Will Rising Debt in China Lead to a Hard Landing?

Moody has recently downgraded China's sovereign debt, which's Moody's first downgrade for the country since 1989. The objective of this study is to get an insight into the local and regional government debt in China, analyze the key factors, and evaluate the economic risks. Based on the published data since 1996, the granger causality test is performed to find out the relationship between local government debt level, the fiscal income, GDP growth rate and CPI. Some major findings are: i) local government debt is accumulated through more spending on economic development and less funding obtained from the revenue sharing scheme between governments. ii) fiscal income and GDP growth rate have positive impact on the increase of local government debt. iii) CPI increase shows negative impact on the local government debt. It’s projected that in the coming years, slower growth and less income with a stable CPI could slow down debt accumulation. The Chinese government should monitor the risk factors closely and use risk mitigation tools to avoid a hard landing.

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Factors Affecting Financial Performance of Tourism Destination Firms Listed on Stock Exchanges in China

Proceedings of Business and Economic Studies ◽

10.26689/pbes.v2i5.899 ◽

2019 ◽

Vol 2 (5) ◽

Author(s):

Dingchen Cui

Keyword(s):

Growth Rate ◽

Financial Performance ◽

Negative Impact ◽

Positive Impact ◽

Stock Exchange ◽

Secondary Data ◽

Total Asset ◽

Gdp Growth ◽

Tourism Destination ◽

Gdp Growth Rate

Purpose: the aim of this research is to test the effect of financial ratio on the financial performance of tourism destination firms listed on stock exchange in China. The research selected ratios: current ratio (CR) as a dimension of liquidity, total asset turnover ratio (TATR) as a dimension of asset utilization, debt ratio (DE) as a dimension of leverage, natural logarithm of total asset (LNTA) as a dimension of firm size, GDP growth rate as a dimension of economic prosperity, and effective tax rate as a dimension of effective tax. This research will use return on asset (ROA), return on sales (ROS), return on equity (ROE) and sales growth (SG) to determine the financial performance. Since stock exchange founded in China, tourism destination firm developed very fast. However tourism destination listed firms have weakness financial performance. Design/methodology/approach: the research data collected from quarterly financial report, from 2012 Q1 to 2018 Q4. The secondary data has been analyzed by multiple regression. Finding: the result indicate that CR, TATR, GDP growth rate have positive impact on financial performance. While DE has negative impact on financial performance. And LNTA has a mix result with financial performance. Originality/value: This study led to the effect of financial ratios on tourism’s financial performance since past researches with this aim were difficult to identify and certain references were not specifically linked to the topic.

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An Inferential Study on the Profitability Determinants of the Cement Industry in Bangladesh

Asian Finance & Banking Review ◽

10.46281/asfbr.v4i2.684 ◽

2020 ◽

Vol 4 (2) ◽

pp. 8-21

Author(s):

Sonia Rezina ◽

Aysha Ashraf ◽

Md. Atiqullah Khan

Keyword(s):

Growth Rate ◽

Interest Rate ◽

Firm Size ◽

Real Interest Rate ◽

Negative Impact ◽

Positive Impact ◽

Cement Industry ◽

Gdp Growth ◽

Macroeconomic Factors ◽

Gdp Growth Rate

This paper examines the impacts of firm-specific and macroeconomic factors in determining the profitability of the cement industry in Bangladesh. This study took stock exchange listed all cement companies of Bangladesh as samples and covered the period of 2000–2018. Return on Assets (ROA) was chosen as the dependent variable and firm size, expense to revenue ratio, leverage, age, inflation rate, GDP growth rate, and real interest rate were chosen as independent variables where the first four are firm-specific and the other three are macroeconomic factors. This study considered ROA as the profitability measurement of the firms. The study found that leverage, GDP growth rate, and real interest rate have significant impacts on the profitability. Firm size, age, GDP growth rate, and real interest rate have a positive impact whereas expenses to revenue ratio, leverage, and inflation have a negative impact on the profitability of the firms under the cement industry.

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Impact of Non-Performing Loans on Credit Growth in the Banking Industry in Tanzania: 2009 – 2018

Asian Journal of Economics Business and Accounting ◽

10.9734/ajeba/2021/v21i330357 ◽

2021 ◽

pp. 10-18

Author(s):

John P. Lihawa ◽

Deus D. Ngaruko

Keyword(s):

Growth Rate ◽

Regression Analysis ◽

Private Sector ◽

Interest Rates ◽

Inflation Rate ◽

Negative Impact ◽

Gdp Growth ◽

Credit Growth ◽

Gdp Growth Rate ◽

The Impact

This study adopted descriptive statistics and multiple regression analysis in investigating the impact of Non-Performing Loans (NPL) on credit growth to private sector in Tanzania, apart from NPL. The study also investigated the influence of interest rates, inflation rates and GDP on credit advancement to private sector in Tanzania. Using multiple linear regression analysis the study found that both NPL and interest rates have negative impact on the credit growth to private sector in Tanzania, with coefficient values of -0.323 and -0.263 for NPL and interest rate respectively. Furthermore, the study also found that Inflation rate and GDP growth rate have positive impact on the credit growth to private sector in Tanzania with coefficients of 0.247and 0.156 for inflation rate and GDP growth rate respectively. The study found that NPL has a significant negative impact on the credit growth by commercial bank to private sector in Tanzania. These results suggest that the central bank should continue to closely monitor and control the level of NPL in the economy and confine it below the threshold of 5% as stipulated by the BOT and IMF. The study also recommends that commercial banks should ensure that a thorough credit risk assessment is conducted when advancing loans to private sector.

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Analysis of the Impact of Exchange Rate, Inflation, Export and Import on Gross Domestic Product in Bangladesh

Business Management and Economics Research ◽

10.32861/bmer.512.170.175 ◽

2019 ◽

pp. 170-175

Author(s):

Papi Halder

Keyword(s):

Economic Growth ◽

Growth Rate ◽

Exchange Rate ◽

Gross Domestic Product ◽

Positive Impact ◽

Domestic Product ◽

Gdp Growth ◽

Policy Makers ◽

Gdp Growth Rate ◽

The Impact

This study is about the impact of selected macroeconomic variables on economic growth of Bangladesh. Economic growth of Bangladesh is measured in terms of annual nominal GDP growth rate. Least squared regression model has been employed considering exchange rate, export, import and inflation rate as independent variables and gross domestic product as the dependent variable in this study. The results reveal that export and import have significant positive impact on GDP growth rate. The other variables (exchange rate and inflation) are not significant, indicating that there exists no significant relationship among the variables. The findings will help the policy makers to make policies concerning the country’s economic growth to remain robust in the near future.

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Firm’s Characteristics and Macro-Economic Variables on Expected Stock Returns

PYC Nepal Journal of Management ◽

10.3126/pycnjm.v12i1.30595 ◽

2019 ◽

Vol 12 (1) ◽

pp. 59-72

Author(s):

Shiva Raj Paudel

Keyword(s):

Growth Rate ◽

Interest Rate ◽

Cash Flow ◽

Stock Return ◽

Negative Impact ◽

Gdp Growth ◽

Common Stock ◽

Macroeconomic Variables ◽

Gdp Growth Rate ◽

Significant Negative Impact

This study examines the effect of firm’s characteristics and macroeconomic variables on common stock return from the firms listed in Nepal Stock Exchange (NEPSE). The explained variable for the study is stock return which is calculated as the annual capital gain yield. The explanatory variables consist of firm size, book to market equity, earning yield, cash flow yield, GDP growth, rate of inflation, real interest rate, and money supply. The data are collected from the database of NEPSE, Nepal Rastra Bank (NRB), and the annual reports of the selected firms. The study is based on the 150 observations from the 10 sample firms for the period of 15 years (from 2003/4 to 2017/18). Fixed effect panel data analysis is used to examine the effect of firm characteristics and macroeconomic variables on common stock return in Nepalese firms. The findings confirms significant negative impact of firm size, book to market equity, earning yield, and cash flow yield on stock return in Nepalese context. Among the macroeconomic variables, GDP growth rate, and interest rate have significant negative impact on stock return. Contrarily, only the rate of inflation has significant positive impact on stock return in the context of Nepal. No significant effect of money supply is observed on common stock return in the context of Nepal.

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Asymmetric Shocks in the Euro Area: Convergence or Divergence?

International Journal of Management and Economics ◽

10.1515/ijme-2017-0016 ◽

2017 ◽

Vol 53 (3) ◽

pp. 7-25

Author(s):

Dariusz K. Rosati

Keyword(s):

Growth Rate ◽

Euro Area ◽

Negative Impact ◽

Moving Average ◽

Gdp Growth ◽

Asymmetric Shocks ◽

Gdp Growth Rate ◽

Structural Divergence ◽

The Impact ◽

Over Time

Abstract The degree of structural divergence in the Euro Area is examined on the basis of the frequency and distribution of observed asymmetric shocks over the period 1996–2015. An asymmetric shock is defined as an opposite sign difference between the deviation of an individual country’s GDP growth rate from a trend and the deviation of the EA-wide GDP growth rate from a trend. Two measures of asymmetric shocks are introduced, one based on exponential trend values and another on moving-average trend values. Geographical distribution of observed (“revealed”) shocks shows that EA member countries differ in terms of structural convergence, with a higher number of asymmetric shocks in countries that joined the EA at a later date. The distribution of asymmetric shocks over time shows two peaks in the number of shocks around 2002 and 2011, but no clear tendency towards more divergence is detected. As actual data may not provide a full picture of asymmetric shocks (given that countries with sufficient fiscal space could have neutralized their negative impact on GDP growth rates) a hypothesis on the existence of “non-revealed” negative asymmetric shocks is examined. Testing for correlation between public debt levels and GDP growth rate deviations confirms the existence of “non-revealed” asymmetric shocks in low-debt countries. In general, the observed differences in the number of asymmetric shocks in EA member countries (and their increases over time) may actually reflect different fiscal policy reactions in individual countries as well as the impact of financial and debt crises, and are not necessarily an indication of widening structural divergence across the EA.

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The Impact of Public Expenditure Structure on Economic Growth in Russia

Economic Policy ◽

10.18288/1994-5124-2018-6-8-35 ◽

2018 ◽

Vol 13 (6) ◽

pp. 8-35

Keyword(s):

Economic Growth ◽

Growth Rate ◽

National Economy ◽

Positive Impact ◽

Empirical Studies ◽

Social Spending ◽

Gdp Growth ◽

Gdp Growth Rate ◽

General Government ◽

The Impact

In this paper we estimate the impact of changes in the structure of general government expenditure on GDP growth rate in Russia. We construct two types of models: with expenses as shares of total general government spending and as percentages of GDP. The structural vector autoregression (SVAR) methodology from [Corsetti et al., 2012] has been used. According to our estimates, an increase in the share of productive expenditures (national economy, education and health) has a positive impact on the rate of economic growth, while an increase of the share of non-productive expenditures (national defense and social policy) has a negative effect on the growth rate of GDP. The largest positive effect among productive expenditures belongs to expenditure on the national economy: increasing spending on the national economy by 1% of GDP while maintaining the total expenditure unchanged leads to an increase in GDP growth rate by 1.1 p.p. The second largest effect is produced by expenditure on education: a 1% of GDP increase in this expenditure with constant total spending leads to additional GDP growth of 0.8 p.p. Expenditure on health care has the least positive impact on growth: the effect of its increase is estimated at +0.1 p.p. to GDP growth rate. For defense and social spending the effect is negative: -2.1 p.p. and -0.7 p.p. respectively. The results obtained in this paper are generally consistent with the results in previous empirical studies for Russia based on fiscal multipliers, as well as results in empirical studies with foreign and international data.

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What is the relationship between FDI and economic growth? Evidence from EU15 countries

Zbornik Veleučilišta u Rijeci ◽

10.31784/zvr.8.1.8 ◽

2020 ◽

Vol 8 (1) ◽

pp. 253-281

Author(s):

Vlatka Bilas

Keyword(s):

Economic Growth ◽

Growth Rate ◽

Panel Cointegration ◽

Gdp Growth ◽

Causality Test ◽

Ardl Model ◽

Long Run ◽

Gdp Growth Rate ◽

The Impact ◽

The Relationship

The aim of the paper is to examine the relationship between foreign direct investment (FDI) and economic growth in EU15 countries over the period 2002-2018. EU15 makes a group of countries which entered the EU prior to the biggest enlargement in 2004, namely latest in 1995 (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom). Paper findings contribute to the existing literature on the impact of FDI on economic growth. It employs different unit root tests, panel cointegration test (ARDL model) and Granger causality. Estimated panel ARDL model found some evidence that there are long-run equilibrium between LogGDP, LogFDI and LogFDIP series. The rate of adjustment back to equilibrium is between 4.43% and 5.95%. The long-run coefficients are all positive, but not all of them are statistically significant. In case of LogFDIP series long-run coefficients are statistically significant, varying between 0.1226 and 0.4398. These coefficients indicate that 1% increase in LogFDIP (logarithm of FDI to GDP) increases LogGDP between 0.1226% and 0.4398%. Results of Dumitrescu-Hurlin panel causality test indicated that there is only unidirectional causal relationship from GDP growth rate to FDI growth rate, and from GDP growth rate to LogFDIP. Conclusively, there is only a weak evidence that FDI had statistically significant impact on the GDP in EU15 countries.

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Do Military Expenditure and Conflict Affect Economic Growth in Sri Lanka? Evidence from the ARDL Bounds Test Approach

International Journal of Economics and Finance ◽

10.5539/ijef.v8n3p1 ◽

2016 ◽

Vol 8 (3) ◽

pp. 1

Author(s):

Abdul Rasheed Sithy Jesmy ◽

Mohd Zaini Abd Karim ◽

Shri Dewi Applanaidu

Keyword(s):

Growth Rate ◽

Civil War ◽

Sri Lanka ◽

Military Expenditure ◽

Gdp Growth ◽

Per Capita Gdp ◽

Long Run ◽

Gdp Growth Rate ◽

Per Capita ◽

Bounds Test

Conflicts in the form of civil war, ethnic tensions and political discord are of enduring concern and a major bottleneck to economic development in Sri Lanka. Three decades of civil war and unethical political culture have caused severe economic problems for the country, including slower rate of growth and a huge defence expenditure. The aim of this study is to examine the effect of military expenditure and conflict on per capita GDP growth rate in Sri Lanka from 1973 to 2014 using the Solow growth model and ARDL bounds test approach. The results of the bounds test are highly significant and lead to cointegration. The negative and significant coefficients of the error correction term illustrate the expected convergence process in the long-run dynamic of per capita GDP. The estimated empirical results show that, the coefficients of military expenditure and conflict are negative and statistically significant in the short-run as well as in the long-run in determining per capita GDP growth rate in Sri Lanka. Hence, it is critically important to take necessary action to decrease military expenditure and provide an efficient political solution to the problem of minorities, specifically in the post-war period.

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