Dynamic of Risk Management and Intermediate Functions of Commercial Banks: The Supply Side Evidence from Nigeria

This study investigated the relationship between risk management and financial intermediation of quoted commercial banks in Nigeria. Panel data were sourced from the Nigeria Stock Exchange for a period that spans 2009 to 2018. Financial intermediation was measured domestic credit of the commercial banks. Domestic credit was modelled as the function of Risk diversification, Basel compliance, risk transfer, credit securitization and risk retention and risk evaluation. Multiple regressions were formulated to ascertain the relationship between risk management and capital investment decision of commercial banks. Panel Unit root test was utilised to establish the stationarity of the data. Panel cointegration, and granger causality test analyse the data. The panel unit root test proved presence of unit root at first difference and concluded that the variables were integrated in the order of 1(I). The study found that, there is a significant relationship between risk management and domestic credit decision, of the quoted commercial banks. The panel cointegrations show the presence of long run relationship between the endogenous variables and the exogenous variables while the granger causality test found uni-directional causality among the variables. From the findings, the study concludes that risk management have significant relationship with domestic credit decisions of the commercial banks. The study recommends that to mitigate the riskiness of banking operations, more avenues for risk diversification should be explored. Although Basel compliance enhances domestic credit decision, its implementation should be done cautiously and in consideration of the intricacies and peculiarities of the Nigerian banking space, as it impinges on most domestic credit decisions.

Human capital interaction on foreign aid-growth nexus: evidence from South Asia and sub-Saharan Africa

Purpose The purpose of this study is to examine the interactive role of human capital development (HCD) in foreign aid-growth relations in South Asia and sub-Saharan Africa countries from 1985–2019. Design/methodology/approach The study used panel data that cut across all countries in South Asia and sub-Saharan Africa collected from The World Bank’s Development Indicators. The data were analysed using Bai and Ng panel unit root idiosyncratic cross-sectional tests and the system generalised method of moments (SGMM). Findings The study found that foreign aid and HCD have negative impacts on economic growth. Fortunately, the interaction of human capital with foreign aid reduces the extent to which foreign aid impedes economic growth. The presumption is that South Asia and sub-Saharan Africa economies had not reaped the potential growth effect of foreign aid inflows due to high illiteracy rates and weak social capacities. The peculiarity of these regions hinders the absorptive capacity to transform positive externality associated with foreign aid into sizeable economic prosperity. Practical implications It is imperative for South Asia and sub-Saharan Africa countries to not depend on foreign aid; instead, the strategic action by policymakers should be to developing sustainable social capacities with HCD as the centre-piece. Originality/value The highpoint of this study is its inter-regional approach and the interplay between human capital and foreign aid using the second generation panel unit root estimator and the SGMM approaches.

Beta-convergence of crop yield across countries: A Modern Panel Data Analysis

This study examines the state of beta-convergence in three major crop yields l in the world namely rice, wheat and maize in terms of output production and cereal grain consumption during the period 1961 to 2016 using modern panel data approach concerning beta convergence. This has been done by applying the advanced panel data methodology, namely, panel unit root tests on demeaned series and panel regression apart from conventional indicators such as standard deviation and coefficient of variation. The conventional sigma convergence indicators namely, standard deviation and coefficient of variation show convergence for wheat for the period of 1986 to 2016 showing a downward trend and thus indicating sigma-convergence, But the results of panel unit root and panel regression establish beta convergence for all the crop yield. This result also shows that economies converge to different steady states.JEL classification: Q1, Q18, C23, O47

Factors influencing tourism investment in the CLMVT countries

The objective of this research is to examine the factors that affect tourism investment in the CLMV countries (Cambodia, Laos, Myanmar, Vietnam and Thailand). This study employs panel data as quarterly data from 2000 - 2019. Data analysis employs the panel unit root test estimated by fixed effect estimation. The results revealed that the Minimum Loan Rate factor has a negative effect on tourism investment while the number of international tourists and Gross Domestic Product (GDP) positively affect tourism investment. Therefore, in each CLMVT country, the relevant authorities should determine a suitable Minimum Loan Rate (MLR), target tourism promotion as a single region and pursue policies that enhance the economy. Such policy should support employment in the tourism sector and enhance the economic system of the CLMVT countries.

Energy Consumption and Four Growth Hypotheses: an Evidence From Saarc Nations

The contemporaneous study investigates the directional relationship between economic growth and energy consumption for four selected SAARC nations from 1990 to 2018 within a panel-data framework. In the empirical literature, conservation, growth, feedback, and neutral hypotheses exist between energy and economic growth. First, study implies a Granger causality test to find the short-run directional relationship. Secondly, it checks the order of panel unit root that is a prerequisite condition for cointegration particularly when we have a long panel. In the end, based on panel unit root, the study estimates the model with the help of FMOLS to find a long-run relationship. The present study explores the conservation hypothesis in the short run at the regional level for Bangladesh and Pakistan. While the feedback hypothesis and neutral hypothesis exist in case of India and Sri-Lanka respectively. On the other hand, in the long run, there is cointegration between economic growth and energy use, while the direction conforms to the feedback hypothesis in our panel after allowing heterogeneous cross-sectional effect. Thus, energy and economic growth are coupled with each other in the long run at a regional level whereas, energy as a factor of the production process does not contribute significantly in the short run. It is because this region is labour abundant, therefore, the share of energy is significantly low in the final output as compared to developed nations. Consequently, the availability of energy at affordable prices truly matters for developing nations of SAARC.

Causal Relationship Between the Spread of the COVID-19 and Geopolitical Risks in Emerging Economies

This study investigates the causality between the spread of the COVID-19 pandemic (measured by new cases per million and new deaths per million) and geopolitical risks (measured by the index of geopolitical risks). We use the balanced panel data framework in 18 emerging economies from January 2020 to August 2020. We run the initial tests of cross-sectional dependence and the panel unit root tests with capturing cross-sectional dependence. Then, we utilize the panel Granger non-causality tests for heterogeneous stationary panel datasets. According to the findings, there is a significant causality from both measures of spreading the COVID-19 pandemic to geopolitical risks. Further tests are performed, and potential implications are also discussed.

Considering nonlinearity and structural changes in the convergence of clean energy consumption: the case of OECD countries

PurposeIn this study, we aim to test the stochastic convergence of per capita clean energy use in 30 OECD (Organization for Economic Co-operation and Development) countries for the period of 1965–2017.Design/methodology/approachThis study employed both linear and nonlinear panel unit root tests, and unlike other studies, this study allowed fractional values in addition to integer values for frequencies in the Fourier functions. Integer values of frequency indicate temporary breaks, while fractional values show permanent breaks.FindingsThe results of the linear panel unit root test indicate that clean energy use does not converge to group average for almost all OECD countries. However, the results of nonlinear panel unit root tests provide evidence that the stochastic convergence hypothesis of clean energy consumption cannot be rejected for most countries. This study does not find any evidence for stochastic convergence of clean energy use in Australia, Canada, Denmark, Ireland, Norway or Sweden. Therefore, the policies regarding clean energy are mandatory in these countries due to their effectiveness. This study also reveals that there are permanent structural breaks in the convergence process of clean energy consumption in approximately half of OECD countries.Originality/valueThis study considers temporary and permanent smooth structural shifts in addition to nonlinearity when testing the stationarity of clean energy consumption in a country i relative to the group average. This new method eliminates deficiencies of the previous panel data techniques. Thus, it provides more reliable results compared to existing literature.