Vol. 27 No. 2 (2024)

Articles

• Open Access Article Economics

  12 Pages Download PDF: A VECM Investigation on the Nexus among Government Spending, Oil Revenues, and Economic Growth: Empirical Evidence from the Sultanate of Oman

  A VECM Investigation on the Nexus among Government Spending, Oil Revenues, and Economic Growth: Empirical Evidence from the Sultanate of Oman

  Sarfaraz Javed, Uvesh Husain

  https://doi.org/10.36923/iefrontiers.v27i2.241

  This study aims to examine the impact of oil resources on the economic growth and government spending in Oman between 1989 and 2018. To enhance economic growth, it is crucial to comprehend how Oman can effectively manage its abundant resources. The objectives are to examine the correlation between oil resources, GDP, and government expenditure; to assess the interconnections that exist in both the short and long run; and to identify the causal pathways using the ARDL and VECM models. The approach involves doing unit root tests and examining long-term associations, followed by using VECM to analyze short-term dynamics. Finally, the analysis is performed on annual data obtained from the World Bank and the National Centre for Statistics and Information. The results indicate that a rise in oil revenue has a significant impact on GDP, whereas an increase in government expenditure has an adverse effect on economic growth. The findings of this research align with those of studies undertaken in other GCC states, emphasizing the significant role of oil in both economic development and public finance. An result of this research is that it will equip policymakers in Oman and other nations abundant in resources with empirical information that can be used to formulate policies for sustainable economic growth and effective resource management.

  pp. 1-12 Abstract views:1030 Downloads:304

• Open Access Article Economics Finance

  17 Pages Download PDF: Unpacking The Contributing And Mitigating Factors of External Debt In Pakistan: An Ardl And Local Projection Approach

  Unpacking The Contributing And Mitigating Factors of External Debt In Pakistan: An Ardl And Local Projection Approach

  Ashfaque Ali Gilal, Nor Asmat Ismail, Siti A'sya Baharudin

  https://doi.org/10.36923/iefrontiers.v27i2.244

  This study aims to investigate the root causes of burgeoning external debt in Pakistan and to identify potential ways to minimise the growing burden of external debt. By analyzing time series data from 1976 to 2022, using the Auto Regressive Distributive Lag Model (ARDL) bound test and local projection impulse response, the research finds a long-term relationship among remittances, external debt, and other variables. The results indicate that gross domestic product (GDP) growth rate, trade volume, and foreign exchange reserves play crucial roles in mitigating Pakistan’s external debt, offering avenues for reducing the country’s debt burden, as the probability values of their coefficients are less than 0.05. However, remittances, gross capital formation, and external debt servicing contribute to increasing external debt at a 5% significance level. The negative and significant error correction term (ECT) implies the system’s stability and convergence. The study concludes that while remittances and gross capital formation have contributed to the increasing external debt, effective management of GDP growth, trade volume, and foreign exchange reserves can mitigate this burden. Based on these findings, it is recommended that the Government of Pakistan prioritize enhancing the GDP growth rate by channelling remittances and other foreign currency inflows, such as Foreign Direct Investment (FDI), foreign grants, and export earnings, towards building up foreign reserves.

  pp. 13-29 Abstract views:542 Downloads:803

• Open Access Article Economics

  15 Pages Download PDF: Impact of Social Capital on Poverty Reduction in Ethiopia: Evidence from the Amhara National Regional Staten

  Impact of Social Capital on Poverty Reduction in Ethiopia: Evidence from the Amhara National Regional Staten

  Fentahun Admassu Yayeh, Wondaferahu Mulugeta Demissie

  https://doi.org/10.36923/iefrontiers.v27i2.248

  This study aims to investigate the influence of social capital on poverty reduction among members of financial cooperatives in the urban and rural areas of the Amhara National Regional State, Ethiopia. Adopted explanatory and used mixed research methods using the cross-sectional study from 348 stratified and randomly selected financial cooperative members. Primary data was collected through a structured questionnaire, focus group discussions, and personal interviews. Furthermore, the data was analysed using logistic regression and multiple linear regression models. Three types of social capital dimensions: cognitive, relational, and structural social capital is operationalized and measured in terms of members' understanding of shared mission and goal, cooperation, and trust. The regression result shows that structural social capital and relational social capital are associated with improved poverty reduction, whereas a lack of cognitive social capital is associated with a decline in the reduction in household poverty of financial cooperative members. Surprisingly, the finding indicated that dimensions of social capital are more effective in affecting monetary poverty than other variables in the Amhara region. The study underscores the importance of social capital in influencing poverty reduction among members of the study area. Recognizing the impact of different dimensions of social capital, policymakers can design targeted interventions to combat poverty effectively. Strengthening social capital within financial cooperatives and promoting collaboration with financial institutions are essential steps towards achieving the Sustainable Development Goal of alleviating poverty in the region.

  pp. 30-44 Abstract views:1172 Downloads:363

• Open Access Article Economics Finance

  12 Pages Download PDF: The Impact of Banking Penetration on Foreign Direct Investment in ASEAN: Comparative Analysis of Indonesia, Malaysia, and Thailand

  The Impact of Banking Penetration on Foreign Direct Investment in ASEAN: Comparative Analysis of Indonesia, Malaysia, and Thailand

  Ariodillah Hidayat, Xenaneira Shodrokova

  https://doi.org/10.36923/iefrontiers.v27i2.245

  High banking penetration is considered an important indicator of the stability and maturity of a country's financial system, which can attract foreign direct investment (FDI). This phenomenon is becoming increasingly relevant in the ASEAN region, which continues to seek to increase its attractiveness for foreign investors amid global challenges. The study used secondary data from the International Monetary Fund covering the period from 2010 to 2021. The analysis was carried out using the regression of panel data of the Random Effect Model type. The results show that banking penetration has a significant positive impact on FDI in ASEAN. This confirms that foreign investors' confidence in the domestic financial system is very important. In Indonesia, strong banking penetration supports FDI growth despite regulatory and infrastructure challenges. In Malaysia, expanding access to digital financial services is important, while in Thailand, cooperation between the banking and telecommunications sectors is an example for other ASEAN countries. ASEAN countries need to focus on increasing banking penetration through policies that support digital financial services, improve corporate governance, and strengthen regional cooperation. The originality of this research lies in an in-depth comparative analysis of the impact of banking penetration in Indonesia, Malaysia, and Thailand, providing insights and policy strategies that can be adopted by other ASEAN countries to increase their FDI attractiveness.

  pp. 45-56 Abstract views:915 Downloads:470

• Open Access Article Economics Digital Economy

  14 Pages Download PDF: Sustainable Practice of Ifrs And Economic Growth: Evidence From A Case Study on A Developing Country

  Sustainable Practice of Ifrs And Economic Growth: Evidence From A Case Study on A Developing Country

  Sarfaraz Javed, Sajjad Nazir, Ghulam Mustafa Malik, Azeem Ahmad Khan, Syed Jalil

  https://doi.org/10.36923/iefrontiers.v27i2.242

  This research aims to investigate whether there is a link between the adoption of International Financial Reporting Standards (IFRS) and the benefits of Foreign Direct Investment (FDI), both of which were significant contributors to Afghanistan's economic growth between 2003 and 2020. This study uses panel integration and causality assessment. It looks into the underlying causes of the problem in terms of short- and long-term partnerships, as well as diversity. The findings of this study support the existence of a positive and significant relationship between the adoption of IFRS and the flow of FDI, as well as the correlation between them. Furthermore, the examination of causes shows that IFRS-related FDI is both a short-term source of EG and a long-term cause of diversification. The analysis of causes demonstrates this. This study investigates Afghanistan and expands on the relationship between IFRS acquisition and FDI income. This research could help developing countries that use IFRS and those that do not use IFRS identify the financial implications of IFRS practices and boost economic growth.

  pp. 57-70 Abstract views:520 Downloads:233

• Open Access Article Economics

  15 Pages Download PDF: Modelling The Role of Institutional Change In A Tourism Growth Model: A Dynamic Analysis

  Modelling The Role of Institutional Change In A Tourism Growth Model: A Dynamic Analysis

  Isah Wada

  https://doi.org/10.36923/iefrontiers.v27i2.250

  This study aims to investigate the dynamic relationships among foreign direct investment (FDI), financial development, tourism development, and institutional quality in selected MENA countries. The research focuses on assessing the significance of institutional quality within these interlinked dynamics and its impact on the variables under consideration. The study's objective aligns with UNSDG Goal 16, which aims to promote peaceful and inclusive societies with strong institutions that support economic growth and development. The study employs a novel panel Autoregressive Distributed Lag (ARDL) estimation approach to analyze empirical data from 2002 to 2018. This method allows for a comprehensive examination of both short-run and long-run interactions among FDI inflows, financial development, tourism development, and institutional quality across multiple countries in the MENA region. The empirical results indicate that, in the long run, institutional quality negatively influences FDI inflows, financial development, and international tourist arrivals, while it positively impacts real GDP. In the short run, financial development was found to negatively affect real GDP, and international tourist arrivals were observed to negatively impact financial development. Additionally, institutional quality exhibited a negative effect on international tourist arrivals in the short run. Country-wise regression results showed that institutional quality positively influenced international tourist arrivals, FDI inflows, real GDP, and financial development. Furthermore, the study identifies significant unidirectional causal relationships, highlighting the pivotal role of institutional quality in economic growth and development. The study concludes that institutional quality plays a critical role in shaping the dynamics of FDI, financial development, and tourism growth. While institutional quality has a positive impact on long-term economic growth, its negative effects on FDI, financial development, and tourism in the short run suggest the need for improved governance and policy interventions.

  pp. 71-85 Abstract views:466 Downloads:228

• Open Access Article Economics

  12 Pages Download PDF: Winter is Coming: A Tale of Two Futures – Entrepreneurial State or Creative Destruction?

  Winter is Coming: A Tale of Two Futures – Entrepreneurial State or Creative Destruction?

  Gustavo Morales-Alonso

  https://doi.org/10.36923/iefrontiers.v27i2.256

  This paper aims to explore the fundamental principles of sound monetary policy, fiscal prudence, and entrepreneurial innovation, which have historically supported the economic prosperity of nations. It seeks to identify the factors leading to an impending financial crisis and proposes countermeasures based on market liberalization and individual entrepreneurial resilience. Using a critical analysis of prevailing economic conditions, this paper evaluates the unchecked expansion of the monetary supply, fiscal policies, and government interventions. The methodology includes a review of historical economic trends and the application of theoretical frameworks concerning monetary policy, fiscal responsibility, and market innovation. The research identifies that the unchecked expansion of the monetary supply has contributed to inflationary pressures, diminished savings incentives, and led to the misallocation of capital. In addition, fiscal looseness and increased government intervention have exacerbated these economic vulnerabilities, creating conditions ripe for an economic crisis of substantial magnitude, possibly surpassing previous crises such as the Great Recession and the COVID-19 pandemic. The paper concludes that this impending crisis is not an unforeseeable "black swan" event but rather one with clear warning signs that require immediate action. The findings advocate for a departure from interventionist policies and emphasize the importance of returning to foundational economic principles, including market liberalization and fostering individual creativity and entrepreneurial innovation. This paper serves as a timely call for policymakers to address these challenges before the full impact of the crisis is realized.

  pp. 86-97 Abstract views:512 Downloads:353

• Open Access Article Economics Financial Management

  12 Pages Download PDF: ESG and Administrative Costs in Equity Trading: Evidence from China

  ESG and Administrative Costs in Equity Trading: Evidence from China

  Lanchun Huang, Zhan Wang

  https://doi.org/10.36923/iefrontiers.v27i2.271

  Recent findings suggest that firms with higher Environmental, social, and governance (ESG) scores may experience lower stock returns, contrary to the common belief that better ESG performance enhances market reputation and stock returns. This study aims to investigate the relationship between ESG performance, management costs, and stock returns by introducing an "ESG-cost framework." The framework proposes that the costs incurred in implementing ESG practices can reduce revenue, offsetting the positive effects of strong ESG performance. Using an empirical analysis of firms based on both their ESG scores and management costs, the study finds that firms with low management costs gain the most from high ESG scores, while those with high costs may see diminished stock returns despite strong ESG performance. Additionally, the study proposes trading strategies that integrate ESG scores and cost considerations, demonstrating that these strategies yield better returns than traditional market indices. These findings offer a new perspective on ESG decision-making and provide valuable insights for constructing effective trading strategies.

  pp. 98-109 Abstract views:551 Downloads:259

• Open Access Article Economics

  14 Pages Download PDF: Impacts of Technology Finance And Technological Innovation On Economic Growth of Jingjinji Region China

  Impacts of Technology Finance And Technological Innovation On Economic Growth of Jingjinji Region China

  liu hong, Ashfaque Gilal, Nor Asmat Ismail

  https://doi.org/10.36923/iefrontiers.v27i2.274

  This study investigates the impact of technology finance and technological innovation on economic growth in the Beijing-Tianjin-Hebei (Jingjinji) region, while also exploring whether this relationship is nonlinear and moderated by technology finance. Using panel data from 2000 to 2021, the study constructs indices for technology finance and technological innovation through principal component analysis (PCA) and applies a threshold regression model. The findings reveal that technological innovation has a stronger positive effect on economic growth when the technology finance index is below or equal to a threshold of 1.459. Beyond this threshold, the impact of innovation diminishes. Additionally, financial development and financial openness positively influence growth, while higher college enrollment ratios have a negative effect. Comparing regional data, the study observes that Beijing has surpassed the technology finance threshold, reducing the positive impact of innovation, whereas Tianjin and Hebei remain below the threshold. The study recommends decreasing technology finance in Beijing and increasing it in Tianjin and Hebei to enhance growth in the region. It also advises the Chinese government to develop comprehensive policies to strengthen financial development and financial openness in the Jingjinji region.

  pp. 110-123 Abstract views:590 Downloads:242

• Open Access Article Finance

  16 Pages Download PDF: The Sustainable Growth of Korean Listed Firms in the lens of Pay Disparity and Managerial Overconfidence

  The Sustainable Growth of Korean Listed Firms in the lens of Pay Disparity and Managerial Overconfidence

  Hansol Lee, Kevin Troy Chua, Minsang Lee

  https://doi.org/10.36923/iefrontiers.v27i2.273

  This study aims to assess the impact of pay disparity on the sustainable growth of listed firms in Korea, and to explore how this relationship is influenced by the presence of managerial overconfidence. Employing a fixed-effects regression model, the analysis draws on 10,244 firm-year observations from Korean-listed firms between 2012 and 2022. The findings reveal a significant positive association between pay disparity and the sustainable growth of firms, supporting the tournament theory, Moreover, this effect is more pronounced in companies led by overconfident management. The robustness tests also confirm the main regression results. This study highlights how pay disparity together with the presence of managerial overconfidence can drive sustainable growth. It recommends tailored compensation strategies that consider management dynamics and organizational context, helping firms navigate compensation challenges and enhance long-term success and competitive advantage. The study provides valuable insights for policymakers, investors, and other stakeholders in crafting equitable compensation practices that promote resilient and sustainable business environments. This study’s originality lies in its consideration of managerial overconfidence, setting it apart from prior research that primarily examines the direct link between pay disparity and sustainable growth.

  pp. 124-139 Abstract views:657 Downloads:193