Determinants of trade credit financing: a dynamic analysis comparing agri-food cooperatives and non-cooperatives

PurposeThe particular characteristics of agri-food cooperatives reduce their ability to access external financial resources. The purpose of this paper is to explore the factors influencing the agri-food cooperatives' trade credit operations by measuring their accounts receivable and comparing the results with agri-food investor-owned firms (IOFs).Design/methodology/approachThe authors apply a partial adjustment model (PAM) estimated using a dynamic panel model with a two-step general method of moments (GMM) estimator to a sample of 11,930 Spanish agri-food cooperatives and IOFs for the period 2011–2018.FindingsThe study concludes that cooperatives and IOFs have an accounts receivable target, which they attempt to achieve rapidly. Cooperatives tend to behave as IOFs do, but they present lower adjustment coefficients. This difference seems to be explained by the unique characteristics of cooperatives which set different economic and social goals, not just profit maximization as IOFs. The findings show differences between the financial and commercial purposes of the cooperatives and IOFs as a result of their internal management policies. Larger cooperatives with access to external financial sources, positive cash flows and operational necessities will grant trade credit.Originality/valueThis study gives interesting implications for cooperative managers and policymakers to help them to understand the strategies behind trade credit policies. Previous empirical studies on the agri-food sector are scarce and focus on IOFs without considering the role of trade credit in European cooperatives.

How bank capital structure decision-making change in recessions: Covid-19 evidence from Pakistan

PurposeThis study contributes to existing literature by investigating bank capital structure dynamics during the Covid-19 pandemic. The role of contemporary bank-specific determinants of capital structure during this period is analyzed.Design/methodology/approachAn independent t-test is carried out to check the response of bank leverage to the crisis. Using fixed effect estimation and difference general method of moments (GMM), the impact of the shock is examined. An unbalanced quarterly data set from 2016q1 to 2020q3 of all commercial banks in Pakistan is used.FindingsThe study finds that due to procyclicality of capital, during the Covid-19 crisis, the banks preempted a fall in capital and improved their capital positions. The role of bank specific variables in determining capital structure like profitability, size and competition weakened during this period. Evidence suggests that policy rate intervention by the central bank was a significant factor in capital structure decisions during the Covid-19 period. The study finds that macroeconomic shocks have significant impact on capital structure decision-making of banks which goes beyond the bank-specific factors.Originality/valueIt finds evidence of a moderating role of monetary policy in capital structure decision-making which has not been previously highlighted in literature. Monetary policy is found to become an important factor deciding the capital structure of banks during the Covid-19 first 3 quarters. This study also explores the impact of Covid-19 on the bank-specific determinants of capital structure of banks.

High-Income Developing Countries, FDI Outflows and the International Investment Agreement Regime

The international investment agreement regime (IIA Regime) is composed of thousands of IIAs and a system of investor–state dispute settlement. Historically, high-income developing countries (HIDCs) were part of the global South and thus ‘hosts’ of foreign direct investment (FDI). Increasingly, however, these countries have become ‘home’ to investors who are hosted and exposed to political risk abroad. Representing both home and host country interests simultaneously, how do HIDCs balance these crosscutting pressures? We argue that as the position of an HIDC shifts from mostly a recipient towards a sender of significant amounts of FDI, it will be more willing to provide protection to foreign investors at the expense of state regulatory space in its IIAs, thereby increasing its exposure to the IIA Regime. Employing an original data set that measures this exposure for sixty-four HIDCs over six decades, we first show that the degree of HIDC exposure to the IIA Regime varies a great deal. Using a general method of moments (GMM) analysis and controlling for a host of confounding factors, we demonstrate that, indeed, higher levels of FDI outflows as a share of the national economy result in greater exposure to the IIA Regime.

The determinants of foreign direct investment: what about the potential of the Arab Maghreb countries?

Purpose The purpose of this paper is to elucidate the main determinants of foreign direct investment (FDI) in the case of the Arab Maghreb countries. Design/methodology/approach We employ a dynamic panel analysis using the General Method of Moments for a sample composed of 105 countries over the period 1985–2018. Findings We show that FDI stability, market size, higher education enrolment, quality of institutions, distance, sharing of common border, and bilateral investment and integration agreements are the main determinants of FDI location. These determinants are neither general. The potential for attracting FDI from AMU countries is poorly exploited. FDI to the AMU is lower than estimated stock. The observed FDI to potential FDI ratio does not exceed 87%. France and Spain are the main investors in the AMU region thanks to historical and cultural links. The FDI from the United States, Canada, Germany, Belgium, and Japan are below what is expected. Originality/value The contribution of this paper is observed on the examining oh the determinants of the FDI in the Arab Maghreb countries. Our study demonstrate that the political stability can decrease investment risk in these countries. The administrations correspondingly require expanding their rules and strategies with union demonstrations which were at the beginning of the departure and closing of several foreign companies.

Uncertainty and Capital Structure: Evidence from an Emerging Country

This paper investigates the impact of uncertainty on corporate capital structure. Using a sample consists of manufacturing firms listed in the Vietnamese Stock Market during the period from 2010 to 2019, we find that an increase in uncertainty can lead to a reduction in the corporate use of debt. This result is robust when we use a lag model or a System General Method of Moments to deal with the endogeneity problems. Moreover, our result shows that firms decrease their leverage when facing a high level of uncertainty because the increase in leverage during the heightened uncertainty periods may reduce firms’ investment. Given that firms in emerging countries in general and in Vietnam in particular rely significantly on debt financing, the results of our paper suggest that policy makers should have solutions to mitigate the adverse impact of uncertainty on firm leverage.

DETERMINANTS OF SYSTEMATIC RISK IN HO CHI MINH CITY’ S REAL ESTATE COMPANIES

This paper aims to investigate factors affecting systematic risk in Ho Chi Minh City’s real estate companies for the period of 2010-2018. The research includes two stages: (i) Measuring systematic risk in Ho Chi Minh City's real estate companies following the approach of the Capital Asset Pricing Model (CAPM) of Sharpe [42] and Lintner [20]; (ii) Applying the panel data regression following Pooled OLS (POLS), Fixed Effect (FEM), Random Effect (REM) and General Method of Moments (GMM) models with two-step difference to identify factors affecting systematic risk in Ho Chi Minh City’s real estate companies. Findings from Ho Chi Minh City’s real estate companies indicate that financial leverage, interest rates, inflation are positively associated with the systematic risk, while systematic risk in the past, profitability, liquidity, real estate price index, land access index, economic growth, interest rates, banking sector fragility index and Government efficiency are negatively related to the systematic risk. This unique finding proposes significant implications for real estate executives, investors and policymakers.

Impact of Banking and Financial Systems on Environmental Sustainability: An Overarching Study of Developing, Emerging, and Developed Economies

In recent years, the developed, emerging, and developing economies have prioritized environmental sustainability attainment. In an attempt to offer some potential policy choices towards the achievement of sustainable development, this paper shifts emphasis from the popularly discussed economic development and carbon emissions nexus. Instead, we examine the impact of the banking and financial system’s activities on carbon emissions for a sample of 45 countries. These are comprised of developed, emerging, and developing countries between 1990 and 2017. To fill the gap in the literature, the nexus is examined in seven different phases. This study exposes robust and reliable empirical results with the use of Feasible General Least Squares, random effects with regards to the Durbin–Wu–Hausman test, and Difference General Method of Moments panel data estimation models. Our findings indicate that the increase of domestic credit to the private sector and commercial bank lending consistently contributes towards aggravated carbon emissions in all economic types. Additionally, increased deposit rates in developing economies, increased lending rates in developed economies, and increased deposit rates in emerging economies contribute towards the overall reduction of carbon emissions. The decrease in lending to high GHG emitting members of the private sector by financial institutions in all economies is recommended based on the results of this study.

Medium Sized Firms in India and Their Dynamic Adjustment Towards Their Target Debt Equity Structure

There have been very few studies done over the world to determine the profitability of firms given the firms expected financial leverage or debt equity structure. Studies from all over the world have identified various factors that are vital in influencing the target debt equity structure of firms. However, different factors vary in terms of their influence on determining the optimal debt equity structure of firms for different countries. This paper researches into various firm specific factors for medium sized companies in India and makes an in-depth analysis to establish the relationship of their impact on medium sized firms which move towards the target debt equity structure through a dynamic process. The medium sized companies have been sampled keeping in mind the market capitalization of these firms in India. This research work tries to explain those factors which have an influence on achieving the optimum debt equity structure for medium sized firms and tries to study how these firms could use their resources in consolidating upon these firm specific factors for the overall profitability of the firms. This line of research has been rarely tried in the Indian context and it promises an innovative insight into scientific research on determining a firm’s profitability. This research work is based on a very unique analytical tool namely the General Method of Moments (GMM) which is a Nobel award winning analytical tool first proposed by its founder Lars Peter Hansen in 1982.This research work is purely quantitative and empirical in nature and is academically relevant for academicians and industry equally.

Trade and economic development: global causality and development- and openness-related heterogeneity

This paper reconsiders the classic relationship between trade and economic development. We examine the short-term and long-run dynamics between trade and income for 167 countries over the period 1970–2011 and assume that the effect is not homogenous for all countries but rather varies according to the development stage and the degree of trade openness. We apply panel cointegration, Granger causality and panel error correction in combination with Dynamic Ordinary Least Squares and General Method of Moments estimation to explore the causal relationship between these two variables. The results suggest a statistically significant positive short-run and long-run global relationship between trade and income. However, when splitting the panel into different income and trade openness groups, a long-run relationship is observed only for high-income countries and countries with a relatively high degree of trade openness.

Fiscal autonomy and stabilization: an empirical analysis of US state governments

Purpose Even though fiscal autonomy plays a role as one of the prerequisite conditions for fiscal decentralization, there has been little research into why fiscal autonomy is important or how it works for subnational governments. This study aims to examine the effectiveness of fiscal autonomy by using a panel dataset of US state governments from 2001 to 2013. Design/methodology/approach According to the results of general method of moments, the author find that fiscal autonomy leads to reducing volatility in total expenditures. Findings It indicates that fiscal autonomy is necessary for state governments performing one of the three Musgravian role of government (e.g. stabilization). However, when we look at the more detailed relationship between fiscal autonomy and volatility by applying expenditures from major categories such as capital outlay, general expenditure and public welfare, this study finds no statistically significant results. Interestingly, balanced budget requirement and tax and expenditure limitation indicate different effects on expenditure volatility, even though they belong to the same institutional factors. Originality/value This paper is meaningful because it can support the importance of fiscal autonomy on fiscal performance.