Scientific Annals of Economics and Business
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Investigating the Determinants of Public Debt Sustainability for European Union Countries
Get PDFThis study investigates the determinants of public debt sustainability in the European Union (EU) countries, focusing on the combined effects of the COVID-19 pandemic and the Ukraine conflict. Utilizing the Generalized Method of Moments (GMM) for the 2000-2022 period to address the endogeneity and heterogeneity aspects, the research incorporates various factors, such as military and healthcare expenditures, private debt, and political stability to provide a comprehensive analysis of public debt dynamics. The findings revealed that lagged debt has a significant positive impact on current public debt, indicating its persistence over time. Economic downturns, military spending, and private debt are identified as key drivers of rising public debt, especially during periods of geopolitical tension and economic instability. Additionally, the study highlighted the roles of GDP per capita, inflation, and government expenditure in influencing fiscal stability. The research underscores the importance of adopting long-term fiscal discipline and counter-cyclical measures to manage public debt, particularly during crises. The study offers a comprehensive and original perspective upon the dynamics of EU countries’ public debt and suggests that fiscal policies encouraging investments and supporting political stability contribute to the sustainable management of public debt
Assessing the Quality and Transparency of Financial Audit Reporting in the Context of Gender Differences – Evidence from Companies Listed on the Regulated Market
Get PDFAnalyzing the impact of gender differences in financial auditing has become an important research issue with the aim of promoting equity and fairness within profession, on the one hand, and to determine the impact that gender disparities may have on quality, diversity and innovation in financial auditing, on the other hand. Quality and transparency are important elements that characterize audit reporting as they contribute to providing reliable and relevant information to stakeholders. Including the impact of gender differences in this equation helps to highlight how quality is perceived, as well as to identify associated risks, evaluate the audit process and communicate audit results. The aim of this study is to investigate how the gender of the signatory of the audit report influences the level of quality and transparency of the issued report, the sample including the firms listed on the Regulated Market of the Bucharest Stock Exchange (BSE) that are subject to the audit of annual financial statements for period 2016-2022. Regression and multiple correspondence factor analysis models are applied on 469 observations. The results of this study show that the quality and transparency of reporting in financial auditing are influenced by gender differences, with mixed teams of auditors leading to higher quality of reporting. Obtaining these results underscores the importance of investigating and raising awareness of the impact of gender disparities in financial auditing and the need to address this issue with utmost care and objectivity in efforts to promote a fairer and more efficient audit profession
Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa
Get PDFThere is no doubt that Sub-Saharan Africa (SSA) is home to many financially excluded persons, and the sub-region accounts for a high proportion of the world’s poor. Despite the co-existence of low level of financial inclusion (FI) and high poverty level in SSA, little attention has been given to empirical linkage between these two phenomena. This research attempts to unravel the channels through which FI (measured by the composite financial inclusion index developed using the Principal Component Analysis) impact poverty reduction in a sample of 25 SSA countries. The system-Generalized Method of Moments (i.e., system-GMM) estimator was employed to analyze data for the 2004-2022 period. The empirical outcomes portray that the FI-poverty reduction relation is non-linear, and it identify income growth, consumption expenditure, agricultural output, and unemployment as the channels through which FI influences poverty reduction in the SSA region. The findings further reveal that an FI value beyond thresholds of 1.44 and 5.25 increases income growth and reduces unemployment, thereby reducing poverty. Additionally, an FI value below thresholds of 2.87 and 1.40 positively impacts consumption expenditure and agricultural output, leading to poverty reduction. The study recommends that the monetary authorities in SSA adopt policies which increase the access to financial services and promote financial literacy to enhance financial inclusion and reduce poverty
Evaluating Dynamic Connectedness Between Economic Sanctions Sentiment, Uncertainty Factors, and Financial Assets: A Quantile VAR Approach
Get PDFThis paper investigates the dynamic connection between investor sentiment and a range of asset classes during the Russia-Ukraine conflict. Using daily data from January 1, 2022, to April 20, 2023, we employ the Quantile Vector Autoregressive (QVAR) connectedness framework to examine the connectedness of investor sentiment, financial stress, geopolitical risk, on commodities, fiat currencies, and stock markets. Our results reveal a time-varying and quantile-dependent pattern of connectedness, with RUWESsent consistently emerging as the primary net transmitter of shocks across all quantiles. Furthermore, the net directional connectedness highlights persistent and robust spillovers between RUWESsent, the Financial Stress Index (FSI), the Geopolitical Risk Index (GPR), and key financial assets throughout much of the sample period. This underscores a high degree of connectedness between sentiment-driven uncertainty and asset price dynamics. These findings provide valuable insights for investors, portfolio managers, regulators, and policymakers, emphasizing the importance of monitoring sentiment and geopolitical developments when formulating financial strategies during periods of heightened uncertainty
AI-Driven Transformation in Employment and Labor Income: A Global Analysis of Workforce Dynamics
Get PDFArtificial intelligence (AI) technology has profoundly transformed the landscape of work, exerting substantial influence on employment and labor income dynamics. This study leverages global AI index data to investigate the implications of AI adoption on employment rates and labor income shares. The findings reveal a detrimental effect of AI on both employment opportunities and the proportion of income allocated to labor, with these impacts varying significantly among different worker demographics and across various countries. By unpacking the current effects of AI technology on the labor market, this paper provides valuable insights and potential strategies to address and mitigate the adverse outcomes associated with the integration of AI in the workforce
The Euro and Saving-Investment Imbalances over 25 Years: The Importance of Common Currency and Common Markets
Get PDFThe 1992 Maastricht Treaty, laid the foundations for the current European Union with its single market in goods, services, capital and labour and established the framework for the creation of the single currency. We study countries that differ in the extent to which they share a common currency or common markets in labour, capital or goods through membership of the single market. These differences between countries allow us to judge the importance of membership of each of these institutions. We examine the impact of the euro on the labour, capital and goods markets and ask if membership of the euro is reflected in the parameters of some standard econometric relationships in particular the Feldstein-Horioka and purchasing power parity equations
Energy Consumption, Economic Growth and CO2 Emissions: Empirical Evidence for EU Countries
Get PDFThis paper explores the relationship between economic growth, energy consumption (from fossil fuels and renewable sources), and CO2 emissions in the EU, highlighting the causal relationships between these variables. Through a Panel Vector Autoregressive (VAR) model and statistical test, it is found that fossil fuel consumption has a strong positive effect on CO2 emissions, while renewable energy has a milder negative effect. Granger causality tests confirm the significant causal relationship between fossil fuel consumption and CO2 emissions, highlight the positive impact of renewables on economic growth, showcase the link between economic growth and both emissions growth and renewable energy consumption. The findings emphasize the urgent need for a more aggressive shift towards renewable energy and enhanced energy efficiency to meet the EU's climate neutrality objectives. This study contributes critical insights for policymakers, emphasizing the importance of balancing economic growth with environmental sustainability by accelerating the transition to cleaner energy sources
Testing Semi-Strong Market Efficiency for Leading Altcoins
Get PDFThis study probes semi-strong market efficiency in leading altcoins by examining how various regulatory and international events impact the daily returns of altcoins. We aspire to contribute valuable insights into the behavior of altcoins market in response to external stimuli, highlighting the implications for investors and market analysts in the rapidly evolving landscape of digital currencies. Several events over the period of 2018 to 2024 are considered categorized in two distinct groups namely, crypto-regulatory events and international events, ranging from outbreak of global pandemics, geo-political events and wars, including COVID-19 waves, vaccines authorizations, imposition of lockdowns, BREXIT post 2018, US withdrawal from Afghanistan, Russia-Ukraine war and Israel-Palestine conflict. Subsequently the impact of these events on the daily returns of five leading altcoins is assessed using the Auto-Regressive Component GARCH-Mean model. Altcoins have been responding to both positive and negative regulatory as well as international events. However, the significance of cumulative abnormal returns in the event window indicates signs of semi-strong market inefficiency. The findings provide new insights into the response of cryptocurrencies to various events at a global level, contributing to the understanding of market behavior and market efficiency, particularly, in the leading crypto-assets other than bitcoin. The findings can help altcoin investors devise trading strategies and build investment portfolios in an optimal manner, thereby minimizing the risks involved
The Interplay of Entrepreneurship, Investment, Credit, and Market Capitalization in Shaping Sustainable Economic Growth: An ARDL Approach for the United States
Get PDFThis study explores the interplay between entrepreneurship, foreign direct investment (FDI), domestic credit, and market capitalization in driving sustainable economic growth in the United States from 2001 to 2023. It aims to provide valuable insights for policymakers to understand how these factors collectively influence economic performance. The study employs an Autoregressive Distributed Lag (ARDL) model to analyze the long- and short-term relationships between the variables. An error correction model (ECM) is also used to investigate the speed of adjustment towards long-run equilibrium. Data for the analysis covering key economic indicators such as GDP, early-stage entrepreneurial activity, FDI, credit, and market capitalization. The results indicate that entrepreneurship (TEA) has a consistently positive impact on economic growth across all lags. FDI shows a positive effect in the current period, though its lagged effects are weaker. Domestic credit to the private sector, while significant, has a negative short-term effect on GDP growth, suggesting that credit allocation inefficiencies may hinder growth. Market capitalization exhibits a strong positive effect, underlining the importance of well-developed financial markets for economic expansion. The error correction model suggests that adjustments towards long-term equilibrium are slow, highlighting areas for policy intervention. This paper contributes to the understanding of how key economic factors interact to influence sustainable growth, particularly by emphasizing the role of entrepreneurship and market capitalization. The findings are relevant for policymakers seeking to foster long-term economic growth in the U.S., as well as for future research on economic development dynamics
Public debt and tax revenues in the West African Economic and Monetary Union (WAEMU) countries: the role of human development
Get PDFThis study aims to examine the role of human development in the relationship between public debt and tax revenues in the West African Economic and Monetary Union. Using econometric models with the panel-corrected standard error (PCSE) method and the robust standard error method of Driscoll and Kraay to account for heteroskedasticity, autocorrelation, potential serial correlations and cross-sectional dependence on panel data covering the period 1995-2022, we analyze these complex links. Our results indicate that human development has a positive effect on government revenues. In addition, we find that rising public debt is a brake on tax revenue mobilization. Finally, our analysis suggests that the negative effect of public debt on revenues could be moderated in the context of human development. Our results suggest that human development policies have a positive effect on the public finances. To reinforce this dynamic, we recommend increasing investment in education and health, which are essential pillars of human development. These investments should be accompanied by reforms aimed at optimizing the allocation of public resources in these sectors. The use of public debt can be an effective tool for stimulating economic growth and increasing public revenues in the context of well-developed human development