Financial development and economic growth in China

The purpose of this paper is to examine the relationship between financial development and economic growth. In particular, the authors examine the impact of financial development on the growth of primary, secondary, and tertiary industries in China. Ordinary Least Square (OLS) multiple regressions are applied on a set of data from China for the period 1978 to 2013 to determine the effects of financial development on economic growth, while controlling for other macroeconomic variables, namely labor force, capital growth, inflation rate and export growth. The empirical results show that financial development has a negative effect on economic growth in general, but on the growth of the tertiary industry in particular. By contrast, it is found that financial development has no significant effect on the primary and secondary industries. The findings offer policymakers some useful insights that more attention may need to be paid on developing capital markets and providing more investment choices/opportunities for Chinese households. This paper is different from most of the previous studies as it uses up-to-date data (1978-2013) from China capturing the effects of financial development on economic growth in addition to other macroeconomic factors

The impact of oil and global markets on Saudi stock market predictability: A machine learning approach

Data availability: Data available on request from the authors.JEL classification: C45; D53; G15.This study investigates the predictability power of oil prices and six international stock markets namely, China, France, UK, Germany, Japan, and the USA, on the Saudi stock market using five Machine Learning (ML) techniques and the Generalized Method of Moments (GMM). Our analysis reveals that prior to the 2006 collapse, oil exerted the least influence on the Saudi market, while the UK and Japan were the most influential stock markets. However, after the collapse, oil became the most influential factor, highlighting the strong dependence of Saudi Arabia's economic structure on oil production. This finding is particularly noteworthy given Saudi Arabia's efforts to reduce its reliance on oil through Vision 2030. We further demonstrate that China's influence on the Saudi market increased significantly after the 2006 collapse, surpassing that of the UK. This is attributable to the substantial trade between China, Japan, and Saudi Arabia, as well as the rise in Saudi foreign direct investment in China, and the decline in such investment in the UK post-collapse. Our results carry important implications for stock market investors and policymakers alike. We suggest that policymakers in Saudi Arabia should continue to diversify their economy away from oil and strengthen economic ties with emerging markets, particularly China, to reduce their vulnerability to oil price fluctuations and ensure sustainable economic growth.The authors received no financial support for the research, authorship, and/or publication of this article

Volatility contagion between cryptocurrencies, gold and stock markets pre-and-during COVID-19: evidence using DCC-GARCH and cascade-correlation network

JEL Classification: C45; D53; E42; G10Availability of data and materials: The datasets used and/or analysed during the current study are available from the corresponding author on reasonable request.The rapid rise of Bitcoin and its increasing global adoption has raised concerns about its impact on traditional markets, particularly in periods of economic turmoil and uncertainty such as the COVID-19 pandemic. This study examines the extent of the volatility contagion from the Bitcoin market to traditional markets, focusing on gold and six major stock markets (Japan, USA, UK, China, Germany, and France) using daily data from January 2, 2011, to June 2, 2022, with 2958 daily observations. We employ DCC-GARCH, wavelet coherence, and cascade-correlation network models to analyze the relationship between Bitcoin and those markets. Our results indicate long-term volatility contagion between Bitcoin and gold and short-term contagion during periods of market turmoil and uncertainty. We also find evidence of long-term contagion between Bitcoin and the six stock markets, with short-term contagion observed in Chinese and Japanese markets during COVID-19. These results suggest a risk of uncontrollable threats from Bitcoin volatility and highlight the need for measures to prevent infection transmission to local stock markets. Hedge funds, mutual funds, and individual and institutional investors can benefit from using our findings in their risk management strategies. Our research confirms the utility of the cascade-correlation network model as an innovative method to investigate intermarket contagion across diverse conditions. It holds significant implications for stock market investors and policymakers, providing evidence for potentially using cryptocurrencies for hedging, for diversification, or as a safe haven.Brunel Research Initiative and Enterprise Fund to FD

Corporate governance disclosure index-executive pay nexus: the moderating effect of governance mechanisms

This paper first employs principal component analysis technique to develop and introduce an alternative UK corporate governance disclosure index to the US‐centric ones. Second, we then investigate whether this new corporate governance disclosure index can determine the level of executive pay (including CEOs, CFOs, and all executive directors) in UK listed firms, and consequently ascertain whether the governance mechanisms can moderate the pay‐for‐performance sensitivity. Employing data on corporate governance, executive pay and performance from 2008 to 2013, we find that, on average, better‐governed firms tend to pay their executives lower compared with their poorly‐governed counterparts. Additionally, our findings suggest that the pay‐for‐performance sensitivity is generally positive, but improves in firms with high corporate governance quality, implying that the pay‐for‐performance sensitivity is contingent on the quality of internal governance structures. We interpret our findings within the predictions of optimal contracting theory and managerial power hypothesis

Technical efficiency in banks: a review of methods, recent innovations and future research agenda

JEL Classification: G21 · D20Copyright © The Author(s) 2023. Technical efficiency in banking is a critical aspect of the financial industry and has been widely studied using various measurement techniques. This systematic literature review offers a comprehensive examination of 305 studies on the application of technical efficiency measurement techniques in both Islamic and conventional banking sectors from 1989 to 2019. Our comprehensive analysis not only provides a broad view of the efficiency measurement literature but also outlines a future research agenda. Despite the extensive research in this field, several issues remain unresolved, including input–output selection, a comparison of efficiency between Islamic and conventional banks, limited cross-country studies, and a lack of exploration into the impact of regulation and Shariah principles. To address these gaps, this review highlights the most commonly used methods, variables, and findings and provides three key recommendations for future research. Three key themes emerge from our examination. First, there is a need to better understand and the application of new frontier techniques other than the traditional methods, which currently dominate the existing literature. Second, the intermediation approach is the most frequently used in variable selection, thus more studies with comparative findings with applications of production and value-added approaches are suggested. Third, the most frequently used input variables are ‘labor’, ‘deposits’ and ‘capital’, whilst ‘loans’ and ‘other earning assets’ are the most popular output variables. We recommend three vital directions for future research: (i) non-interest expenses to be included amongst the inputs, while non-interest income should be added to the list of outputs, especially when estimating efficiency scores of Islamic banks. (ii) The impact of environmental variables such as, inter alia, Shariah principles, country-specific factors, and management quality is suggested to be considered simultaneously in models measuring and comparing the efficiency of Islamic and conventional banks. (iii) The selection of performance metrics employed should be expanded to include both the standard efficiency scores and the Malmquist Total Factor Productivity Index (TFP). The paper concludes with research needs and suggests directions for future research

Detecting a stochastic gravitational wave background with the Laser Interferometer Space Antenna

The random superposition of many weak sources will produce a stochastic background of gravitational waves that may dominate the response of the LISA (Laser Interferometer Space Antenna) gravitational wave observatory. Unless something can be done to distinguish between a stochastic background and detector noise, the two will combine to form an effective noise floor for the detector. Two methods have been proposed to solve this problem. The first is to cross-correlate the output of two independent interferometers. The second is an ingenious scheme for monitoring the instrument noise by operating LISA as a Sagnac interferometer. Here we derive the optimal orbital alignment for cross-correlating a pair of LISA detectors, and provide the first analytic derivation of the Sagnac sensitivity curve.Comment: 9 pages, 11 figures. Significant changes to the noise estimate

Calibration and Characterization of the IceCube Photomultiplier Tube

Over 5,000 PMTs are being deployed at the South Pole to compose the IceCube neutrino observatory. Many are placed deep in the ice to detect Cherenkov light emitted by the products of high-energy neutrino interactions, and others are frozen into tanks on the surface to detect particles from atmospheric cosmic ray showers. IceCube is using the 10-inch diameter R7081-02 made by Hamamatsu Photonics. This paper describes the laboratory characterization and calibration of these PMTs before deployment. PMTs were illuminated with pulses ranging from single photons to saturation level. Parameterizations are given for the single photoelectron charge spectrum and the saturation behavior. Time resolution, late pulses and afterpulses are characterized. Because the PMTs are relatively large, the cathode sensitivity uniformity was measured. The absolute photon detection efficiency was calibrated using Rayleigh-scattered photons from a nitrogen laser. Measured characteristics are discussed in the context of their relevance to IceCube event reconstruction and simulation efforts.Comment: 40 pages, 12 figure

All-particle cosmic ray energy spectrum measured with 26 IceTop stations

We report on a measurement of the cosmic ray energy spectrum with the IceTop air shower array, the surface component of the IceCube Neutrino Observatory at the South Pole. The data used in this analysis were taken between June and October, 2007, with 26 surface stations operational at that time, corresponding to about one third of the final array. The fiducial area used in this analysis was 0.122 km^2. The analysis investigated the energy spectrum from 1 to 100 PeV measured for three different zenith angle ranges between 0{\deg} and 46{\deg}. Because of the isotropy of cosmic rays in this energy range the spectra from all zenith angle intervals have to agree. The cosmic-ray energy spectrum was determined under different assumptions on the primary mass composition. Good agreement of spectra in the three zenith angle ranges was found for the assumption of pure proton and a simple two-component model. For zenith angles {\theta} < 30{\deg}, where the mass dependence is smallest, the knee in the cosmic ray energy spectrum was observed between 3.5 and 4.32 PeV, depending on composition assumption. Spectral indices above the knee range from -3.08 to -3.11 depending on primary mass composition assumption. Moreover, an indication of a flattening of the spectrum above 22 PeV were observed.Comment: 38 pages, 17 figure

An improved method for measuring muon energy using the truncated mean of dE/dx

The measurement of muon energy is critical for many analyses in large Cherenkov detectors, particularly those that involve separating extraterrestrial neutrinos from the atmospheric neutrino background. Muon energy has traditionally been determined by measuring the specific energy loss (dE/dx) along the muon's path and relating the dE/dx to the muon energy. Because high-energy muons (E_mu > 1 TeV) lose energy randomly, the spread in dE/dx values is quite large, leading to a typical energy resolution of 0.29 in log10(E_mu) for a muon observed over a 1 km path length in the IceCube detector. In this paper, we present an improved method that uses a truncated mean and other techniques to determine the muon energy. The muon track is divided into separate segments with individual dE/dx values. The elimination of segments with the highest dE/dx results in an overall dE/dx that is more closely correlated to the muon energy. This method results in an energy resolution of 0.22 in log10(E_mu), which gives a 26% improvement. This technique is applicable to any large water or ice detector and potentially to large scintillator or liquid argon detectors.Comment: 12 pages, 16 figure