The impact of cash holding, and exchange rate volatility on the firm’s financial performance of all manufacturing sector in Pakistan

Exchange rate movement is a mostly debatable issue amongst economists and strategic financial planners in the economies as a vital phenomenon, of every economy in the developing the world. This study sets out to examine the impact of cash conversion cycle, Size, Age, and exchange rate movement on firms’ financial decisions. The estimation used techniques of static panel data analysis in this study; pooled OLS, random effects, and fixed effects. Interaction techniques are applied to check the impact of the exchange rate by multiplying this variable with the main variables of cash conversion cycle, that is receivable in days and payables in days. The results depict there is a significant negative relationship between return on assets and exchanger rate during the period of review while the beta of cash conversion cycle has negative value; age and size are positive and significant at 1% level with return on assets. Therefore, it is recommended that organizations that have some measure to agreement in foreign currencies can adopt some advanced hedging technique to occupy the exchange rate movements risk to improve firm’s performance

STOCK MARKET AND ECONOMIC GROWTH IN VIETNAM

For many years, the relationship between the financial system and economic growth has attracted the attention of scholars intending to uncover the direction of the relationship. The stock market is a part of the financial system and plays an essential role in channelling equity funds into the economy and creating liquidity for the equity instruments. A substantial empirical study postulates that the stock market can boost the economic growth of an economy. However, other studies assert that, at best, the stock market is an unimportant economic driver

The role of institutions in mitigating the risk of push and pull factors on economic growth

It is widely acknowledge that both push (global) and pull (domestic) factors can be important in driving foreign capital flows. While both the risk from push and pull factors are able to direct or indirectly cripple economic growth, it is essential for the countries to deal and adequately manage both the push and pull factors. The main objective in this study is to analyze the role of institutional quality both political and social institutions in mitigating the potential adverse effects of push and pull factors on growth. We provide new evidence the relationship between political and social institutions, push or pull factors, and economic growth. Generally, our finding indicate that institutions quality play an important role in mitigating several components of both push and pull push factors. Good political institutional, high democracy and stable political institutions positively and significantly offsetting the negative effect of push factors global uncertainty shocks and changes of global growth rate on growth, while weak social problems assist country in alleviating potential severe of destructive global interest rate on country. The results robust using several proxies of political institutions. For pull factor, political stability assist country in reducing negative effect of inflation uncertainty, while social cohesion reduce the detriment of high debt. We confirm that improvement institutional quality both political and social institutions especially political institutions be an imperative strategy in ensuring the effectiveness of policies on mitigating the changes of changes of global factors risk shocks. The policymakers should take advantages from the findings of this research in search for strategy stability on financial and macroeconomic to boost economic growth

STOCK MARKET DEVELOPMENT AND ECONOMIC GROWTH IN VIETNAM

For many years, the relationship between the financial system and economic growth has attracted the attention of scholars intending to uncover the direction of the relationship. The stock market is a part of the financial system and plays an essential role in channelling equity funds into the economy and creating liquidity for the equity instruments. A substantial empirical study postulates that the stock market can boost the economic growth of an economy. However, other studies assert that, at best, the stock market is an unimportant economic driver. This thesis aims to examine the causal relationship between the stock market and economic growth in Vietnam in the period from 2000 to 2015. In order to examine the potential impact of the financial crisis and develop a well-functioning stock market in Vietnam, this study also undertakes a critical comparative quantitative research of a selected developing country in the South-East Asian region to identify potential policy implications. This analysis utilises the Autoregressive Distributed Lag Model to investigate the causal linkage in the long and short-run between the stock market and economic growth. The determinant vectors present in the stock market are the price index and the size of market capitalisation. This study defines economic growth as a real increase in gross domestic product per capita. Then, to develop the well-functioning stock market in Vietnam, this study undertakes a critical comparative quantitative research of a selected developing country in the South- East Asian region for the implications. The findings of this study suggest that there are significant cointegration relationships between stock market development and economic growth in Vietnam from 2000 to 2015. Furthermore, there are also significant cointegration relationships between economic growth and the development of the banking sector and foreign direct investment. In the long run, the market capitalisation has a positive impact on economic growth. Conversely, economic growth has a negative long-run relationship with the stock market index. This negative relationship is significant, but the impact is low. In the short run, stock market capitalisation size, and the economic growth; stock market index and economic growth are pairly bi- directional short-run Granger causality relations. The findings also suggest that, from 2000 to 2015, economic growth supports the development of the money market and attracts more foreign direct investment inflows in Vietnam. However, in this period, the speed in increasing FDI was lower than speed of economic growth leads to the negative sign in the long run relationship between FDI and economic growth. Also, in the comparative study, the findings in the Vietnam case are consistent with the results obtained for the pre-crisis subsample in the case of Thailand. The findings suggest the causality runs from both directions between the stock market and economic growth. However, when the crisis data was taken into consideration, the significant estimated long-run coefficients give a stronger negative impact that confirms the financial crisis worsened the economic conditions in Thailand between 1994 and 2014

Determination of Corporate Credit Ratings: Vietnamese Evidence

The global economies have been experiencing a process of rapid financial integration and globalization since the 1980s. Consequently, individual economies are increasingly under the influences of a wide range of factors at home and abroad, which generate not only more opportunities for trade and investment but also more risks for domestic firms. The twentieth century witnessed numerous, and in many cases, spectacular corporate default and insolvency cases in both the developed and emerging economies. The credit rating agencies have been playing an increasingly important role in the risk monitoring and risk management system, but recently, they were under criticism for failures in various aspects. In the case of Vietnam, the transformation into an open economy since the 1990s has enhanced the development of the credit market and the commercial banking system. Credit-related activities are one of the most profitable and fastest-growing areas, but such activities face a rising level of challenges due to the increasingly open and competitive business and economic environment. Consequently, Vietnamese commercial banks invest an enormous amount of financial resources in improving credit quality measurement and risk management procedures. Although the State Bank of Vietnam, since 2002, has developed the Credit Information Centre (CIC) providing corporate credit ratings and financial information to support banking systems and other enterprise investors, the rating procedures of both Vietnamese commercial banks and the CIC are still at the early developmental stage. Moreover, there is little practical research concerning how and to what extent the corporate credit ratings of Vietnamese firms are affected by corporate, market, and macroeconomic conditions. Despite reservations about the quality of the credit ratings, the ratings by the CIC and the commercial banks in Vietnam are the only comprehensive measures of corporate credit ratings in Vietnam. Keeping this caveat in mind, the primary purpose of this study is to examine the impact that various organizational, financial, and macroeconomic variables have on credit ratings for Vietnamese corporations. By working closely with the CIC, a comprehensive dataset is constructed that contains the credit ratings for 500 Vietnamese firms and a wide range of potential determinants of corporate credit ratings over four years from 2011 to 2014. Considering the potential limitations in the dataset and given the general lack of relevant research in the Vietnamese context, a triangulation approach to the determination of credit ratings of Vietnamese firms is undertaken. The main task is to identify the main determinants of corporate credit ratings and estimate their impacts. The specification of the model is based on a comprehensive review of relevant literature and considers the credit rating determinants in four aspects, including firm-specific financial ratios, macroeconomic factors, earnings management practice, and capital structure. Following a series of tests, the model is estimated using GMM for an Arellano-Bond dynamic panel (or GMM-IV) model. The GMM-IV model is further complemented by other models that focus on how earnings management affects the impacts of financial ratios on credit ratings using the ordered-probit model and how macroeconomic and firm-specific factors determine credit rating transition into a financial distress status using the Cox hazard model. The key findings confirm the significance of a wide range of financial ratios for the determination of corporate credit ratings. However, the current financial ratios are limited for identifying those firms that are in financial distress, and various macroeconomic variables are additionally useful for examining the deterioration in corporate financial status. Earnings management practices break the link between key financial ratios and credit ratings and thus makes credit rating baseless. The research has contributed to the academic literature and rating practice in Vietnam. It provides a close analysis of several determinants that have significant impacts on Vietnamese corporations’ credit ratings but have not been explicitly explored in the rating process of the CIC. The research also proposes to Vietnamese commercial banks enhanced procedures for improving their credit analysis which is currently mainly based on qualitative methods

A review of the IFRS adoption literature

This paper reviews the literature on the effects of International Financial Reporting Standards (IFRS) adoption. It aims to provide a cohesive picture of empirical archival literature on how IFRS adoption affects: financial reporting quality, capital markets, corporate decision making, stewardship and governance, debt contracting, and auditing. In addition, we also present discussion of studies that focus on specific attributes of IFRS, and also provide detailed discussion of research design choices and empirical issues researchers face when evaluating IFRS adoption effects. We broadly summarize the development of the IFRS literature as follows: The majority of early studies paint IFRS as bringing significant benefits to adopting firms and countries in terms of (i) improved transparency, (ii) lower costs of capital, (iii) improved cross-country investments, (iv) better comparability of financial reports, and (v) increased following by foreign analysts. However, these documented benefits tended to vary significantly across firms and countries. More recent studies now attribute at least some of the earlier documented benefits to factors other than adoption of new accounting standards per se, such as enforcement changes. Other recent studies examining the effects of IFRS on the inclusion of accounting numbers in formal contracts point out that IFRS has lowered the contractibility of accounting numbers. Finally, we observe substantial variation in empirical designs across papers which makes it difficult to reconcile differences in their conclusions

Pension systems in East Asia and the Pacific : challenges and opportunities

With the recovery from the recent crisis, countries of the East Asia and Pacific region are rethinking their financial, and social policy, including old-age protection. Population aging, in combination with ongoing urbanization, and economic transformation, will place increasing pressure on traditional family care arrangements. Coverage under formal pension systems is generally low, and the absence of social safety nets for the needy elderly, poses risks in the face of breaks in the economic growth path. In addition to common systemic challenges, formal old-age income support systems confront issues specific to their design type: 1) The national provident fund, and social security systems with reserve funds, have demonstrated problems with investment policy, and performance, governance and management. 2) In the established market economies, social security systems are fiscally unsustainable in the long run, and often have a weak benefit-contribution link. 3) These types of systems encounter additional problems in transition economies, including low contribution collection from previously socialized enterprises. Options addressed by the paper involve the adoption of an integrated view on retirement income provision, averting fiscal un-sustainability, and, integrating public, and private sector pensions. Additionally, moving toward a multi-pillar structure with prudent coverage extension, and, fostering financial markets, to allow decentralized pension funds management, are also suggested.Health Economics&Finance,Public Sector Economics,Pensions&Retirement Systems,Environmental Economics&Policies,Banks&Banking Reform

Trends in Emerging Markets Finance, Institutions and Money

Since the waves of financial liberalization in the 1980s, emerging market economies have been accessible to foreign investors. Altogether, they contributed up to 43.8% of the global GDP in 2018, and many of them, such as China, India, Bangladesh, Philippines, Myanmar and Vietnam from 2010 to 2019, are among the fastest-growing economies in the world. Given the high economic growth, the assets issued by companies in emerging markets are viewed as a new set of investment opportunities for global investors and fund managers who seek to improve the risk-adjusted performance of their portfolios. In addition to their risky profile due to the lack of transparency as well as stable and matured institutions, their recent development path faces a number of challenges arising not only from the slow pace of economic reforms but also from their increased integration with the world. Geopolitical risks, the US–China trade wars, and rising policy uncertainty around the world are expected to reduce their growth potential and performance. This Special Issue dedicates special attention to the current dynamics of emerging financial markets, as well as their perspectives of development as a key driver for sustainable firms and economies. Accordingly, the focus is particularly placed on market integration and interdependence, valuations and risk management practices, and the financing means for inclusive growth