• The Journal of Asian Finance, Economics and Business
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• 제7권11호
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• pp.607-617
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• 2020

This study investigates the causal relationship between public and private external debt and economic growth in developing countries. Our model includes 18 selected Asian developing and transition economies from 1995 thru 2019. We employ the dynamic heterogeneous panel data methods, pooled mean group (PMG), robust cross-sectional augmented autoregressive distributed lag (CS-ARDL), and pairwise panel causality test. The results of PMG and CS-ARDL show the existence of causality between external debt and economic growth both in the short-run and long-run. The pairwise Granger causality test found the bidirectional causal relationship runs from total external debt, public external debt, and private external debt to economic growth and economic growth to external debt. The results showed first the existence of causality in the short-run and long-run between external debt and economic growth and the second, bi-directional causality that runs from external debt to economic growth and economic growth to external debt. Both the dynamic models and robust estimator found the same inferences about the impact of main variables on economic growth in Asian developing and transition economies. The findings of this study suggest to assure debt management, investment in productive sectors, increase domestic savings, decrease external dependency, and focus on international trade.

• The Journal of Asian Finance, Economics and Business
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• 제8권11호
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• pp.21-29
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• 2021

The objective of this study is to see how a country's level of democracy impacts the relationship between financial development and income disparity. We argue that political regimes, supported by their degree of democracy, are important for various decentralization theories to predict the impact of financial development on income inequality. Our study tests this argument using Vietnam time series data for the period 2000-2020 through the ARDL model. The financial development variable is represented by five proxies, the income inequality variable is represented by the GINI coefficient and the role of democracy is represented by the Freedom House Index. Data serving for the study is taken from data sources with high reliability. The results of the study have strong evidence that (1) financial development has a positive impact on income inequality, (2) democratic government will reduce national income inequality. (3) And a higher degree of democracy tends to mitigate the positive impact of financial development on income inequality. Thus, our study contributes to the literature by providing a new look at the mixed results regarding the relationship between financial development and theoretical income inequality. Finally, the article provides policy implications for the Government of Vietnam.

• The Journal of Asian Finance, Economics and Business
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• 제8권12호
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• pp.75-83
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• 2021

Variation in demand, natural resource availability, and technological advancement within a country are the main reasons for necessitating export and import activities between nations. Accordingly, this paper aims to analyze the effect of economic openness on Multifactor Productivity (MFP) in selected Asian countries (Vietnam, Thailand, The Philippines, Indonesia, Cambodia, China, Japan, Malaysia, South Korea, and Singapore) based on data for the period 1990-2018. The analysis conducted in the study employed the panel ARDL approach based on the estimation by Pooled Mean Group (PMG), Mean Group (MG), and Dynamic Fixed Effect (DFE). The Hausman test conducted indicates that the PMG estimation is better than that of MG and DFE since it has a higher variability value than the significance value. The results revealed that economic openness is able to elicit significant and positive effects on short-term and long-term MFP growth. In addition, the study established that other variable, such as the number of schooling years, are also able to produce a positive and significant effect on MFP growth in the long term. Since economic openness can impact MFP growth, every country should thus increase its export activities through more capital and worker inputs that will stimulate greater production.

• The Journal of Asian Finance, Economics and Business
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• 제8권5호
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• pp.61-68
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• 2021

The exchange rate is considered a tool improving the volume of exports and reducing imports. This paper aims to determine the impact of the exchange rate on exports and imports between Vietnam and the United States in the context of the trade war. The research uses Autoregressive Distributed Lag (ARDL) and Nonlinear Autoregressive Distributed Lag (NARDL) Model in the time-series data from 2010:1 to 2020:9. The ARDL's results support that real exchange rate impact on export and import volumes, but less than the trade war. The trade war helps trade balance increase 0.35%, while the exchange rate increases trade balance 0.191% when the Vietnamese currency devalues 1% in the long run. In the short term, the real exchange rate makes the trade balance decrease. Therefore, the J curve exists between Vietnam and the U.S. The NARDL expresses that the exchange rate is asymmetric both in the short term and the long term. The findings of this study point to two important elements. Firstly, the exchange rate plays a minor role in exports and imports. Secondly, trade war plays a vital role in increasing exports and imports volume between two countries, and the J curve exists between the two countries.

• The Journal of Asian Finance, Economics and Business
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• 제8권5호
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• pp.1-9
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• 2021

The purpose of this study is to examine the effects of economic uncertainty on MNC investment in Malaysia from 2009 to 2019 by employing an ARDL method. The results revealed that Economic Policy Uncertainty (EPU) has a positive association with the capital expenditures of Nestle, British American Tobacco, and Public Bank in the long run. In a similar period, the Gross Domestic Product (GDP) is positively significant with the capital expenditures of British America Tobacco and Heineken. However, inflation is negatively related to the capital expenditures of British America Tobacco and Heineken. Additionally, the exchange rate has a significant and negative relationship with the capital expenditures of Nestle and Petronas, while the ECT value is negative and significant in the short run, hence confirming that co-integration exists. In view of this, it is imperative that the government plays a prerogative role to support MNC operations, as MNCs foster the developing countries' economic development through facilitating full employment. This study sets to enhance the personal knowledge of those with a strong interest in the Malaysian financial market. As long as MNCs believe that the Malaysian market has the potential to grow, they will continue to invest for the benefit of the country.

• The Journal of Asian Finance, Economics and Business
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• 제8권5호
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• pp.573-581
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• 2021

The current study analyzed the impacts of fiscal decentralization (FD) on the economic stability of Pakistan. This study used time series data from 1981 to 2017. The collected data was first passed through the unit root analysis. ARDL estimation techniques were employed to scrutinize the data where long-run associations were tested through Wald F-statistics. The long-run estimates were extracted by applying Ordinary Least Square, and error correction mechanisms were employed to find the speed of adjustment for disequilibria between the long and the short run. Wald F-statistics confirmed the existence of long-run cointegration. Long-run elasticities suggested that fiscal decentralization because of limited institutional capabilities of provincial governments failed in bringing stability in the economy of Pakistan. Similarly, transparency issues and misspecification of projects hinder the outcome of investment to stabilize the economy. High service payments on debt cut the amount that can be used for skills improvements and destabilize the economy. High Population growth puts pressure on infrastructure and reduces production capacity, ultimately destabilizing the economy by increasing unemployment and inflation. Based on these findings, the government is suggested to improve the institutional capacity of lower governments for the desired outcome of power devolution.

• The Journal of Asian Finance, Economics and Business
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• 제8권5호
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• pp.617-626
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• 2021

The study examines the existence of twin deficit in two emerging economies (Turkey and Iran) and also investigates the relation of twin deficit with specific macroeconomic indicators such as the GDP, money supply, foreign direct investment, and the interest rate both in short and long-run periods. The twin-deficit concept refers to a situation where the current account deficit and budget deficits exist in the same corresponding period of an economy. This study employs the Bound Test Autoregressive lag distributed (ARDL) model on time-series quarterly secondary data of Turkey and Iran from 1992 to 2019. The stationarity of variables has been ensured through the Augmented Dickey-Fuller (ADF) test at the level and the first difference. The results reveal the existence of a twin deficit in both the short and long-run periods only in Iran. Its existence could not be observed in the Turkish economy. The findings suggest a positive relationship between twin deficit and GDP, and a negative relationship between twin deficit and FDI and M2. At the same time, the relationship of the twin deficit with interest rate could not be found in the Iranian economy. The findings may be helpful for economic managers of both countries in executing their economic policies.

• The Journal of Asian Finance, Economics and Business
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• 제8권5호
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• pp.325-334
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• 2021

This study aims to investigate whether economic growth is elevated by banking industry development in Jordan. The study adopts time-series econometric methodologies, which comprise the bounds testing approach within the autoregressive distributed lag (ARDL) and the conditional causality analysis. Consistent with the assumptions of the adopted methodology, the study utilized annual time-series data for a relatively long period of thirty-nine years, between 1980 and 2018. The empirical results show that Jordan's economic growth is strongly responsive in respect to any changes in banking industry development. Also, the results reveal the harmful impact of rising lending interest rate; as this rate increases, economic growth will decrease. The findings are in line with the conceptual arguments of the supply-leading hypothesis, which confirmed that banking development is considered as one of the main pillars that have stimulating effects on economic growth. The evidence of the current study may provide important implications for policymakers and bankers. Those professionals should work to maintain a stable regulatory system that enhances the banking system function in activating economic growth. Also, a considerable focus should be placed on designing a steady interest rate policy to avoid the inherently undesirable impacts of high-interest rates on the Jordanian economy.

• The Journal of Asian Finance, Economics and Business
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• 제8권3호
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• pp.99-110
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• 2021

This study aims to examine empirically the industry and economic fundamental factors that affect the stock prices of the leading palm oil company in Indonesia. The dynamics of stock price are analyzed using the autoregressive distribution lag (ARDL) model both for symmetric and asymmetric effects. The data used in this study are monthly data for the period from 2008:01 to 2020:03. In the long run, the company stock price moves in line with the competitor company stock price at the current time. The palm oil price has a positive effect on the stock price. Meanwhile, inflation negatively affects the stock price in the short run. The estimated equilibrium correction coefficient indicates a reasonably quick correction of the distortion of the stock price equilibrium in monthly dynamics. However, fundamental factors have asymmetric effects, especially the response of stock price when these factors decrease rather than increase in the short run. Stock prices that are responsive to declines in fundamental performance should be of particular concern to both investors and management in their strategic decision making. The results of this study will contribute to the enrichment of literature related to stock prices from the viewpoint of economic analysis on firm-level data.

• The Journal of Asian Finance, Economics and Business
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• 제9권10호
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• pp.49-59
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• 2022

This paper examined the impact of real exchange rate volatility on trade balance in Malaysia by using quarterly data from year 2000 until 2019. Generalized Autoregressive Heteroscedasticity (GARCH) model was used to extract the volatility component of real exchange rate before examining its impact on trade balance. Furthermore, Autoregressive Distributed Lag (ARDL) model was used to investigate the long-run relationship and short-run dynamic between trade balance, money supply, national income and volatility of exchange rate. Empirical results show the existence of co-movement between variables under study in the long-run. However, the results also suggest that volatility of real exchange rate does not significantly affect trade balance neither in the long-run nor short-run. The risk which is associated in the movement of exchange rate do not influence trader's behaviour toward Malaysia exports and imports. Thus, it should be note that any depreciation or appreciation in Malaysian Ringgit do not have an impact towards trade balance either it is being further improved or deteriorates. Hence, exchange rate volatility may not be too concern for policymakers. This may be partially due to manage floating exchange rate regime that has been adopted by Malaysia eventually eliminated the element of risk in the currency market.