Do institutions still matter for investors? Impact of institutional determinants on investment inflows into European economies

2018 ◽  
Vol 68 (2) ◽  
pp. 245-270
Author(s):  
Victoria Donu ◽  
Martin Janíčko
Keyword(s):  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
European Countries ◽  
Model Framework ◽  
Heritage Foundation ◽  
Institutional Determinants ◽  
European Economies ◽  
Economic Stabilization

Institutional quality is commonly cited as a reason that investment infl ows still vary across European countries, despite their economic stabilization following the tumultuous years in the early 1990s. This article tests empirically whether institutional quality has any bearing on the level of investment infl ows into selected groups of European countries. The role of institutions is assessed using Economic Freedom indices from the Heritage Foundation. We construct a panel dataset from 2000–2015 for 35 European countries to apply a fixed-effects and generalized method of moments model framework in the regression benchmark with the metrics from the Heritage Foundation. Results show that although institutional quality has some impact on the level of investment, it is less significant than expected and far less than suggested by the existing theoretical literature. Macroeconomic fundamentals matter more than do institutional factors.

scholarly journals Credit composition and income inequality in Vietnam: an empirical analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Le Quoc Hoi ◽  
Hương Lan Trần
Keyword(s):  
Income Inequality ◽  
Educational Level ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Primary Data ◽  
Data Set ◽  
Content Type ◽  
Private Credit ◽  
The Impact

PurposeThis paper aims to examine the credit composition and income inequality reduction in Vietnam. In particular, the authors focus on the distinction between policy and commercial credits and investigate whether these two types of credit had adverse effects on income inequality. The authors also examine whether the impact of policy credit on income inequality is conditioned by the educational level and institutional quality.Design/methodology/approachThe authors use the primary data set, which contains a panel of 60 provinces collected from the General Statistics Office of Vietnam from 2002 to 2016. The authors employ the generalized method of moments to solve the endogenous problem.FindingsThe authors show that while commercial credit increases income inequality, policy credit contributes to reducing income inequality in Vietnam. In addition, we provide evidence that the institutional quality and educational level condition the impact of policy credit on income inequality. Based on the findings, the paper implies that it was not the size of the private credit but its composition that mattered in reducing income inequality, due to the asymmetric effects of different types of credit.Originality/valueThis is the first study that examines the links between the two components of credit and income inequality as well as constraints of the links. The authors argue that analyzing the separate effects of commercial and policy credits is more important for explaining the role of credit in income inequality than the size of total credit.

Outsourcing in 18 European countries: The role of worker power

2016 ◽  
Vol 39 (3) ◽  
pp. 481-499
Author(s):  
Fabian Dekker ◽  
Ferry Koster
Keyword(s):  
Focus Of Attention ◽  
European Countries ◽  
Future Research ◽  
National Data ◽  
Logistic Analysis ◽  
European Economies ◽  
Cross National

Most research on outsourcing looks at cost-driven, resource-based or transformational motives to understand outsourcing decisions at the company-level. This article brings in the workers’ perspective, which is a topic that has not been the focus of attention of most previous studies. The article takes cross-national data for 18,264 companies in 18 European economies to examine the role of worker power on outsourcing decisions. According to the results from multilevel logistic analysis and contrary to the authors’ expectations, worker power relates to a higher likelihood of outsourcing. This article concludes with some thoughts on this finding and presents some directions for future research.

scholarly journals The Role of Institutional Quality in Health Expenditure-Labour Force Participation Nexus in Africa

2021 ◽  
Author(s):  
Olaide Sekinat Opeloyeru ◽  
Temitope Olanike Faronbi ◽  
Isiaka Akande Raifu
Keyword(s):  
Health Expenditure ◽  
Fixed Effects ◽  
Labour Force ◽  
Government Expenditure ◽  
Institutional Quality ◽  
Labour Force Participation ◽  
African Countries ◽  
Government Health ◽  
Government Health Expenditure

Abstract The study investigated the role of institutional quality in the relationship between health expenditure and labour force participation (LFP) in Africa, taking into consideration two forms of health expenditures (government health expenditure (GHE) and out-of-pocket health expenditure (OOPHE)) and gender labour force participation dichotomy. We employed data of 39 African countries for the period between 2000 and 2018 using Panel Fixed Effects with Driscoll and Kraay standard errors and two-stage System Generalised Method of Moments (GMM). The results revealed that government health expenditure yields an increasing effect on total, female, and male LFP. OOPHE, in most cases, leads to a decline in LFP. The institutional quality was found to be detrimental to LFP. The magnitude of the positive effect of government health expenditure on LFP is reduced by the interaction of institutional quality with government expenditure. In conclusion, we advocate for the improvement in institutional apparatuses across African countries. JEI CODE: E62; H51; J21; O43

FINANCIAL INCLUSION, INSTITUTIONAL QUALITY AND FINANCIAL DEVELOPMENT: EMPIRICAL EVIDENCE FROM OIC COUNTRIES

2021 ◽  
pp. 1-28
Author(s):  
MINHAJ ALI ◽  
MUHAMMAD IMRAN NAZIR ◽  
SHUJAHAT HAIDER HASHMI ◽  
WAJEEH ULLAH
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Financial Inclusion ◽  
Moderation Effect ◽  
The Relationship ◽  
Unique Study

This unique study examines the moderation effect of institutional quality (IQ) on the relationship between financial inclusion (FI) and financial development (FD) of 45 Organization of Islamic Cooperation (OIC) countries. For empirical analysis, panel data are used for the period 2000–2016. We use the Arellano–Bond generalized method of moments (GMM) and two-stage least-squares (2SLS) method in our estimations to draw multidimensional results. The empirical results confirm the significant positive relationship between FI, IQ and FD. Interestingly, we find that IQ moderates FI and has a significant positive impact on FD. Our findings are robust to alternative econometric specifications of FI, IQ and FD. Therefore, policymakers must sensibly understand the pivotal role of FI and IQ in establishing sustainable future development of OIC countries.

scholarly journals The Impacts of Chinese FDI and China–Africa Trade on Economic Growth of African Countries: The Role of Institutional Quality

Economies ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 53
Author(s):  
Miao Miao ◽  
Qiaoqi Lang ◽  
Dinkneh Gebre Borojo ◽  
Jiang Yushi ◽  
Xiaoyun Zhang
Keyword(s):  
Economic Growth ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
African Countries ◽  
Policy Action ◽  
Mediating Role ◽  
Theoretical Perspectives ◽  
Chinese Foreign Direct Investment

While there is a consensus on the expanding importance of the China–Africa economic relationship, there is much more debate on how to portray the relationship. Thus, this study is aimed to examine the impacts of the China–Africa trade and Chinese foreign direct investment (FDI) on the growth of African countries controlling the mediating role of institutional quality. The two-step system Generalized method of moments (GMM) model is applied using robust data for the period of 2003–2017. Drawing on complementary theoretical perspectives, this study took into account the conditional effect of China–Africa trade and Chinese FDI subject to the institutional quality of African countries and the interdependence of China–Africa trade and Chinese FDI to African countries. The benign impacts of the China–Africa trade and Chinese FDI on economic growth to African countries remain contingent upon appropriate policy action to improve the institutional quality of African countries and the synergies between the China–Africa trade and Chinese FDI to African countries.

scholarly journals The role of finance in inclusive human development in Africa revisited

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Simplice Asongu ◽  
Rexon Nting
Keyword(s):  
Human Development ◽  
Financial Development ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
African Countries ◽  
Content Type ◽  
Credit Bureaus ◽  
Public Credit ◽  
Private Credit

PurposeThis study aims to investigate the direct and indirect linkages between financial development and inclusive human development in African countries.Design/methodology/approachThe study employs a battery of estimation techniques, notably: two-stage least squares, fixed effects, generalized method of moments and Tobit regressions. The dependent variable is the inequality adjusted human development index. All dimensions of the Financial Development and Structure Database of the World Bank are considered.FindingsThe main finding is that financial dynamics of depth, activity and size improve inclusive human development, whereas the inability of banks to transform mobilized deposits into credit for financial access negatively affects inclusive human development.Practical implicationsPolicies should be tailored to improve mechanisms by which credit facilities can be provided to both households and business operators. Surplus liquidity issues resulting from the inability of banks to transform mobilized deposits into credit can be resolved by enhancing the introduction of information sharing offices (like public credit registries and private credit bureaus) that would reduce information asymmetry between lenders and borrowers.Originality/valueThis study complements the extant literature by assessing the nexus between financial development and inclusive human development in Africa.

Impact of Institutional Quality on Bilateral Exports: Exploring the role of Development

2021 ◽  
Vol 5 (2) ◽  
pp. 17-34
Author(s):  
Muhammad Zubair Chishti ◽  
Babar Hussain ◽  
Muhammad Aqib Khursheed
Keyword(s):  
Interaction Effect ◽  
Fixed Effects ◽  
Institutional Quality ◽  
High Dimensional ◽  
Future Research ◽  
Research Gaps ◽  
Heterogeneous Effect ◽  
Bilateral Exports ◽  
Econometric Technique

This study uses the gravity model to analyze the homogeneous and heterogeneous effect of institutional quality and development on bilateral exports. We use the panel data of 61countries for the period 2000 to 2016 and employ the Poisson Pseudo Maximum Liklihood (PPML) econometric technique with a High-Dimensional fixed effect (HDFE) for an estimation that allows the analysis in the presence of high dimensional fixed effects. The findings reveal that the direct effect of institutional quality and level of development on bilateral exports is positive and significant. Further, the institutional quality and the level of development of the exporter country have more impact on bilateral exports than that of the importer country. Our estimation results of homogeneity of institutions show that when both trading countries share the same level of institutional quality, it boosts the bilateral exports.  The major finding of this study reveals that the interaction effect of institutional quality and level of development on bilateral exports is positive and significant. High value of interaction term of exporter economy and low value of importer country suggest that interaction effect of institutional quality and level of development on bilateral exports of exporter country have a greater impact than the interaction effect of institutional quality and level of development of importer country due to having the more production and exports facilities in exporter country. Based on the findings, some essential policies are also recommended, followed by some future research gaps.

Board size, ownership concentration and future firm risk

2016 ◽  
Vol 10 (4) ◽  
pp. 692-709 ◽  
Author(s):  
Junaid Haider ◽  
Hong-Xing Fang
Keyword(s):  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Ownership Concentration ◽  
Firm Risk ◽  
Board Size ◽  
Content Type ◽  
Managerial Decisions ◽  
Large Shareholders ◽  
Moderating Role

Purpose The purpose of this paper was first to find out whether the negative relationship between board size and future firm risk persists in China while contemplating all sorts of endogeneity. Second, the authors have investigated the role of large shareholders in influencing the managerial decisions concerning future firm risk via board size. Finally, the authors examined whether the moderating role of large shareholders is any different in state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) in China. Design/methodology/approach The sample included all the A-listed firms listed on the Shanghai and the Shenzhen stock exchanges over a sample period from 2008 to 2013. The authors used fixed effects regression and the generalized method of moments (GMM) to test the three hypotheses. Findings The authors found that board size is negatively associated with future firm risk when measured as volatility in future stock prices and future cash flows. Second, large shareholders directly influence managerial decisions about future firm risk, irrespective of board size. Third, the moderating role of ownership concentration is insignificant in both SOEs and NSOEs. Originality/value To the best of the authors’ knowledge, this is the first study which has analyzed the role of large shareholders in the relationship between board size and future firm risk. This study provides valuable insights, particularly in the context of a developing country, into the role played by large shareholders in influencing managerial decisions concerning future firm risk.

scholarly journals From Emerging to Developed Market: The Neoinstitutional Approach Based on the Case of Poland

2020 ◽  
Vol 19 (2) ◽  
pp. 37-70
Author(s):  
Arkadiusz Jan Derkacz
Keyword(s):  
Economic Development ◽  
European Countries ◽  
Economic Research ◽  
Main Research ◽  
Policy Practice ◽  
Institutional Determinants ◽  
Socio Economic Development ◽  
Order Preference ◽  
Polish Economy

Background. The issue of economic growth is still an important area of economic research. This topic is crucial for the economic sciences as well as for economic policy practice. Let this statement be the most important assumption in this arti­cle. Everything that happens in the economy concerns socio-economic phenomena. The main scientific problem comes down to the question of what is the role of in­stitutional factors in the socio-economic development of Poland? Research aims. The author set himself two main aims. The first aim is an at­tempt to present institutional determinants that affect the socio-economic devel­opment of the Polish economy. The second is an attempt to present the devel­opment of the Polish economy by setting it against the background of selected European countries. Methodology. This work uses a modified taxonomic development measure meth­od based on the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). The research was embedded in the current of new institutional eco­nomics. The concept of the institutional matrix was also used. Key findings. Analyses conducted have facilitated the creation of an overview of the socio-economic development of the Polish economy. This was illustrated by the average socio-economic development index (ASEDI). Taxonomic measures of development were also calculated for all 10 of the economies analyzed. The main research time horizon is 2008–2018. Part of the collected data enabled anal­ysis of the period 1995–2018. The results of research and analyses have shown that selected institutional factors significantly affect the final level and quality of socio-economic development of Poland in comparison with selected European countries.

The Moderating Role of Natural Resources Between Institutional Quality and CO2 Emissions: Evidence From Developing Countries

2021 ◽  
Author(s):  
Bashir Muhammad
Keyword(s):  
Developing Countries ◽  
Natural Resources ◽  
Co2 Emissions ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Fixed Effect ◽  
System Gmm ◽  
Instrumental System ◽  
Moderating Role

Abstract The recent study aim is to scrutinize the moderating role of natural resources between institutional quality and carbon dioxide (CO2) emissions in 106 developing countries from 1996 to 2017 by using dynamic fixed effect, generalized method of moments (GMM) and system generalized method of moments (system GMM) estimators as well as apply the instrumental fixed effect, the instrumental time fixed effect and instrumental system GMM estimators as robustness. We make use of dynamic models and instrumental system GMM to reduce the result of autocorrelation increasing from misspecification of a model as well as clear the biases from unnecessary data and solve the possible endogeneity issues. The empirical results indicate that financial development, trade, and institutional factors: corruption perception control, government effectiveness, political stability, regulatory quality, rule of law, and voice and accountability play a vital role in CO2 emissions reduction but natural resources along with economic growth are the core factors that cause CO2 emission in developing countries. On the opposing, natural resources boost the indirect impact of institutional quality on CO2 emissions in developing countries.

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