Although the relationship between financial development and economic growth have been extensively studied, the literature that examines the role of financial inclusion, as a key factor of financial development, and the possible impact of governance quality on financial inclusion link to growth is not as vast. Promoting financial inclusion and developing good governance are main, but challenging priorities

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Recent trends in developed economies exhibit strong interdependencies between the stability of the financial sector and macroeconomic variables. The financial sector has become a vital part of the economy and the tendencies toward its higher complexity and a greater volume as a country progresses create numerous transmission channels through which economic performance can be affected. The purpose of

Using the linear OLS and nonlinear quantile regressions, this study examines nature of dynamic comovement between stocks and treasury bonds in Europe and its main drivers of financial uncertainty and investors’ expectations about future economic state. Comovement of the EU asset markets is proxied by pair-wise realized correlations between stock and 10-year treasury bond returns in thirteen European

We study the implications of foreign investments for firm performance. Using a panel sample of publicly listed non-financial firms in 17 countries in Asia Pacific from 1990 to 2016, we examine whether firms with larger foreign investments perform better than those with smaller foreign investments and whether cost efficiency and revenue growth mediate the effect of foreign investments on firm performance

Through parametric accelerated failure-time survival analysis on a panel of 117 countries for 1970–2018, the study finds robust and generalizable empirical evidence that TTUII (Total Time to Upsurge in Income Inequality) declines after a country allows capital flow across borders. This arguably occurs via the channel of wage inequality, and one or more channels of patrimonial capitalism, labor replacement

We use Bayesian and GMM panel VAR frameworks to study interactions between financial and macroeconomic imbalances based on a global sample of 24 countries spanning the period 1998–2012. We find that financial cycles play an important role in shaping macroeconomic imbalances with expansions inducing economic overheating and a downward pressure on public debt-to-GDP ratios. Financial misalignments invoke

This study examines the relationship between internal tournament competition and corporate ownership structure. Since sophisticated investors are more likely than naïve investors to understand the value-creating incentives of internal tournaments, we expect that tournament-oriented firms will attract greater ownership interest among institutional investors than individual investors. We first formalize

This paper investigates whether more informative stock prices lead to managers making more efficient corporate decisions. I find a negative relationship between probability of informed trading (PIN) and firm value shortfalls, which capture managerial inefficiency. This relationship is robust to controlling for endogeneity issues and using alternative measures. Moreover, I show that stock price informativeness

Using financial data on firms worldwide, we assess the impact of COVID-19 on corporate performance. We show that firm performance deteriorates during the COVID-19 pandemic. The adverse effects of COVID-19 on firm performance are less pronounced in countries with better healthcare systems, more advanced financial systems, and better institutions. Finally, uncertainty avoidance strengthens the adverse

This paper analyzes the impact of the banking system reform implemented through the banking consolidation (mergers and acquisitions) carried out in Spain to address the collapse of savings banks. The 2008 global financial crisis triggered a sovereign debt crisis in Europe and the burst of a real estate bubble in Spain, and forced a government intervention, despite policymakers not yet having developed

Using panel data on IT investment choices and outcomes, we perform the first empirical test of the existence of peer effects and social learning in Jordanian banks' IT investment decisions. We fit a linear in means model of social interaction and find evidence of peer effects in banks' choice of IT investment, consistent with the presence of contextual or endogenous effects. Further, a bank's IT investment

This study explores whether language barriers affect investors’ reactions to textual information in analyst reports. To this end, we compare the price reaction to the linguistic tone in Japanese and U.S. reports and analyze the effect of an English translation on that reaction. We find that prices react significantly to the linguistic tone in both Japanese and U.S. reports. However, we only observe

This study examines whether and how female directors enhance innovation performance. Based on a sample of U.S. firms, this study shows that firms with more female directors on boards present a more pronounced positive association between R&D and future firm performance (measured by earnings and operating cash flow), suggesting a positive impact of female directors on R&D performance. We also examine

In this paper, we estimate the value of the no-negative-equity guarantee (NNEG) embedded in reverse mortgage contracts and develop a method for calculating regulatory capital requirements according to Basel II and III. We employ a Monte Carlo simulation method that assumes an ARMA-EGARCH process for house prices in four European countries: France, Germany, Spain and the United Kingdom. The results

This paper investigates the effect of insider ownership on stock price synchronicity. Specifically, for countries with poor investor protection, the managerial entrenchment effect dominates. When ownership increases, synchronicity increases at an increasing rate. However, for countries with strong investor protections, managerial entrenchment effect only dominates the incentive alignment effect when

Multilateral development banks (MDBs) are key players in the International Financial Architecture and an important source of external finance for governments. Beyond their impact to foster development in recipient countries, understanding the behavior of MDB flows is important to assess their contribution to macroeconomic stability. This paper studies the co-movement of sovereign lending from MDBs

We investigate how a firm manipulates its real activities in production to meet the earnings target in product market competition against its product-market rivals. We show that the equilibratory way to reach the earnings target is to set a higher first-period output level, reaching a higher short-term profit level. However, once the expected level of demand uncertainty is high, a firm will exploit

Recent empirical contributions using sector-level data have outlined the importance of foreign direct investment backward spillovers on firms’ performances. Using a rich firm-level dataset, we construct measures of vertical linkages at the firm-level to include the differences in firms’ sourcing and supplying behaviour within an industry to better measure vertical spillovers derived from multinational

The study evaluates the return and volatility transmission between the health and tourism stocks. The outbreak of covid-19 pandemic brought about an unprecedented crisis in the global health and financial market with the tourism sector being among the largest casualty as it experienced an almost total collapse as a result of economic lockdowns and movement restrictions, while the health sector witnessed

This study utilizes a time-varying parameter Bayesian vector autoregressive model to investigate the dynamic interactions between geopolitical risk (GPR) and renewable energy consumption growth (RECG). The identification strategy is flexible to accommodate cases both with and without restrictions of the direction of impact. It is shown that GPR shocks have positive impacts on RECG over time. In contrast

In this paper, we contribute to the literature in the following ways. First, we test whether stock returns respond differently to exchange rates in high and low interest rate environments. Second, we further probe into possible asymmetric effects of appreciation and depreciation on stock returns. Third, we examine the role of extreme (negative) low interest rate in the nexus among the low interest

This study examines the information dissemination process across 25 major global market indices during the times of COVID-19 pandemic spread. The results suggest that the information from non-systematic sources contributed to the price decline and increased volatility. In contrast, the systematic information lowered the volatility and facilitated the recovery process towards more stable markets. These

This paper provides evidence regarding the impact of soft information on foreign bank efficiency in the ASEAN-5 market in the years following the Asian crisis. The analysis presented here develops previous literature by disaggregating soft information into five difference types and examining whether institutional quality (proxied for by host-country economic risk stability index) mitigates the impact

This paper analyzes the influence of certain factors on the demand and supply of solar modules by employing the fully modified ordinary least squares method using Japanese data. Our regression analysis shows that interest rates and money supply (M2) significantly impact the solar photovoltaic module supply, indicating that lower interest rates and more funding channels for the renewable energy sector

We reassess the connection between capital account openness and capital flows in an empirical framework that is grounded in theory and makes use of previously unexplored variation in the data. We demonstrate how our theory-consistent regressions can overcome some ubiquitous measurement problems in the literature. Within our proposed framework, we ask: what can be said robustly about the effect of capital

This research argues that the inconclusive evidence on the board gender diversity–firm performance relationship across nations may be due to the moderating effect of national governance quality. Applying a multi-hierarchical modeling technique on a dataset containing 15,051 firm-year observations from 2931 companies in 46 countries, the results generally confirm this Hypothesis. Specifically, board

This study investigates the implications of earnings management on corporate loan pricing. Through two competing hypotheses (smoothing hypothesis and managerial opportunism hypothesis), we find that both accruals and real activities management are associated with higher loan spreads. Banks view earnings management as a value-destroying process that hampers a borrower’s capacity to repay a loan. Therefore

This study examines the impact of the 2007–08 global financial crisis on issuance activity and yield spreads in the Regulation S private debt market. We explore the implications of the flight-to-quality effect by comparing two types of Regulation S issues subject to different jurisdictions and territorial boundaries - standalone Regulation S issuance and combined Regulation S and Rule 144A issues.

We apply concepts form machine learning to forecast stock prices. First, we introduce the general (3 by 3) forecasting model, in which the financial markets are populated by three types of stocks: Overpriced stocks, underpriced stocks and fairly priced stocks. The objective of the financial analyst or a potential investor is to identify which stock belongs to which classification, and to take the relevant

Using high frequency data and connectedness measures based on a time-varying parameter vector autoregression (TVP-VAR) model, we study dynamic connectedness among the realized volatility of 15 commodity futures (Gold, Heating oil, Light crude oil, Natural gas, Copper, Platinum, Cocoa, Coffee, Corn, Cotton, Orange Juice, Soybean, Soybean meal, Sugar, and Wheat) from September 22, 2008 to May 28, 2020

We analyze the post-merger operating performance of FDIC-assisted bank mergers (regulatory mergers) during and after the 2008–09 financial crisis. Regulatory mergers experience significant improvements in profitability and cost efficiency up to two years following the transaction. These improvements are significantly higher than those experienced by non-merger peers. In contrast, the post-merger operating