The impacts of IPO financing and monetary policy on economic growth in Bangladesh: Evidence from a dynamic assessment

Bangladesh is considered a fast-growing emerging economy and the new Asian tiger. The increasing need for capital funds in Bangladesh is largely met by banks, mainly due to the country’s underdeveloped nature of the stock market. Bank financing is assumed to be influenced by monetary policies, particularly, by bank rates adopted each year by the central bank of Bangladesh. On the other hand, while some studies stress the need for strengthening the debt and equity securities markets to support Bangladesh’s fast economic growth, debates swirl about whether or to what extent the stock market contributes to economic growth in the country. To address the understanding gap, in this paper, we examine the impact of capital financing through equity initial public offerings (IPO) and bank rate on the economic growth of Bangladesh. We use annual data from 1981 to 2019 and employ an autoregressive distributive lag (ARDL) framework to examine the long-run and short-run impacts of IPO financing and bank rate on GDP growth rate. Our findings suggest the existence of a long-run cointegrating relationship between IPO financing, bank rate, and GDP growth. We find that IPO financing does not have a significant long-run impact but shows only a one-period short-run positive impact on economic growth. On the other hand, bank rate shows a long-run negative and a one-period short-run positive impact on economic growth. Findings overall suggest that IPO financing does not significantly contribute to long-run economic growth while giving only a temporary boost. Further, increases in bank rate - as one would expect - depress economic growth in the long-run, while generating herd behavior immediately. Our findings stress the need for encouraging more quality IPO issuances, increasing the issuance size, and ensuring proper utilization of the funds by IPO issuers to make the capital market a key driver of economic growth.

The analysis of the effects of Bank Soundness Rate, Inflation and Indonesian Bank Rate on the Profit Growth of Regional Development Banks

Regional Development Banks (BPD in Indonesian) are a type of bank in Indonesia that is established by the local provincial government. Its purpose is to boost regional development and provide initial capital to the province that private banks would not risk giving, as well as giving basic financial services for the general provincial population. RDBs support not only the economic growth in their respective regions but also Indonesia's macroeconomic growth. The purpose of this study is to provide empirical evidence on the impact of the bank soundness rate, inflation and Indonesian Bank rate (BI Rate) on the profit growth of Regional Development Banks. In this study, the authors use data for 2014-2019. The sample of the study is represented by 26 regional development banks in Indonesia, which are registered with the Bank Indonesia and the Financial Services Authority. The authors identified five regions of Indonesia that are being analyzed: Java (including Bali), Sumatra, Kalimantan, Sulawesi and Irian Jaya (including Nusa Tenggara). The authors use for analysis the secondary data obtained from quarterly and annual financial statements of banks. Hypothesis testing was performed using multiple regression analysis, data processing was performed in the SPSS Statistics program. It was found that the components of bank soundness (Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Non-Performing Loans (NPL), Loan to Deposit Ratio (LDR), Good Corporate Governance (GCG)), inflation and the BI Rate do not affect the profits growth of regional development banks. However, such a variable as the Operational Efficiency (known in Indonesia as BOPO) has little effect on the profits growth of regional development banks in Sumatra. For other regions, such an effect is not observed.

RISK ASSESSMENT OF INVESTMENTS IN INTERNATIONAL AND RUSSIAN STEEL GROUPS

Investments in the stock market are becoming more attractive against the background of a reduction in the key bank rate. For the Russian investor, there are new opportunities to increase capital, including by buying shares of large international and Russian companies. When diversifying the investment portfolio, it is necessary to choose companies from different sectors of the economy. The article is devoted to the risk assessment of investments in metallurgical companies. It turns out how risky it is to invest in Russian steel giants compared to international corporations.

PROBLEMS OF DEVELOPMENT OF BANK INSURANCE IN RUSSIA

The article is devoted to the problems of effective interaction between banks and insurance companies in the Russian financial market. The international experience in the formation of bank insurance groups and the main advantages that both participants in such a symbiosis receive are considered. The main threats posed by further integration into this system of social networks and the construction of ecosystems on their basis are considered. Proposals were made to regulate this market in order to both develop competition and increase its value for policyholders by introducing restrictions on the part of the regulator on the use of insurance as a compensator of the bank rate on a loan and other manipulations.

Property investment: gearing and portfolio returns

PurposeThe aim of this study is to comment upon the relatively straightforward but often misunderstood role of gearing (or leverage) on the potential equity return of a property investment portfolio.Design/methodology/approachThis education briefing is an explanation of the how the addition of individual assets to a portfolio can, with gearing, impact upon the portfolio return.FindingsAlthough, this case study is relatively straightforward, it shows how portfolios can be geared to give enhanced returns at differing, aggregate and levels of risk.Practical implicationsThe process of borrowing at a bank rate below the return rate on an investment project can increase the equity return of the project as long as all incomes and discount rate remain at appropriate levels.Originality/valueThis is a review of existing models.

An Economic Impact of Eucalyptus Plantation on Farmers' Sustainability in Gujarat

The economic analysis of eucalyptus was carried out in Middle Gujarat during 2018-19. The average gross return per hectare was 222391, and net return over total cost was 85291. On an average, in normal cost and return situation at ten percent rate of discount the net present value (NPV) was found to be positive ( 47563.15), B: C ratio was found more than unity (1.40), and internal rate of return (IRR) was more (35.00 percent) than the standard bank rate. The results also indicated that three marketing channels were found for the marketing of the eucalyptus tree. Out of the three channels, Channel-I (Producer–Wholesaler–Retailer–Consumer) dominated as 88.33 percent of respondents were selling eucalyptus tree through this channel. The net price received by farmer per quintal and producer share in consumer rupee was maximum in Channel-I. Overall it was observed that the investment on eucalyptus plantation was a profitable and economically viable option under Gujarat conditions.

Interest Rates and Growth of Private Domestic Investment in Kenya; Vector Autoregressive Econometric Approach

This study sought to determine the relationship between short term interest rate, long term interest rate, and private domestic investment in Kenya using time series quarterly data spanning 1997 to 2018. Vector autoregressive model was used to estimate the relationship. The findings show that the central bank rate and lending rate significantly impact private domestic investment. The results emphasize the role of interest rate policy and monetary policy in driving domestic private investment in Kenya. The findings of this study will be of benefit to policy makers through provision of data-based evidence that will be used as a guide while making appropriate policies to encourage growth of private domestic investment in the country leading to economic growth.