The interaction of finance and innovation for low carbon economy: Evidence from Saudi Arabia

Saudi Arabia sets an ambitious plan to install 58.7 GW renewable capacity along with several mitigation measures. For the smooth accomplishment of undertaken projects, the role of the financial market is crucial. This paper investigates the role of financial development in explaining the low carbon economy (LCE), incorporating the role of innovation in the context of Saudi Arabia, where fossil fuel contributes almost 100% share of the total energy mix. We apply the standard, asymmetric, and quantile Autoregressive Distributed Lag (ARDL) Approaches to analyse our time-series data from 1981 to 2016 (both yearly and monthly forms). Our empirical analysis demonstrates that finance asymmetrically fosters the carbon economy, but it helps to achieve a low carbon economy through the channel of innovation under different economic circumstances. Our empirical evidence reinforces the role of the financial market in overcoming the financial constraints for launching green projects. © 2022 The AuthorsKCR-KFL-06-20; King Abdulaziz University, KAUThis project was funded by King Abdulaziz University , Jeddah, Saudi Arabia, and King Abdullah City for Atomic and Renewable Energy , Riyadh, Saudi Arabia under grant no. ( KCR-KFL-06-20 ). Therefore, the authors gratefully acknowledge their technical and financial support

Comparative study on finance‐growth nexus in Malaysia and Indonesia: Role of institutional quality

The impact of financial development (FD) on economic growth in the context of Malaysia and Indonesia has been examined in this study regarding the role of the financial crisis and strategic changes in the institutional setup. Autoregressive distributed lags and threshold regression were applied, and time series data were analyzed for the period between 1984 and 2017 revealing that FD promoted the economic growth in both economies during this period. A nonlinear analysis also revealed that FD and economic growth follow an inverted U‐shape relation in the case of Malaysia whereas, in Indonesia, it followed a U‐shape relation. It was discovered that not all measures of FD promote economic growth. For instance, market capitalization was profound in the Malaysian economy while credit to the private sector and money supply was conducive for the Indonesian economy. The analysis demonstrated that the Asian and global financial crisis adversely affected economic growth in the case of Indonesia due to poor institutional quality (IQ), whereas in Malaysia it was relatively safe from the adversity brought about by the financial crisis due to the presence of IQ and good corporate governance. However, a positive change in IQ was found to have a much greater impact on augmenting economic growth rather than playing a mediating role in connection with FD and economic growth in Malaysia. In the context of Indonesia however, IQ was found to impede economic growth but played a positive and significant mediating role in the nexus of FD and economic growth. The spill‐over analysis revealed that Malaysian FD is positively associated with Indonesian economic growth while Indonesian FD is negatively associated with the Malaysian economy. This study provided all economic and anecdotal explanations in supporting the results of this study

Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach

The perception of special interest groups as a serious threat to economic growth has strengthened over the years; however, the vast empirical literature surrounding this claim has produced mixed and inconclusive results. This study re-examines the issue incorporating a potentially important aspect that has generally been ignored by previous studies, namely, the implicit suggestion by some of the theoretical works that the extent and the intensity of the growth effects of special interest groups may differ significantly over different time frames. Specifically, this study uses dynamic panel error-correction methods (Pesaran, Shin, and Smith (1999)) to properly determine whether these effects, if they exist, occur mostly in the short run or the long run based on data from a panel of 48 U.S. states for the years 1975 – 2004. The joint Hausman-type test selected the preferred model, which controls for human capital achievement, initial income, income inequality, and the tax burden. This model produced results which are in sharp contrast to the simple linearly negative or positive findings reported in much of the literature by indicating that special interest groups have significant non-linearly inverted U-shaped long-run effects on growth, and that it takes time (about 8 years) for the full effects to become evident. The results provide evidence that U.S. states face a threshold point below which special interest groups’ lobbying and rent-seeking activities boost long-run growth performance but above which they have damaging effects on long-run growth effort. This is confirmed by the Lind and Mehlum (2010) u-test which also suggests that the threshold point is reached when the activities and strength of special interest groups (measured by the percentage of each state’s public and private non-agricultural wage and salary employees who are union members, and which varies from 3.8% to 38.7%)) is at the 15.8% level

Business models innovation in investment banks: A resilience perspective

© 2020, The Author(s). Firms frequently change their business models in order to respond to internal and external challenges. This study aims to explore how investments banks adjust their business models in response to internal and external challenges. Based on a qualitative data from ten major investment banks operating in the largest financial market in the Middle East, we show that investment banks can achieve resilience by adjusting their business models through continuous activity changes in response to internal and external challenges. Specifically, investment banks adjust their business models through deploying alternative combinations of activities from a broad repertoire of activities. Within the same bank, divisions that respond to external challenges tend to sustain their performance, whereas resilient divisions that respond to both internal and external challenges tend to bounce back or achieve substantial increase in performance levels. This study contributes to the literature by proposing resilience as an alternative approach to business model innovation and by providing insight into how firms adjust their business models by altering specific activities in response to both internal and external challenges