Does the Number of Hajj Pilgrims Boost Economic Growth in Saudi Arabia?

This paper uses the multivariate Johansen cointegration approach and Granger causality tests to study the causal relationship between the number of pilgrims and the non-oil GDP growth in Saudi Arabia over the period 1980–2016 by integrating the real effective exchange rate index as an additional variable. Our findings indicate that there is only one long-run relationship between the three variables when the non-oil GDP growth is the dependent variable. There is a unidirectional long-run causality from the number of pilgrims to non-oil GDP growth. Besides, we find no short-run causal relationships between the three variables. Therefore, an important policy implication resulting from this study is that pilgrims can be a led growth factor to economic growth in Saudi Arabia in the long run. The pilgrimage event can, therefore, be an excellent opportunity for Saudi Arabia to boost its economic activity as stated by its 2030 vision.

Can Unconditional In-Kind Transfers Keep Children Out of Work and in School? Evidence from Indonesia

Child labour is a global issue which creates a need for evidence-based interventions such as cash and in-kind transfers. However, there is limited evidence about the effect of in-kind transfers on child labour, impeding policy development. We address this gap by examining the impacts of an unconditional in-kind transfer, a nation-wide subsidised rice program, on child labour and schooling using longitudinal household survey data from Indonesia. To identify the causal effect, we use coarsened exact matching with difference-in-differences estimator. The results indicate that the program is effective in decreasing the probability of working for boys though it does not have a significant impact on the probability of schooling. However, as an unconditional in-kind transfer, its ability to decrease child work for boys, especially of those who are both working and attending school, provides an important policy implication on how a food subsidy program can indirectly influence child wellbeing.

COMPETITION, DIVERSIFICATION, AND STABILITY IN THE INDONESIAN BANKING SYSTEM

We examine the impact of competition and portfolio diversification on banking stability for conventional and Islamic banks in Indonesia. We find that the Islamic banking sector is less stable, when compared to the conventional banking sector. Competition in the banking sector reduces stability, while diversification enhances it. We find that competition negatively impacts the Islamic banks, but diversification has no impact on these banks. An interesting finding is that competition and diversification complement each other in enhancing the stability of the Indonesian banking sector. These findings carry an important policy implication for the banking sector of Indonesia.

Asymmetric Effects of Fiscal Deficit on Inflation: Evidence from India

This study examined the asymmetric effect of fiscal deficit, money supply, and exchange rate on inflation over 1991-2016. The study employed the Non-Linear Autoregressive Distributive Lag Model (NARDL) to achieve the objectives. The results provided evidence in favour of the asymmetric effect. Further, the results showed the positive and negative changes in fiscal deficit on inflation differently. The results also highlighted that the money supply created an inflationary situation more than the fiscal deficit, whereas the exchange rate promoted inflation. So, the policymaker should be much bothered about money supply rather than a fiscal deficit as it has a relatively more positive effect on inflation, it could be an important policy implication of the study

Microfinance and Inequality: Case of Indonesia

This study investigates the role of microfinance from small-sized banks, usually with a limited geographical area of operation, in Indonesia, namely Bank Perkreditan Rakyat (BPR) on the income inequality. Using a province level panel data of 2012-2018 the results show that loans from such a bank are associated with income inequality reduction, supporting the arguments that microfinance contributes to income inequality reduction. This study has an important policy implication regarding the existence of BPR in Indonesia.

The Effect of Fiscal Balance Funds on Local Economic Growth in Indonesia

The fiscal balance funds are the funds from the central government for the local government, and it has become the main revenue for the local governance. As the main revenue, the fiscal balance funds could affect the local economic growth. By looking at the data from the period of 2011 to 2018, this essay investigates two things, first is the relationship between fiscal balance funds and the local economic growth. This essay also identifies what are the major determinants of local economic growth in Indonesia is. Furthermore, do the results differ across regional groups. The essay finds that the relationship between fiscal balance funds have positive effect on economic growth. With the most significant funds are the DAU and DAK. The results also confirm that increasing human capital would increase economic growth. This essay also finds that even though the results for regions vary, capital expenditure still shows positive effect for economic growth. The findings from this essay would have important policy implication for the central government in Indonesia in reviewing the fiscal balance policy and determining the priority sectors

Growth of Companies: Empirical Study of the Companies Listed in Developing Economies

The aim of this study is to investigate the impact of some control determinants on growth of companies as a reflection to an economic perspective. The methodology used in the current study is cross sectional for a sample of companies belonging to industrial and service sectors (non-financial sector) for the year of 2019 in developing economies. We find a positive link between a number of board members and companies’ growth, while leadership position has insignificant link to companies’ growth. This means that an important policy implication should be considered by policy makers and management in the companies to increase numbers of members in the board of directors which is worth towards enhancement of companies’ growth. The value and originality of this study lies in its results that should be taken into account by several interested parties such as the management in the companies who engage in behavior that leads to maintaining strong control determinants, and also the financial analysts who manage studies on control determinants to enhance companies' growth and further the policymakers who design and implement plans of such determinants.

The empirical evidence on the determinants of fiscal decentralization.

This paper analyzes the main determinants of fiscal decentralization in a sample of eighty-four countries. The empirical findings show that the most consistent variable affecting fiscal decentralization is the size of a country: as land size increases, the level of fiscal decentralization increases as well. Countries with higher income equality, an educated population, more democratic, more urbanized and open to trade are also more likely to be more decentralized, though the findings demonstrate that there are regional and income variations. The most important policy implication is that governments interested in deepening the devolution of fiscal responsibilities to sub-national levels may consider acting to affect those variables that have been shown to exert a positive influence on this process.

Tax Reform and Economic Growth in Developing Countries: The Trade Openness and Public Revenue Channels

The current article examines the economic growth effect of tax reform in developing countries. Tax reform is defined here as the process that entails the convergence of developing countries' tax structure towards that of developed countries. The analysis covers a sample of 92 developing countries over the period 1980-2015. The empirical results have shown that tax reform promotes economic growth, including when governments are able to collect a minimum level of public revenue-to-GDP ratio and when they further open-up their economies to international trade. These findings have an important policy implication.

Tests of Income Convergence in ASEAN and SAARC Trading Blocs

The cherished goal of speedy economic growth in the Asian regional blocs cannot be achieved without attaining income convergence among them. Economic integration and assessment of income convergence or disparities among Asian blocs is the aim of this study. This study assesses a number of factors, such as trade openness, foreign direct investment, intellectual property rights protection and governance, to see how open economies are integrating themselves while competing with each other. Findings reveal that the SAARC group has not shown intra-regional income convergence, while the ASEAN group provides sufficient evidence. Although simultaneously considering SAARC and ASEAN groups in the form of a panel, there is evidence of non-convergence between the two regional groups. An important policy implication of the study is that the ASEAN and SAARC blocs are in dire need for combined and collective policy framework at the regional level. JEL: O19, O31, F15