Equity and debt market timing, cost of capital and value and performance : evidence from listed firms in Thailand

Market timing is an infant theory of capital structure used to explain concealed motivation of managers. Equity market timing refers to equity issuance when the stock market is favourable to reduce the cost of capital, while debt market timing refers to debt financing when the interest rate is particularly low to minimize the cost of capital. However, there is no consensus in the literature as to whether firms can take such advantages in real markets, especially in Thailand. Furthermore, it is far from settled as to what the determining factors of market timing are. Additionally, the success of the decrease in cost of capital remains ambiguous. This study investigates market timing theory through three empirical studies.The first study examines the presence of equity market timing in Thailand with 285 IPO firms and 1,038 SEO issuances from 2000 to 2014. The results reveal that IPO and SEO firms tend to take advantage in the stock market when the market is in a good condition, such as a hot period, economic expansion, and bullish time. In addition, the study finds that timers obtain higher proceeds and maintain these proceeds as cash after offering. Moreover, this is the first study to explore how the corporate governance dimension is the potential determinants of equity market timing.The second study looks at the existence of debt market timing in Thailand with 189 corporate bond’s issuances from 2001 to 2014. The results indicate that the firms tend to time the debt market when the market is hot and there is a low interest rate. Likewise, we find that timers gain more proceeds and pay lower interest rates. Moreover, this is the first study to reveal that timers retain the proceeds as cash after issuance and that the corporate governance and board structure are significant determinants of debt market timing.The third study investigates the influence of market timing on cost of capital and firm performance. We find that market timing policy can lead to both success and failure of cost reduction and performance increment, depending on the types of issued securities, the strategy of market timing, and the method of cost of capital and firm performance estimation.Furthermore, this study provides some suggestions for managers, shareholders, investors, regulators and other stakeholders to comprehend the cause and effect of market timing and to prepare in order to protect their benefits. Also, this study informs regulators and policy makers to improve the efficiency of stock and bond markets in Thailand

Tail risk, systemic risk and spillover risk of crude oil and precious metals

The relationship between oil prices and metal prices has been extensively investigated. However, the tail risk, systemic risk and spillover risk of oil prices have not been investigated via extreme value theory (EVT). We use this novel approach to determine the tail risk of oil, precious metals, how much risk they pose to the financial system and to what extent a shock in oil prices spill over to other precious metals as well as from the financial system. We use long time series of daily data from 1st January 1987 to 31st December 2021 as long time series is required for the EVT. The data is based on the total return index (RI) of four precious metals including gold, platinum, palladium and silver. Our results show that the tail risk of these metals is lower during the crisis period except the Covid-19 pandemic crisis. Most importantly, gold is a safer asset due to the lowest tail risk among four precious metals, indicating the claim that gold is a precious asset to mitigate the returns during market downturns and acts as a ‘safe haven’. Moreover, we also find that extreme systemic risk (tail-β) for crude oil and selected precious metals reduces during crisis period. This is also recognising the fact that these commodities act as a prospective asset for portfolio diversification to hedge against financial assets' volatility. Finally, the spillover risk among crude oil and selected precious metals varies over time, especially during the crisis period and crude oil is an important stimulator of the spillover risk for precious metals. By using our findings, financial market investors can improve their investment planning to attain the maximum advantage of portfolio diversification. Financial managers can further apply these results in forecasting to estimate future global oil market trends for improving their hedging skills and portfolio performance

Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement

Financial inclusion is recognized as a key enabler of the 2030 Sustainable Development Goals agenda of the United Nations. Hence, this study investigates the impacts of internal conflicts, economic growth, information and communications technology, institutional quality, and remittance inflows on financial inclusion in selected South Asian countries. Notably, both the independent and moderating/mediating effects of internal conflict settlement on financial inclusion are explored for the countries of concern. Overall, the results from the econometric analysis reveal that internal conflict resolution, higher mobile subscriptions, and lower levels of corruption improve financial inclusivity while higher economic growth inhibits financial inclusion in South Asia. Further, resolving internal conflicts is found to indirectly boost financial inclusion by moderating the economic growth-financial inclusion nexus and mediating the remittance inflows-financial inclusion relationship. In line with these key findings, several financial inclusion-related policies are recommended to help promote financial inclusivity across South Asia

The effects of regional trade integration and renewable energy transition on environmental quality:Evidence from South Asian neighbors

Improving environmental quality across South Asia has become one of the utmost important policy agendas of the concerned governments. The susceptibility of the majority of the South Asian countries to multifaceted climate change adversities has motivated the need to identify the factors that can function to ensure environmental sustainability within this region. Although several studies have highlighted the importance of globalization and cleaner energy use in tackling the environmental woes of the South Asian countries, very little is known regarding the impacts of regional trade and renewable energy transition in this regard. Hence, this paper aims to scrutinize the effects of enhancing intra-regional trade integration and undergoing renewable energy transition on per capita carbon dioxide emissions in the context of six South Asian nations between 1990 and 2016. Besides, the impacts of economic growth, financial development, and urbanization on carbon dioxide emissions are also examined. The results from the recently developed cross-sectionally augmented autoregressive distributed lag regression approach, accounting for cross-sectional dependency and slope heterogeneity issues, reveal that facilitating trade among the South Asian neighbors reduces carbon emissions both in the short-and long run. Moreover, enhancing the share of renewable energy in the aggregate energy consumption figures is also found to reduce carbon dioxide emissions in both the short-and long-run. Furthermore, both regional trade integration and renewable energy transition are found to jointly reduce carbon dioxide emissions in South Asia. The results also authenticate the existence of the environmental Kuznets curve hypothesis while financial development and urbanization are found to boost carbon dioxide emissions only in the long run. Hence, the findings from this study impose key policy takeaways concerning environmental sustainability within South Asia

Inflation, oil prices, and economic activity in recent crisis: Evidence from the UK

This study examines the link between inflation and the macroeconomy such as output, trade balance and unemployment as reflected through crude oil prices. Using monthly data from the UK spanning January 2010 to June 2022, we apply a combination of three analyses including the VAR model, time-varying VAR analysis, and time-varying panel model with robustness. The results reveal that in the event of inflation shocks the other economic indicators decrease initially. However, Brent crude oil shocks are the quickest in responding to surging inflation compared to other proxies, rebounding to a positive level in only one month. Furthermore, the impact of inflation shocks is strong in the first quarter but diminishes in the long run. This information can be used to inform and assist policymakers to develop policies that mitigate the negative effects of inflation in the short term. Our findings also have important implications for businesses operating in the UK in making strategic decisions

The determinants of issuing central bank digital currencies

Central Bank Digital Currencies (CBDC) are considered ‘digital fiat currencies’ that do not have a physical form, which is a key distinction from conventional fiat money. This study aims to identify factors that influence central banks’ decisions in taking advanced actions to issue CBDC, namely, the economic, market, demographic and technical factors. Data is collected from the CBDC Tracker and the WB database for the period 2013-2021. We applied the Pooled OLS estimations to examine the impact of the key factors on being in an advanced stage for issuing CBDC; moreover, probit and logistic regression are employed to robust our results and overcome the limitations of Pooled OLS. The findings demonstrate that underdeveloped economies are more engaged in issuing CBDC. Besides, better regulations, FDI inflow, young populations, and more urban societies would increase the probability of CBDC issuance. Nevertheless, results show the impact of technical factors is heterogeneous across countries

Can enhancing financial inclusivity lower climate risks by inhibiting carbon emissions? Contextual evidence from emerging economies

Climate change has become a global concern. Hence, acknowledging the importance of lowering climate risks by curbing greenhouse gas emissions, this study assesses whether financial inclusion, alongside “energy efficiency improvement, renewable energy use, economic growth, international trade, and urbanization,” mitigate carbon dioxide emissions in 22 emerging economies over the 2008-2018 period. Utilizing econometric methods robust to handling cross-sectionally-dependent, heterogeneous, and endogenous data, results reveal that financial inclusion directly cannot mitigate carbon dioxide emissions. Contrarily, energy efficiency improvement and higher renewable energy share in the aggregate energy consumption level inhibit carbon dioxide emissions. Moreover, energy efficiency gains are observed to impose a moderating effect by reducing carbon emissions jointly with greater financial inclusivity. Furthermore, the results also indicate that economic growth, international trade, and urbanization boost the emission figures. In light of these findings, several carbon dioxide-mitigating policies are recommended for neutralizing climate risks in emerging countries of concern