1,721,314 research outputs found
Financialization, household debt and income inequality: Empirical evidence
No full textThe aftermath of the most recent financial crisis has prompted a surge of interest in the impact of finance capitalism on national economies and individual livelihoods. Yet, research on the impact of financialization on income inequality, remains scant and inconclusive. Using data for 33 countries over 1996–2015, we provide evidence that of the three financialization dimensions - of the financial, nonfinancial and household sectors - only household financialization exerts a positive and robustly significant impact on income inequality. Re-estimations by system generalized-methods-of-moments (SYS-GMM) and difference-GMM as well as alternative income inequality measures, confirm the significant, positive impact of household indebtedness over all other financialization dimensions. Following disaggregation of household financialization into its three main components (mortgage, consumer and other purposes debt), we also uncover that it is increasing levels of household debt aimed at sustaining living standards that is accountable for the positive impact on income inequality, whilst mortgage debt reduces it.</p
How consistent are measures of financial liberalization in assessing its impact on bank cost efficiency? A cross–country empirical analysis
No full textUsing a sample of commercial bank–year observations covering 104 countries over the 1999–2017 period, we consider five contemporary de jure and de facto indicators of financial liberalization to provide a comparative assessment of their impact on bank cost efficiency. With the sole exception of one de jure index, all other financial liberalization measures consistently indicate an improvement in cost efficiency. We also compare the effects before and after the 2007 global financial crisis, which instigated a policy shift from deregulation to prudential re–regulation. We find that prudential re–regulation did not detrimentally affect bank cost efficiency. Our results for the main financial liberalization measures hold irrespective of countries’ stage of economic development and prove robust to re–estimations based on a single-country efficiency frontier for the US, alternative model specifications and methodologies that account for endogeneity and cross section dependence. The key policy implication from our findings is that prudential policies aimed at fostering stability and less bank risk–taking, can be pursued without any risks of hindering financial intermediation and lowering bank cost efficiency
An empiric on geopolitical risk and the tourism-economic growth nexus
No full textPurpose: This study empirically examines the moderating role of geopolitical risk on the tourism–economic growth nexus by applying a recent geopolitical risk indicator developed by Caldara and Iacoviello (2022) in a cross-country panel data growth model context for a sample of 24 countries. Design/methodology/approach: A Dummy Variable Least Squares panel data model, nonparametric covariance matrix estimator and SYS-GMM estimation techniques are employed for the analysis. The authors capture the GPR moderating effect by disaggregating the cross-country sample according to low versus high country GPR score and through a GPR interaction coefficient. Several controls are included in the models such as gross fixed capital formation and—consistent with Barro (1990)—government consumption. Trade openness is used to account for the export-led growth effect. In line with neoclassical growth theory (e.g. Barro, 1991), the authors also include the real interest rate, to account for policy makers' commitment to macroeconomic stability, financial depth, as a proxy for financial development, population growth and the level of secondary school education. The authors also control for unobserved country-specific and time-invariant effects. Findings: The research finds that the interaction term of geopolitical risk significantly contributes to the predictive ability of the regression and provides empirical evidence that confirms that only in low geopolitical risk countries international tourism positively and significantly contributes to economic growth. Important theoretical and policy implications flow from these findings. Originality/value: The study not only contributes to advancing academic knowledge on the tourism–growth nexus, it also has impact beyond academia. Many countries have in the past pursued and many continue to pursue, tourism specialization and/or tourism-led growth strategies based on the theoretically well-established and empirically validated positive link between inbound tourism and economic growth. The findings alert policy makers in such countries to the significant moderating role that geopolitical risk plays in affecting the above-mentioned relationship and to the importance of prioritizing geopolitical stability as a policy precursor for the successful implementation of such strategies.</p
Climate risk and foreign direct investment entry mode
No full textThe paper examines how climate risk impacts the strategic entry mode choices - between greenfield investments and cross-border mergers and acquisitions (M&As) - of multinational enterprises (MNEs) into foreign markets. Our study adds to existing literature through a cross-countries empirical analysis and uses a newly developed dataset, the Multinational Revenue, Employment, and Investment Database (MREID), that accounts for how both physical and transition risks of climate change affect MNEs’ entry mode choice. Physical risk refers to the tangible impacts of climate change such as extreme weather events, while transition risk involves regulatory and policy changes associated with moving towards a low-carbon economy. Using data for 139 source countries and 134 destination countries over the period from 2010 to 2021, we find that an increase in the physical risk of climate change leads to MNEs choosing greenfield investment when entering into a new market while a higher level of transition risk discourages greenfield investment. Physical risk has a negative and significant influence on MNEs’ entry choice of using cross-border M&A. There is a positive and significant correlation between transition risk and cross-border M&A though such a relationship is not robust. Industrial-level evidence shows a similar pattern in the majority of the industries. Our findings provide policymakers with guidelines helping to mitigate the negative impact of climate change on business decisions at the global level
When do regulations matter for bank risk-taking? An analysis of the interaction between external regulation and board characteristics
Full text linkPurpose - According to previous international studies the impact of external regulation on bank risk is ambiguous. This paper asks the question, “When do regulations matter for bank risk-taking?” by reporting the first empirical investigation of how the relation between bank regulations (capital requirements, official supervisory power, and market discipline) and bankrisk-taking is moderated by board monitoring characteristics.Design/methodology/approach - Using SYS-GMM, the analysis of the interaction between bank-level boards of directors’ attributes (board size, board independence, and board gender diversity) and external regulation is based on a sample of 493 banks operating in 54 countries over 2001-2015, accounting for three measures of bank risk-taking.Findings - Regulations matter for bank risk-taking conditional on board characteristics:board size, board independence and board diversity. With the exception of capital requirements, the market discipline exerted by external private monitoring and greater supervisory power are unable to mitigate the propensity to greater risk taking by banks resulting from larger board size, higher board independence and greater gender diversity of the board.Originality/value - The bank risk empirical literature is still silent as to the interaction between board governance and regulation for the purpose of examining banks’ risk-taking. This paper fills this gap, thus making a significant contribution by extending our knowledge of whether and how board governance moderates the relationship between external regulation and bank risk-taking
The impact of communications and emotions on merger and acquisition success: Does anyone care how you feel about your deal?
No full textMost merger and acquisition (M&A) performance studies focus upon protagonist pre-deal characteristics, post-deal post-acquisition integration strategies, or a combination of the two. However, a critical part of the M&A process has been overlooked. The “deal completion” phase, between the announcement of a deal and its completion, can make the difference between success and failure. This paper examines this neglected process by focusing upon managerial practices aiming to influence investor sentiment during the deal completion phase. We contend that skillful use of acquirer voluntary communications can affect acquirer stock market price. This matters, as a higher price for acquirer stock generally improves an acquirer’s ability to purchase a target company and helps a deal to close successfully. We therefore investigate whether acquirers can influence their share price positively through the skillful use of voluntary communications, in terms of both the volume of communications and the sentiment expressed. We suggest that these voluntary communications can reduce information asymmetry between the acquirer and the financial markets, and so influence market prices. We examine 548 large M&A deals between US acquirers and US targets, completed during 2010–2016, and analyze more than 15,000 voluntary communications taking place between announcement and completion dates. Using stock volatility and cumulative abnormal returns, we find that acquirers benefit from more voluntary communications in the short term, particularly in all equity deals. We also find that the sentiment of voluntary communications matters, as those that express negative sentiment in the short term see a reduction in performance, while longer term those expressing positive sentiment see a positive relationship with stock volatility. These results show that managers can use voluntary communications to influence market perceptions of their acquisition strategies, and that sentiment matters
Does intellectual property rights protection affect UK and US outward FDI and earnings from FDI? A sectoral analysis
Full text linkPurpose. Despite decades of research, the relationship between intellectual property rights
(IPRs) and FDI remains ambiguous. Using a recently developed patent enforcement index
(along with a broader IPR index) and a large sectoral country-to-country FDI dataset, we revisit
the FDI-IPR relationship by testing the impact of IPRs on UK and US outward FDI flows as
well as earnings from outward FDI.
Design/methodology/approach. We use disaggregated data for up to 9 distinct sectors of
economic activity from both the US and UK for outward FDI flows and earnings from outward
FDI, for a panel of up to 42 developed and developing countries over sample periods from
1998 to 2015. We employ a panel fixed effects approach that allows us to exploit the
longitudinal properties of the data using Driscoll and Kraay’s (1998) nonparametric covariance
matrix estimator.
Findings. We do not find any consistent evidence in support of the hypothesis that countries’
strength of IPR protection or enforcement affects inward FDI, or that sector of investment
matters. Our results prove robust to sensitivity checks that include an alternative broader
measure of IPR strength, analyses across sub-samples disaggregated according to the strength
of countries’ IPRs as well as developing vs. developed economies, and an extended
specification accounting for dynamic effects of the response of FDI to both previous investment
levels and IPR (patent) protection.
Originality. We make use of the largest most granular sectoral country-to-country FDI dataset
employed to date in the analysis of the FDI-IPR nexus with disaggregated data for outward
FDI and earnings from outward FDI across up to 9 distinct sectors of economic activity from
both the US and UK. We employ a more sophisticated measure of IPR strength, the patent
index proposed by Papageorgiadis et al. (2014), which places emphasis on the effectiveness of
enforcement practices as perceived by managers, together with the overall administrative
effectiveness and efficiency of the national patent system
Civil Conflict and Cross-Border Lending:A Sectoral, Micro Lender-Level Analysis of Syndicated Loans
Full text linkThis study examines empirically the impact of civil conflict on cross-border lending. Our sample covers 165 countries over the period 1984-2019 with loan data disaggregated at the economic sectoral level (primary, secondary and tertiary sectors), an analysis that is absent in existing literature. Our results indicate that cross-border lending to the primary sector is not significantly influenced by civil conflict, whereas cross-border lending to secondary and tertiary sectors is negatively impacted by the outbreak of civil conflict, leading to a decreased volume of loans or reversals of existing loans
The Impact of FDI on Nigeria’s Exports: A Sectoral Analysis
Full text linkPurpose – The purpose of this paper is to examine the FDI-exports relationship in Nigeria using disaggregated FDI and export data.Design/methodology/approach – This paper applies the ARDL cointegration approach in examining the long-run relationship between FDI and exports.Findings – Our results suggest that aggregate FDI has a positive and statistically significant long-run impact on total exports. Once exports are disaggregated into oil and non-oil exports, the positive, cointegrating relationship holds only for oil exports. When disaggregated by sector, primary sector and manufacturing sector FDI have a positive and significant long-run relationship with both total exports and oil exports but service sector FDI does not appear to have any significant influence on Nigerian exports.Originality/value – This is the first paper that employs both sectoral FDI and disaggregated export data to examine the FDI-exports nexus in Nigeria.<br/
The inward FDI - energy intensity nexus in OECD countries:A sectoral R&D threshold analysis
Full text linkOver recent years, concerns about the need to reduce energy intensity have intensified due to the increasing volume of greenhouse gas emissions that has amplified problems related to global climate change and environmental pollution. At the same time, foreign direct investment (FDI) has been found to have a prominent effect on energy intensity. This study empirically examines the relationship between sectoral FDI inflows and energy intensity by investigating the possibility of a threshold effect of research and development (R&D) technological absorptive capacity. Our sample covers 34 OECD countries over 1987–2013, with FDI and R&D data disaggregated at three sectoral levels (primary, secondary and tertiary sectors), an analysis that is absent in existing literature. We uncover a significant R&D input threshold in the relationship between FDI inflows to non-primary sectors and energy intensity. FDI inflows to non-primary sectors increase the level of energy intensity when the level of sectoral R&D is below the threshold, but such effect decreases when the sectoral R&D level is above the threshold point. Important implications flow from our findings with respect to the type of FDI and the level of indigenous R&D to be encouraged (or discouraged) by policymakers to effectively reduce energy intensity
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