Authors:Fevzi Ölmez, Emre Bilgiç, Esra Aydın Abstract: This research aims to investigate the role of the economic policy uncertainty (EPU) in the outward FDI (OFDI) of the United Kingdom (UK) by considering the institutional quality (IQ) and globalization level of the host country as contextual factors. The UK’s OFDI to its twenty partners is analyzed by using the factor augmented model for the 2005–2019 period. The results show that the EPU of the host country has a negative and significant effect on the UK's OFDI. Furthermore, the findings surprisingly illustrate that the globalization level of the host country has a negative and significant impact on the UK's OFDI. In terms of IQ, this study indicates that, while government effectiveness and regulatory quality have a negative and significant influence on the UK's OFDI, the rule of law has a positive and significant effect on the UK's OFDI. This will be one of a few studies considering OFDI in the scope of EPU. Also, the contradicting results of the study add unique perspectives to the literature about the relationship between OFDI, globalization, and IQ. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-08-07 DOI: 10.1108/JEFAS-05-2023-0143 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Orlando Gomes Abstract: Literature on psychology highlights four traits that shape an amoral and antisocial personality: Machiavellianism, narcissism, psychopathy and sadism. Together, these personality traits form the Dark Tetrad. In this study, the standard intertemporal utility maximization model is reassessed from the point of view of a representative economic agent endowed with the Dark Tetrad personality traits. The approach followed in this paper consists of identifying how each of the Dark Tetrad traits might be logically associated with the dynamic utility problem, as well as exploring, in the context of the model, the implications, for consumption and utility, of admitting the presence of such traits in individuals’ personalities. It is found that, typically, dark personalities penalize consumption growth, even when such traits are interpreted directly and positively contributing to the utility of the agent. It is also found that in economies with two or more interacting agents, the dark traits might have a mutually destructive nature. Economics is going through a smooth revolution in the direction of becoming an eminently behavioral science. Most of the traditional economic models, based on the idea of the hyper-rational agent, are being replaced or complemented by a different view of the homo-economicus, in which, among other things, personality matters. This paper offers a novel contribution in this direction. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-07-19 DOI: 10.1108/JEFAS-07-2022-0164 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:V Shunmugasundaram, Aashna Sinha Abstract: The purpose of this study is to investigate the impact of behavioral biases on investment decisions through a serial mediation of overconfidence and disposition effects. The authors assess the behavioral biases affecting the investment decisions of life insurance policyholders through the serial mediation of overconfidence and disposition effects using a structured questionnaire. The study included 501 life insurance policyholders who were selected using a snowball sampling technique. The results of this study revealed that behavioral biases influence the investment decisions of life insurance policyholders. The results also support the serial mediation model, where behavioral biases influence the investment decisions of life insurance policyholders via overconfidence and disposition effects. This study makes a theoretical contribution to the field of behavioral finance by exploring the influences of behavioral biases on investment decisions. It also introduces overconfidence and disposition effects as serial mediators between behavioral biases and investment decisions. The study will be helpful for researchers, academicians and policymakers in the development of a more comprehensive model in the area of behavioral finance and in raising awareness regarding those biases among policyholders in order to improve their investment strategy. This study has extended the ongoing simple mediation model by integrating overconfidence and disposition effects in a serial mediation model between behavioral biases and investment decisions. The study will contribute to the area of behavioral finance, as it is the first time this particular study has been conducted according to the authors’ knowledge. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-07-11 DOI: 10.1108/JEFAS-08-2023-0243 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Carlos Alexander Grajales, Katherine Albanés Uribe Abstract: This paper proposes a methodology based on an uncertain mining technology that identifies the linguistic relationships of ESG and its components with a financial performance metric to help the sustainability diagnosis of a region, specifically Latin America. First, based on a relevant dataset of companies in a region, a procedure is formulated whereby an uncertain mining technology extracts the mathematically significant linguistic relationships of ESG and its components with a financial performance metric. Second, a knowledge management process is designed based on the linguistic summaries obtained from the mining process. As a final step and drawing upon the two preceding processes, a diagrammatic system of signals is proposed for diagnosing the sustainability of the region as contributed by its companies. After this methodology is instantiated on a group of Multilatinas, it is observed that their sustainability contributions to the region are limited and that none of the identified linguistic relationships between ESG and the financial performance metric are favorable for the region. This is the first proposal of its kind and it can be applied to any region of the world to assess the financial performance of its companies regarding their ESG commitments. In addition, it enables the region to comprehensively monitor compliance with the 2030 SDG agenda. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-06-17 DOI: 10.1108/JEFAS-02-2024-0040 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Lua Thi Trinh Abstract: The purpose of this paper is to compare nine different models to evaluate consumer credit risk, which are the following: Logistic Regression (LR), Naive Bayes (NB), Linear Discriminant Analysis (LDA), k-Nearest Neighbor (k-NN), Support Vector Machine (SVM), Classification and Regression Tree (CART), Artificial Neural Network (ANN), Random Forest (RF) and Gradient Boosting Decision Tree (GBDT) in Peer-to-Peer (P2P) Lending. The author uses data from P2P Lending Club (LC) to assess the efficiency of a variety of classification models across different economic scenarios and to compare the ranking results of credit risk models in P2P lending through three families of evaluation metrics. The results from this research indicate that the risk classification models in the 2013–2019 economic period show greater measurement efficiency than for the difficult 2007–2012 period. Besides, the results of ranking models for predicting default risk show that GBDT is the best model for most of the metrics or metric families included in the study. The findings of this study also support the results of Tsai et al. (2014) and Teplý and Polena (2019) that LR, ANN and LDA models classify loan applications quite stably and accurately, while CART, k-NN and NB show the worst performance when predicting borrower default risk on P2P loan data. The main contributions of the research to the empirical literature review include: comparing nine prediction models of consumer loan application risk through statistical and machine learning algorithms evaluated by the performance measures according to three separate families of metrics (threshold, ranking and probabilistic metrics) that are consistent with the existing data characteristics of the LC lending platform through two periods of reviewing the current economic situation and platform development. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-06-10 DOI: 10.1108/JEFAS-04-2021-0026 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Sakib Bin Amin, Bismi Iqbal Samia, Farhan Khan Abstract: The main purpose of this paper is to analyse the influence of capital efficiency on the economic growth of Bangladesh using the Harrod-Domar (H-D) model. We use annual data from 1980 to 2019 for this paper. Three steps are taken in the data analysis. First, to check the existence of a unit root, we use the augmented Dickey-Fuller (ADF) test and to determine co-integration among the variables, we use the Johansen-Juselius co-integration test. Next, for long-run estimation, we use the dynamic ordinary least square (DOLS) estimator. The sensitivity of the long-run estimations is further checked by the fully modified OLS (FMOLS) and autoregressive distributed lag (ARDL) estimators. Lastly, we use the Granger causality test to determine the long-run causality among the variables. The long-run co-integration test validates the co-integrating relationship among the variables. DOLS estimations reveal that the economic growth of Bangladesh is negatively associated with the incremental capital output ratio (ICOR), validating the notion that capital efficiency matters for achieving higher economic growth. On average, an increase in ICOR by a unit tends to reduce economic growth in the long term by 0.75 percent. Our results also reveal no significant relationship between savings and economic growth when the model is extended. Finally, causality results indicate unidirectional causality between ICOR and economic growth. Based on the results obtained, we argue that the enhancement of capital productivity could bring efficiency because ICOR is an inverse of capital productivity. Since Bangladesh’s capital productivity is considerably low compared with other neighbouring countries, it is suggested that firms should gradually move towards technological advancement and enhance economies of scale, etc. in the long run. Moreover, policies in favour of continuous skill development programmes could be highly effective in increasing capital productivity given that capital follows a vintage structure. This is the first paper to analyse the economic growth pattern of Bangladesh using the traditional H-D model by incorporating variables such as savings and ICOR and also by relaxing the assumption of time-invariant (i.e. fixed) data of the variables. Moreover, this paper extends the traditional H-D empirical model by introducing key indicators and time breaks for Bangladesh’s economy through a stepwise regression process. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-05-28 DOI: 10.1108/JEFAS-06-2021-0096 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Armando Urdaneta Montiel, Emmanuel Vitorio Borgucci Garcia, Segundo Camino-Mogro Abstract: This paper aims to determine causal relationships between the level of productive credit, real deposits and money demand – all of them in real terms – and Gross National Product between 2006 and 2020. The vector autoregressive technique (VAR) was used, where data from real macroeconomic aggregates published by the Central Bank of Ecuador (BCE) are correlated, such as productive credit, gross domestic product (GDP) per capita, deposits and money demand. The results indicate that there is no causal relationship, in the Granger sense, between GDP and financial activity, but there is between the growth rate of real money demand per capita and the growth rate of total real deposits per capita. The study shows that bank credit mainly finances the operations of current assets and/or liabilities. In addition, economic agents use the banking system mainly to carry out transactional and precautionary activities. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-04-25 DOI: 10.1108/JEFAS-03-2023-0081 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Junaidi Junaidi Abstract: This research investigates the Islamic banks’ intermediation role (e.g. branches and deposits) in financing. It also examines how financing contributes to the regions' economic growth and poverty alleviation as a predictor and mediator variable. A total of 297 observations were extracted from 33 Indonesian districts and 14 Islamic banks during the period 2012–2020. Fixed-effect regression analysis was used to examine variable’s interactions. The empirical results indicate that Islamic banks have adopted a channelling role towards redistributing capital from lender to borrower. Besides, there are crucial roles in developing economies and reducing poverty at the district level. This study also reinforces the critical role of financing in mediating the relationship between branches and deposits as predictor variables and GDP and poverty as outcome variables. The current study was limited to Indonesian Islamic banks and the district’s perspective. Future research needs to cover sub-districts and other poverty measurements (e.g. human education and development perspectives), including conventional and Islamic banks. It can help practitioners, regulators and researchers observe the dynamic behaviour of the banking sector to understand its role in the economic and social fields. Bank managers and regulators should promote branches, deposits and financing. It also enlightens people about the essential role of Islamic banks and their fundamental operations in business and economics. This study contributes to economic literature, bank managers and local governments' decision-making processes by developing and testing an economic growth and poverty model. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-04-24 DOI: 10.1108/JEFAS-06-2021-0097 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Daniel Werner Lima Souza de Almeida, Tabajara Pimenta Júnior, Luiz Eduardo Gaio, Fabiano Guasti Lima Abstract: This study aims to evaluate the presence of abnormal returns due to stock splits or reverse stock splits in the Brazilian capital market context. The event study technique was used on data from 518 events that occurred in a 30-year period (1987–2016), comprising 167 stock splits and 351 reverse stock splits. The results revealed the occurrence of abnormal returns around the time the shares began trading stock splits or reverse stock splits at a statistical significance level of 5%. The main conclusion is that stock split and reverse stock split operations represent opportunities for extraordinary gains and may serve as a reference for investment strategies in the Brazilian stock market. This study innovates by including reverse stock splits, as the existing literature focuses on stock splits, and by testing two distinct “zero” dates that of the ordinary general meeting that approved the share alteration and the “ex” date of the alteration, when the shares were effectively traded, reverse split or split. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-04-19 DOI: 10.1108/JEFAS-08-2021-0168 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Chi Aloysius Ngong, Kesuh Jude Thaddeus, Josaphat Uchechukwu Joe Onwumere Abstract: This paper aims to examine the causation linking financial technology to economic growth in the East African Community states from 1997 to 2019. Autoregressive distributed lag is used. Gross domestic product per capita proxies economic growth, automated teller machines, point of sale, debit card ownership and mobile banking measure financial technology. The results unveil a significant relationship between financial technology and economic growth. The findings show bidirectional causality between automated teller machine and economic growth, with unidirectional causation from economic growth to point of sales and internet banking, mobile banking and government effectiveness to economic growth. The error correction term is negatively significant, demonstrating a long-term convergence between Fintech measures and economic growth. The governments should effectively enact and implement policies that protect investments in financial technologies to boost economic growth in the East African Community countries. The government should reduce taxes on financial technology equipment and related services. The use of automated teller machine, debit card ownership and internet banking should be encouraged through cashless transactions. Financial institutions should adopt cashless operation policies to encourage the use of financial technologies. Research results on the bond between financial technology and economic growth are not conclusive. These studies demonstrate that technological innovations are double edged-swords, with both positive and negative sides. The results are conflicting; some reveal positive relationships, while others show negative links. Hence, research is required to fill the lacuna. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-04-05 DOI: 10.1108/JEFAS-01-2022-0009 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Allan Pérez-Orozco, Juan Carlos Leiva, Ronald Mora-Esquivel Abstract: This study explores the mediating role of marketing management in the relationship between online presence and product innovation among Small and Medium Enterprises (SMEs). The sample comprises 205 Costa Rican SMEs collected by the Global Competitiveness Project during the first half of 2019. The data were analyzed using a two-stage modeling strategy for ordinary regression models to analyze mediation effects. Marketing management as a strategic resource or capability accounts for the relationship between online presence and product innovation performance in SMEs, meaning that online presence resources require complementary organizational capabilities in marketing management to enhance product innovation. This study, grounded in the resource-based view theory, contributes to the innovation field by identifying marketing management capabilities as an intermediate strategic interaction between online presence and product innovation performance in SMEs. Thus, managers should recognize the advantages of integrating marketing management principles and tactics into online presence tools to realize the value of their products by tailoring them to their client’s needs. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-04-05 DOI: 10.1108/JEFAS-04-2022-0087 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Raúl Vázquez-López Abstract: The main goal of this paper is to examine the evolution of Latin American productive integration in terms of the regional value added incorporated in intra-regional exports of Argentina, Brazil, Chile, Colombia, Mexico and Peru. In addition, the study traces the trade and productive integration trajectories for each of these countries from 1995 to 2015. Based on the use of OECD’s global ICIO input-output tables, this paper applies the methodological framework by Wang et al. (2018) for the analysis of trade flows at the bilateral level, which allows breaking down the value of gross exports of each sector-country, depending on the origin of the value added contained in exports, as well as their use. The estimates show very low shares of value added from regional partners in the intra-regional exports of the countries studied. Conversely, the weight of the value added incorporated in these exports by countries outside the region has increased in tandem with China’s expanding involvement in Latin America. This development, along with the downward trend in domestic value added incorporated in exports, indicates a lack of a regional integration process of any depth. This article addresses an economic problem of conventional importance from a global value chain perspective using a novel methodology based on the use of global input–output tables. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-03-20 DOI: 10.1108/JEFAS-09-2022-0202 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Vera Rebiazina, Elena Sharko, Svetlana Berezka Abstract: The paper aims to reveal the impact of relationship marketing (RM) practices adopted by companies in emerging markets on their market and financial performance (FP) over a long-term, 13-year perspective. The research design combines primary empirical data from 229 Russian companies, based on the Contemporary Marketing Practices (CMP) survey, and objective FP data from official statistical databases for 2008–2020 to verify the impact of RM practices on market and FP in the long term. The research underlines the significant impact of RM practices. It is important to notice that the effect of product development (PD) on marketing performance is mediated by competitor orientation. PD affects market and FP, whose roles vary with the return on assets (ROA). Research design supplements the subjective survey data with the objective FP data on the ROA to avoid common method bias. Implementation of RM practices by Russian companies can increase their effectiveness of performance in the long term. This research shows the positive impact of RM practices on the FP of Russian firms over the past 13 years. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-02-29 DOI: 10.1108/JEFAS-01-2022-0034 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
Authors:Olfa Ben Salah, Anis Jarboui Abstract: The objective of this paper is to investigate the direction of the causal relationship between dividend policy (DP) and earnings management (EM). This research utilizes the panel data analysis to investigate the causal relationship between EM and DP. It provides empirical insights based on a sample of 280 French nonfinancial companies listed on the CAC All-Tradable index during the period of 2008–2015. The study initiates with a Granger causality examination on the unbalanced panel data and employs a dynamic panel approach with the generalized method of moments (GMM). It further estimates the empirical models simultaneously using the three-stage least squares (3SLS) method and the iterative triple least squares (iterative 3SLS) method. The estimation of our various empirical models confirms the presence of a bidirectional causal relationship between DP and EM. Our study highlights the prevalence of EM in the French context, particularly within DP. It underscores the need for regulatory bodies, the Ministry of Finance, external auditors and stock exchange organizers to prioritize governance mechanisms for improving the quality of financial information disclosed by companies. This research is, to the best of our knowledge, the first is to extensively investigate the reciprocal causal relationship between DP and EM in France. Previous studies have not placed a significant emphasis on exploring this bidirectional link between these two variables. Citation: Journal of Economics, Finance and Administrative Science PubDate: 2024-02-29 DOI: 10.1108/JEFAS-09-2021-0198 Issue No:Vol. ahead-of-print, No. ahead-of-print (2024)
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