This paper examines the impact and importance of economic freedom index on private capital inflows in Nepal. The foreign direct investment is treated as the private capital inflows and considered as dependent variable for this study. Economic freedom index, one year lag of private capital inflow, consumer price index and exchange rate are the independent variables. The data are collected from the data bank of Heritage Foundation. In addition to this, different published articles and reports are also analyzed. The information regarding economic freedom index is based on four key categories: rule of law (property rights, judicial effectiveness, and government integrity); government size (tax burden, government spending, and fiscal health); regulatory efficiency (business freedom, labor freedom, and monetary freedom); and market openness (trade freedom, investment freedom, and financial freedom). The multiple regression model is applied to test the significance and importance of economic freedom in the Nepalese context specific to private capital inflows.
The result shows that economic freedom is not the potent determinant of private capital inflows in Nepal. The increasing trend of private capital inflow and positive relationship between consumer price index (CPI) and exchange rate (ER) states that Nepal's economy is beyond the control of the authority and failing to stabilize the domestic currency as in each year Nepalese currency is depreciated and it is again fueled by the increasing trend of CPI.
{"title":"Economic Freedom of Nepal and Private Capital Inflows: A Case of Nepal","authors":"Post Raj Pokharel","doi":"10.2139/ssrn.3852805","DOIUrl":"https://doi.org/10.2139/ssrn.3852805","url":null,"abstract":"This paper examines the impact and importance of economic freedom index on private capital inflows in Nepal. The foreign direct investment is treated as the private capital inflows and considered as dependent variable for this study. Economic freedom index, one year lag of private capital inflow, consumer price index and exchange rate are the independent variables. The data are collected from the data bank of Heritage Foundation. In addition to this, different published articles and reports are also analyzed. The information regarding economic freedom index is based on four key categories: rule of law (property rights, judicial effectiveness, and government integrity); government size (tax burden, government spending, and fiscal health); regulatory efficiency (business freedom, labor freedom, and monetary freedom); and market openness (trade freedom, investment freedom, and financial freedom). The multiple regression model is applied to test the significance and importance of economic freedom in the Nepalese context specific to private capital inflows.<br><br>The result shows that economic freedom is not the potent determinant of private capital inflows in Nepal. The increasing trend of private capital inflow and positive relationship between consumer price index (CPI) and exchange rate (ER) states that Nepal's economy is beyond the control of the authority and failing to stabilize the domestic currency as in each year Nepalese currency is depreciated and it is again fueled by the increasing trend of CPI.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"33 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74954612","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper is a survey of the most important research in the economic policy uncertainty literature. Economic policy uncertainty, although still under-researched relative to mainstream topics in economics and finance, has recently received increased scholarly attention. Through synthesizing common themes in the literature, the paper highlights the progress made so far and suggest some avenues for future research which allows future researchers to position their research and differentiate themselves from other studies in the literature. The paper finds that economic policy uncertainty affects banks through a reduction in credit supply and loan re-pricing. High economic policy uncertainty compel bank managers to discretionary distort bank financial reporting in ways that help them to mitigate the depressing effect of economic policy uncertainty on their profitability.
{"title":"Economic Policy Uncertainty in Banking: A Literature Review","authors":"Peterson K. Ozili","doi":"10.2139/ssrn.3851426","DOIUrl":"https://doi.org/10.2139/ssrn.3851426","url":null,"abstract":"This paper is a survey of the most important research in the economic policy uncertainty literature. Economic policy uncertainty, although still under-researched relative to mainstream topics in economics and finance, has recently received increased scholarly attention. Through synthesizing common themes in the literature, the paper highlights the progress made so far and suggest some avenues for future research which allows future researchers to position their research and differentiate themselves from other studies in the literature. The paper finds that economic policy uncertainty affects banks through a reduction in credit supply and loan re-pricing. High economic policy uncertainty compel bank managers to discretionary distort bank financial reporting in ways that help them to mitigate the depressing effect of economic policy uncertainty on their profitability.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"73 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85975382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article aims to discuss tax whistleblowing. First, its fundamentals and legal nature are discussed. Compared international practices in tax whistleblower programs are stated and analyzed. The objective and formal aspects of tax whistleblowing and the subjective legal elements - whistleblower, accused, and Administration - are reviewed. In the sequence, the procedure of tax whistleblowing in the Brazilian Federal Tax Administration is critically exposed. Given the growing international use of rewards in tax whistleblowing, a brief reflection is promoted on the advantages and disadvantages of offering monetary incentives to tax whistleblowers. It concludes with some recommendations for strengthening a tax whistleblower program. Encouraging tax whistleblowers by ensuring protection and, perhaps, rewards are a cost-effective and efficient alternative to obtain information on tax irregularities and tax wrongdoings that are difficult to detect by traditional tax screening and auditing methods.
{"title":"Tax Whistleblowing: Fundamentals, International Practices and Legal Regime","authors":"Antonio Lopo Martinez, Fábio Souza e Silva","doi":"10.2139/ssrn.3850407","DOIUrl":"https://doi.org/10.2139/ssrn.3850407","url":null,"abstract":"This article aims to discuss tax whistleblowing. First, its fundamentals and legal nature are discussed. Compared international practices in tax whistleblower programs are stated and analyzed. The objective and formal aspects of tax whistleblowing and the subjective legal elements - whistleblower, accused, and Administration - are reviewed. In the sequence, the procedure of tax whistleblowing in the Brazilian Federal Tax Administration is critically exposed. Given the growing international use of rewards in tax whistleblowing, a brief reflection is promoted on the advantages and disadvantages of offering monetary incentives to tax whistleblowers. It concludes with some recommendations for strengthening a tax whistleblower program. Encouraging tax whistleblowers by ensuring protection and, perhaps, rewards are a cost-effective and efficient alternative to obtain information on tax irregularities and tax wrongdoings that are difficult to detect by traditional tax screening and auditing methods.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81502676","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the impact of political relations on media coverage. Using a sample of 3,290 American Depository Receipts (ADRs) from 45 countries, we find that poor political relations between the US and an ADR firm’s home country induce negative coverage by the US media of the ADR firm. To alleviate endogeneity, we adopt France’s and Germany’s opposition to the Iraq War and the inauguration of the US president as two shocks to bilateral political relations between the US and foreign countries. In placebo tests, we show either no negative effect of political relations on ADR firms’ press releases and non-US media coverage or such an effect not driven by firms’ US sales. We further document the three economic mechanisms underlying the impact of political relations on media coverage: US journalists’ country sentiment, a country’s popularity among US readers, and the US media’s political beliefs. Finally, we document the two consequences of negative coverage by the US media: investors respond to negative news in a short horizon but quickly adjust with a stock price reversion in a long horizon, and negative coverage leads to a higher likelihood of firms terminating their ADRs.
{"title":"Political Relations and Media Coverage","authors":"T. Ruf, Jun-Min Song, Bohui Zhang","doi":"10.2139/ssrn.3849962","DOIUrl":"https://doi.org/10.2139/ssrn.3849962","url":null,"abstract":"We study the impact of political relations on media coverage. Using a sample of 3,290 American Depository Receipts (ADRs) from 45 countries, we find that poor political relations between the US and an ADR firm’s home country induce negative coverage by the US media of the ADR firm. To alleviate endogeneity, we adopt France’s and Germany’s opposition to the Iraq War and the inauguration of the US president as two shocks to bilateral political relations between the US and foreign countries. In placebo tests, we show either no negative effect of political relations on ADR firms’ press releases and non-US media coverage or such an effect not driven by firms’ US sales. We further document the three economic mechanisms underlying the impact of political relations on media coverage: US journalists’ country sentiment, a country’s popularity among US readers, and the US media’s political beliefs. Finally, we document the two consequences of negative coverage by the US media: investors respond to negative news in a short horizon but quickly adjust with a stock price reversion in a long horizon, and negative coverage leads to a higher likelihood of firms terminating their ADRs.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82239598","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines how increased tax enforcement accompanied by the new tax administration system impacts firm investment efficiency, exploiting the staggered implementation of the third phase of the Golden Tax Project (GTP III) in China. Consistent with the monitoring role of tax authorities (Desai et al., 2007), I find that firms improved their investment efficiency after the local tax office adopted the new system. This effect is more pronounced when tax authorities previously suffered from resource constraints, when the tax enforcement is further enhanced through local fiscal pressure, and when firms have a higher ex-ante propensity to avoid taxes. An analysis of the potential mechanisms of this investment efficiency effect reveals that increased tax enforcement serves as a substitute for corporate governance in that it has positive spillover effects on financial reporting quality and that investments are more responsive to market prices.
本文利用中国黄金税收项目第三阶段(GTP III)的交错实施，研究了新的税收征管制度下增加的税收执法对企业投资效率的影响。与税务机关的监督作用相一致(Desai et al.， 2007)，我发现在地方税务局采用新制度后，企业的投资效率提高了。当税务机关先前遭受资源限制时，当税收执法通过地方财政压力进一步加强时，以及当企业具有更高的事前避税倾向时，这种效应更为明显。对这种投资效率效应的潜在机制的分析表明，增加税收执法可以替代公司治理，因为它对财务报告质量具有积极的溢出效应，并且投资对市场价格的反应更敏感。
{"title":"Tax Enforcement and Firm Investment Efficiency: Evidence from Staggered Implementation of Tax Administration Information System","authors":"Fan Wu","doi":"10.2139/ssrn.3869665","DOIUrl":"https://doi.org/10.2139/ssrn.3869665","url":null,"abstract":"This paper examines how increased tax enforcement accompanied by the new tax administration system impacts firm investment efficiency, exploiting the staggered implementation of the third phase of the Golden Tax Project (GTP III) in China. Consistent with the monitoring role of tax authorities (Desai et al., 2007), I find that firms improved their investment efficiency after the local tax office adopted the new system. This effect is more pronounced when tax authorities previously suffered from resource constraints, when the tax enforcement is further enhanced through local fiscal pressure, and when firms have a higher ex-ante propensity to avoid taxes. An analysis of the potential mechanisms of this investment efficiency effect reveals that increased tax enforcement serves as a substitute for corporate governance in that it has positive spillover effects on financial reporting quality and that investments are more responsive to market prices.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"81 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82592259","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Krzysztof Jackowicz, Oskar Kowalewski, Łukasz Kozłowski
We investigated whether home country culture determines the lending behavior of foreign subsidiaries in host countries during both tranquil and difficult economic times. We employed a dataset of foreign-owned banks originating from 49 home countries and operating in 47 host countries during the period 1996–2018. We found that, in general, only certain dimensions of the home country culture of multinational banks influence lending activities of the foreign bank subsidiaries. However, the impact of home country culture strengthens significantly during crises. Interestingly, we established that the cultural values of the home country are more important than the cultural distances between home and host countries in explaining foreign bank lending attitudes.
{"title":"Foreign Bank Lending: The Role of Home Country Culture During Prosperous and Crisis Periods","authors":"Krzysztof Jackowicz, Oskar Kowalewski, Łukasz Kozłowski","doi":"10.2139/ssrn.3835894","DOIUrl":"https://doi.org/10.2139/ssrn.3835894","url":null,"abstract":"We investigated whether home country culture determines the lending behavior of foreign subsidiaries in host countries during both tranquil and difficult economic times. We employed a dataset of foreign-owned banks originating from 49 home countries and operating in 47 host countries during the period 1996–2018. We found that, in general, only certain dimensions of the home country culture of multinational banks influence lending activities of the foreign bank subsidiaries. However, the impact of home country culture strengthens significantly during crises. Interestingly, we established that the cultural values of the home country are more important than the cultural distances between home and host countries in explaining foreign bank lending attitudes.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72991683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
[We examine the association between economic growth and financial development for the Brazilian economy from 1997 to 2018. Vector-autoregressive (VAR) models and Granger causality tests are employed, with financial development represented by two different variables, the first being the “banking channel” (total bank loans to the private sector as a percentage of GDP), and the second being the “stock market channel” (market value of the companies listed at B3 - Brazilian Stock Exchange - as a percentage of GDP). Economic growth is measured by the real growth of Gross Domestic Product. The empirical analysis adopts the procedures developed by Toda and Yamamoto (1995). The main conclusions are that there exists strong evidence of unidirectional Granger causality between economic growth and financial development (from the latter to the former), when measured by both the banking and stock market channels, contradicting several results available in the literature.
{"title":"Financial development and economic growth in Brazil","authors":"A. Sanvicente, Victor Guglielmetti","doi":"10.2139/ssrn.3832920","DOIUrl":"https://doi.org/10.2139/ssrn.3832920","url":null,"abstract":"[We examine the association between economic growth and financial development for the Brazilian economy from 1997 to 2018. Vector-autoregressive (VAR) models and Granger causality tests are employed, with financial development represented by two different variables, the first being the “banking channel” (total bank loans to the private sector as a percentage of GDP), and the second being the “stock market channel” (market value of the companies listed at B3 - Brazilian Stock Exchange - as a percentage of GDP). Economic growth is measured by the real growth of Gross Domestic Product. The empirical analysis adopts the procedures developed by Toda and Yamamoto (1995). The main conclusions are that there exists strong evidence of unidirectional Granger causality between economic growth and financial development (from the latter to the former), when measured by both the banking and stock market channels, contradicting several results available in the literature.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"43 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76090696","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the impact of IMF programs on private capital flows in the assisted countries. We look at the impact on inflows and outflows of both traditional and precautionary programs, also taking into account the characteristics of the programs. Using the entropy balancing method to address the selection bias, we find that traditional IMF programs have an anticatalytic effect on private capital inflows; this effect is mainly driven by programs that went off-track and by exceptional access programs. By contrast, precautionary programs are found to have a catalytic effect, working mainly through outflows.
{"title":"The Catalytic Role of IMF Programs","authors":"Claudia Maurini, Alessandro Schiavone","doi":"10.2139/ssrn.3852797","DOIUrl":"https://doi.org/10.2139/ssrn.3852797","url":null,"abstract":"This paper investigates the impact of IMF programs on private capital flows in the assisted countries. We look at the impact on inflows and outflows of both traditional and precautionary programs, also taking into account the characteristics of the programs. Using the entropy balancing method to address the selection bias, we find that traditional IMF programs have an anticatalytic effect on private capital inflows; this effect is mainly driven by programs that went off-track and by exceptional access programs. By contrast, precautionary programs are found to have a catalytic effect, working mainly through outflows.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84550927","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Geography plays a fundamental role in today’s interconnected world. Financial flows operate within a multitude of regulatory and supervisory parameters often heavily influenced by regional factors. While deposit insurance is one factor affecting these flows, it too has been influenced by regional factors, particularly in the past 20 years with the rapid growth and development of deposit insurance systems, and has undergone substantial changes as a result. Understanding geographic dynamics in deposit insurance design enables policy makers to better understand the impact of regional factors on the features of deposit insurance systems and vice versa. Correlation between deposit insurer features in neighbouring jurisdictions offers the potential to facilitate collaboration under the grounds of common history and institutional development, but also introduces many challenges to multiple and bilateral coordination. We explore these issues further and highlight considerations for deposit insurance research, training and more targeted technical assistance initiatives.
{"title":"The Geographic Dynamics of Deposit Insurance","authors":"Ryan Defina","doi":"10.2139/ssrn.3886865","DOIUrl":"https://doi.org/10.2139/ssrn.3886865","url":null,"abstract":"Geography plays a fundamental role in today’s interconnected world. Financial flows operate within a multitude of regulatory and supervisory parameters often heavily influenced by regional factors. While deposit insurance is one factor affecting these flows, it too has been influenced by regional factors, particularly in the past 20 years with the rapid growth and development of deposit insurance systems, and has undergone substantial changes as a result. Understanding geographic dynamics in deposit insurance design enables policy makers to better understand the impact of regional factors on the features of deposit insurance systems and vice versa. Correlation between deposit insurer features in neighbouring jurisdictions offers the potential to facilitate collaboration under the grounds of common history and institutional development, but also introduces many challenges to multiple and bilateral coordination. We explore these issues further and highlight considerations for deposit insurance research, training and more targeted technical assistance initiatives.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"51 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90235722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Raising funds from international markets is very key factor for any listed entity as it does not only cater the need of funds but also increase the goodwill and reputation of company on international platform. It helps the company in broadening it’s shareholder base and to enhance investor quality. Nowadays many Indian listed entities attract towards international capital markets as the underlying instruments are listed and traded in international stock exchanges hence free from delivery and settlement problems. Further the foreign investors are not required to comply with rigid formalities and regulation which otherwise they would require in case of investment through other Foreign Direct Investment (FDI) routes. The present research paper undertakes critical study of various methods and instruments of tapping international capital markets. This paper examines the regulatory provisions to issue instruments in international capital markets.
{"title":"Resource Mobilization by Listed Entities in International Capital Markets","authors":"Chinmay Gosavi","doi":"10.2139/ssrn.3812316","DOIUrl":"https://doi.org/10.2139/ssrn.3812316","url":null,"abstract":"Raising funds from international markets is very key factor for any listed entity as it does not only cater the need of funds but also increase the goodwill and reputation of company on international<br>platform. It helps the company in broadening it’s shareholder base and to enhance investor quality.<br>Nowadays many Indian listed entities attract towards international capital markets as the underlying instruments are listed and traded in international stock exchanges hence free from delivery and settlement problems. Further the foreign investors are not required to comply with rigid formalities and regulation which otherwise they would require in case of investment through other Foreign Direct Investment (FDI) routes. The present research paper undertakes critical study of various methods and instruments of tapping international capital markets. This paper examines the regulatory provisions to issue instruments in international capital markets.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"29 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74063879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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