The Economics and Finance Letters

Do FDI and foreign remittance inflows affect the unemployment rate? A new insight

Md Nurul Kabir Biplob — 2024-04-09

This study aims to investigate the impact of FDI and foreign remittances on unemployment from 1991 to 2020 from Bangladesh's perspective. With the use of EViews 10 version, this study used the ARDL technique to capture the long-run and short-run estimations. The study utilized the unemployment rate as a dependent variable and foreign direct investment (FDI) and foreign remittances as independent factors. The remaining factors include exchange rate, GDP growth, exports, and inflation rate; these are controllable variables. The results of the research show that FDI and foreign remittance have a positive and statistically significant association with unemployment rate in Bangladesh, both in the long run and in the short term. Thus, according to the findings, FDI and foreign remittances are creating more unemployment in Bangladesh. Unlike the general economic theory, which states that the bidirectional relationship of FDI with the unemployment rate, as well as foreign remittances with the unemployment rate, is inverse, these research outcomes basically suggest that FDI and foreign remittance inflows are displacing domestic labor with, perhaps, a low-cost, highly skilled overseas workforce, and also indicate that there might be an increasing trend in the brown-field investment sector. For policy implications, this investigation lends support to the theory that Bangladesh should focus more and more on skilled development policies for domestic workers and create a sound environment for foreign investors in order to reduce the country's unemployment rate.

Factors affecting the volatility of bitcoin prices

Renhong Wu — 2024-04-24

To explore the impact of factors from the traditional financial market, such as economic policy uncertainty, oil prices, the NASDAQ index, and gold prices, to identify factors contributing to Bitcoin volatility. This study uses traditional OLS (ordinary least squares) regression analysis to examine how different external factors affect Bitcoin price volatility from January 2014 to March 2023. By employing a comprehensive approach to recognize the distinctive characteristics of the Bitcoin market, namely, 24-hour trading and the short duration of its existence, we’ve included a wide spectrum of data to ensure a cohesive comparison with other financial datasets. The findings of the statistical analysis indicate that EPU and the NASDAQ index promote positive fluctuations in Bitcoin volatility, whereas gold prices act as a dampener. Conversely, we do not find empirical support for the influence of energy prices, such as oil, on Bitcoin volatility. These findings indicate that we should not undervalue Bitcoin in any financial transaction scenario. It means that all stakeholders should treat the issue of Bitcoin volatility more seriously, even including governments, who should actively regulate the Bitcoin market, and investors, who should recognize the dangers of this volatility, make rational decisions based on individual circumstances, and employ flexible trading strategies.

Financial constraints of ASEAN firms: Impact alleviation by ESG pillars

Yee Ling Ng — 2024-04-26

The purpose of this study is to examine whether ESG plays a positive moderating role in the negative relationship between financial constraint, the Kaplan-Zingales (KZ) and Whited and Wu (WW) indexes, and firm performance: Return of Asset (ROA) and Return of Equity (ROE). This study uses information from the Thomas Refinitiv database, which covers the Association of Southeast Asian Nations (ASEAN-5): Indonesia, Malaysia, Singapore, Thailand, and the Philippines non-financial firms from 2011 to 2019. Fixed-effects (FE) are used as the baseline model, and random-effects (RE) act as the robustness of methods. The results show that the main effect of financial constraints is to act as an obstacle to firm performance. However, the marginal effects of financial constraints can be improved in the presence of ESG. Firms with a high ESG score are better at alleviating the adverse impact of financial constraints as compared to those with a low ESG score. When the ESG score is further broken down into three sub-pillar dimensions, the S-score is of the greatest magnitude in its moderating role in the ESG breakdown. The findings have important implications: effective financial support and the source of funding from the government are crucial to supporting firm performance. ESG-compliant strategies should also be formulated to encourage ESG disclosure, which leads to increased capital allocation efficiency. The firms should be stringent on S-score, which helps drive the company as employees respond by giving their best. Governments and firms need to deploy ESG guidelines in order to succeed in thriving competitive firm performances.

Board composition, ESG practices, and firm performance: Evidence from the Pakistan stock exchange

Sayyed Sadaqat Hussain Shah — 2024-05-27

This study delves into the intricate relationship between corporate governance factors, including board size and the proportion of non-executive directors, and firm performance, with a specialized focus on environmental, social, and governance (ESG) considerations. Employing a secondary data analysis methodology, the research draws insights from a comprehensive dataset comprising 100 companies listed on the Pakistan Stock Exchange over a period spanning from 2018 to 2022. The study investigates these relationships using rigorous regression analysis to uncover significant findings. The analysis reveals a robust positive correlation between larger board sizes and firm performance, indicating that companies with expanded boards tend to exhibit improved financial performance within the Pakistani market landscape. Conversely, a higher proportion of non-executive directors is associated with decreased performance, highlighting potential challenges stemming from board composition. Furthermore, the research unveils the pivotal role of ESG practices in augmenting the positive relationship between board size and firm performance. However, it notes that this enhancement weakens as the proportion of non-executive director’s increases, suggesting a nuanced interplay between corporate governance structures and ESG considerations. Practically, the study underscores the critical importance of fostering diverse and well-structured boards while integrating ESG principles into corporate governance frameworks. By carefully considering board composition and embracing ESG practices, organizations can not only enhance their financial performance but also promote sustainability and long-term value creation, aligning with evolving stakeholder expectations and regulatory requirements in the Pakistani business landscape.

Firm characteristics and tax aggressiveness of quoted companies in Nigeria

Otuedon Ajueyitse Martins — 2024-06-20

This study examined the firm characteristics of tax aggressiveness among quoted companies in Nigeria. The specific objectives were to determine the influence of firm size, profitability, liquidity and leverage on the tax aggressiveness of firms. It was an ex-post-facto and longitudinal study that spanned five years (2015-2019). The population consisted of 87 non-financial companies while the sample size was 67. The data used were from the financial statements and accounts of the sampled companies. The statistical techniques used include descriptive statistics, correlations and random and fixed effects panel least squares regression. The study showed that firm size and profitability have a significant influence and positive relationship with tax aggressiveness while liquidity has no significant influence on tax aggressiveness but has a positive relationship with it. Leverage had a significant influence while having a negative relationship with tax aggressiveness. It was concluded that firm characteristics are critical factors influencing tax aggressiveness among quoted companies in Nigeria. It recommended that a company's size should not be the basis for tax aggressiveness and that its profitability, liquidity and leverage position be disclosed in a way that accurately reflects its financial status. It will be of immense benefit to companies to ensure that their tax strategies align with ethical and legal standards and that they maintain transparency in their financial reporting. Similarly, the findings of this study have important implications for government tax authorities at both the federal and state levels in terms of the assessment of companies for tax purposes.