Purpose: To explore the impact of non-traditional activities on both the cost and profit efficiency of banks as the measures of banks’ performance for the context of Sri Lanka. Design/Methodology/Approach: This study has considered systemically important banks in Sri Lanka as the sample and a panel data set for the period 2009 to 2019 obtained from annual reports of the banks. Estimation of bank efficiency was based on Stochastic Frontier Analysis (SFA). The efficiency of banks estimated using Cobb-Douglas and Translog Frontier forms. Findings: The efficiency scores indicate that profit efficiency of banks have decreased due to the involvement in non-traditional activities while the cost efficiency of banks have increased due to the involvement in non-traditional activities. The analysis shows that technology development has a significant impact on profit inefficiency under both cobb-douglas and translog models, while ATM development has only a significant impact on cost inefficiency under translog model when banks engage in both traditional and non-traditional banking activities. Yet, both profit and cost inefficiency of banks does not influence due to the ownership status of banks under the both models. Originality: This study contributes to the extant literature by highlighting the impact of inclusion of non-interest income as the secondary source of banks’ income to the banks’ performance in terms of profit and cost efficiencies as existing literature is silent regarding in this aspect.
{"title":"Impact of Non-Interest Income on Bank Efficiency: Evidence from Sri Lanka","authors":"J. Weerasuriya, R. Rathnayake, P. Fernando","doi":"10.4038/sajf.v1i1.25","DOIUrl":"https://doi.org/10.4038/sajf.v1i1.25","url":null,"abstract":"Purpose: To explore the impact of non-traditional activities on both the cost and profit efficiency of banks as the measures of banks’ performance for the context of Sri Lanka. Design/Methodology/Approach: This study has considered systemically important banks in Sri Lanka as the sample and a panel data set for the period 2009 to 2019 obtained from annual reports of the banks. Estimation of bank efficiency was based on Stochastic Frontier Analysis (SFA). The efficiency of banks estimated using Cobb-Douglas and Translog Frontier forms. Findings: The efficiency scores indicate that profit efficiency of banks have decreased due to the involvement in non-traditional activities while the cost efficiency of banks have increased due to the involvement in non-traditional activities. The analysis shows that technology development has a significant impact on profit inefficiency under both cobb-douglas and translog models, while ATM development has only a significant impact on cost inefficiency under translog model when banks engage in both traditional and non-traditional banking activities. Yet, both profit and cost inefficiency of banks does not influence due to the ownership status of banks under the both models. Originality: This study contributes to the extant literature by highlighting the impact of inclusion of non-interest income as the secondary source of banks’ income to the banks’ performance in terms of profit and cost efficiencies as existing literature is silent regarding in this aspect.","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"1 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72992937","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}
{"title":"Short and Long Term Determinants of Bank Credit Growth in Sri Lanka","authors":"P. Dharmadasa","doi":"10.4038/sajf.v1i1.24","DOIUrl":"https://doi.org/10.4038/sajf.v1i1.24","url":null,"abstract":"","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"13 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89445795","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}
{"title":"Antecedents of Customer Adoption on Digital Banking with Special Reference to Non-Banking Financial Institutes in Sri Lanka","authors":"K. Madusanka, D. Kumari","doi":"10.4038/sajf.v1i1.28","DOIUrl":"https://doi.org/10.4038/sajf.v1i1.28","url":null,"abstract":"","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"69 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76773086","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}
Pub Date : 2021-05-06DOI: 10.1177/22779787211007970
A. Memon, W. Akram, Ghulam Abbas, A. Chandio, Sultan Adeel, Iram Yasmin
This study explores the financial sustainability of microfinance institutions (MFIs) in the economic context to identify how macro-level economic decisions affect the micro-level decisions in the microfinance sector in South Asia. For that purpose, the data of 409 South Asian MFIs combined with the macroeconomic variables of respective countries are used over the period 1999–2017. The empirical analysis uses a fixed-effect model (FEM) to analyse the unbalance panel data of microfinance institutions and macroeconomic variables. We employ two-stage least squares (2SLS) model for robustness and System Generalized Method of Moment (GMM) to address the potential endogeneity and over-identification bias. The results reveal that economic indicators such as foreign investment, human development, inflation, interest rate, private credit, and labour force participation have negatively influenced financial sustainability except for the GDP growth. The overall economic results seem imperative from the good-governance perspective of MFIs. Besides, the government and microfinance policymakers need to give due consideration to the macro-level economic decisions to achieve the financial sustainability of MFIs. JEL Classification: A12, G21, G28, O1, Q01
{"title":"Financial Sustainability of Microfinance Institutions and Macroeconomic Factors: A Case of South Asia","authors":"A. Memon, W. Akram, Ghulam Abbas, A. Chandio, Sultan Adeel, Iram Yasmin","doi":"10.1177/22779787211007970","DOIUrl":"https://doi.org/10.1177/22779787211007970","url":null,"abstract":"This study explores the financial sustainability of microfinance institutions (MFIs) in the economic context to identify how macro-level economic decisions affect the micro-level decisions in the microfinance sector in South Asia. For that purpose, the data of 409 South Asian MFIs combined with the macroeconomic variables of respective countries are used over the period 1999–2017. The empirical analysis uses a fixed-effect model (FEM) to analyse the unbalance panel data of microfinance institutions and macroeconomic variables. We employ two-stage least squares (2SLS) model for robustness and System Generalized Method of Moment (GMM) to address the potential endogeneity and over-identification bias. The results reveal that economic indicators such as foreign investment, human development, inflation, interest rate, private credit, and labour force participation have negatively influenced financial sustainability except for the GDP growth. The overall economic results seem imperative from the good-governance perspective of MFIs. Besides, the government and microfinance policymakers need to give due consideration to the macro-level economic decisions to achieve the financial sustainability of MFIs. JEL Classification: A12, G21, G28, O1, Q01","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"11 1","pages":"116 - 142"},"PeriodicalIF":0.9,"publicationDate":"2021-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/22779787211007970","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48711363","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}
Pub Date : 2021-04-04DOI: 10.1177/2277978721995654
Zouhaier Dhifaoui
Determinism and non-linear behaviour in log-return and conditional volatility time series of the stock market index is examined for twenty-six countries. For this goal, the principal statistical techniques used in this study are a robust estimator of correlation dimension, a normalized non-linear prediction error, and pseudo-periodic surrogate data method. The proposed approach indicates, first, the stochastic behaviour of all log-return time series. Second, the inability of local linear, ARMA, or state- dependent noise models (such as ARCH, GARCH, and EGARCH) to describe its structure for the frontier, emerging, and developed markets. The same stochastic behaviour of conditional volatility time series, estimated by the stochastic volatility model with moving average innovations, is detected. This finding proves the efficiency of the stochastic volatility model compared with some analysed types of GARCH models for all studied markets. JEL Classification: C12, C52, D53, E44
{"title":"Determinism and Non-linear Behaviour of Log-return and Conditional Volatility: Empirical Analysis for 26 Stock Markets","authors":"Zouhaier Dhifaoui","doi":"10.1177/2277978721995654","DOIUrl":"https://doi.org/10.1177/2277978721995654","url":null,"abstract":"Determinism and non-linear behaviour in log-return and conditional volatility time series of the stock market index is examined for twenty-six countries. For this goal, the principal statistical techniques used in this study are a robust estimator of correlation dimension, a normalized non-linear prediction error, and pseudo-periodic surrogate data method. The proposed approach indicates, first, the stochastic behaviour of all log-return time series. Second, the inability of local linear, ARMA, or state- dependent noise models (such as ARCH, GARCH, and EGARCH) to describe its structure for the frontier, emerging, and developed markets. The same stochastic behaviour of conditional volatility time series, estimated by the stochastic volatility model with moving average innovations, is detected. This finding proves the efficiency of the stochastic volatility model compared with some analysed types of GARCH models for all studied markets. JEL Classification: C12, C52, D53, E44","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"11 1","pages":"69 - 94"},"PeriodicalIF":0.9,"publicationDate":"2021-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721995654","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45873919","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}
Pub Date : 2021-04-01DOI: 10.1177/2277978721995649
Hon-Chung Hui
This article explores the effects of political events on foreign exchange returns in Malaysia. We identify five political events in recent history, namely the 13th General Election (GE13), the imprisonment of a key opposition politician, the scandal from the 1MDB exposé, the appointment of a new Central Bank Governor and the 14th General Election (GE14). Using event studies, our findings show that the imprisonment of the opposition party leader triggered a favourable response from the foreign exchange market. However, market reactions to the 1MDB scandal were largely unfavourable. The GE13 triggered unfavourable market response, while the reverse is true for market reactions to GE14. Market response to the appointment of the new Central Bank Governor was rather positive. The Event Study is the first of its kind that examines the foreign exchange market implications of key political events in Malaysia. There are practical considerations that emanate from these findings. JEL Classification: F31, D72, D73, O38
{"title":"Were Foreign Exchange Markets Reacting Negatively to Political Events? The Case of Malaysia","authors":"Hon-Chung Hui","doi":"10.1177/2277978721995649","DOIUrl":"https://doi.org/10.1177/2277978721995649","url":null,"abstract":"This article explores the effects of political events on foreign exchange returns in Malaysia. We identify five political events in recent history, namely the 13th General Election (GE13), the imprisonment of a key opposition politician, the scandal from the 1MDB exposé, the appointment of a new Central Bank Governor and the 14th General Election (GE14). Using event studies, our findings show that the imprisonment of the opposition party leader triggered a favourable response from the foreign exchange market. However, market reactions to the 1MDB scandal were largely unfavourable. The GE13 triggered unfavourable market response, while the reverse is true for market reactions to GE14. Market response to the appointment of the new Central Bank Governor was rather positive. The Event Study is the first of its kind that examines the foreign exchange market implications of key political events in Malaysia. There are practical considerations that emanate from these findings. JEL Classification: F31, D72, D73, O38","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"105 - 129"},"PeriodicalIF":0.9,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721995649","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41910377","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}
Pub Date : 2021-04-01DOI: 10.1177/2277978721990970
Oindrila Dey, Swapnendu Banerjee
This article provides a critical discussion on the working of status as an instrument to elicit desirable effort within an organization. It postulates a comprehensive survey of the studies on incentive, especially non-monetary incentives like status. Different studies are summarized concisely and elaborate comments on the divergent views on valuation for status, the relationship between monetary and status incentives, the technique of modelling status and the cost of introducing status have been illustrated. The article underlines some probable adverse consequences associated with the use of the status incentive. Status works by creating inequality and has strong unwarranted influence even beyond organizational purview. It emphasizes the need for profound research to account for the optimal and prudent use of status as incentives. JEL Classification: L2, D21, D86
{"title":"Incentives, Status and Thereafter: A Critical Survey","authors":"Oindrila Dey, Swapnendu Banerjee","doi":"10.1177/2277978721990970","DOIUrl":"https://doi.org/10.1177/2277978721990970","url":null,"abstract":"This article provides a critical discussion on the working of status as an instrument to elicit desirable effort within an organization. It postulates a comprehensive survey of the studies on incentive, especially non-monetary incentives like status. Different studies are summarized concisely and elaborate comments on the divergent views on valuation for status, the relationship between monetary and status incentives, the technique of modelling status and the cost of introducing status have been illustrated. The article underlines some probable adverse consequences associated with the use of the status incentive. Status works by creating inequality and has strong unwarranted influence even beyond organizational purview. It emphasizes the need for profound research to account for the optimal and prudent use of status as incentives. JEL Classification: L2, D21, D86","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"11 1","pages":"95 - 115"},"PeriodicalIF":0.9,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721990970","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44907137","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}
Pub Date : 2021-03-15DOI: 10.1177/2277978721989934
L. Hung, N. T. Hoan
In an open multi-country economy, the safe assets supply shapes the pattern of international capital flows. A higher productivity growth rate raises the net capital inflows for economies with abundant safe assets, but reduces the net capital inflows for economies with scarce safe assets. The cross-section analysis on a sample of 170 economies over 1980–2013 confirms the theory. The evidence is robust for instrument-variable (IV) analysis method. JEL Classifications: F15, F36, F43
{"title":"International Capital Flows When Safe Assets Scarcity Matters","authors":"L. Hung, N. T. Hoan","doi":"10.1177/2277978721989934","DOIUrl":"https://doi.org/10.1177/2277978721989934","url":null,"abstract":"In an open multi-country economy, the safe assets supply shapes the pattern of international capital flows. A higher productivity growth rate raises the net capital inflows for economies with abundant safe assets, but reduces the net capital inflows for economies with scarce safe assets. The cross-section analysis on a sample of 170 economies over 1980–2013 confirms the theory. The evidence is robust for instrument-variable (IV) analysis method. JEL Classifications: F15, F36, F43","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"11 1","pages":"151 - 167"},"PeriodicalIF":0.9,"publicationDate":"2021-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721989934","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45250414","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}
Pub Date : 2021-03-11DOI: 10.1177/2277978721989929
A. Rath, A. Sachan
The objective of the article is to examine the fiscal sustainability of the Indian central government’s finances in the era of rule-based fiscal policy. Asymmetric budgetary adjustment process and revenue–expenditure nexus are also analysed in this article by employing threshold autoregressive models/momentum threshold autoregressive models. Findings of the article reveal emerging issues in fiscal sustainability in India. The central government’s expenditure as a share of gross domestic product (GDP) has been falling continuously, leaving little room for further pruning. The current scenario of negative growth in central government’s revenue as a share of GDP, if not reversed, can become the Achilles heel of government finances in India. JEL Classification: E62, H600, H500, C32
{"title":"Emerging Issues in Fiscal Sustainability in India: A Study of Central Government Finances, 1979–1980 to 2018–2019","authors":"A. Rath, A. Sachan","doi":"10.1177/2277978721989929","DOIUrl":"https://doi.org/10.1177/2277978721989929","url":null,"abstract":"The objective of the article is to examine the fiscal sustainability of the Indian central government’s finances in the era of rule-based fiscal policy. Asymmetric budgetary adjustment process and revenue–expenditure nexus are also analysed in this article by employing threshold autoregressive models/momentum threshold autoregressive models. Findings of the article reveal emerging issues in fiscal sustainability in India. The central government’s expenditure as a share of gross domestic product (GDP) has been falling continuously, leaving little room for further pruning. The current scenario of negative growth in central government’s revenue as a share of GDP, if not reversed, can become the Achilles heel of government finances in India. JEL Classification: E62, H600, H500, C32","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"11 1","pages":"39 - 68"},"PeriodicalIF":0.9,"publicationDate":"2021-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721989929","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49534098","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}
Pub Date : 2021-02-27DOI: 10.1177/2277978720979890
L. Hung
On one monthly time-series data set of Vietnam economy over 02/2008–09/2018, the Time-Varying-Coefficient VAR model records that the trade-off between inflation and output growth is mitigated by the foreign capital inflows. The inflation is mostly determined by credit supply growth, while output growth is largely driven by foreign direct investment (FDI) capital inflows. A monthly increase of FDI by USD 1 billion can raise 1.77% of monthly output growth rate. The result also holds on accounting for exchange rate fluctuation. JEL Classifications: E31, F15, F36, F43
{"title":"Output-inflation Trade-off in the Presence of Foreign Capital: Evidence for Vietnam","authors":"L. Hung","doi":"10.1177/2277978720979890","DOIUrl":"https://doi.org/10.1177/2277978720979890","url":null,"abstract":"On one monthly time-series data set of Vietnam economy over 02/2008–09/2018, the Time-Varying-Coefficient VAR model records that the trade-off between inflation and output growth is mitigated by the foreign capital inflows. The inflation is mostly determined by credit supply growth, while output growth is largely driven by foreign direct investment (FDI) capital inflows. A monthly increase of FDI by USD 1 billion can raise 1.77% of monthly output growth rate. The result also holds on accounting for exchange rate fluctuation. JEL Classifications: E31, F15, F36, F43","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"179 - 192"},"PeriodicalIF":0.9,"publicationDate":"2021-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720979890","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47347076","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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