scholarly journals The Role Of Interest Rate Reforms In Lesotho: An Empirical Investigation

2011 ◽  
Vol 27 (4) ◽  
pp. 69
Author(s):  
Nicholas M. Odhiambo
Keyword(s):  
Interest Rate ◽  
Foreign Aid ◽  
Financial Deepening ◽  
Bounds Testing ◽  
Critical Question ◽  
Expected Inflation ◽  
Long Run ◽  
Financial Depth ◽  
Short Run ◽  
Positive Effect

<span>This paper examines the efficacy of interest rate reforms in Lesotho during the period 1972-2009. The study attempts to answer one critical question: Does interest rate liberalisation positively or negatively affect financial deepening in Lesotho? The study examines this linkage by regressing the financial depth variable on real income, deposit rate, foreign aid, the expected inflation and the lagged value of financial depth. Using the ARDL-Bounds testing approach, the study finds that there is a positive relationship between interest rate reforms and financial deepening in Lesotho, meaning that interest rate reforms lead to financial deepening in Lesotho. The results apply regardless of whether the financial deepening model is estimated in the short run or in the long run. Other results indicate that: i) An increase in real GDP has a positive effect on financial deepening in Lesotho - both in the short run and in the long run; ii) expected inflation has a positive effect on financial deepening in the short run; and iii) foreign aid has a negative effect on financial deepening in Lesotho in the short run.</span>

Financial Depth and Exchange Rate Volatility

2016 ◽  
Vol 62 (1) ◽  
pp. 19-30 ◽  
Author(s):  
Massomeh Hajilee ◽  
Omar M. Al Nasser
Keyword(s):  
Exchange Rate ◽  
Financial Market ◽  
Exchange Rate Volatility ◽  
Financial Deepening ◽  
Bounds Testing ◽  
Exchange Rate Uncertainty ◽  
Long Run ◽  
Financial Depth ◽  
Short Run ◽  
The Many

It is empirically well established that financial depth increases the power of the financial system and helps both government and the private sector to have access to adequate funds without a noticeable change in asset prices and exchange rates. Exchange rate uncertainty is considered one of the many factors that affect financial market performance. In this study, we try to determine the short-run and long-run effects of exchange rate volatility on financial depth in 26 selected countries, classified as developed, developing, and emerging economies over the period 1980-2011. Our findings indicate that exchange rate volatility has short-run and long-run effects in the majority of countries in this study. We found for 16 countries out of 26, financial depth responds significantly to exchange rate volatility (nine positive, seven negative). Furthermore, using the bounds testing approach shows that exchange rate volatility has significant impact on financial deepening in 20 out of 26 countries in the short run. The results show that despite similar classification and grouping, the estimated results could be very country specific depending on each country’s particular characteristics. We suggest that for every country, it is crucial to choose and implement appropriate financial market and exchange rate policies.

scholarly journals INFLASI DARI SUDUT PANDANG MONETER DAN FISKAL (STUDI KASUS SUMATERA BARAT)

2019 ◽  
Vol 1 (1) ◽  
pp. 131
Author(s):  
Zul Azhar ◽  
Alpon Satrianto ◽  
Nofitasari Nofitasari
Keyword(s):  
Interest Rate ◽  
Money Supply ◽  
Government Spending ◽  
Descriptive Research ◽  
Distributed Lag ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
The Interest Rate ◽  
Positive Effect

This study aims to analyze the effect of money supply M2, interest rate, government spending and local tax on the inflation in West Sumatera. This type of research is descriptive research and secondary datain the form of time-series from quartely 1 2007 to 2017 quartely 4 using the method of Autoregresive Distributed Lag analysis. The results of this study indicate that money supply in the long run have a significant and positive effect on inflation West Sumatera. In the short run  and long run the interest rate has a significant and positive effect on inflation in West Sumatera. Government spending in the Long run has a significant and negative effect on inflation in West Sumatera. Based on the result of this study can be concluded that there is inflation in West Sumatera is monetery of phenomenon in the long run. 

scholarly journals Tourism And Economic Growth In Kenya: An Empirical Investigation

2012 ◽  
Vol 11 (5) ◽  
pp. 517 ◽  
Author(s):  
Obadiah N. Kibara ◽  
Nicholas M. Odhiambo ◽  
Josephine M. Njuguna
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Tourism Development ◽  
Series Data ◽  
Bounds Testing ◽  
Critical Question ◽  
Dynamic Relationship ◽  
Long Run ◽  
Short Run ◽  
Annual Time Series

In this study, we examine the dynamic relationship between tourism sector development and economic growth using annual time-series data from Kenya. The study attempts to answer one critical question - Is tourism development in Kenya pro-growth? The study uses an ARDL-bounds testing approach to examine these linkages and also incorporates trade as an intermittent variable between tourism development and economic growth in a multivariate setting. The results of our study show that there is a uni-directional causality from tourism development to economic growth. The results are found to hold irrespective of whether the causality is estimated in the short run and long run. Other results show that international tourism Granger-causes trade, while trade Granger-causes economic growth in Kenya in both the short and the long run.

scholarly journals Are Banks And Stock Markets Positively Related? Empirical Evidence From South Africa

2010 ◽  
Vol 26 (6) ◽  
Author(s):  
Nicholas M Odhiambo
Keyword(s):  
South Africa ◽  
Stock Market ◽  
Stock Markets ◽  
Real Income ◽  
Market Development ◽  
Bounds Testing ◽  
Critical Question ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><a name="OLE_LINK2"></a><a name="OLE_LINK1"><span style="mso-bookmark: OLE_LINK2;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;" lang="EN-GB"><span style="font-family: Times New Roman;">In this study, we examine the relationship between banks and stock market development in South Africa.<span style="mso-spacerun: yes;">&nbsp; </span>The study attempts to answer one critical question: Are banks and stock markets positively related in South Africa? The bank development is proxied by the ratio of the domestic credit to the private sector to GDP (DCP/GDP), while the stock market development is proxied by the ratio of the stock market capitalisation to GDP (CAP/GDP).Unlike the majority of the previous studies, the current study uses the newly introduced ARDL-Bounds testing approach, as proposed by Pesaran<span style="mso-spacerun: yes;">&nbsp; </span>et al. (2001), to examine this linkage. The empirical results show that there is a distinct positive relationship between banks and stock markets in South Africa. The results apply irrespective of whether the model is estimated in the short run or in the long run. <span style="mso-bidi-font-style: italic;">Other results show that in the short run, the stock market development in South Africa is positively determined by the level of savings, but negatively affected by the rate of inflation and the lagged values of the stock market development. However, in the long run, the stock market is positively determined by real income and the inflation rate. </span><span style="mso-spacerun: yes;">&nbsp;</span></span></span></span></a></p>

scholarly journals ARDL Bounds Testing Approach to Cointegration: A Re-Examination of Augmented Fisher Hypothesis in an Open Economy

2014 ◽  
Vol 2 (2) ◽  
pp. 103-114
Author(s):  
R. Santos Alimi
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Open Economy ◽  
Nominal Interest Rate ◽  
Fisher Effect ◽  
Bounds Testing ◽  
Expected Inflation ◽  
Long Run ◽  
Fisher Hypothesis ◽  
Effective Exchange

This paper investigated the relationship between expected inflation and nominal interest rates in Nigeria and the extent to which the Fisher effect hypothesis holds, for the period 1970-2012. We attempted to advance the field by testing the traditional closed-economy Fisher hypothesis and an augmented Fisher hypothesis by incorporating the foreign interest rate and nominal effective exchange rate variable in the context of a small open developing economy, such as, Nigeria. We applied ARDL bound testing, vector error correction (VECM) and stability of the functions was also tested by CUSUM and CUSUMSQ. We found that full Fisher hypothesis does not hold but there is a Fisher effect in the case of Nigeria over the period under study. In the context of an open economy, the study showed that aside expected inflation, the international variables - foreign interest and nominal effective exchange rates - contain information that predict the nominal interest rate and it also suggested a feed-back mechanism between nominal interest rate and foreign interest rate. Finally, CUSUM test confirms the long-run relationships between the variables and also shows the stability of the coefficients.

scholarly journals IMPACT OF INTEREST RATE ON PRIVATE SECTOR CREDIT; EVIDENCE

2016 ◽  
Vol 04 (01) ◽  
pp. 47-52
Author(s):  
Nadeem Aftab ◽  
◽  
Khalil Jebran ◽  
Irfan Ullah ◽  
Muhammad Awais ◽  
...  
Keyword(s):  
Interest Rate ◽  
Private Sector ◽  
Term Effect ◽  
Short Term ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Negative Effect ◽  
Short Run ◽  
Auto Regressive ◽  
Positive Effect

This study explored the long and short term effect of interest rate on private sector credit on Pakistan for the period of 1975 to 2011. The Stationary of data was analyzed by Augmented Dickey Fuller and Phillips Peron test. This study applied Auto Regressive Distribution Lag (ARDL) model for the purpose of analyzing long and short term relationship. The results revealed significant negative effect of interest rate on private sector credit in the long run, and also in the short run. The results also indicated significant positive effect of inflation on private sector credit in long and short run. However, exchange rate was found to have no effect on private sector credit.

scholarly journals Analysis of the determinants of foreign direct investment in Ghana

2019 ◽  
Vol 26 (1) ◽  
pp. 56-75 ◽  
Author(s):  
Michael Asiamah ◽  
Daniel Ofori ◽  
Jacob Afful
Keyword(s):  
Interest Rate ◽  
Direct Investment ◽  
Inflation Rate ◽  
Electricity Production ◽  
Negative Effects ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Long Run ◽  
Short Run ◽  
Positive Effect

Purpose The factors that determine foreign direct investment (FDI) are important to policy-makers, investors, the banking industry and the public at large. FDI in Ghana has received increased attention in recent times because its relevance in the Ghanaian economy is too critical to gloss over. The purpose of this paper is to examine the determinants of FDI in Ghana between the period of 1990 and 2015. Design/methodology/approach The study employed a causal research design. The study used the Johansen’s approach to cointegration within the framework of vector autoregressive for the data analysis. Findings The study found a cointegrating relationship between FDI and its determinants. The study found that both the long-run and short-run results found statistically significant negative effects of inflation rate, exchange rate and interest rate on FDI in Ghana while gross domestic product, electricity production and telephone usage (TU) had a positive effect on FDI. Research limitations/implications The study found a cointegrating relationship between FDI and its determinants. The study found that both the long-run and short-run results found statistically significant negative effects of inflation rate, exchange rate and interest rate on FDI in Ghana whiles gross domestic product, electricity production and TU had a positive effect on FDI. Practical implications This study has potential implication for boosting the economies of developing countries through its policy recommendations which if implemented can guarantee more capital inflows for the economies. Social implications This study has given more effective ways of attracting more FDI into countries which in effect achieve higher GDP and also higher standard of living through mechanisms and in the end creating more social protection programs for the people. Originality/value Although studies have been conducted to explore the determinants of FDI, some of the core macroeconomic variables such as inflation, interest rate, telephone subscriptions, electricity production, etc., which are unstable and have longstanding effects on FDI have not been much explored to a give a clear picture of the relationships. Therefore, a study that will explore these and other macroeconomic variables to give clear picture of their relationships and suggest some of the possible ways of dealing with these variables in order to attract more FDI for the country to achieve its goal is what this paper seeks to do.

scholarly journals HOW DOES PENSIONS AFFECT SAVINGS IN NIGERIA? EVIDENCE FROM QUARTERLY DATA

2019 ◽  
Vol 66 (4) ◽  
pp. 541-558
Author(s):  
Nurudeen Abu ◽  
Bilyaminu Kadandani ◽  
Ben Obi ◽  
Murtala Modibbo
Keyword(s):  
Interest Rate ◽  
Real Interest Rate ◽  
Retirement Income ◽  
Bounds Testing ◽  
Testing Technique ◽  
Quarterly Data ◽  
Internal Conflicts ◽  
Long Run ◽  
Ardl Bounds Testing ◽  
Short Run

This study investigates the effect of pensions on savings in Nigeria using quarterly data over the 2004-2015 period. Employing the ARDL bounds testing technique, the empirical evidence reveal that there is cointegration between pensions and savings, along with internal conflicts, unemployment, real interest rate and income level. The results indicate that pensions has a negative and significant effect on savings in the short-run, while its effect on savings is positive and significant in the long-run. These findings suggest that the availability of pensions will displace savings in the short-run, while it provides an avenue for individuals to increase their retirement income in the long-run, leading to higher national savings. In addition, internal conflicts and unemployment have a negative and significant effect on savings in the short-run and the long-run. Based on these findings, this study recommends policies to promote pension contributions, including reducing internal conflicts and unemployment to raise savings in Nigeria in the long-run.

Linearly Transforming Variables in the VAR Model, How Does it Change the Impulse Response?

2017 ◽  
Vol 7 (1) ◽  
Author(s):  
Peter Reusens ◽  
Christophe Croux
Keyword(s):  
Interest Rate ◽  
Impulse Response ◽  
Linear Transformation ◽  
Vector Autoregression ◽  
Impulse Response Function ◽  
Structural Shocks ◽  
Expected Inflation ◽  
Long Run ◽  
Short Run

AbstractThis paper analyzes the impulse response function of vector autoregression models for variables that are linearly transformed. The impulse response is equal to the linear transformation of the original impulse response if and only if the shock is equal to the linear transformation of the original shock. In particular, we consider shocks in one error term only, generalized shocks, structural shocks identified by short-run recursive restrictions and structural shocks identified by long-run recursive restrictions. A vector autoregression model with expected inflation, the overnight rate and a long term ex-ante real interest rate that replaces the corresponding long term nominal interest rate, illustrates our results.

scholarly journals DOES FOREIGN AID PROMOTE DEMOCRATIC INSTITUTIONS IN POST-CONFLICT CAMBODIA? EVIDENCE FROM ARDL BOUNDS TESTING APPROACH

2021 ◽  
pp. 1-61
Author(s):  
LY SLESMAN
Keyword(s):  
Foreign Aid ◽  
Structural Break ◽  
Democratic Institutions ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Post Conflict ◽  
Long Run ◽  
Economic Aid ◽  
Short Run ◽  
Testing Approach

Whether foreign aid promotes or hinders democratic institutions has been debated with opposing views. This paper investigates short- and long-run effects of foreign aid on democratization in post-conflict Cambodia using autoregressive distributed lag bounds testing and Gregory–Hansen structural break testing approach for cointegration over 1980–2015 period. The findings reveal that net bilateral foreign aid per capita, aggregated and classified into purpose-based ‘governance aid’, ‘economic aid’, ‘other aid’ and ‘donor-specific aid’ from the US, EU, France, Australia and Japan, promote long-run democratization. In the short run, only governance and economic aid appear to have a consistent positive effect on democratization.

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