Nexus between financial innovations, remittances and credit performance: Evidence from augmented ARDL and nonlinear ARDL

The motivation for this study is to assess the impact of financial innovation and remittances on bank-based financial institutions’ credit performance in Bangladesh for the period 1981–2019. The study applies augmented ARDL (AARDL) and nonlinear ARDL (NARDL) to identify both long-run and short-run effects and directional causality by performing non-granger casualty tests. AARDL confirms the presence of a long-run association between financial innovation, remittance, trade openness, FDI, and credit performance, which is measured by non-performing loans. In the long run, financial innovation and FDI volatility expose a positive link with NPLs, but remittance inflows and trade openness establish a negative association. Asymmetry shocks in financial innovation reveal a positive relationship with credit performance. In contrast, the asymmetric shock of remittance and trade openness unveil a negative tie to credit performance, especially in the long run. Furthermore, directional causality provides evidence to support a feedback hypothesis explaining causality between financial innovation and credit performance, as well as remittance inflows and credit performance. These findings suggest that credit performance is guided by future development in remittances and financial innovation; thus, closer attention from policymakers and financial experts is persistent to capitalize or mitigate the impact of the financial system.

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Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

Economies ◽

10.3390/economies9020051 ◽

2021 ◽

Vol 9 (2) ◽

pp. 51

Author(s):

Lorna Katusiime

Keyword(s):

Exchange Rate ◽

Interest Rates ◽

Financial Innovation ◽

Macroeconomic Policy ◽

Mobile Money ◽

Distributed Lag ◽

Distributed Lag Model ◽

Long Run ◽

Short Run ◽

The Impact

This paper examines the effects of macroeconomic policy and regulatory environment on mobile money usage. Specifically, we develop an autoregressive distributed lag model to investigate the effect of key macroeconomic variables and mobile money tax on mobile money usage in Uganda. Using monthly data spanning the period March 2009 to September 2020, we find that in the short run, mobile money usage is positively affected by inflation while financial innovation, exchange rate, interest rates and mobile money tax negatively affect mobile money usage in Uganda. In the long run, mobile money usage is positively affected by economic activity, inflation and the COVID-19 pandemic crisis while mobile money customer balances, interest rate, exchange rate, financial innovation and mobile money tax negatively affect mobile money usage.

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THE IMPACT OF RESEARCH AND DEVELOPMENT INVESTMENT ON AGRICULTURAL SECTOR PERFOMANCE IN KENYA

Journal of Agricultural Policy ◽

10.47941/jap.161 ◽

2017 ◽

Vol 2 (1) ◽

pp. 34-57

Author(s):

John Githii Kimani ◽

Dr. George Ruigu Ruigu

Keyword(s):

Research And Development ◽

Agricultural Sector ◽

Research Policy ◽

Trade Openness ◽

Policy And Practice ◽

Long Run ◽

Short Run ◽

The Government ◽

Parsimonious Model ◽

The Impact

Purpose: The purpose of the study was to assess the impact of research and development investment/expenditure on the agricultural sector performance in Kenya.Methodology: The study took the peoples impact assessment direction. The data for this study was collected from various government agencies such as KARI, ASTI, Kenya Agricultural Sector Data compendium website, FAOSTAT, World Bank among others. Co-integration and error correction modeling methods were used in analyzing the data for this study.Results: Co-integration results for both the parsimonious and non-parsimonious model indicated that that there is a long-run relationship among the variables in the agriculture performance in Kenya. Further, findings in this study indicated that the variables under study were insignificant determinants of the long run Total Factor Productivity of the agricultural sector. Meanwhile, Trade openness was the only significant determinant of the short run agricultural Total Factor Productivity.Unique Contribution to Policy and Practice: This study recommends the institutionalization of policies aimed at ensuring interaction between the various stakeholders in the agricultural sectors. This interaction will ensure that resources are better allocated to reduce duplication of research and dissemination activities. In addition, greater collaboration among the stakeholders will promote and strengthen the connection between research, policy and the application of research findings. The study further advocates that the government should follow a trade liberazation oriented approach to the agricultural sector as opposed to a trade tightening approach.

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TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

Journal of Business Economics and Management ◽

10.3846/16111699.2012.720587 ◽

2014 ◽

Vol 16 (1) ◽

pp. 188-205 ◽

Cited By ~ 23

Author(s):

Qazi Muhammad Adnan Hye ◽

Wee-Yeap Lau

Keyword(s):

Economic Growth ◽

Human Capital ◽

Granger Causality ◽

Trade Openness ◽

Granger Causality Test ◽

Causality Test ◽

Long Run ◽

Rolling Window ◽

Short Run ◽

The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

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Foreign Direct Investment and Trade Components in Context of Pakistan

European Scientific Journal ESJ ◽

10.19044/esj.2016.v12n34p384 ◽

2016 ◽

Vol 12 (34) ◽

pp. 384 ◽

Cited By ~ 1

Author(s):

Muhammad Akram Gilal ◽

Khadim Hussain ◽

Muhammad Ajmair ◽

Sabahat Akram

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Trade Openness ◽

Annual Data ◽

Investment Liberalization ◽

Long Run ◽

Short Run ◽

The Impact

Objective of this paper was to evaluate the impact of foreign direct investment (FDI) on trade components (exports and imports) of Pakistan using annual data from 1975 to 2013. Engle and Granger two step cointegration method was used for conducting the analysis. This method was adopted because all the variables of interest were non stationary in level and stationary at first difference. Results provide evidence of long run cointegrating relationship as well as short run relationship between FDI and trade components. A rise in FDI causes both exports and imports to increase. Based on these empirical findings, we strongly recommend Government of Pakistan to focus on the strategy of investment liberalization as well as trade openness.

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Does Nominal Devaluation Improve Income Distribution? Evidence from Bangladesh

South Asian Survey ◽

10.1177/0971523114539586 ◽

2012 ◽

Vol 19 (1) ◽

pp. 61-77

Author(s):

Muhammad Shahbaz ◽

Mohammad Mafizur Rahman

Keyword(s):

Income Inequality ◽

Income Distribution ◽

Trade Openness ◽

Bounds Testing ◽

Correction Model ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

Auto Regressive ◽

The Impact

The article aims to investigate the impact of nominal devaluation on income distribution in Bangladesh both in short and long runs. In doing so, Auto Regressive Distributed Lag (ARDL) bounds testing has been employed for cointegration, and Error Correction Model (ECM) has been used for short-run dynamics. The empirical psychology has confirmed the existence of long-run relationship between the variables. Furthermore our estimated results reveal that nominal devaluation tends to decrease income inequality. Though economic growth appears to improve income distribution, non-linear link between both the variables, however, depicts Kuznets’ inverted-U curve (1955). Financial development causes further deterioration in income distribution. Trade openness contributes to income inequality as discussed in Leontief Paradox.

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FINANCIAL DEVELOPMENT, INCOME, TRADE, AND URBANIZATION ON CO2 EMISSIONS: NEW EVIDENCE FROM KYOTO ANNEX COUNTRIES

Journal on Innovation and Sustainability RISUS ISSN 2179-3565 ◽

10.24212/2179-3565.2018v9i3p17-37 ◽

2018 ◽

Vol 9 (3) ◽

pp. 17 ◽

Cited By ~ 10

Author(s):

Muhammad Rizwan Nazir ◽

Muhammad Imran Nazir ◽

Shujahat Haider Hashmi ◽

Zeeshan Fareed

Keyword(s):

Co2 Emissions ◽

Financial Development ◽

Environmental Degradation ◽

Trade Openness ◽

Negative Influence ◽

Financial Reforms ◽

Long Run ◽

Short Run ◽

Carbon Dioxide Co2 ◽

The Impact

This study attempts to empirically investigate the impact of financial development, income, trade openness, and urbanization on carbon dioxide (CO2) emissions for the 21 Kyoto Annex countries using a balance panel data and GMM system over the period of 1970-2016. The results show a positive relationship between income and CO2 emissions in long-run. All models support the EKC hypothesis which assumes an inverted U-shaped relationship among income and environmental degradation. Financial development has a long-run negative influence on CO2 emissions, indicating that financial development reduces the environmental degradation. This means that financial development can be used as an implement to keep the degradation environmental clean by presenting financial reforms. The urbanization declines the CO2 emissions; however, it is essential for the policymakers and urban planners in these countries to control the rapid increase in urbanization. The panel causality confirms that bi-directional causal relationship between financial development, CO2 emissions, income, trade openness, and Urbanization in short-run.

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The Kyoto Protocol and CO2 emission: is India still hibernating?

Indian Growth and Development Review ◽

10.1108/igdr-10-2017-0080 ◽

2018 ◽

Vol 11 (2) ◽

pp. 152-168 ◽

Cited By ~ 4

Author(s):

Aaqib Ahmad Bhat ◽

Prajna Paramita Mishra

Keyword(s):

Economic Growth ◽

Energy Consumption ◽

Kyoto Protocol ◽

Empirical Relationship ◽

Trade Openness ◽

Content Type ◽

Long Run ◽

Short Run ◽

International Climate ◽

The Impact

Purpose The purpose of this study is to investigate the relationship between CO2 emission and its core determinants, namely, economic growth, energy consumption and trade openness in the pre- and post-Kyoto Protocol era in the Indian economy. Design/methodology/approach The study uses the ARDL bounds test to analyze the long-run and short-run empirical relationship between the interested variables for the time period 1971-2013. A dummy variable representing the Kyoto Protocol regime has been included to examine the likely impact of international climate policies (Kyoto Protocol) in controlling and reducing CO2 emission in India. Findings The empirical results indicate the possibility of increase in CO2 emission from India even after the Kyoto Protocol regime. Evidence of inverted U-shaped relationship between CO2 emission and economic growth (EKC hypothesis) has been confirmed. However, compared to increase in CO2 emission, the magnitude of decrease due to improvement in economic growth is relatively lesser. Energy consumption and trade openness are also found to increase CO2 emission. Research limitations/implications The results indicate that there is a lack of commitment on the part of India to curtail CO2 emission, which can be disastrous for future prosperity. Financing the renewable electricity generation, R&D subsidy and tax-free renewable energy seems to be imperative to address this catastrophic problem. Originality/value This study is the first attempt to analyze the impact of international climate policy (Kyoto Protocol) on CO2 emission by incorporating a fixed dummy in the ARDL specifications.

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The nexus between tourism demand and output per capita with the relative importance of trade openness and financial development

Tourism Economics ◽

10.5367/te.2015.0505 ◽

2016 ◽

Vol 23 (1) ◽

pp. 168-186 ◽

Cited By ~ 27

Author(s):

Muhammad Shahbaz ◽

Ronald Ravinesh Kumar ◽

Stanislav Ivanov ◽

Nanthakumar Loganathan

Keyword(s):

Financial Development ◽

Structural Breaks ◽

Trade Openness ◽

Tourism Demand ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

In Series ◽

Per Capita ◽

The Impact

This article revisits the tourism-growth nexus in Malaysia using time series quarterly data over the period 1975–2013. The authors examine the impact of tourism using two separate indicators – tourism receipts per capita and visitor arrivals per capita. Using the augmented Solow production function and the autoregressive distributed lag bounds procedure, they also incorporate trade openness and financial development and account for structural breaks in series. The results show the evidence of cointegration between the variables. Assessing the long-run results using both indicators of tourism demand, it is noted that the elasticity coefficient of tourism is 0.13 and 0.10 when considering visitor arrivals and tourism receipts (in per capita terms), respectively. Notably, the impact of tourism demand is marginally higher with visitor arrivals. The elasticity of trade openness is 0.19, that of financial development is 0.09 and that of capital share is 0.15. In the short run, the coefficient of tourism is marginally negative, and for financial development and trade openness, it is 0.01 and 0.18, respectively. The Granger causality tests show bidirectional causation between tourism and output per capita, financial development and tourism and trade openness and tourism demand, duly indicating the feedback or mutually reinforcing impact between the variables and providing evidence that tourism is central to enhancing the key sectors and the overall income level.

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Bank competition, financial innovations and economic growth in Ghana

African Journal of Economic and Management Studies ◽

10.1108/ajems-09-2012-0057 ◽

2014 ◽

Vol 5 (1) ◽

pp. 30-51 ◽

Cited By ~ 9

Author(s):

Anthony Adu-Asare Idun ◽

Anthony Q.Q. Aboagye

Keyword(s):

Economic Growth ◽

Granger Causality ◽

Financial Innovation ◽

Bank Competition ◽

Content Type ◽

Financial Innovations ◽

Long Run ◽

Short Run ◽

The Relationship ◽

Finance Growth Nexus

Purpose – This paper takes the finance-growth nexus further by looking at the relationship between bank competition, financial innovations and economic growth in Ghana. The purpose of this paper is to find the causality among bank competition, financial innovations and economic growth in Ghana. Design/methodology/approach – The relationship between bank competition, financial innovations and economic growth was established through the framework of the endogenous growth model. In addition, the paper employed the bound testing ARDL cointegration procedures to enable us to establish both short-run and long-run relationship between bank competition, financial innovations and economic growth. Granger causality test were also estimated to determine the direction of causality. Findings – The results showed that, in the long run, bank competition is positively related to economic growth while financial innovation is negatively related to economic growth. In the short run, bank competition is negatively related to economic growth. By the same token, financial innovation is positively related to economic growth in the short run. In terms of causality, the results showed that there is unidirectional Granger causality from bank competition to economic growth. However, there is bidirectional Granger causality between financial innovation and economic growth. Practical implications – The study therefore, recommends for more regulations toward a more competitive banking system with more innovative products tailored toward mobilization of savings and investment to growth induced sectors of the economy. Originality/value – This paper provides a time series perspective to the finance-growth nexus and highlights the potential contribution of effective banking development to the economic welfare of the Ghanaian citizens.

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Impact of Foreign Direct Investment, Trade Openness, Domestic Demand, and Exchange Rate on the Export Performance of Bangladesh: A VEC Approach

Economics Research International ◽

10.1155/2012/463856 ◽

2012 ◽

Vol 2012 ◽

pp. 1-10 ◽

Cited By ~ 4

Author(s):

Bishnu Kumar Adhikary

Keyword(s):

Foreign Direct Investment ◽

Exchange Rate ◽

Direct Investment ◽

Export Performance ◽

Trade Openness ◽

Domestic Demand ◽

Vec Model ◽

Long Run ◽

Short Run ◽

The Impact

This paper investigates the impact of foreign direct investment (FDI), trade openness, domestic demand, and exchange rate on the export performance of Bangladesh over the period of 1980–2009 using the vector error correction (VEC) model under the time series framework. The stationarity of the variables is checked both at the intercept and intercept plus trend regression forms under the ADF and PP stationarity tests. The Johansen-Juselius procedure is applied to test the cointegration relationship between variables followed by the VEC regression model. The empirical results trace a long-run equilibrium relationship in the variables. FDI is found to be an important factor in explaining the changes in exports both in the short run and long-run. However, the study does not trace any significant causal relationship for the cases of trade openness, domestic demand, and exchange rate. The study concludes that Bangladesh should formulate FDI-led polices to enhance its exports.

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