Pub Date : 2024-09-01DOI: 10.1177/09726527241257351
Silu Muduli, Shridhar Kumar Dash
This study, utilizing bank-level data for India, investigates the relationship between funding liquidity and banks’ risk-taking behavior. The study uses two risk measures: risk-weighted assets (encompassing credit, market, and operational risk) and liquidity creation (encompassing intermediacy risk). Findings reveal that banks with higher funding liquidity exhibit higher risk-taking behavior. This risk-taking behavior is more pronounced during economic recuperation and expansionary monetary policy phases. Notably, during economic recuperation, banks display heightened intermediacy risk, contrasting with the absence of such evidence during expansionary monetary policy phases. Larger banks with higher deposit shares demonstrate lower risk-taking behavior. Additionally, banks with a return on equity (ROE) below the average ROE exhibit a proclivity for increased risk-taking. This study advocates for liquidity regulation as a crucial complement to bank capital regulation, offering empirical support for moderate risk-taking among highly liquid banks and fortify their balance sheets for a stable banking system in India.JEL Codes: E32, E52, G21, G28
{"title":"Funding Liquidity and Risk-Taking Behavior of Banks in India","authors":"Silu Muduli, Shridhar Kumar Dash","doi":"10.1177/09726527241257351","DOIUrl":"https://doi.org/10.1177/09726527241257351","url":null,"abstract":"This study, utilizing bank-level data for India, investigates the relationship between funding liquidity and banks’ risk-taking behavior. The study uses two risk measures: risk-weighted assets (encompassing credit, market, and operational risk) and liquidity creation (encompassing intermediacy risk). Findings reveal that banks with higher funding liquidity exhibit higher risk-taking behavior. This risk-taking behavior is more pronounced during economic recuperation and expansionary monetary policy phases. Notably, during economic recuperation, banks display heightened intermediacy risk, contrasting with the absence of such evidence during expansionary monetary policy phases. Larger banks with higher deposit shares demonstrate lower risk-taking behavior. Additionally, banks with a return on equity (ROE) below the average ROE exhibit a proclivity for increased risk-taking. This study advocates for liquidity regulation as a crucial complement to bank capital regulation, offering empirical support for moderate risk-taking among highly liquid banks and fortify their balance sheets for a stable banking system in India.JEL Codes: E32, E52, G21, G28","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"11 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142182203","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 : 2024-08-13DOI: 10.1177/09726527241257755
Jesús Antonio López Cabrera, Enrique González Mata, Juan Quiñonez Wu
This study aims to recognize and succinctly evaluate the monetary policy implemented during the COVID-19 pandemic, as well as in the immediate recovery period, and their economic impact in Central America and the Dominican Republic (CARD). To this end, the study carries out a qualitative and quantitative analysis of the monetary policy implemented to reduce the negative economic impact on CARD, during the period 2020–2022. VAR and panel econometric techniques were used for the analysis. The results show that even though the central banks of CARD countries did indeed seek to stimulate economic activity, the effects on aggregate economic activity are very small. Other types of policies, such as fiscal, financial, and regulatory policies, may have contributed to reducing to a greater extent the negative impact of the COVID-19 pandemic on economic activity.JEL Codes: E52, G01, C54
{"title":"Monetary Policy Reaction to COVID-19 and Their Economic Impact in Central America and the Dominican Republic","authors":"Jesús Antonio López Cabrera, Enrique González Mata, Juan Quiñonez Wu","doi":"10.1177/09726527241257755","DOIUrl":"https://doi.org/10.1177/09726527241257755","url":null,"abstract":"This study aims to recognize and succinctly evaluate the monetary policy implemented during the COVID-19 pandemic, as well as in the immediate recovery period, and their economic impact in Central America and the Dominican Republic (CARD). To this end, the study carries out a qualitative and quantitative analysis of the monetary policy implemented to reduce the negative economic impact on CARD, during the period 2020–2022. VAR and panel econometric techniques were used for the analysis. The results show that even though the central banks of CARD countries did indeed seek to stimulate economic activity, the effects on aggregate economic activity are very small. Other types of policies, such as fiscal, financial, and regulatory policies, may have contributed to reducing to a greater extent the negative impact of the COVID-19 pandemic on economic activity.JEL Codes: E52, G01, C54","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"59 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142182205","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 : 2024-07-25DOI: 10.1177/09726527241257359
Emiliya James, Parthajit Kayal, Moinak Maiti, G. Balasubramanian
This study examines the hedging and safe-haven characteristics across the various segments of non-fungible tokens (NFTs). It adopts the case study approach to blend the key study findings on the risk and return aspects of different NFT segments. The study finds that various segments of NFTs have mixed levels of correlations with traditional financial assets. Online games and metaverse segments of NFTs display a link to the crypto assets. Similarly, only the metaverse segment shows an association with the market sentiment. Art, online games, and collectibles segments within the NFTs space show mixed levels of hedging. However, all NFT segments under consideration show ambiguous safe-haven facets. Overall, the present study highlights some of the important aspects to consider while investing in the different segments of NFTs with respect to portfolio optimization, market dynamics, and risk management.JEL Codes: C12, C13, J64
{"title":"A Study on the Hedging and Safe-Haven Features of Non-fungible Tokens Segments","authors":"Emiliya James, Parthajit Kayal, Moinak Maiti, G. Balasubramanian","doi":"10.1177/09726527241257359","DOIUrl":"https://doi.org/10.1177/09726527241257359","url":null,"abstract":"This study examines the hedging and safe-haven characteristics across the various segments of non-fungible tokens (NFTs). It adopts the case study approach to blend the key study findings on the risk and return aspects of different NFT segments. The study finds that various segments of NFTs have mixed levels of correlations with traditional financial assets. Online games and metaverse segments of NFTs display a link to the crypto assets. Similarly, only the metaverse segment shows an association with the market sentiment. Art, online games, and collectibles segments within the NFTs space show mixed levels of hedging. However, all NFT segments under consideration show ambiguous safe-haven facets. Overall, the present study highlights some of the important aspects to consider while investing in the different segments of NFTs with respect to portfolio optimization, market dynamics, and risk management.JEL Codes: C12, C13, J64","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"381 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141778030","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 : 2024-06-02DOI: 10.1177/09726527241248003
Saikat Mondal, Rudra P. Pradhan, Vinodh Madhavan, Debaleena Chatterjee, Ann Mary Varghese
The study examines the relationship and linkages between spot and future prices of European Union Emission Trading Systems (EU-ETS) during 2019–2021. Dynamic conditional correlation specification of multivariate generalized autoregressive conditional heteroskedasticity (MGARCH) model was employed to examine the time-varying correlation between spot and future prices. Also, vector autoregression mean model and MGARCH-Baba-Engle-Kroner-Kraft volatility model was jointly estimated to model the spillover between EU ETS spot and future prices in the first and second moments. Lastly, we utilize the variance-covariance matrix of joint mean-variance model estimation to derive the optimal conditional hedge ratio as well as the hedge effectiveness of EU ETS future contracts. Our findings reveal a high conditional correlation and significant spillover between carbon spot and future markets in EU. Further, our study uncovers a high degree of hedge effectiveness for EU ETS future contracts. This is possibly the first study that examines the linkages between EU ETS spot and future prices pertaining to the recent transition stage of phase III and the initial stage of ongoing phase IV of the ETS market. Our findings pinpoint to ETS markets becoming more complete and in turn offering optimal hedging avenues.JEL Codes: G15, C58, Q38
{"title":"Carbon Emissions Pricing: Linkages Between EU ETS Spot and Future Prices and Completeness of EU ETS Market","authors":"Saikat Mondal, Rudra P. Pradhan, Vinodh Madhavan, Debaleena Chatterjee, Ann Mary Varghese","doi":"10.1177/09726527241248003","DOIUrl":"https://doi.org/10.1177/09726527241248003","url":null,"abstract":"The study examines the relationship and linkages between spot and future prices of European Union Emission Trading Systems (EU-ETS) during 2019–2021. Dynamic conditional correlation specification of multivariate generalized autoregressive conditional heteroskedasticity (MGARCH) model was employed to examine the time-varying correlation between spot and future prices. Also, vector autoregression mean model and MGARCH-Baba-Engle-Kroner-Kraft volatility model was jointly estimated to model the spillover between EU ETS spot and future prices in the first and second moments. Lastly, we utilize the variance-covariance matrix of joint mean-variance model estimation to derive the optimal conditional hedge ratio as well as the hedge effectiveness of EU ETS future contracts. Our findings reveal a high conditional correlation and significant spillover between carbon spot and future markets in EU. Further, our study uncovers a high degree of hedge effectiveness for EU ETS future contracts. This is possibly the first study that examines the linkages between EU ETS spot and future prices pertaining to the recent transition stage of phase III and the initial stage of ongoing phase IV of the ETS market. Our findings pinpoint to ETS markets becoming more complete and in turn offering optimal hedging avenues.JEL Codes: G15, C58, Q38","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"44 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141259944","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 : 2024-05-28DOI: 10.1177/09726527241251515
Ameet Kumar Banerjee, Hemanta Kumar Pradhan
We examine the hedging and safe-haven characteristics of gold, silver, platinum, and palladium and three major indices in the US market. The metal markets are known for their hedging characteristics during financial distress. This article sheds new insights using high-frequency data into precious metals’ hedging and safe-haven abilities under extreme market volatility conditions attributed to the COVID-19 crisis using the copula method. The results show that gold outperforms all other precious metals in hedging and as a safe haven under extreme stock market conditions, in both the pre-crisis and crisis periods, with silver as the next best alternative.JEL codes: G01, G11, G15, G19
{"title":"Did Precious Metals Serve as Hedge and Safe-haven Alternatives to Equity During the COVID-19 Pandemic: New Insights Using a Copula-based Approach","authors":"Ameet Kumar Banerjee, Hemanta Kumar Pradhan","doi":"10.1177/09726527241251515","DOIUrl":"https://doi.org/10.1177/09726527241251515","url":null,"abstract":"We examine the hedging and safe-haven characteristics of gold, silver, platinum, and palladium and three major indices in the US market. The metal markets are known for their hedging characteristics during financial distress. This article sheds new insights using high-frequency data into precious metals’ hedging and safe-haven abilities under extreme market volatility conditions attributed to the COVID-19 crisis using the copula method. The results show that gold outperforms all other precious metals in hedging and as a safe haven under extreme stock market conditions, in both the pre-crisis and crisis periods, with silver as the next best alternative.JEL codes: G01, G11, G15, G19","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"50 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141173074","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 : 2024-03-15DOI: 10.1177/09726527241233920
Zynobia Barson, Kwame Simpe Ofori, Peterson Owusu Junior, Kwabena G. Boakye, George Oppong Appiagyei Ampong
Periods of crisis prompt investors to look out for means of making returns even in uncertain market conditions. Investors are using stocks selected on an environmental, social, and governance (ESG) basis to mitigate the unavoidable risks of investing in assets during these times of pandemic and war. In an integrated global financial system, we sought to explore the connectedness, if any, between the returns on the Bourse Régionale des Valeurs Mobilières (BRVM) and ESG-based stocks. Using a time-varying parameter vector autoregression (TVP-VAR) to analyze daily returns from 12 March 2013 to 4 April 2022, we find categorically that ESG-based stocks and BRVM stocks are connected, with ESG-based stocks dominating the network connectedness. Furthermore, using dynamic connectedness correlations from dynamic conditional correlation generalized autoregressive conditional heteroscedasticity (DCC-GARCH), we show that ESG stocks could be used as a safe haven or weak hedge for BRVM stocks in times of crisis. We test for the robustness of our findings using quantile causality. The causality test further shows that ESG-based stocks cause movements in BRVM stocks mostly at the lower quantiles—enhancing the findings of dominancy from the TVP-VAR estimates and offer diversification and safe haven benefits from the DCC-GARCH in extreme conditions. The implication of these findings for investors is that they could benefit from using ESG-based stocks in their portfolios, particularly in times of crisis.JEL Codes: G01, G11
{"title":"Time-varying Connectedness Between ESG Stocks and BRVM Traditional Stocks","authors":"Zynobia Barson, Kwame Simpe Ofori, Peterson Owusu Junior, Kwabena G. Boakye, George Oppong Appiagyei Ampong","doi":"10.1177/09726527241233920","DOIUrl":"https://doi.org/10.1177/09726527241233920","url":null,"abstract":"Periods of crisis prompt investors to look out for means of making returns even in uncertain market conditions. Investors are using stocks selected on an environmental, social, and governance (ESG) basis to mitigate the unavoidable risks of investing in assets during these times of pandemic and war. In an integrated global financial system, we sought to explore the connectedness, if any, between the returns on the Bourse Régionale des Valeurs Mobilières (BRVM) and ESG-based stocks. Using a time-varying parameter vector autoregression (TVP-VAR) to analyze daily returns from 12 March 2013 to 4 April 2022, we find categorically that ESG-based stocks and BRVM stocks are connected, with ESG-based stocks dominating the network connectedness. Furthermore, using dynamic connectedness correlations from dynamic conditional correlation generalized autoregressive conditional heteroscedasticity (DCC-GARCH), we show that ESG stocks could be used as a safe haven or weak hedge for BRVM stocks in times of crisis. We test for the robustness of our findings using quantile causality. The causality test further shows that ESG-based stocks cause movements in BRVM stocks mostly at the lower quantiles—enhancing the findings of dominancy from the TVP-VAR estimates and offer diversification and safe haven benefits from the DCC-GARCH in extreme conditions. The implication of these findings for investors is that they could benefit from using ESG-based stocks in their portfolios, particularly in times of crisis.JEL Codes: G01, G11","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"13 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140156492","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 : 2024-02-24DOI: 10.1177/09726527231214075
A. Athira, P. J. Jijo Lukose
We show that over the last two decades, India’s effective tax rates (ETRs) have increased by 7.8 percent, which contrasts with the downward trend in ETRs for US firms documented by Dyreng et al. (2017). After controlling for changes in firm characteristics, macroeconomic factors, and tax policy changes, our findings show that ETRs increased by 0.37 percent per year during the sample period. Further, we examine the proposition that public firms are more likely to engage in non-conforming tax management than private firms. We observe a stronger upward trend in ETRs among private firms than public firms, consistent with the capital market pressure hypothesis. The permanent book-tax difference is the primary driver of the ETR trend for both private and public firms. Our findings contribute to the recent debate about the trend in ETRs by undermining concerns regarding rising corporate tax avoidance and reinforcing the argument that improved tax efficiency and economies of agglomeration in countries with large domestic markets contribute to higher ETRs.JEL Codes: G38, H25, H26, H32
{"title":"The Increasing Trend in Effective Tax Rates in India: Role of Macroeconomic Factors, Tax Policy Changes and Firm Characteristics","authors":"A. Athira, P. J. Jijo Lukose","doi":"10.1177/09726527231214075","DOIUrl":"https://doi.org/10.1177/09726527231214075","url":null,"abstract":"We show that over the last two decades, India’s effective tax rates (ETRs) have increased by 7.8 percent, which contrasts with the downward trend in ETRs for US firms documented by Dyreng et al. (2017). After controlling for changes in firm characteristics, macroeconomic factors, and tax policy changes, our findings show that ETRs increased by 0.37 percent per year during the sample period. Further, we examine the proposition that public firms are more likely to engage in non-conforming tax management than private firms. We observe a stronger upward trend in ETRs among private firms than public firms, consistent with the capital market pressure hypothesis. The permanent book-tax difference is the primary driver of the ETR trend for both private and public firms. Our findings contribute to the recent debate about the trend in ETRs by undermining concerns regarding rising corporate tax avoidance and reinforcing the argument that improved tax efficiency and economies of agglomeration in countries with large domestic markets contribute to higher ETRs.JEL Codes: G38, H25, H26, H32","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"09 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2024-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139953893","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 : 2023-12-04DOI: 10.1177/09726527231202065
Jo-Yu Wang, Chih-Hsuan Chang, Juo-Lien Wang
This study examines the effects of share repurchase announcements on Taiwanese firms after various financial practices and decisions from 2000 to 2020. First, we discuss whether there is a significant abnormal return on the price around share repurchase announcement. Furthermore, we explore whether firms take advantage of buyback announcements to signal the outsiders that the company’s stock price is undervalued. Second, we discuss whether the repurchase announcements have abnormal returns after financing or dividend distribution decisions as companies implement these decisions in response to future operating plans. Further, we explore whether there is a conflict between these funding operation policies and the repurchase announcement. According to our results, there is an opposing effect between seasoned equity offering and share repurchase announcements. We found the effect of the announcement of share repurchase after a cash dividend is better than a stock dividend. The results also show that the effect of a share repurchase announcement after the issuance of convertible bonds is better than an ordinary corporate bond issue, especially the firms with a low market-to-book ratio. It means that convertible bonds can reduce liabilities if the investors convert the debt into equity and improve the company’s capital structure. JEL Codes: G14, G30
{"title":"Do Prior Financial Events to Share Repurchase Announcements Matter?","authors":"Jo-Yu Wang, Chih-Hsuan Chang, Juo-Lien Wang","doi":"10.1177/09726527231202065","DOIUrl":"https://doi.org/10.1177/09726527231202065","url":null,"abstract":"This study examines the effects of share repurchase announcements on Taiwanese firms after various financial practices and decisions from 2000 to 2020. First, we discuss whether there is a significant abnormal return on the price around share repurchase announcement. Furthermore, we explore whether firms take advantage of buyback announcements to signal the outsiders that the company’s stock price is undervalued. Second, we discuss whether the repurchase announcements have abnormal returns after financing or dividend distribution decisions as companies implement these decisions in response to future operating plans. Further, we explore whether there is a conflict between these funding operation policies and the repurchase announcement. According to our results, there is an opposing effect between seasoned equity offering and share repurchase announcements. We found the effect of the announcement of share repurchase after a cash dividend is better than a stock dividend. The results also show that the effect of a share repurchase announcement after the issuance of convertible bonds is better than an ordinary corporate bond issue, especially the firms with a low market-to-book ratio. It means that convertible bonds can reduce liabilities if the investors convert the debt into equity and improve the company’s capital structure. JEL Codes: G14, G30","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"17 7","pages":""},"PeriodicalIF":1.5,"publicationDate":"2023-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138604129","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 : 2023-11-14DOI: 10.1177/09726527231196722
Pami Dua, Neha Verma
This article examines the role of domestic and global factors in driving foreign direct investment (FDI) inflows to Asian emerging economies. Conventional panel estimations do not adequately account for the interdependence among countries caused by common global shocks and spatial effects. This article, employing a novel technique, augments the panel cointegration estimations with a proxy for unobserved common factors extracted from the augmented mean group regression. Our estimations control for nonstationarity, endogeneity, cross-sectional dependence, and heterogeneity. Based on the data of six Asian emerging economies from 2000Q1 to 2019Q4, we find a significant impact of both push (global) and pull (domestic) factors in attracting FDI. Our policy implication suggests the sequential opening of the capital account with capital controls and macroprudential regulations in place. JEL Codes: F21, F30, F41
{"title":"Drivers of Foreign Direct Investment Inflows to Emerging Asian Economies","authors":"Pami Dua, Neha Verma","doi":"10.1177/09726527231196722","DOIUrl":"https://doi.org/10.1177/09726527231196722","url":null,"abstract":"This article examines the role of domestic and global factors in driving foreign direct investment (FDI) inflows to Asian emerging economies. Conventional panel estimations do not adequately account for the interdependence among countries caused by common global shocks and spatial effects. This article, employing a novel technique, augments the panel cointegration estimations with a proxy for unobserved common factors extracted from the augmented mean group regression. Our estimations control for nonstationarity, endogeneity, cross-sectional dependence, and heterogeneity. Based on the data of six Asian emerging economies from 2000Q1 to 2019Q4, we find a significant impact of both push (global) and pull (domestic) factors in attracting FDI. Our policy implication suggests the sequential opening of the capital account with capital controls and macroprudential regulations in place. JEL Codes: F21, F30, F41","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"31 21","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134953961","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 : 2023-11-14DOI: 10.1177/09726527231196926
Kousik Ganguly, Ajay Kumar Mishra
Using a sample of 1,953 listed firms on the National Stock Exchange from 2009 to 2021, we investigate whether politically connected firms alter their cash holding patterns following the Insolvency and Bankruptcy Code (IBC) reforms introduced in 2016. We also examine the impact of changes in a firm’s cash holdings on its performance. Results show that politically connected firms reduced their cash holdings following the implementation of IBC in 2016, as new reforms better protected creditors through strict enforcement rights. We also find that politically connected firms with large amounts of cash perform poorly in the post-IBC period compared to their nonconnected peers. The results are robust after excluding the COVID-19 period and controlling for firm size, leverage, and business group affiliations. JEL Codes: G32; G34; G38
{"title":"Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India","authors":"Kousik Ganguly, Ajay Kumar Mishra","doi":"10.1177/09726527231196926","DOIUrl":"https://doi.org/10.1177/09726527231196926","url":null,"abstract":"Using a sample of 1,953 listed firms on the National Stock Exchange from 2009 to 2021, we investigate whether politically connected firms alter their cash holding patterns following the Insolvency and Bankruptcy Code (IBC) reforms introduced in 2016. We also examine the impact of changes in a firm’s cash holdings on its performance. Results show that politically connected firms reduced their cash holdings following the implementation of IBC in 2016, as new reforms better protected creditors through strict enforcement rights. We also find that politically connected firms with large amounts of cash perform poorly in the post-IBC period compared to their nonconnected peers. The results are robust after excluding the COVID-19 period and controlling for firm size, leverage, and business group affiliations. JEL Codes: G32; G34; G38","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":"31 28","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134953955","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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