  
Vol 12 (17) ◽  
pp. 6837 ◽  
Author(s):  
Weiqing Li ◽  
Huaping Sun ◽  
Dang Khoa Tran ◽  
Farhad Taghizadeh-Hesary
Keyword(s):  
Environmental Regulation ◽  
Technological Innovation ◽  
Product Innovation ◽  
Positive Impact ◽  
Process Innovation ◽  
Industrial Enterprises ◽  
Current Period ◽  
Long Run ◽  
The Government ◽  
The Impact

The development of the resource-based industry has obvious negative externality, and the government’s environmental regulation on the resource-based industry will force the technological innovation of the resource-based industry. This paper selects the panel data of 12 resource-based industries in China from 2003 to 2019 and tests the impact of environmental regulation on technological innovation of resource-based industries by constructing the econometric model. The results show that environmental regulation can promote the technological innovation of resource-based industries. Specifically, environmental regulation has no significant positive impact on the immediate product innovation of 12 resource-based industries in China, but it has a significant positive impact on the product innovation lagging behind one period and two periods. Environmental regulation has no significant impact on the process innovation of current period, but has a significant positive impact on the process innovation of lagging one period. Industrial scale has a significant positive impact on product innovation of resource-based industries. The input of scientific and technological activity personnel has a significant positive impact on the product innovation of current period, and in the long run, it promotes both product innovation and process innovation. On this basis, this paper puts forward the relevant measures and suggestions for the formulation of environmental regulation policies. The government departments should subdivide the resource-based industries, formulate environmental rules and policies by classification, encourage industrial enterprises to carry out technological innovation, reasonably implement fiscal and taxation policy tools and increase the investment in R&D funds, and improve the training mechanism of scientific and technological personnel.

Investigating the Impact of Exchange Rate Volatility, Inflation and Economic Output on International Trade of India

2020 ◽  
Vol 68 (2) ◽  
pp. 207-226
Author(s):  
Aastha Arora ◽  
Sarika Rakhyani
Keyword(s):  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Volatility ◽  
Goods And Services ◽  
Economic Output ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Trade Of Services ◽  
The Impact

Four models have been constructed separately for exports of goods, imports of goods, exports of services and imports of services to explore the impact of exchange rate volatility, inflation and economic output on India’s foreign trade. AutoRegressive Distributed Lag (ARDL) bounds test run on monthly data over the period of 2011–2020 reports that in the long run, growth in production positively impacts the trade in goods and services. Rise in level of prices negatively impacts the exports of goods. In the short run, a rise in volatility brings a decline in the imports of goods but in the long run, it has a positive impact on the exports of goods. Volatile exchange rate has no impact on trade in services. An increase in inflation in the short run leads to a rise in the imports of goods but brings a decline in the trade of services.

scholarly journals The Impact of Infrastructure on Tourism: The Case of Sri Lanka

2019 ◽  
Vol 15 (7) ◽  
pp. 174 ◽  
Author(s):  
A. M. M. Mustafa
Keyword(s):  
Time Series ◽  
Sri Lanka ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact ◽  
Adf Test

This study examines the impact of infrastructure on tourism development in Sri Lanka with greater emphasis on road network. The time period used in this study are ranging from year 2005 to year 2017. The annual time series data are analyzed by using statistical package, E-Views 10 after the preliminary calculations by using Microsoft Excel. The unit root of the variables is tested by ADF test to test the stationarity of the time series data used in the model of this study. Co-integration is tested with the use of Engle–Granger. The relationship of causality between the variables is found by test of Granger Causality. The results show that infrastructure has significant short run as well long run positive impact on tourism. Two-way causal relationship is found between tourism sector and infrastructure. Further, this study recommends that the government should play its role in improving the infrastructure facilities to increase tourist’s arrival in Sri Lanka.

scholarly journals Impact of Petroleum on Smes Growth in Nigeria

2014 ◽  
Vol 2 (2) ◽  
pp. 4-14
Author(s):  
Sam B.A. Tende ◽  
Ezie Obumneke
Keyword(s):  
Positive Impact ◽  
Unit Root Test ◽  
Petroleum Products ◽  
Goods And Services ◽  
Petroleum Price ◽  
The Government ◽  
Petroleum Refineries ◽  
Private Investors ◽  
Log Linear ◽  
The Impact

ABSTRACT The study undertakes an empirical research on the impact of petroleum on small and medium scale enterprises (SMEs) development in Nigeria. The log linear error correction model was adopted to examine how petroleum price (PP), Imported petroleum (IMP) and domestically produced petroleum (DPP) had impacted on Nigeria’s SMEs. Unit root test was carried out on each of the variables to determine their level of stationarity. They were however found stationary after first difference (that is, they are all integrated of order one (I(1)), then it was safe to proceed with Johansen Cointegration Test. The integrated variables were then used for the regression analysis. The cointegration result showed that the variables used in the model have a long term, or equilibrium relationship between them. It was observed that from the analysis that PP and IMP were found to be statistically insignificant and both had negative relationships with SMEs development Nigeria, while DPP had a positive impact and is statistically significant. Due to the underproduction of the Nigerian petroleum refineries, the government had to resort to importation of the shortfall which also has its cost implications on its sales and distribution. Local manufacturers and farmers had to pay more for transporting their goods and services to the markets. Incessant price hikes of petroleum products have led to crisis and industrial actions led by some pressure groups in Nigeria which has caused distortion in the SMEs activities of Nigeria overtime The study thus recommends that the down-stream oil need to be deregulated to allow private investors come in to build in more refineries so as to produce the petroleum at a relatively lower cost to propel the growth of SMEs in the country.

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