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Personal bankruptcy prediction using decision tree model
Get PDFPurpose. Personal bankruptcy is on the rise in Malaysia. The Insolvency Department of Malaysia reported that personal bankruptcy has increased since 2007, and the total accumulated personal bankruptcy cases stood at 131,282 in 2014. This is indeed an alarming issue because the increasing number of personal bankruptcy cases will have a negative impact on the Malaysian economy, as well as on the society. From the aspect of individual’s personal economy, bankruptcy minimizes their chances of securing a job. Apart from that, their account will be frozen, lost control on their assets and properties and not allowed to start any business nor be a part of any company’s management. Bankrupts also will be denied from any loan application, restricted from travelling overseas and cannot act as a guarantor. This paper aims to investigate this problem by developing the personal bankruptcy prediction model using the decision tree technique.
Design/methodology/approach. In this paper, bankrupt is defined as terminated members who failed to settle their loans. The sample comprised of 24,546 cases with 17 per cent settled cases and 83 per cent terminated cases. The data included a dependent variable, i.e. bankruptcy status (Y = 1(bankrupt), Y = 0 (non-bankrupt)) and 12 predictors. SAS Enterprise Miner 14.1 software was used to develop the decision tree model.
Findings. Upon completion, this study succeeds to come out with the profiles of bankrupts, reliable personal bankruptcy scoring model and significant variables of personal bankruptcy.
Practical implications. This decision tree model is possible for patent and income generation. Financial institutions are able to use this model for potential borrowers to predict their tendency toward personal bankruptcy.
Social implications. Create awareness to society on significant variables of personal bankruptcy so that they can avoid being a bankrupt.
Originality/value. This decision tree model is able to facilitate and assist financial institutions in evaluating and assessing their potential borrower. It helps to identify potential defaulting borrowers. It also can assist financial institutions in implementing the right strategies to avoid defaulting borrowers.
Doi: https://doi.org/10.1108/JEFAS-08-2018-007
Seasonal anomalies in the market for American depository receipts
Get PDFPurpose. The literature provides extensive evidence for seasonality in stock market returns, but is almost non-existent concerning the potential seasonality in American depository receipts (ADRs). To fill this gap, this paper aims to examine a number of seasonal effects in the market for ADRs.
Design/methodology/approach. The paper examines four ADRs for the period from April 1999 to March 2017 to look for signs of eight important seasonal anomalies. The authors follow the standard methodology of using dummy variables for the time period of interest to capture excess returns. For comparison, the same analysis on two US stock market indices is conducted.
Findings. The results show the presence of a highly significant pre-holiday effect in all return series, which does not seem to be justified by risk. Moreover, turn-of-the-month effects, monthly effects and day-of-the-week effects were detected in some of the ADRs. The seasonality patterns under analysis tended to be stronger in emerging market-based ADRs.
Research limitations/implications. Overall, the results show that significant seasonal patterns were present in the price dynamics of ADRs. Moreover, the findings lend support to the idea that emerging markets are less efficient than developed stock markets.
Originality/value. This is the most comprehensive study to date for indication of seasonal anomalies in the market for ADRs. The authors use an extensive sample that includes recent significant financial events such as the 2007/2008 financial crisis and consider ADRs with different characteristics, which allows to draw comparisons between the differential price dynamics arising in developed market-based ADRs and in the ADRs whose underlying securities are traded in emerging markets.
Doi: https://doi.org/10.1108/JEFAS-09-2018-008
Co-authorship networks of Argentine economists
Get PDFPurpose. This paper aims to provide information about the structure of collaborative work among Argentinian economics. The study provides specific applied research of social network analysis focus on this profession in this specific country.
Design/methodology/approach. The contribution opted for applying social network analysis tools to papers presented in a congress and published in its proceedings. The authors focus in detecting main actors, groups of co-authorship, professionals acting as bridges between groups and differences between genders.
Findings. The paper provides empirical insights about how co-authorship has evolved between Argentine economists. The authors find that structural properties of the network, main actors, both male and female, main universities or center that affiliates them, a gender gap that might be closing out.
Research limitations/implications. The paper focuses on the network for the period 1964-2014 without a more detailed dynamic. It also does not explain main topics worked by the authors.
Practical implications. The work provides knowledge about how groups are created in Economics in Argentina, how cooperation has evolved and what has been the role of women in this development. It also shows how different departments and entities collaborate with diverse success in the creation of new knowledge in Economics in Argentina.
Originality/value. The paper works with data from a source of information non-previously studied and contributes in explaining a particular type of collaborative work in a profession in Argentina.
Doi: https://doi.org/10.1108/JEFAS-06-2018-006
Foreign direct investment and institutional stability: who drives whom?
Get PDFPurpose. The purpose of this paper is to examine the relationship between foreign direct investment (FDI) flows and institutional stability. The focus country is Canada. It is one of the few countries where the economy remained relatively stable compared to other economies during the Global Financial Crisis. It is crucial for Canada to determine the optimal level of institutional development to attract more FDI and sustain the sound financial stability in future.
Design/methodology/approach. This study uses the auto-regressive distributive lag (ARDL) approach to understand the relationship between FDI and institutional stability along with other controlled variables, for instance, gross national product, inflation and exports.
Findings. The key finding of this work is that FDI and institutional stability are cointegrated in the long run. The error correction model of ARDL shed light on institutional stability being an exogenous variable, and FDI is an endogenous variable. Institutional stability affects FDI, as it is exogenous. The findings will help policymakers to implement policies to strengthen the institution’s settings, and this, in turn, will attract more investment.
Originality/value. Based on previous theoretical and empirical literature, most of the research points to FDI positively affect institutional stability. In some cases, the relationship does not always hold true. This study will fix the gap in the literature by investigating the relationship between FDI and institutional stability of Canada.
Doi: https://doi.org/10.1108/JEFAS-05-2018-004
Employment and labour hoarding: a production function approach
Get PDFPurpose. This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding.
Design/methodology/approach. This study adopts a production function approach, using data from Malta, a small state in the EU.
Findings. The results confirm the hypothesis and indicate that firms are normally prepared to employ and dismiss more workers in the long run than in the short run.
Practical implications. This finding has important implications for developed countries, including that labour hoarding can be of certain relevance in times of economic slowdown as shocks are absorbed by internal flexibility.
Originality/value. The results of this study add on to the existing literature in two ways. First, this study compares two industries –manufacturing and financial services– for which the former sector received support to hoard labour after the financial turmoil of 2008. Consequently, the dominance of labour hoarding in manufacturing relative to financial services is uncovered and the effect of hoarding practices on labour demand is estimated. Second, Malta is an interesting case because it is one of the smallest economies in the world and faces a high degree of vulnerability because of constraints associated with small size and insularity. As a result, firms adopt policy-induced measures to minimise adjustment costs.
Doi: https://doi.org/10.1108/JEFAS-07-2017-007
The impact of monetary policy on Islamic bank financing: bank-level evidence from Malaysia
Get PDFPurpose. This paper aims to examine the distributional differences of Islamic bank financing responses to financing rate across bank-specific characteristics in dual banking system. The study also aims to provide understanding of how efficiently Islamic banks perform their roles as suppliers of capital for businesses and entrepreneurs.
Design/methodology/approach. The study uses panel regression methodology covering all Islamic banks in Malaysia. The study estimates the benchmark model for Islamic bank financing with respect to bank characteristics and monetary policy.
Findings. The evidence suggests that bank-specific characteristics are important in determining Islamic financing behaviour. The Islamic financing behaviour is consistent with conventional lending behaviour that the Islamic bank financing operates depending on the level of bank size, liquidity and capital. There is no significant difference between Islamic bank financing and conventional bank lending behaviour with respect to changes in monetary policy.
Originality/value. Many problems and challenges relating to Islamic financing instruments, financial markets and regulations must be addressed and resolved. In practice, it would be a good idea if Islamic banks move away from developing debt-based instruments and concentrate more efforts to develop profit and loss sharing instruments.
Doi: https://doi.org/10.1108/JEFAS-01-2018-001
Earnings management para evitar reportar pérdidas: Chile, 2010-2014
Get PDFPropósito. Examinar si las firmas no financieras que estuvieron registradas en la Superintendencia de Valores y Seguros de Chile (SVS) manipularon la cifra de beneficios para evitar reportar pérdidas o disminuciones en las ganancias, durante el período 2010-2014.
Diseño/metodología/enfoque. Se analizaron la distribución de los beneficios netos y la distribución de los cambios en los beneficios netos de las firmas, de acuerdo con la metodología de Burgstahler y Dichev (1997).
Hallazgos. Los resultados mostraron frecuencias inusualmente bajas de pequeñas pérdidas y de pequeñas disminuciones en los beneficios, y frecuencias inusualmente altas de pequeñas utilidades y de pequeños incrementos en las ganancias. Ambos resultados fueron estadísticamente significativos.
Implicaciones prácticas. El estudio presentó evidencia de posibles prácticas de earnings management para evitar reportar pérdidas o disminuciones en el beneficio neto durante el período 2010-2014. Estos resultados permitirían identificar empresas “sospechosas” de earnings management, y aumentarían la probabilidad de detectar las firmas que manipularon al alza el beneficio reportado en los estados financieros o que —en un caso extremo— cometieron un fraude aún no revelado.
Originalidad/valor. Los resultados de este tipo de estudios podrían ser útiles para focalizar actividades de monitorización y fiscalización para una mayor transparencia en el mercado bursátil.
Doi: https://doi.org/10.1108/JEFAS-11-2017-010
Social power of preadolescent children on influence in their mothers’ purchasing behavior Initial study in Peruvian toy stores
Get PDFPurpose. This paper aims to investigate the relationship between legitimate and expert social power types of preadolescent children on the influence perception in their mothers’ purchasing behavior in Peruvian toy stores. The literature review takes into consideration the concepts of social power and the influence on family behavior to then focus on social power within family behavior with the purpose of mainly developing four hypotheses regarding purchasing behavior.
Design/methodology/approach. The methodology followed a non-experimental transversal correlational-causal design. A pilot sample size of 67 cases was used. The sample was based on an objective population of Peruvian mothers of families that live in northern Lima and that go to purchase toys to major shopping centers with their children aged 8-11 years.
Findings. The results show that the expert social power, as well as the legitimate social power, has a strong relationship. In addition, both social powers have an impact on the influence perception in purchasing child-mother, but not on the influence perception in purchasing mother-child. Moreover, the test of moderation of the expenditure level on toy purchases did not have an effect on the context that was studied.
Originality/value. The contribution shows that important changes are happening in the consumption behavior on the aspect of children influencing mothers, and that for Latin American contexts, the level of expenditure still does not crucially affect the causality demonstrated.
Doi: https://doi.org/10.1108/JEFAS-01-2018-001
Is the health care price inflation in US urban areas stationary? Evidence from panel unit root tests
Get PDFPurpose. This study aims to investigate, for the first time in the literature, the stochastic properties of the US aggregate health-care price inflation rate series, using the data on health-care inflation rates for a panel of 17 major US urban areas for the period 1966-2006.
Design/methodology/approach. This goal is undertaken by applying the first- and second-generation panel unit root tests and the panel stationary test developed recently by Carrion-i-Silvestre et al. (2005) that allows for endogenously determined multiple structural breaks and is flexible enough to control for the presence of cross-sectional dependence.
Findings. The empirical findings indicate that after controlling for the presence of cross-sectional dependence, finite sample bias, and asymptotic normality, the US aggregate health-care price inflation rate series can be characterized as a non-stationary process and not as a regime-wise stationary innovation process.
Research limitations/implications. The research findings apply to understanding of health-care sector price escalation in US urban areas. These findings have timely implications for the understanding of the data structure and, therefore, constructs of economic models of urban health-care price inflation rates. The results confirming the presence of a unit root indicating a high degree of inflationary persistence in the health sector suggests need for further studies on health-care inflation rate persistence using the alternative measures of persistence. This study’s conclusions do not apply to non-urban areas.
Practical implications. The mean and variance of US urban health-care inflation rate are not constant. Therefore, insurers and policy rate setters need good understanding of the interplay of the various factors driving the explosive health-care insurance rates over the large US metropolitan landscape. The study findings have implications for health-care insurance premium rate setting, health-care inflation econometric modeling and forecasting.
Social implications. Payers (private and public employers) of health-care insurance rates in US urban areas should evaluate the value of benefits received in relation to the skyrocketing rise of health-care insurance premiums.
Originality/value. This is the first empirical research focusing on the shape of urban health-care inflation rates in the USA.
Doi: https://doi.org/10.1108/JEFAS-02-2017-004
A bibliometric analysis of venture capital research
Get PDFPurpose. The purpose of this study is to present the evolution of academic research in venture capital (VC) research between 1990 and 2014.
Design/methodology/approach. The study analyzes the most influential journals in VC research by analyzing papers, which were published on the Web of Science database.
Findings. Results show a steady increasing rate of VC research during the past 25 years. The paper reports the 40 academic journals that permanently publish articles about VC research.
Originality/value. The main contribution of this work is to develop a general overview of the leading journals in VC research, which leads to the development of a future research agenda for bibliometric analysis, such as the review of the most productive and influential authors, universities and countries in VC research.
Doi: https://doi.org/10.1108/JEFAS-01-2018-001