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1
Iqbal, Zafar, and Ghulam Mustafa Zahid. "Macroeconomic Determinants of Economic Growth in Pakistan." Pakistan Development Review 37, no. 2 (June 1, 1998): 125–48. http://dx.doi.org/10.30541/v37i2pp.125-148.
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The main purpose of this paper has been to examine the effects of some of the key macroeconomic variables on Pakistan’s economic growth. Multiple regression framework is used to separate out the effects of key macroeconomic factors on growth over the period 1959-60 to 1996-97. The quantitative evidence shows that primary education to be an important prerequisite for accelerating growth. Similarly, increasing the stock of physical capital would help to contribute to growth. The empirical results also suggest that openness of Pakistan’s economy promotes economic growth. Alternatively, the budget deficit is negatively related to both output growth variables. The external debt is also negatively related to growth, suggesting that relying on domestic resources is the best alternative to finance growth. However, the results presented in this study reinforce the importance of sensible long-run growth-oriented policies to obtain sustainable growth.
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Oyebowale, Adeola Y., and Amr S. Algarhi. "Macroeconomic determinants of economic growth in Africa." International Review of Applied Economics 34, no. 6 (July 16, 2020): 839–57. http://dx.doi.org/10.1080/02692171.2020.1792422.
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Basorudin, Muhammad, Harwin Dwi, Hartini Sri, Gantjang Amannullah, and Hamid Rachmadani. "The vulnerable financial issue: Capital flight in Indonesia." European Journal of Applied Economics 18, no. 1 (2021): 89–105. http://dx.doi.org/10.5937/ejae18-26921.
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Indonesia is a developing country with a high demand for capital from both domestic and international sources. However, international capital flows are needed the most. For non-Western countries, especially Indonesia, capital flight is an unfavourable financial problem. This research aims to summarise capital flight from Indonesia and analyse the impact of macroeconomic and non-macroeconomic determinants through capital flight. Macroeconomic determinants include budget deficits, economic growth, inflation rates, and exchange rates. Nonmacroeconomic determinants are the degree of trade openness, interest rate differences, and dummy ratings. The data comes from the Bank of Indonesia, OECD, Moody's, and BPS-Statistics Indonesia. The coverage of this research is the Indonesian quarter from 2010 to 2018. This period complies with the latest procedures of the sixth edition of the Balance of Payments Manual (BPM 6). In this research, the measurement of the capital flight is the World Bank's residual method, trade misinvoicing method, and combined method. This research finds that, compared with other economics, non-macroeconomics is the most influential determinant of capital flight from Indonesia.
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Chirwa, Themba G., and Nicholas M. Odhiambo. "Macroeconomic Determinants of Economic Growth: A Review of International Literature." South East European Journal of Economics and Business 11, no. 2 (December 1, 2016): 33–47. http://dx.doi.org/10.1515/jeb-2016-0009.
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AbstractThe paper conducts a qualitative narrative appraisal of the existing empirical literature on the key macroeconomic determinants of economic growth in developing and developed countries. Much as other empirical studies have investigated the determinants of economic growth using various econometric methods, the majority of these studies have not distinguished what drives or hinders economic growth in developing or developed countries. The study finds that the determinants of economic growth are different when this distinction is used. It reveals that in developing countries the key macroeconomic determinants of economic growth include foreign aid, foreign direct investment, fiscal policy, investment, trade, human capital development, demographics, monetary policy, natural resources, reforms and geographic, regional, political and financial factors. In developed countries, the study reveals that the key macroeconomic determinants that are associated with economic growth include physical capital, fiscal policy, human capital, trade, demographics, monetary policy and financial and technological factors.
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Taresh A., Abdulrahman, Dyah Wulan Sari, and Rudi Purwono. "Joint Determinants of Monetary, Macroeconomic, Social and Income Inequality." Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan 21, no. 2 (December 30, 2020): 134–60. http://dx.doi.org/10.23917/jep.v21i2.11254.
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This study discusses all the potential relationships between monetary, macroeconomic, social and income inequality in an integrated manner by making Indonesia a concrete case study. This empirical study discussed the relationship based on theoretical modelling and carried out through appropriate estimators applied to the data of 33 provinces in Indonesia. To achieve this objective, the simultaneous model of seemingly unrelated regressions (SUR) was used. The results concluded that there are variables that jointly determined the monetary, macroeconomic and social also income inequality. Like, consumption can increase inflation and macroeconomic while at the same time can reduce population growth and human development, and increases income inequality. Savings which determine credit also pushes macroeconomics while simultaneously increasing population growth, and it can reduce income inequality. Minimum wages can reduce inflation and encourage production growth, while increases human development and reduces population growth also can reduce income inequality. Unemployment can also reduce inflation and increase economic growth, at the same time reduces population growth and human development while increases income inequality. Education and health encourages economic growth and the level of human development then can reduce income inequality.
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Bayaraa, Batchimeg. "Determinants of Mongolian Economic Growth." Applied Studies in Agribusiness and Commerce 12, no. 1-2 (May 2, 2018): 61–66. http://dx.doi.org/10.19041/apstract/2018/1-2/9.
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Mongolia is the second largest landlocked country, which has unique economic condition. This paper aims to examine Mongolian economic growth from 2000 until 2016 and identify its determinants. The growth was studied based on the growth rate of National Domestic Product. Initially, 20 macroeconomic variables are chosen and tested for the economic growth determinators such as; unemployment rate, human capital index, import growth, inflation rate, export growth, and interest rate, etc. The results showed that the growth rate of dollar exchange, inflation rate, and the growth rate of export were the main factors (81.4%). Mongolian GDP per capita and poverty rate were compared with other Asian lower-middle-economies, which are classified in the same classification as Mongolia. An increment of average salary was adjusted by the inflation rate, which showed the purchasing power declined in 2015. Statistics of Central Bank of Mongolia, Central Intelligence Agency, World Bank’s statistics, and the statistics from National Statistics Office of Mongolia are used for the research.
JEL Classification: H0, H30, H6, H70
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AINajjar, Fouad K. "Economic Freedom and Macroeconomic Determinants of Economic Growth: Cross‐Country Evidence." Review of Accounting and Finance 1, no. 3 (March 2002): 74–84. http://dx.doi.org/10.1108/eb026992.
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F. Ibrahim, Seham, and Naglaa A. Morad. "Macroeconomic determinants of economic growth using panel data analysis." Global Journal of Economics and Business 9, no. 1 (August 2020): 184–97. http://dx.doi.org/10.31559/gjeb2020.9.1.14.
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Buryk, Zoriana, Vitalii Bashtannyk, and Faig Ragimov. "Economic growth: macroeconomic effects of Public Borrowings at the global level." Problems and Perspectives in Management 17, no. 3 (August 20, 2019): 169–83. http://dx.doi.org/10.21511/ppm.17(3).2019.14.
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The study examines the peculiarities of the impact of public debt on the economic growth of states. The aim of the study was to analyze and identify the determinants of the impact of government borrowing on economic growth. The following research methods have been applied: analysis and synthesis of data and theoretical work, comparative analysis, statistical, correlation, cluster and discriminant analysis. According to the results of the survey, it is established that the growth of government borrowing can have both a negative and a positive effect on the economy, provided that it implements as the share of government debt to GDP, does not exceed 60% and is implemented in the form of financial investments (golden rule of public finance). The state’s deficit is allowed provided that state assets grow; current income from investment fully covers current expenses. The results of clusterization allowed to allocate 3 groups of states: states that demonstrated the economic downturn; states characterized by slow economic growth; states that were characterized by high level of economic growth. The first group of states (the countries with economic downturn) observed a negative high level of government debt and GDP. The results showed the low level of domestic borrowing development in low and middle income countries, which in developed countries allows governments to finance the investment projects on the basis of local loans (municipal bonds, infrastructure bonds, mainly medium and long-term), increase the debt burden in terms of economic recession.
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Najmudin, Ekaningtyas Widiastuti, and Ghifari Taufiqurrahman. "INVESTIGATING THE ROLE OF ISSUING CORPORATE ISLAMIC BOND AND SELECTED DETERMINANTS ON FIRM'S PROFITABILITY." Humanities & Social Sciences Reviews 8, no. 5 (September 7, 2020): 48–57. http://dx.doi.org/10.18510/hssr.2020.855.
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Purpose of the study: The purpose of this study is to investigate the effect of corporate Islamic bond issuance, internal and macroeconomic factors on firm's profitability. The internal factors involved potentially as determinants of profitability are leverage and firm size. Meanwhile, the macroeconomic factors are economic growth and the inflation rate.
Methodology: The sample is taken from companies listed at Indonesia Stock Exchange (IDX) and selected from 24 companies. The sample is 21 companies whose data completely and issued the Islamic bond during the period 2012 until 2018. Moreover, the panel data regression was employed as an analytical tool to test the data.
Main Findings: The results suggest that Islamic bond issuance and financial leverage have a negative influence on profitability, firm size has no significant influence on profitability, and economic growth and inflation rate have a positive influence on profitability.
Applications of this study: A firm, as well as an investor, must consider the lower Islamic bond issuance and debt proportion. Besides, they should anticipate decreased economic growth and the inflation rate.
Novelty/Originality of this study: This study observes evidence from Indonesia Stock Exchange (IDX) that develops the previous studies and adds references for further studies about Islamic bond issuance. Also, it combines Islamic fund source and firm-specific internal as well as macroeconomic factors (economic growth and inflation rate) macroeconomics factors insert what are the macroeconomic factor which affects the profitability of the business to give a clear picture of how the effect of all factors on profitability.
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Heller, Janusz, and Emila Ewertowska. "The Macroeconomic Determinants and Effects of Economic Growth in Ireland." Gospodarka Narodowa 224, no. 5-6 (June 30, 2008): 111–30. http://dx.doi.org/10.33119/gn/101336.
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Saad, Wadad. "Economic Growth and Total Factor Productivity in Lebanon." International Journal of Economics and Finance 9, no. 2 (January 11, 2017): 159. http://dx.doi.org/10.5539/ijef.v9n2p159.
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This study investigates empirically the determinants of economic growth and total factor productivity in Lebanon over the period 1980-2014. To do so, we firstly estimate the total factor productivity in a growth accounting framework. Secondly, an Autoregressive Distributed Lag (ARDL) modeling approach has been applied to examine the relationship between economic growth and some macroeconomic variables such as foreign direct investment, openness, claims on private sector, and official development assistance. Then we consider modeling the effects of these macroeconomic determinants on TFP through an ARDL model. Findings of the regression analysis suggest the presence of a statistically significant relationship between economic growth and the variables involved in this study except for claims on private sector which appears to be insignificant. The results of TFP model show a significant relationship with claims on private sector and openness on one hand and insignificant link with the direct foreign investment and official development assistance on the other hand.
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Jiao, Linda. "Macroeconomic determinants of wine prices." International Journal of Wine Business Research 29, no. 3 (August 21, 2017): 234–50. http://dx.doi.org/10.1108/ijwbr-09-2016-0032.
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Purpose The purpose of this paper is to identify the macroeconomic determinants of fine-wine prices and estimate their impacts. Design/methodology/approach The author models the Liv-ex fine-wine price indices with the macroeconomic variables of emerging and developed markets on a monthly basis from 1996 to 2015. Findings The demand from emerging markets plays a key role in fine-wine pricing and, more precisely, in the price fluctuation of prestige Bordeaux wines. Furthermore, the continuous weakening of the US dollar in real terms favors an increase in fine-wine prices. Since 2011, the slowdown in economic growth in emerging markets, followed by the depreciation of national currencies, has negatively affected the luxury wine market. Along with the process of financialization in the fine-wine market, prices have become more volatile. Factors such as money supply, real interest rates and the growth of investment funds have started to show their influence on fine-wine pricing. Originality/value Complementary to the hedonic price modeling, this research can provide an analysis to wine-price modeling and forecasting within the macroeconomic approach.
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Atiq, Faaeza, Mudassir Uddin, and Irfan Hussain Khan. "The Impact of Key Macroeconomic Determinants on Pakistan’s Economy." Global Social Sciences Review V, no. II (June 30, 2020): 260–72. http://dx.doi.org/10.31703/gssr.2020(v-ii).25.
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This paper intended to analyze key Macroeconomic factor’s effect on Pakistan’s economic development. The annual time-series data has been taken from 1980 to 2018 on External Debts, Foreign Direct investment. Consumer Price Index and Term of Trade. Variables stationarity is analyzed by ADF and Ng-Perron tests; afterwards, JJ test and Granger Causality test are used for Long-run (LR) & Short-run(SR) associations between variables, respectively. Also, Residuals Diagnostic Test used for checking residuals assumptions and CUSUM and CUSUMSQ are used for checking parameter constancy. The result shows significantly negative and positive long-run effects of External Debts and Foreign Direct Investment (FDI) respectively on the economic growth of Pakistan. Albeit, Consumer Price Index (CPI), Term of Trade (TOT) and, FDI significantly Granger cause economic growth in the short-run. Research suggests that economic policies devised in such a way that deteriorates External Debts and attract foreign investments and strengthen the economic growth of Pakistan in the long-term.
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Mousa, Wael. "Macroeconomic Determinants of Saudi Total Factor Productivity." Applied Economics and Finance 5, no. 1 (December 12, 2017): 37. http://dx.doi.org/10.11114/aef.v5i1.2856.
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Traditionally, labor productivity has been modelled as driven by capital accumulation, and the technology issue is exogenous. However, this model has been unable to sufficiently explain growth, and recent thinking on growth has given prominence to other factors such as technological advancement, human capital, and research and development. This has led to new growth models. This study employed the conventional growth accounting framework and aimed to estimate the total factor productivity in Saudi Arabia from 1970 to 2015. Additionally, it aimed to explore the macroeconomic determinants that affect total factor productivity. The results confirmed that economic stability, trade openness, and human factor development have positive impacts on total factor productivity. Interestingly, private credit by banks has a negative impact on Saudi total factor productivity. Negative relationships were also found between total factor productivity and the variables of population growth and government consumption.
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Biswas, Sreelata, and Anup Saha. "Macroeconomic Determinants of Economic Growth in India: A Time series Analysis." SOP Transactions on Economic Research 1, no. 2 (June 30, 2014): 54–72. http://dx.doi.org/10.15764/er.2014.02006.
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Ghimire, Luna, Ajay Kumar Shah, and Ram Kumar Phuyal. "Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences." Journal of World Economic Research 9, no. 1 (2020): 76. http://dx.doi.org/10.11648/j.jwer.20200901.20.
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Alhannom, Essa A., and Ghaleb S. Mushabeb. "Workers’ Remittances in Yemen: Macroeconomic Determinants and Impact on Economic Growth." Management & Economics Research Journal 3, no. 2 (September 1, 2021): 41–62. http://dx.doi.org/10.48100/merj.2021.157.
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This study aims to examine the determinants of workers’ remittances and their impact on economic growth in Yemen. Autoregressive Distributed Lag (ARDL) bounds test to co-integration and error correction model (ECM) were applied on data covering the period from 1990 to 2014. According to the model of remittances determinants, workers’ remittances in Yemen respond to the macroeconomic conditions of both the home and host countries. It is found that, in the long-run, migrant stock and income level at the host countries are positively and strongly influence remittances level, with a feeble impact of domestic inflation rates. The effect of the home country’s income seems to be positive but insignificant in explaining the behavior of remittances level. The model of economic growth suggests that, in the long-run, the impact of workers’ remittances appears to be positive and moderate with positive and stronger influences observed for financial development and official development assistance. Accordingly, it is recommended that a lesser weight should be given to remittances in the strategic planning process, taking into consideration the increasing potentials of the conditions in the neighboring host countries to be changed. In addition, using remittances as a means of economic growth can be enhanced by encouraging migrants to direct their savings towards productive investment activities, and via formal channels.
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Owiredu, Alexander, Moses Oppong, and Sandra A. Asomaning. "Macroeconomic Determinants of Stock Market Development in Ghana." International Finance and Banking 3, no. 2 (August 1, 2016): 33. http://dx.doi.org/10.5296/ifb.v3i2.9555.
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Financial systems have been found to have a positive influence on the economic development of most countries. The stock market, which is also a component of the financial system is said to play an integral role in economic growth. This paper examines the macroeconomic determinants of stock market development in Ghana for the period 1992 to 2012 using annual secondary data from Bank of Ghana Quarterly Economic Bulletins, Ghana Statistical Service, Ghana Stock Exchange Market Statistics, the World Bank and IMF’s International Financial Statistics. The macroeconomic indicators such as the real income (GDP per capita income), domestic saving, stock market liquidity, financial intermediary growth, macroeconomic stability (inflation) and private capital flows with stock market capitalization used as a proxy for the study were collected and used for the analysis. These variables were examined to establish a relationship with stock market developments based on a linear regression model.The regression analysis found stock market liquidity to be statistically significant to stock market developments as opposed to the other determinants (such as macroeconomic stability (inflation) real income and domestic savings and private capital flows) which were found to be non-significant. This result suggests that macroeconomic stability (inflation), real income, domestic savings and private capital flows proved not to have any significant impact on stock market development, since their regression coefficients were not statically significant at the 5% level of significance.
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Yevdokimov, Yuri, Leonid Melnyk, Oleksii Lyulyov, Olga Panchenko, and Victoria Kubatko. "Economic freedom and democracy: determinant factors in increasing macroeconomic stability." Problems and Perspectives in Management 16, no. 2 (June 7, 2018): 279–90. http://dx.doi.org/10.21511/ppm.16(2).2018.26.
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The main goal of the article is to analyze the role and influence of economic freedom on macroeconomic stability. For this purpose, the authors used the integrated index of economic freedom, calculated by the Heritage Foundation and Democracy Index. It is noted that this index indicator was calculated by the experts from the World Bank using the index of voice and accountability. In the paper, the authors used the multinational panel dataset for 11 countries of the EU for the purpose of checking the correlation between economic freedom, democracy and macroeconomic stability. It should be highlighted that the abovementioned 11 countries are related by the fluctuation of economic growth during the transformation process (1996–2016) from communist party to the democracy and political pluralism. In addition, the authors proposed to add the indicators of political stability and trade openness, which allowed to take into account implementation of flexible macroeconomic instruments, including monetary policy, which towards increasing the economic growth, employment and financial development of the countries. The findings are directed received using the regression equation with fixed and random effects showed the high level of correspondence of the model used with the original observations. Despite the chosen approach to estimate the macroeconomic stability, the findings showed that there is a positive and statistically significant impact of economic freedom and democracy on macroeconomic stability.
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Anand, Vivek, Muhammad Qasim Nizamani, and Farheen Qasim Nizamani. "Macroeconomic Determinants of Inclusive Growth in Pakistan: An ARDL Approach." II IV, no. II (June 30, 2019): 105–18. http://dx.doi.org/10.31703/ger.2019(iv-ii).09.
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There is increasing concern that growth in most part of the world in not distributed equitably. This is particularly the situation in Pakistan, where the economic growth is uneven and biased toward the affluent. This study aims to present empirical analysis to characterize the association between inclusive growth and its macro-economic determinants in Pakistan. In this context, the study employs annual time-series data for 23 years (1994-2017). In order to obtain long-run and short-term results, both auto-regressive distributed lag (ARDL) and error correction model (ECM) was being implemented. The findings of the study reveal that infrastructure development and government consumption have a positive and significant impact on the long-term inclusive growth of Pakistan. In contrast, a negative relationship is being observed between inflation, health expenditure and inclusive growth. Based on the findings, the study suggests that policymakers should develop appropriate policies to promote healthy government expenditure, infrastructure development, control inflation, and bring transparency in the health sector for fostering inclusive growth in Pakistan.
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Kiselakova, Dana, Beata Sofrankova, Erika Onuferova, and Veronika Cabinova. "Assessing the effect of innovation determinants on macroeconomic development within the EU (28) countries." Problems and Perspectives in Management 18, no. 2 (June 19, 2020): 277–89. http://dx.doi.org/10.21511/ppm.18(2).2020.23.
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Innovations play an inevitable role in achieving macroeconomic growth of countries, and innovative activity is perceived as a source of sustainable development. This paper’s main objective is to explore the impact of innovation determinants on the macroeconomic development of the EU (28) member countries and identify key problem areas distorting sustainable development and growth of these countries. The research analysis is performed using panel data regression models estimated from 2010 to 2018. Innovation potential was quantified using selected indicators, such as patent granted, high-tech exports, gross domestic expenditures on R&D, government expenditure on education, direct investment, gross fixed capital, and tertiary educational attainment. Such indicators as real GDP per capita and GNI per capita were applied to measure economic growth. The results provide evidence of a statistically significant relationship between innovation and economic growth (p < 0.01). Therefore, both research hypotheses were accepted. Based on innovation potential assessment, the statistically significant impact of five indicators were confirmed (high-tech exports, gross domestic expenditure on R&D, government expenditure on education, direct investment, and tertiary educational attainment). In this backdrop, the most significant effect was revealed for variable gross domestic expenditure on R&D (0.5343). The findings lead to the conclusion that the EU’s and national innovation policies and initiatives should aim to create framework conditions that favor the innovation environment and increase R&D expenditure to endorse real economic growth. AcknowledgmentThis article has been prepared within the research project VEGA No. 1/0279/19 “Model approaches to increase performance and competitiveness in the European area in the context of sustainable development”.
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Sharma, Rajesh, Pradeep Kautish, and D. Suresh Kumar. "Impact of Selected Macroeconomic Determinants on Economic Growth in India: An Empirical Study." Vision: The Journal of Business Perspective 22, no. 4 (November 11, 2018): 405–15. http://dx.doi.org/10.1177/0972262918803173.
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Due to the socio-economic, infrastructural and governance peculiarities, identification of key macroeconomic factors determining the economic growth in developing countries becomes a complicated case. The present study attempts to assess the impact of foreign aid, government consumption expenditure, foreign direct investment, trade openness, exchange rate, human capital development, and inflation on economic growth in India by using yearly data for the period of 46 years, that is, from 1971 to 2016. An autoregressive distributed lag (ARDL) bounds model enables to examine the short-run and long-run impact of selected determinants on economic growth during the study period. The outcomes of the study find that in the long run, foreign aid, the government’s final consumption expenditure and foreign direct investment have a positive and significant impact on economic growth, whereas, economic growth has been negatively influenced by exchange rate and human capital development. Contrary to the long run, foreign aid has a negative and significant impact on economic growth in the short run. The short-run outcomes show that all the selected macroeconomic determinants have either negative or positive influence on economic growth. To ensure the long-run economic growth, besides regulating the exchange rate fluctuations, policies related to export -import and human capital development need to be re-examined.
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Çevis, Ismail, and Burak Çamurdan. "The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies." Pakistan Development Review 46, no. 3 (September 1, 2007): 285–99. http://dx.doi.org/10.30541/v46i3pp.285-299.
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The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries.
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Chirwa, Themba G., and Nicholas M. Odhiambo. "Sources of Economic Growth in Zambia: An Empirical Investigation." Global Business Review 18, no. 2 (March 9, 2017): 275–90. http://dx.doi.org/10.1177/0972150916668449.
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In this article, the key macroeconomic determinants of economic growth in Zambia are investigated using the autoregressive distributed lag (ARDL) bounds testing approach. The study has been motivated by the unsustainable growth trends that Zambia has been experiencing in recent years. Our study finds that the key macroeconomic determinants that are significantly associated with economic growth in Zambia include, amongst others, investment, human capital development, government consumption, international trade and foreign aid. The study’s results reveal that in the short run, investment and human capital development are positively associated with economic growth, while government consumption, international trade and foreign aid are negatively associated with economic growth. However, in the long run, the study finds investment and human capital development to be positively associated with economic growth, while only foreign aid is negatively associated with economic growth. These results have significant policy implications. They imply that short–run economic policies should focus on creating incentives that attract investment and increase the quality of education, the effectiveness of government institutions, the promotion of international trade reforms and the effectiveness of development aid. In the long run, development strategies should focus on attracting the accumulation of long-term investment, improving the quality of education and the effectiveness of development aid.
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Pradhan, Rudra P., Mak B. Arvin, Sara E. Bennett, Mahendhiran Nair, and John H. Hall. "Bond Market Development, Economic Growth and Other Macroeconomic Determinants: Panel VAR Evidence." Asia-Pacific Financial Markets 23, no. 2 (April 12, 2016): 175–201. http://dx.doi.org/10.1007/s10690-016-9214-x.
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ÇEviŞ, İSmail, and Burak ÇAmurdan. "The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies." Pakistan Development Review 47, no. 3 (September 1, 2008): 285–99. http://dx.doi.org/10.30541/v47i3pp.285-299.
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The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries. JEL classification: F21, R19, C23 Keywords: Foreign Direct Investment, the Determinants of FDI, the Developing Countries, Transition Economies, Panel Data Analysis
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Macedo, Anthony, Sofia Gouveia, and João Rebelo. "Macroeconomic determinants of Port and Douro wine exports: An econometric approach." REGION 7, no. 2 (November 20, 2020): L1—L8. http://dx.doi.org/10.18335/region.v7i2.314.
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This study analyses recent trends (2006-2018) in Port and Douro wine exports and estimates their macroeconomic determinants. The results of the gravity equation reveal that the purchasing power in importing countries is the most important export determinant of Port and Douro wines. Therefore, in order to increase exports, the strategic decision-makers concerned with the industry should pay special attention to the markets in wealthier countries or with a high potential for economic growth, taking into account issues such as market access, adaptation to the market to wine consumption, and regulation.
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Ho, Sin-Yu. "Macroeconomic determinants of stock market development in South Africa." International Journal of Emerging Markets 14, no. 2 (April 1, 2019): 322–42. http://dx.doi.org/10.1108/ijoem-09-2017-0341.
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Purpose The purpose of this paper is to examine the macroeconomic determinants of stock market development in South Africa during the period 1975–2015. Specifically, it examines the impact of banking sector development, economic growth, inflation rate, real interest rate and trade openness on the development of the South African stock market. Design/methodology/approach The author employs autoregressive distributed lag bounds testing procedure that allows the author to empirically investigate both the short- and long-run relationships between the stock market development and its determinants in the context of South Africa. In addition, the author also conducts a sensitivity analysis by accounting for the presence of structural breaks in the underlying series to check for the robustness of the estimation. Findings This paper confirms the findings by other studies that banking sector development and economic growth promote stock market development, while inflation rate and real interest rate inhibit stock market development. In addition, this paper finds an interesting result in the fact that trade openness has a negative impact on stock market development, which is different from the findings of many other studies. Originality/value Currently, while the theoretical and empirical literature presents diverse views on the relationship between each determinant and stock market development, no study has focussed on the South African stock market. Given the significant role that the South African stock market plays in Africa as measured by its market capitalisation and market capitalisation ratio, there is a need for a better understanding of the macroeconomic factors influencing its development.
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Rachuba, Joanna. "GDP growth as a bank loan quality determinant." Journal of Banking and Financial Economics 2/2020, no. 14 (December 29, 2020): 21–37. http://dx.doi.org/10.7172/2353-6845.jbfe.2020.2.2.
Full textAbstract:
Past financial crises and recessions have revealed the importance of the economy’s condition for the loan quality. Macroeconomic determinants of the non-performing loans have been attracting considerable attention in recent years. The aim of this paper is to organize and summarize studies examining the role of GDP growth and its impact on bank loan quality. This approach reveals the research problem which is to specify if there exists a statistically significant relationship between economic growth and the level of non-performing loans. It is equally important to determine the direction of this link. By appealing to common knowledge, the research hypothesis states that an increase in economic activity results in improving loan quality. To verify the hypothesis, the analysis of the relevant literature and the methods of verbal as well as tabular description have been applied. Empirical results on the link between the macroeconomic environment and the level of non-performing loans appear to be quite conclusive. It has been found that an economic expansion generally improves the loan quality. This broadly proven relationship is in line with many studies which confirm the borrowers’ increased willingness to repay debts in a favourable economic environment. Far less frequently, the macroeconomic activity leads to future bank losses. Additionally, some studies do not provide any statistically significant effect of GDP growth on the loan quality.
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Hussain, Saddam, Chunjiao Yu, and Liu Wan. "Energy – Growth Nexus- A Case of South Asian Countries." Asian Journal of Economics and Empirical Research 8, no. 2 (September 2, 2021): 58–66. http://dx.doi.org/10.20448/journal.501.2021.82.58.66.
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The relationship between energy consumption and economic growth is a hot issue in today's society. This paper aims to empirically verify the relationship between energy consumption and economic growth. This article analyzes the relation of energy consumption with the economic growth taking the case of South Asian countries (Afghanistan, Bangladesh, Bhutan, India, Pakistan, Sri Lanka, and Nepal) along with the macroeconomic determinants that affect the total economic growth – FDI growth, CPI rate and population growth in order to avoid omitted variable bias and misleading results. The time span of this study covers the period of 1980–2019. To examine the significant relation of these determinants and impact of energy consumption on economic growth, In-pooled regression, Fixed-effects, Bidirectional fixed effect, Random-effects, and GLS estimation regression model are used. The estimated results show a positive correlation of energy consumption and all other economic determinants with economic growth except CPI, where there is a negative correlation founded.
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Fetchenhauer, Detlef, and Gerben van der Vegt. "Honesty, Trust and Economic Growth." Zeitschrift für Sozialpsychologie 32, no. 3 (September 2001): 189–200. http://dx.doi.org/10.1024//0044-3514.32.3.189.
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Summary: This article investigates cross-country differences in economic growth rates from a psychological perspective. Based on social capital theory it is argued that 1) financial honesty and trust are positively correlated with each other when they are aggregated on a country level and that 2) a high level of financial honesty and trust in a given country reduces transaction costs and thus stimulates economic growth. Using data from the World-Value-Surveys in 1981 and 1990 these hypotheses are empirically confirmed. The influence of social capital (i.e., financial honesty and trust) on economic growth was robust and substantial even if a number of relevant variables like gross national product (GNP), urbanization, economic inequality or the proportion of agriculture in gross domestic product were controlled. Thus, it seems worthwhile for economic psychology to further explore the influence of psychological determinants (like trust and honesty) on macroeconomic variables like economic growth or wealth.
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Neemey, Pooja, and Namita Sahay. "Indian Corporate Bond Market: An Analysis of Growth and Impact of Macroeconomic Determinants." Vision: The Journal of Business Perspective 23, no. 3 (July 24, 2019): 244–54. http://dx.doi.org/10.1177/0972262919850925.
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Robust, deep and vibrant corporate bond markets are necessary to increase financial system stability of a nation, help the needs of credit and mitigate financial crises of corporate sector that is important for the economic growth. The present article focuses on Indian corporate bond market growth and its impact on some select monetary, fiscal and economic variables as this creates advantages for investors, corporates and governments from 2006–2007 to 2016–2017. The study used the secondary data collection method with the help of monetary, fiscal and economic variables as independent variables and yield rate as dependent variables. From the analysis, it was identified that a complete corporate bond market is associated with economic, monetary and fiscal variables neither negatively nor positively nor at a significant rate. The result of the analysis concludes that among all the selected variables, GDP in percentage is considered as the chief variable that is predominantly mandatory for India because it is commencing its bond market with the foreign participants.
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Ali, Hina, and Khizra Sardar. "Macroeconomic and Socioeconomic Determinants of Economic Growth: An Empirical Examination of South Asian Economies." Pakistan Journal of Humanities and Social Sciences 8, no. 2 (December 31, 2020): 47–56. http://dx.doi.org/10.52131/pjhss.2020.0802.0102.
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Economic growth is not a new phenomenon; empiric is filled with studies from the preceding two centuries that examined growth. The new thing in this analysis is that this study considers growth determinants for south Asian economies. The reason behind this selection is that most of the studies didn’t consider a combined analysis of these states. In this regard, this paper has examined seven explanatory variables that are unemployment, Access to electricity, domestic credit to the private sector, foreign direct investment, inflation, and total debt while gross domestic product as a dependent variable has been examined. To prove these determinants' role statistically, PMG/ARDL (Pooled Mean Group Auto-Regressive Distributed Lagged Model) test has been utilized. Estimates provoked a statistically significant role of these determinates in economic growth determination.
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Kostakis, Ioannis. "Public Investments, Human Capital, and Political Stability: The Triptych of Economic Success." Economics Research International 2014 (September 9, 2014): 1–20. http://dx.doi.org/10.1155/2014/709863.
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This study assesses the effects of fiscal policy on economic growth in a sample of 96 countries from 1990 to 2010. Ordinary Least Squares (OLS) and Extreme Bound Analysis are mainly estimated in order to investigate whether public investments, human capital, and political stability affect growth controlling for initial output and human capital levels. Furthermore, in this empirical research four subsets of independent variables were used: (a) demographic factors, (b) political determinants, (c) region variables, and (d) variables regarding macroeconomic policy. Empirical results suggest that there is an important difference in the impact of public and private sector investments on the growth of per capita income. Moreover, political indicators such as corruption control, rule of law, and government effectiveness have a high impact on economic growth. Demographic factors, including fertility rate and mortality growth, as well as several macroeconomic variables, like inflation rate index and government consumption, were estimated to be statistically significant factors of economic performance. Fiscal volatility may also be a new possible channel of macroeconomic instability that leads to lower growth. Policy implications of the findings are discussed in detail.
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Durguti, Esat Ali, Emine GASHI, Filloreta Demiri Kunoviku, and Milaim Mehmeti. "DAF Determinants Affecting Economic Growth – Evidence for Western Balkans Countries." International Journal of Finance & Banking Studies (2147-4486) 9, no. 1 (March 10, 2020): 36–46. http://dx.doi.org/10.20525/ijfbs.v9i1.652.
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The purpose of this paper is to find out if selected determinants have any effect on the economic growth rate using the strong balanced panel data for the Western Balkan countries for the period 2001-2017, and the data used are on an annual basis, which in total there are 102 observation periods. For the realization of the paper, secondary data and an advanced dynamic approach were used, such as pooled OLS methods, fixed and random effects model, to test economic growth rate as dependent variable, and explanatory variables such as working remittances to GDP, exports to GDP, imports to GDP, foreign direct investment to GDP and inflation rate. From the generated outputs, it is true to say that working remittances to GDP, exports to GDP, and imports to GDP have an effect that influences economic growth, respectively GDP growth. Even though foreign direct investment to GDP and inflation rate does not have a significant effect on economic growth, respectively GDP growth.
Keywords: Economic growth; macroeconomic determinants; panel data.
JEL code: O47, O11, C23
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Depren, Ozer, Mustafa Tevfik Kartal, and Serpil Kilig Depren. "Macroeconomic Determinants of Interest Rates in Bricst, Mint, and Fragile Five Countries: Evidence from Quantile Regression Analysis." Studies in Business and Economics 16, no. 1 (April 1, 2021): 51–67. http://dx.doi.org/10.2478/sbe-2021-0005.
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Abstract As a substantially important indicator for economies, interest rates are influenced by a variety of macroeconomic factors. Considering this fact, the study aims to determine the influential macroeconomic determinants on deposit interest rates in emerging countries by using 12 independent macroeconomic determinants, yearly data between 1980 and 2018, and quantile regression method, which is applied for the first time to analyze interest rates. The empirical results show that influential determinants and their effects on the interest rate are differentiating for countries. The findings reveal that the most important factor in the interest rate is the consumer price index (CPI) in Turkey and Mexico; unemployment in Russia and China; total reserves in Nigeria; GDP in Indonesia; imports of goods and services in Brazil and South Africa. The results of the analysis emphasize the importance of macroeconomic indicators on the interest rates in each quantile. Taking measures by considering the findings of the study, which shows the role and importance of each macroeconomic indicator in quantiles, is essential to promote economic growth via ensuring low-level deposit interest rates and hence providing credit growth in emerging countries.
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Degu, Adisu Abebaw, and Dagim Tadesse Bekele. "Macroeconomic determinants of total factor productivity and its trend in Ethiopia." International Journal of Research in Business and Social Science (2147- 4478) 8, no. 6 (October 26, 2019): 219–28. http://dx.doi.org/10.20525/ijrbs.v8i6.553.
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Total factor productivity (TFP) as a source of economic growth, has been recognized in economic theory for a long period of time. In this research we tried to examine the effect of some macroeconomic factors, which include trade openness, inflation, government expenditure, credit extended and foreign direct investment, and natural disaster drought on total factor productivity and its trend in Ethiopia by using Time series data spanning from 1991 to 2018. The TFP was computed by using the growth accounting method from Cobb–Douglas production function. ARDL was used for estimation of the short and long run econometric model. Accordingly, the trend analysis shows the growth in TFP has been fluctuating over the study period. The result from ARDL indicated that; in long run foreign direct investment, government expenditure and drought negatively and significantly affect TFP. Credit extended is found to affect TFP positively and significantly, while inflation and trade openness are insignificant. Therefore, policies such as; subsidizing domestic firms, effective government spending and making the agriculture sector drought resistant need to be stimulated.
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Holobiuc, Ana-Maria. "Determinants of economic growth in the European Union. An empirical analysis of conditional convergence." SocioEconomic Challenges 5, no. 2 (2021): 26–34. http://dx.doi.org/10.21272/sec.5(2).26-34.2021.
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Being established from the initiative of six visionary countries in the second half of the 20th century, the European Economic Community has shifted the history of the European continent by promoting economic collaboration and political stability. Given its initial success, the regional group has quickly evolved from customs union to Economic and Monetary Union, comprising nowadays twenty-seven European countries. Although the European Union has successfully managed political, economic, social and even sanitary turmoil, the stability of the European architecture continues to be threatened by the heterogeneity of its members. In this respect, one of the main challenges for the European Union in its current composition aims the convergence of the economic performance between countries and regions. The purpose of this paper is to study the economic growth patterns in the European Union during 2000 and 2019, also conducting a comparative analysis between New and Old Member States. In order to capture the European economic landscape, the methodology was based on conditional β-convergence and the estimates were conducted by using ordinary least squares and generalized least squares with fixed effects. We have tried to find the relationship between the lagged value of GDP per capita and the subsequent growth rates, but also to study the influence of macroeconomic and social-related variables. By estimating regressions based on panel data, we have found evidence in favor of income convergence in the European Union, based on the inverse relationship between the lagged value of GDP per capita and the annual growth rates. Moreover, the comparative analysis between the New and Old Members illustrated that convergence was stronger in the latter group, given the sound macroeconomic and social environment. The empirical analysis suggested that the economic growth process both at aggregate and subgroup level was enhanced by investment, exports of goods and services, sound public finances and the increase of percentage of population with tertiary education. Consequently, in order to increase the cohesion between Members and to avoid separatist movements, the European decision-makers should strengthen the macroeconomic and social frameworks, maintaining a sustainable economic growth trajectory for both the New Members from Central and Eastern Europe and the Old Member States.
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Muş, Ümmü Eymen, Dilek Temiz Dinç, Mehmet Yazici, and Aytaç Gökmen. "Determinants of Poverty." International Journal of Civic Engagement and Social Change 5, no. 4 (October 2018): 41–66. http://dx.doi.org/10.4018/ijcesc.2018100104.
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In this study, the definition of poverty and the determinants of poverty are discussed in detail. After examination of the poverty situations of all income groups according to World Bank classification have been analyzed separately by the method of regression. According to the analysis conducted by the method of dynamic panel generalized least square regression, impact on current poverty from the previous year and the current growth of poverty has been observed, yet the effects of inflation on poverty are controversial. The exchange rate is not included in the regression because the two-main macroeconomic discussed determinants of poverty in the literature are used in the regression as control variables that there is multicollinearity between exchange rate, growth and inflation. This study points out that in the struggle against the poverty, the most important contribution is gained with economic growth. Since high volatility in price level and exchange rates prevents the growth, inflation and exchange rate policies assessed in the perspective of the importance of growth policy.
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Gupta, Poonam. "CASE STUDY: The determinants of remittances to India." MIGRATION LETTERS 7, no. 2 (January 28, 2014): 214–23. http://dx.doi.org/10.33182/ml.v7i2.194.
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This paper analyses the macroeconomic determinants of remittances to India and assesses the impact of the current global slowdown on these flows. The paper shows that remittances exhibit a strong trend, whereby they have increased at a robust rate of 10 per cent a year since 1992. The movement of remittances is limited around the trend and traditionally has not been affected by the domestic or external macroeconomic variables. This pattern has changed since 2000, when the remittances have responded positively to the domestic interest rates and the Indian stock market; and negatively to the external interest rates. Looking ahead, a slowdown in the economic growth rate in advanced economies is unlikely to reduce the flow of remittances to India in the short term; but a prolonged slowdown, if it significantly reverses the migration of Indians, can reduce the trend growth rate.
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Ashraf, Naseem, and Qurrat Ul Ain Butt. "Macroeconomic and Idiosyncratic Factors of Non-Performing Loans: Evidence from Pakistan’s Banking Sector." Journal of Finance and Accounting Research 1, no. 2 (August 30, 2019): 44–71. http://dx.doi.org/10.32350/jfar/0102/03.
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Using panel data approach in the Pakistan banking sector over the period 2010 to 2016, we examine the bank-specific and macroeconomic determinants of non-performing loans. We use quantitative research design with OLS random effect model. Furthermore, we use various regression and correlation analysis in this study. We find that rise in capital adequacy ratio, bank size, GDP growth rate, and inflation, reduces the non-performing loans (NPL) ratio. Our results also show that a rise in loan loss provisions enhances the NPL ratio. Our results suggest that banks with poor asset-quality can sabotage the growth of fiscal as well as the economic sector. Outcomes of the study emphasis on the need to clear-out the NPLs to keep financial sector sound. NPLs can cause high loan loss provisions which affect the capitalization of banks that ultimately impacts fiscal and economic growth. Bank supervisory agencies should therefore pay attention to monitory and macroeconomic policies of the banks. This study examines the impact of idiosyncratic and macroeconomic determinants of non-performing loans on banks’ asset quality using recent data from 2010 to 2016, the time period when major banking sector reforms were launched.
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Aladejare, Samson Adeniyi. "Macroeconomic Vs. Resource Determinants of Economic Growth in Africa: A COMESA and ECOWAS Study." International Economic Journal 34, no. 1 (September 11, 2019): 100–124. http://dx.doi.org/10.1080/10168737.2019.1663439.
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Fwasa K Singogo and Emmanuel Ziramba. "An Analysis of Macroeconomic Determinants of Remittances in Southern Africa." Journal of Economics and Behavioral Studies 11, no. 4(J) (September 26, 2019): 43–53. http://dx.doi.org/10.22610/jebs.v11i4(j).2919.
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The study analyzed macroeconomic determinants of remittances in Southern Africa and used annual data for the period ranging from 2003-2016. The macroeconomic determinants used include: remittances themselves, inflation rate, GDP growth rate, nominal exchange rate, broad money and age dependency ratio. A panel study was carried out using both the fixed and random methods of which the random method was found to be most appropriate. The countries included in the study were Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland and Zambia. It was found that of the variables used, only changes/improvements in the home countries’ economic environment and the exchange rate were statistically significant.
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Demir, Caner. "Macroeconomic Determinants of Stock Market Fluctuations: The Case of BIST-100." Economies 7, no. 1 (February 1, 2019): 8. http://dx.doi.org/10.3390/economies7010008.
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The purpose of this study is to analyze the impacts of some prominent macroeconomic factors on the Turkish Stock Market index, BIST-100 (Borsa Istanbul-100). For centuries, and mostly since the 20th century, stock markets are at the heart of economies. In our era, the largest economic crises arise from the stock market instabilities and thus, the stock markets are the focus of interest of the economy. Economists, investors, and policymakers try to predict the tendency of share prices, which substantially depend on foreign and domestic macroeconomic factors. Within this purpose, this study tries to investigate the impact of some selected macroeconomic factors on BIST-100 index over the 2003Q1–2017Q4 period. The findings obtained from the quarterly data via the ARDL Bounds Test suggest that economic growth, the relative value of the domestic currency, portfolio investments and foreign direct investments raise the stock market index while interest rate and crude oil prices negatively affect it. The results briefly reveal that the Istanbul Stock Exchange Market needs stronger domestic currency, higher international capital inflows, and lower energy and investment costs.
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Koju, Laxmi, Ram Koju, and Shouyang Wang. "Macroeconomic determinants of credit risks: evidence from high-income countries." European Journal of Management and Business Economics 29, no. 1 (November 6, 2019): 41–53. http://dx.doi.org/10.1108/ejmbe-02-2018-0032.
Full textAbstract:
Purpose The purpose of this paper is to empirically assess the significant indicators of macroeconomic environment that influence credit risk in high-income countries. Design/methodology/approach The study employs the system generalized method of moments estimator to avoid the dynamic panel bias and endogeneity issues. Different indices of economic growth are used in each model in order to find the most significant proxy of the economic cycle that influences problem loans. The analysis is carried out using a sample of 49 developed countries covering a 16-year period (2000–2015). Findings The overall empirical results highlight that the development of industrial sectors and exports are the main drivers of loan performance in high-income countries. The findings specifically recommend adopting an expansionary fiscal policy to boost per capita income and potential productivity for the safety of the banking system. Practical implications The findings have direct practical applicability for stabilizing the financial system. The study recommends the government to increase the productivity of export-oriented industries in order to boost employment and increase the payment obligations of individuals and business firms. More importantly, it highlights the essentiality of perfect economic policy to control default risks. Originality/value To the best of the authors’ knowledge, this is the first empirical study that compares the relative effect of three alternative proxies of the economic cycle on credit risk and identifies the most significant proxy. The current study also empirically shows that industrial development could be one of the crucial factors to improve financial health in developed countries.
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Makohon, Valentyna, Yurii Radionov, and Iryna Adamenko. "Investment policy of the state as a tool for economic growth of the country." Problems and Perspectives in Management 18, no. 3 (September 16, 2020): 245–54. http://dx.doi.org/10.21511/ppm.18(3).2020.21.
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The investment policy of the state is an important tool for diversifying the economy. This paper analyzes the share of capital investment in GDP, the index of fixed capital investment for 2015–2019, and assesses the investment policy determinants of the state of developed countries and emerging countries. Correlation-regression analysis methods were used to determine the relationship between real GDP, the share of industrial output in GDP, and the index of fixed capital investment in countries with economies in transformation. As a result, it was determined that in the vast majority of countries studied, the increase in investment in fixed assets contributes to the acceleration of economic growth, and the level of economic growth determines the investment potential of countries; that the heterogeneity of the impact of investment on the level of economic growth in countries with transformational economies is due to their raw material orientation, insufficient level of validity and predictability of the implemented investment policy of the state; the state’s investment policy is an important tool for ensuring macroeconomic stability and stimulating economic growth in a recession. Using the data of the panels for the period from 2015 to 2019, it is substantiated that the creation of conditions for macroeconomic balance will increase business activity of enterprises, which is the result of purposeful influence of state investment policy on economic processes by ensuring quality transformation and innovation of the national economy. The obtained results show that the level of influence of the state investment policy on the level of economic growth varies significantly depending on the level of development of financial institutions in the country and the infrastructure of the financial market.
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Kingori, Nderitu. "Market Structure, Macroeconomic Shocks, and Banking Risk in Kenya." Econometric Research in Finance 1, no. 2 (November 20, 2016): 81–113. http://dx.doi.org/10.33119/erfin.2016.1.2.2.
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This paper investigates the effect of changing market structure and macroeconomic shocks on the borrowing and lending risk exposure of Kenyan commercial banks using a GMM estimation approach. Borrowing risk exposure was found not to be persistent, being mainly affected by the degree of concentration and external economic shocks. Interestingly, the results also suggest that changes in the short-term interest rate do not affect the net interest margin, which may imply that bank deposit and lending rates are rigid and that the interest rate channel may be ineffective. The lending risk exposure was found to be persistent, and it was affected by the degree of concentration, internal economic shocks, and external economic shocks. The positive relationship between degree of concentration as well as borrowing and lending risk exposure supports the concentration-fragility view, as the declining franchise value did not lower incentives for making good loans during the study period where the degree of concentration was on a downward trend. Further analysis of the factors contributing to the persistence of lending risk exposure using a PVAR model found that the banks' loan growth rate and the market interest rate were key determinants. The effect of the loan growth rate was about double the effect of interest rate risk, implying that risk taking by some of the medium-sized and small banks is the key determinant of the persistence of lending risk exposure.
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Kumarasinghe, Pivithuru Janak. "Determinants of Non Performing Loans: Evidence from Sri Lanka." International Journal of Management Excellence 9, no. 2 (August 31, 2017): 1113–21. http://dx.doi.org/10.17722/ijme.v9i2.932.
Full textAbstract:
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
Keywords: Nonperforming Loans, Macroeconomic Determinants,
In the recent past, the global financial crisis and the subsequent recession in many developed countries have increased households’ and firms’ defaults, causing significant losses to the banks. Case of Sri Lanka is no difference. The changes in the economic conditions are believed to have a critical role to play in determining the level of nonperforming loans. Regulators all over the world have started to pay more attention to the credit quality of the Banks and strengthened the regulatory frameworks. This paper attempts to study the macroeconomic determinants of banks’ loan quality in Sri Lanka by analyzing secondary data over the period 1998–2014. The methodology to be adopted for the study was arrived at upon careful review of the literature and following the empirical studies conducted on the determinants of the nonperforming loans. The finding of the analysis is that, out of the six determinants, GDP growth rate and the Export Growth are significant in determining the level of the NPLs in the Sri Lankan banking sector. The relationship of the GDP with the NPL is found to be positive which is not consistent with the majority of the empirical findings
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Obeng, Samuel Kwabena, and Daniel Sakyi. "Macroeconomic determinants of interest rate spreads in Ghana." African Journal of Economic and Management Studies 8, no. 1 (March 13, 2017): 76–88. http://dx.doi.org/10.1108/ajems-12-2015-0143.
Full textAbstract:
Purpose The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013. Design/methodology/approach The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation. Findings The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run. Research limitations/implications The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads. Originality/value The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana.