The fiscal and monetary conducts in Nigeria: An interaction with the balance of payments

This study examines the fiscal and monetary conducts in Nigeria and their interaction with the balance of payments for the period 1970-2010. It examines how the government adjusts its desired level of nominal expenditure and income from taxes to variations in price level and how fast such adjustments are. Also, the means by which the Nigerian economy absorbs the exchange market pressure (EMP) are determined. Descriptive analysis, three-stage least squares (3SLS), vector error correction model (VECM), autoregressive distributed lag (ARDL) and dynamic ordinary least squares (DOLS) are employed. Evidence from the descriptive analysis suggests that deficit financing mostly through the central bank credit becomes the standard fiscal policy with the implication of increased money supply, rising inflation and balance of payment deterioration. Results from 3SLS show that nominal government expenditure and revenue adjust positively to inflation rate and income level, and government expenditure quickly adjusts while its revenue lags behind. Evidence from VECM reveals that in the long-run and short-run fiscal deficit, price, and private sector credit have significant impacts on money supply. Granger causality results indicate that in the short-run, unidirectional causality runs from money supply to inflation; and from government deficit to price while in the long-run, bidirectional causality runs between money supply and price. Also the DOLS results reveal that domestic credit has a significant negative impact on EMP and that external imbalances are absorbed more by depleting foreign reserves than exchange rate depreciation. These results are capable of providing useful information to policy makers to make useful policies, and to monetary authorities to abide by prudent fiscal operations without relying on the banking system for deficit financing. Generally, the probable policy recommendation is the designation of the appropriate way of achieving credible fiscal behaviour, and the application of credit restriction rules to curtail credit from the banking system for deficit financin

Economic growth and methane emission: testing the EKC hypothesis in ASEAN economies

Purpose – The purpose of this study is to analyze the Environmental Kuznets Curve (EKC) hypothesis within the methane (CH4) emission–economic growth nexus among the six Association of Southeast Asian Nations (ASEAN) countries from 1985 to 2012. Design/methodology/approach – The study employs dynamic panel data estimation approaches such as mean group (MG) and pooled MG (PMG) techniques. Findings – The findings reveal that the EKC hypothesis for the CH4 emission in these economies proves to be valid. In other words, economic growth causes CH4 emissions to decrease. Nevertheless, energy consumption is deteriorating the environment by enhancing CH4 emissions in these countries. Originality/value – The ASEAN region has experienced substantial economic growth over the previous few decades. Nevertheless, pollution has also increased manifolds in this region. Methane is a more potent greenhouse gas (GHG) as compared to carbon dioxide (CO2) and a major source of socio-economic issues in the ASEAN region. This study is the first in the existing literature on the EKC hypothesis examining the role of economic growth on CH4 emissions in the selected ASEAN countries. The outcomes of this study could be really beneficial for the policymakers in this region regarding sustainability and economic development

Financial sector development and economic growth: a co-integration analysis for ASEAN countries

Among the 17 sustainable development goals (SDGs) of the United Nation, the 8th goal emphasises economic growth as an essential means of achieving other SDGs especially in developing countries. Therefore, this study empirically investigates the role of financial sector development, among other relevant factors, in the economic growth of five ASEAN economies over the 1994-2017 period. It uses Kao and Fisher-Johansen co-integration tests to examine the presence of a long-run association among the variables. Furthermore, FMOLS method is used to determine the long-run estimates of the predictors' influences on the economic growth of those countries. The long-run outcomes of the estimation suggest that financial sector development and human development index have significant positive impact on the economic growth of those countries. Based on the findings, this study recommends ASEAN countries to embrace additional robust measures to improve the financial sector and human development in order to realise sustainable economic growth

Stock Market Development and Economic Growth: Evidences from Asia-4 Countries

The main purpose of this study is to examine the role of stock markets in economic growth for four Asian countries namely Bangladesh, India, China and Singapore. Annual time series cross country data over the period 1991 to 2012 and Autoregressive Distributed Lag (ARDL) bound testing approaches an analytical technique are used.  Our results suggest that there is long-term cointegration among economic growth, Foreign Direct Investment (FDI), stock market development and inflation. The long-term elasticity estimates of the stock market development in all countries show expected sign but statistically significant only in China and Singapore. Incoming FDI is found to have positive relation to economic growth in all countries except India and statistically insignificant for all countries except China. In the short run, stock market also has positive relation to economic growth in all countries but significant only in India and China. The impact of FDI on growth is significant and positive only for Singapore. The results indicate that the inflation variable is statistically significant in Bangladesh and Singapore. The empirical findings of the study reveal that stock market development and FDI inflows play vital roles in the process of economic growth and development in these selected countries. Keywords: Economic growth, stock market, ARDL model, Asia-4 countries JEL Classifications: C22, O16, O40, O5

Greenfield, mergers & acquisitions, energy consumption, and environmental performance in selected SAARC and Asean Countries

This study by using the random effects (RE) and robust least square estimates (RLS) examines the influence of two different types of FDI namely Greenfield (GF), Mergers & Acquisition (M&A) and energy consumption, on environmental performance of the eight selected economies in SAARC and ASEAN regions over the 2003-2014 period. Moreover, economic growth and population growth are used as controlled variables. The originality of this study is the use of Environmental Performance Index (EPI) to examine the effects of two different types of foreign capital inflows on the environment. According to the empirical outcomes of this study, GF and M&A investments have exacerbated the environmental performance in the selected eight SAARC and ASEAN countries, hence confirm the Pollution Haven Hypothesis (PHH) to be valid. In addition, energy consumption and population growth are also found to be serious havoc for the environmental performance in this case. Nonetheless, economic growth has improved the overall environmental performance in these countries. The study suggests the formulation and enforcement of strict environmental regulations to seek environment friendly and energy efficient GF and M&A investments. In addition, renewable energy use and population control policies are highly desirable in these countries for clean and healthy environment. Accordingly, these economies are recommended to develop policies to realize sustainable economic development for improved environmental performance

Agency costs and post cross border acquisition performance of Malaysian acquires

The purpose of this paper is to investigate whether the variation in the performance of Malaysian acquirers following cross-border acquisition (CBA) activities is explained by agency costs factors. This study uses one, two and three years buy-and-hold abnormal return (BHAR) to measure acquisition performance and weighted least square regression to evaluate the impact of agency costs factors on acquisition performance. The findings suggest that the CBA performance is influenced by agency costs of the acquirers where those with lower agency costs, characterized by higher institutional ownership, higher board gender diversity, and higher board ethnic diversity perform better. The sample was restricted to CBAs in Malaysia, which limits the generalization of the findings to other countries.The results are reasonable to serve as guide to policy makers to make appropriate policy concerning the representation of female and various races on board of directors. The results could also guide in making appropriate investment policy decision that will result in long-term performance of acquiring firms.The novel contribution of this study is in terms of revealing the applicability of corporate finance theories in explaining CBA performance in emerging markets where CBAs are aggressively undertaken and high failure rates of CBAs are reported using long term datasets and robust performance measures and analyses

Malaysian Firms’ Shareholders’ Wealth Effect Following Cross-Border Acquisition

Objective: Purpose of this study is to investigate long run shareholders’ wealth effect (SWE) of Malaysian acquiring firms following cross-border acquisition (CBA).Methodology: Using buy-and-hold abnormal returns model for shareholder’s wealth effect and Euclidean method for identifying matching firms, study was employed 176 CBA deals of Malaysian acquiring firms for period of 2004-2015.Using conventional t-statistics, skewness adjusted t-statistics, bootstrapping skewness adjusted t-statistics and Multivariate of Analysis of Variance (MANOVA) as statistical tools were analyzed the data and test the hypotheses that acquiring firms’ wealth effect is impacted by CBA deals. Results: Study found that shareholder wealth effect of acquiring firm is significantly positive in shorter period while negative or mixed effect in longer period due to use different method to measures.However, there is no difference of SWE between the groups: Level of control in target firm (including SWE of Major vs. Minor acquisitions) and SWE of Shariah-complaint status firms vs. conventional firms. Moreover, Shareholder’s wealth effect differ industry to industry.Implication: study presents an empirically supported to describe the significance of long run shareholder’s wealth effect of Malaysian acquiring firms following cross-border acquisition.Firstly, study focuses on long-run shareholders’ wealth effect of Malaysian acquiring firms rather than short-run shareholder effects. Secondly, it utilizes a long-run methodology commonly used in such events as domestic mergers, seasoned equity offerings, and IPOs (e.g. Fama, 1998), but not applied to cross-border acquisition.This paper is most extensive analysis to date of the long-run performance of Malaysian acquiring firms carrying out cross-border acquisitions

Testing the theoretical proposition of exchange market pressure: The Nigerian experience

In this paper, monetary model of Exchange Market Pressure (EMP) is applied to Nigerian economy over the period 1970 to 2010.In support of the EMP propositions, dynamic ordinary least squares (DOLS) results reveal that domestic credit has stable significant negative relationship with exchange market pressure.The findings also provide evidence that Nigerian monetary authorities absorbed most of the exchange market pressure by adjusting the foreign reserves.The overall results indicate that the Nigeria’s experience provides another good example to test the theoretical propositions of the Girton-Roper monetary model of exchange market pressure

Stock price index and exchange rate nexus in African markets

This paper examines the relationship between stock price index and exchange rate in six African markets using monthly data for the period January 2007 to October 2015. A quantile regression approach is used. This methodology is shown to perform better than the ordinary least squares estimators, particularly when the conditional distribution is heterogeneous. Our empirical evidence reveals an interesting pattern in the association of these two financial markets in Africa, which shows that the negative relationship between stock and foreign exchange markets is more apparent when exchange rates are extremely low or high. The negative relationship between the two variables is in line with the portfolio balance effect

Stock market development and economic growth: Evidences from Asia-4 countries

The main purpose of this study is to examine the role of stock markets in economic growth for four Asian countries namely Bangladesh, India, China and Singapore.Annual time series cross country data over the period 1991 to 2012 and autoregressive distributed lag bound testing approaches an analytical technique are used.Our results suggest that there is long-term cointegration among economic growth, foreign direct investment (FDI), stock market development and inflation.The long-term elasticity estimates of the stock market development in all countries show expected sign but statistically significant only in China and Singapore.Incoming FDI is found to have positive relation to economic growth in all countries except India and statistically insignificant for all countries except China. In the short-run, stock market also has positive relation to economic growth in all countries but significant only in India and China.The impact of FDI on growth is significant and positive only for Singapore.The results indicate that the inflation variable is statistically significant in Bangladesh and Singapore.The empirical findings of the study reveal that stock market development and FDI inflows play vital roles in the process of economic growth and development in these selected countries