Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101278
Umar Kayani , Umer Iqbal , Ahmet Faruk Aysan , Bayu Arie Fianto , Mustafa Raza Rabbani , Fakhrul Hasan
This research compares the performance of sharia-compliant (SC) and non–shariah-compliant (non-SC) firms by examining the impact of working capital on the return on assets, the return on equity, and the net profit margin. The dataset, based on the Dow Jones Islamic Market Index (DJIMI) standards, is divided by the leverage ratio and includes PSX-500 firms listed in the Pakistan Stock Exchange from 1996 to 2020. Our findings reveal that working capital has a significant and positive effect on all firm proxies, among which non-SC firms outperform SC firms because of their access to funds for business operations. SC firms face restrictions in obtaining funds from conventional banks. Our study has many implications. As liquidity injection is crucial for growth, policy makers should focus on developing novel credit instruments that are SC to address financing needs and boost business operations.
{"title":"Revealing the secrets of working capital: A comparison between sharia-compliant and conventional firms","authors":"Umar Kayani , Umer Iqbal , Ahmet Faruk Aysan , Bayu Arie Fianto , Mustafa Raza Rabbani , Fakhrul Hasan","doi":"10.1016/j.ecosys.2024.101278","DOIUrl":"10.1016/j.ecosys.2024.101278","url":null,"abstract":"<div><div>This research compares the performance of sharia-compliant (SC) and non–shariah-compliant (non-SC) firms by examining the impact of working capital on the return on assets, the return on equity, and the net profit margin. The dataset, based on the Dow Jones Islamic Market Index (DJIMI) standards, is divided by the leverage ratio and includes PSX-500 firms listed in the Pakistan Stock Exchange from 1996 to 2020. Our findings reveal that working capital has a significant and positive effect on all firm proxies, among which non-SC firms outperform SC firms because of their access to funds for business operations. SC firms face restrictions in obtaining funds from conventional banks. Our study has many implications. As liquidity injection is crucial for growth, policy makers should focus on developing novel credit instruments that are SC to address financing needs and boost business operations.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101278"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178167","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101267
Francesco Marchionne , Noemi Giampaoli , Matteo Renghini
We examine how institutional quality affects the probability of banking and sovereign debt crises using a panel of 138 countries from 1996 to 2017. Individually, proxies of institutional quality capture different institutional dimensions and suffer from measurement errors. Jointly, we find that their impact is heterogeneous, and multicollinearity slightly biases the estimates: measures more closely related to regulatory quality and corruption mitigation decrease the probability of financial instability, while those oriented toward social capital have perverse effects. This evidence questions the beneficial effect of institutions. On the contrary, when we extract the common component of institutional quality from multiple imprecise measures using a principal component analysis, better institutions unambiguously reduce the probability of financial distress. Such a shielding effect occurs regardless of whether institutions are considered exogenous or endogenous. Financial structure, cultural differences, and international agreements do not affect our findings. Estimates are robust to several econometric exercises.
{"title":"Institutions and financial crises","authors":"Francesco Marchionne , Noemi Giampaoli , Matteo Renghini","doi":"10.1016/j.ecosys.2024.101267","DOIUrl":"10.1016/j.ecosys.2024.101267","url":null,"abstract":"<div><div>We examine how institutional quality affects the probability of banking and sovereign debt crises using a panel of 138 countries from 1996 to 2017. Individually, proxies of institutional quality capture different institutional dimensions and suffer from measurement errors. Jointly, we find that their impact is heterogeneous, and multicollinearity slightly biases the estimates: measures more closely related to regulatory quality and corruption mitigation decrease the probability of financial instability, while those oriented toward social capital have perverse effects. This evidence questions the beneficial effect of institutions. On the contrary, when we extract the common component of institutional quality from multiple imprecise measures using a principal component analysis, better institutions unambiguously reduce the probability of financial distress. Such a shielding effect occurs regardless of whether institutions are considered exogenous or endogenous. Financial structure, cultural differences, and international agreements do not affect our findings. Estimates are robust to several econometric exercises.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101267"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178157","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101276
Ichiro Iwasaki , Mihoko Satogami
This paper explores the regional disparities in the diversity of corporate officers in Germany. Our empirical analysis, encompassing 65,745 German businesses, reveals a pronounced inclination among Berlin and former East German firms to appoint female officers, in contrast to their former West German counterparts. Furthermore, we found that companies in Berlin exhibit greater diversity in the national backgrounds of their officers as compared to those in the former West Germany, while firms in the former East German regions lag behind in this aspect. Moreover, our empirical results indicate a greater willingness among Berlin and East German firms to hire younger corporate officers as compared to firms in the former West Germany. These findings demonstrate statistical robustness against heterogeneity in industrial sectors and firm sizes and are particularly evident in companies established after the 1990 reunification.
{"title":"Diversity of corporate officers and its regional disparities in Germany","authors":"Ichiro Iwasaki , Mihoko Satogami","doi":"10.1016/j.ecosys.2024.101276","DOIUrl":"10.1016/j.ecosys.2024.101276","url":null,"abstract":"<div><div>This paper explores the regional disparities in the diversity of corporate officers in Germany. Our empirical analysis, encompassing 65,745 German businesses, reveals a pronounced inclination among Berlin and former East German firms to appoint female officers, in contrast to their former West German counterparts. Furthermore, we found that companies in Berlin exhibit greater diversity in the national backgrounds of their officers as compared to those in the former West Germany, while firms in the former East German regions lag behind in this aspect. Moreover, our empirical results indicate a greater willingness among Berlin and East German firms to hire younger corporate officers as compared to firms in the former West Germany. These findings demonstrate statistical robustness against heterogeneity in industrial sectors and firm sizes and are particularly evident in companies established after the 1990 reunification.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101276"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101273
Shengjun Zhu , Yi Zhou , Xianjuan Chen
Understanding how firms respond to environmental regulation through product-mix decisions is critical to assessing the broader impact of such policies. This paper contributes to the literature by incorporating intra-firm dynamics and examining how these interact with firms’ capabilities to adjust their product scope and mix in response to environmental regulations, which are influenced by the costs of these adjustments. The empirical evidence suggests that targeted firms reallocated resources away from pollution-intensive products, indicating the policy’s effectiveness. Moreover, the relationship between environmental regulations and firms’ product-mix decisions is contingent on their ability to adapt their portfolios. Lastly, firms with different ownership structures display varying capacities to develop and sustain particular products.
{"title":"Environmental regulation and firms' product mix: The role of firms' product-specific capabilities","authors":"Shengjun Zhu , Yi Zhou , Xianjuan Chen","doi":"10.1016/j.ecosys.2024.101273","DOIUrl":"10.1016/j.ecosys.2024.101273","url":null,"abstract":"<div><div>Understanding how firms respond to environmental regulation through product-mix decisions is critical to assessing the broader impact of such policies. This paper contributes to the literature by incorporating intra-firm dynamics and examining how these interact with firms’ capabilities to adjust their product scope and mix in response to environmental regulations, which are influenced by the costs of these adjustments. The empirical evidence suggests that targeted firms reallocated resources away from pollution-intensive products, indicating the policy’s effectiveness. Moreover, the relationship between environmental regulations and firms’ product-mix decisions is contingent on their ability to adapt their portfolios. Lastly, firms with different ownership structures display varying capacities to develop and sustain particular products.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101273"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178166","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this study, we examine the effects of four environmental taxes (taxes on carbon, energy, resources, and transport) on two indices of anti-corruption (the Control of Corruption Index [CC] and the Corruption Perceptions Index [CPI]) and a third index, the Political Corruption Index (PCI), shedding light on the question whether the implementation of environmental taxes leads to more government corruption. Our hypothesis is that firms that are affected by environmental taxes may compensate for or evade the loss of revenue through some corrupt practices and behaviors. We conduct a rich empirical analysis for a global sample of 111 countries and two subsamples (45 high-income countries and 66 low- and middle-income countries) from 2002 to 2020. Most environmental taxes have significant positive effects on CC and CPI, while they have negative effects on PCI, implying that environmental taxes appear to increase anti-corruption indices. We also discuss the possible channels for the effects of environmental taxes on corruption: general government expenditure, and taxes on income, profits, and capital gains. Accordingly, we uncover a plethora of interesting findings that are robust to multiple secondary tests.
{"title":"Do environmental taxes corrupt governments?","authors":"Canh Phuc Nguyen , Nadia Doytch , Binh Quang Nguyen , Duyen Thuy Le Tran","doi":"10.1016/j.ecosys.2024.101268","DOIUrl":"10.1016/j.ecosys.2024.101268","url":null,"abstract":"<div><div>In this study, we examine the effects of four environmental taxes (taxes on carbon, energy, resources, and transport) on two indices of anti-corruption (the Control of Corruption Index [CC] and the Corruption Perceptions Index [CPI]) and a third index, the Political Corruption Index (PCI), shedding light on the question whether the implementation of environmental taxes leads to more government corruption. Our hypothesis is that firms that are affected by environmental taxes may compensate for or evade the loss of revenue through some corrupt practices and behaviors. We conduct a rich empirical analysis for a global sample of 111 countries and two subsamples (45 high-income countries and 66 low- and middle-income countries) from 2002 to 2020. Most environmental taxes have significant positive effects on CC and CPI, while they have negative effects on PCI, implying that environmental taxes appear to increase anti-corruption indices. We also discuss the possible channels for the effects of environmental taxes on corruption: general government expenditure, and taxes on income, profits, and capital gains. Accordingly, we uncover a plethora of interesting findings that are robust to multiple secondary tests.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101268"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178158","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The economic literature reports ambiguous effects of regional economic integration (REI) and political stability on exports. Therefore, this research analyzes the effects of REI and political stability on intra-African exports, compares them to the effects on intra-African imports and explores the combined effect of REI and political stability on intra-African exports. We use the two-stage least squares and fixed-effects approach which includes the two-step feasible generalized method of moments (GMM) estimation to address endogeneity issues in a panel of 49 African countries over the period of 1996–2022. The results show that REI and political stability lead to an increase in intra-African exports. However, while REI results in an increase in intra-African imports, political stability results in a decrease; similar findings are highlighted for overall intra-African trade as well as for total exports of goods and services. The results remain robust across diverse estimation techniques. Furthermore, they reveal that political stability plays a role in amplifying the relationship between REI and intra-African exports. Supporting the African Continental Free Trade Area agenda, these findings imply that African policymakers need to (i) strengthen REI to increase intra-African trade and (ii) improve political stability to ensure that a greater part of REI is canalized in a more effective way in order to boost intra-African exports.
经济文献报告了区域经济一体化（REI）和政治稳定对出口的模棱两可的影响。因此，本研究分析了区域经济一体化和政治稳定对非洲内部出口的影响，将其与对非洲内部进口的影响进行了比较，并探讨了区域经济一体化和政治稳定对非洲内部出口的综合影响。我们采用两阶段最小二乘法和固定效应法，其中包括两步可行的广义矩量法（GMM）估计，以解决 1996-2022 年期间 49 个非洲国家面板中的内生性问题。结果显示，可再生能源投资和政治稳定导致非洲内部出口增加。然而，虽然可再生能源指数导致非洲内部进口增加，但政治稳定却导致进口减少；非洲内部总体贸易以及货物和服务总出口也有类似发现。这些结果在不同的估算技术中都保持稳健。此外，它们还揭示了政治稳定在放大 REI 与非洲内部出口之间的关系方面所起的作用。这些研究结果支持非洲大陆自由贸易区议程，意味着非洲政策制定者需要（i）加强 REI，以增加非洲内部贸易；（ii）改善政治稳定性，以确保更多的 REI 能够以更有效的方式得到利用，从而促进非洲内部出口。
{"title":"Regional (economic) integration, political stability uncertainty and (intra-African) exports","authors":"Essotanam Mamba , Kwami Ossadzifo Wonyra , Kodjo Evlo","doi":"10.1016/j.ecosys.2024.101266","DOIUrl":"10.1016/j.ecosys.2024.101266","url":null,"abstract":"<div><div>The economic literature reports ambiguous effects of regional economic integration (REI) and political stability on exports. Therefore, this research analyzes the effects of REI and political stability on intra-African exports, compares them to the effects on intra-African imports and explores the combined effect of REI and political stability on intra-African exports. We use the two-stage least squares and fixed-effects approach which includes the two-step feasible generalized method of moments (GMM) estimation to address endogeneity issues in a panel of 49 African countries over the period of 1996–2022. The results show that REI and political stability lead to an increase in intra-African exports. However, while REI results in an increase in intra-African imports, political stability results in a decrease; similar findings are highlighted for overall intra-African trade as well as for total exports of goods and services. The results remain robust across diverse estimation techniques. Furthermore, they reveal that political stability plays a role in amplifying the relationship between REI and intra-African exports. Supporting the African Continental Free Trade Area agenda, these findings imply that African policymakers need to <em>(i)</em> strengthen REI to increase intra-African trade and (<em>ii</em>) improve political stability to ensure that a greater part of REI is canalized in a more effective way in order to boost intra-African exports.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101266"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142264100","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101274
Roman Horvath , Eva Horvatova , Maria Siranova
We examine the determinants of financial development using our global sample and employing different measures of financial development that assess the degree of depth and efficiency of financial intermediaries. We use instrumental variable Bayesian model averaging to test competing theories with this unifying framework. After examining nearly 20 potential determinants of financial development, we find that the rule of law, as well as some of its components, is the most important. In addition, our results suggest that wealth inequality is irrelevant to banking sector development but positively associated with stock market development.
{"title":"The determinants of financial development: Evidence from Bayesian model averaging","authors":"Roman Horvath , Eva Horvatova , Maria Siranova","doi":"10.1016/j.ecosys.2024.101274","DOIUrl":"10.1016/j.ecosys.2024.101274","url":null,"abstract":"<div><div>We examine the determinants of financial development using our global sample and employing different measures of financial development that assess the degree of depth and efficiency of financial intermediaries. We use instrumental variable Bayesian model averaging to test competing theories with this unifying framework. After examining nearly 20 potential determinants of financial development, we find that the rule of law, as well as some of its components, is the most important. In addition, our results suggest that wealth inequality is irrelevant to banking sector development but positively associated with stock market development.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101274"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01DOI: 10.1016/j.ecosys.2024.101271
Gabriel Caldas Montes , João Dantas
The open economy trilemma refers to the impossibility of a country fully and simultaneously achieving three political objectives: monetary policy independence, exchange rate stability and financial openness. However, corner configurations related to the three policies of the trilemma are increasingly rare. In fact, countries tend to choose a policy combination composed of partial financial integration, managed exchange rate flexibility and partial monetary independence. Given the possibility of intermediate choices, there exists an index able to measure the relative divergence (or convergence) regarding the policy choices of the trilemma. The index identifies whether countries are adopting similar (or divergent) policy mixes in relation to the trilemma policy options. However, the consequences of adopting a more (or less) convergent policy arrangement on monetary policy credibility are unknown. Hence, this study investigates the effects of trilemma policies convergence patterns on monetary policy credibility. The idea is to verify whether a more convergent arrangement of policies related to the trilemma in open economies helps build monetary policy credibility. Our database is formed by 94 (developed and developing) countries with different characteristics. Thus, we run estimates based on a family of Tobit models for different sub-samples of countries, and also considering different periods – before and after the Global Financial Crisis. The study brings important practical implications. In general, the findings show that a convergent strategy increases credibility. The estimates corroborate the idea that countries adopting divergent policies from the global standard tend to be more exposed to economic instability and, as a result, have difficulties in anchoring inflation expectations.
{"title":"Effects of trilemma policies patterns on monetary policy credibility","authors":"Gabriel Caldas Montes , João Dantas","doi":"10.1016/j.ecosys.2024.101271","DOIUrl":"10.1016/j.ecosys.2024.101271","url":null,"abstract":"<div><div>The open economy trilemma refers to the impossibility of a country fully and simultaneously achieving three political objectives: monetary policy independence, exchange rate stability and financial openness. However, corner configurations related to the three policies of the trilemma are increasingly rare. In fact, countries tend to choose a policy combination composed of partial financial integration, managed exchange rate flexibility and partial monetary independence. Given the possibility of intermediate choices, there exists an index able to measure the relative divergence (or convergence) regarding the policy choices of the trilemma. The index identifies whether countries are adopting similar (or divergent) policy mixes in relation to the trilemma policy options. However, the consequences of adopting a more (or less) convergent policy arrangement on monetary policy credibility are unknown. Hence, this study investigates the effects of trilemma policies convergence patterns on monetary policy credibility. The idea is to verify whether a more convergent arrangement of policies related to the trilemma in open economies helps build monetary policy credibility. Our database is formed by 94 (developed and developing) countries with different characteristics. Thus, we run estimates based on a family of Tobit models for different sub-samples of countries, and also considering different periods – before and after the Global Financial Crisis. The study brings important practical implications. In general, the findings show that a convergent strategy increases credibility. The estimates corroborate the idea that countries adopting divergent policies from the global standard tend to be more exposed to economic instability and, as a result, have difficulties in anchoring inflation expectations.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 2","pages":"Article 101271"},"PeriodicalIF":2.8,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144178164","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-05-13DOI: 10.1016/j.ecosys.2025.101312
Antonella Biscione , Annunziata de Felice , Francesco Porcelli
This paper theoretically and empirically examines two key aspects of local government performance: (i) the relationship between performance assessment systems and the efficiency of local authorities in delivering public services, and (ii) whether inefficient local authorities can improve their assessment scores by raising more tax revenues thanks to a better local socioeconomic conditions. We address these issues using the Comprehensive Performance Assessment (CPA) program implemented in England (2002–2008) as a case study. We provide insights into the design of performance evaluation frameworks in an era of increasing data transparency. Our two-step approach involves estimating an efficiency index using non-parametric Data Envelopment Analysis (DEA) and analyzing the relationship between technical efficiency and CPA scores through raw correlation analysis and a random-effects ordered probit model. We find that CPA scores are only moderately correlated with efficiency. Additionally, we provide evidence, in line with the theoretical framework, that inefficient councils can improve their CPA scores by increasing property tax rates. However, this strategy proves effective only under favorable local conditions. These findings offer valuable guidance for policymakers and local authorities in navigating the trade-offs between fiscal strategy and performance outcomes.
{"title":"Local administrations and the procurement of performance. Evidence from English local authorities","authors":"Antonella Biscione , Annunziata de Felice , Francesco Porcelli","doi":"10.1016/j.ecosys.2025.101312","DOIUrl":"10.1016/j.ecosys.2025.101312","url":null,"abstract":"<div><div>This paper theoretically and empirically examines two key aspects of local government performance: (i) the relationship between performance assessment systems and the efficiency of local authorities in delivering public services, and (ii) whether inefficient local authorities can improve their assessment scores by raising more tax revenues thanks to a better local socioeconomic conditions. We address these issues using the Comprehensive Performance Assessment (CPA) program implemented in England (2002–2008) as a case study. We provide insights into the design of performance evaluation frameworks in an era of increasing data transparency. Our two-step approach involves estimating an efficiency index using non-parametric Data Envelopment Analysis (DEA) and analyzing the relationship between technical efficiency and CPA scores through raw correlation analysis and a random-effects ordered probit model. We find that CPA scores are only moderately correlated with efficiency. Additionally, we provide evidence, in line with the theoretical framework, that inefficient councils can improve their CPA scores by increasing property tax rates. However, this strategy proves effective only under favorable local conditions. These findings offer valuable guidance for policymakers and local authorities in navigating the trade-offs between fiscal strategy and performance outcomes.</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 3","pages":"Article 101312"},"PeriodicalIF":3.3,"publicationDate":"2025-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144916396","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-25DOI: 10.1016/j.ecosys.2025.101311
Le Phan , Hai Thanh Nguyen
This paper examines the micro-level benefits and (hidden) costs of the transition of Vietnam’s informal household businesses into the formal sector during the period 2007–2015. On the benefit side, the paper finds that such a transition, or “formalization,” leads to higher investment, greater capital stock, and a lasting increase in labor productivity, which ranges between 23 and 69 percent. There is no statistically significant increase in total factor productivity, indicating that the gain in labor productivity comes from capital deepening rather than genuine innovation. On the cost side, the paper finds evidence of a lasting visibility effect, meaning that household firms have to pay higher bribes and spend more time dealing with government red tape after formal registration. JEL codes: D21, E26, L25, 017
{"title":"Formalization, productivity, and hidden costs: Evidence from Vietnam","authors":"Le Phan , Hai Thanh Nguyen","doi":"10.1016/j.ecosys.2025.101311","DOIUrl":"10.1016/j.ecosys.2025.101311","url":null,"abstract":"<div><div><span>This paper examines the micro-level benefits and (hidden) costs of the transition of Vietnam’s informal household businesses into the formal sector during the period 2007–2015. On the benefit side, the paper finds that such a transition, or “formalization,” leads to higher investment, greater capital stock, and a lasting increase in labor productivity, which ranges between 23 and 69 percent. There is no statistically significant increase in total factor productivity, indicating that the gain in labor productivity comes from capital deepening rather than genuine innovation. On the cost side, the paper finds evidence of a lasting </span><em>visibility</em> effect, meaning that household firms have to pay higher bribes and spend more time dealing with government red tape after formal registration. JEL codes: D21, E26, L25, 017</div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 3","pages":"Article 101311"},"PeriodicalIF":3.3,"publicationDate":"2025-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144916395","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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