DETERMINANTS OF FINANCIAL DEVELOPMENT: IMPACT OF HUMAN CAPITAL IN EMERGING MARKETS COUNTRIES

This study aims to examine determinants of financial development and see role of quality of human capital in financial development in 19 Emerging Market countries during 2008-2017. Financial development in this study is proxied using the financial development index to accommodate multi-dimensional of financial development. Estimation is using the dynamic panel method Generalize Method of Moment (GMM). The results show that the quality of human capital has contributed to increasing financial development in emerging market countries in 2008-2017. Meanwhile, trade openness and government expenditure do not have a statistically significant effect and domestic savings have a significant positive effect on financial development.

Socially Irresponsible Employment in Emerging-Market Manufacturers

Are socially irresponsible employment practices, such as abusive discipline and wage theft, systematically tied to manufacturing outcomes in emerging-market countries? Drawing on a stream of stakeholder theory that emphasizes economic interdependencies and insights from the fields of industrial relations and human resource management, we argue that working conditions within a firm are facets of a systemic approach to value creation and value appropriation. Some manufacturers operate “low road” systems that rest on harmful practices. Others operate “high road” systems in which the need to develop employees’ human capital deters socially irresponsible employment practices. To test the theory, we conduct a large-scale study of labor violations and manufacturing outcomes by analyzing data on over four thousand export-oriented small manufacturers in 48 emerging-market countries. The analysis demonstrates that socially irresponsible employment practices are associated with inferior firm-level manufacturing outcomes even after controlling for the effects of firm size, industry, product mix, production processes, host country, destination markets, and buyer mix. The theory and results suggest an opportunity for multinational corporations to improve corporate social performance in global value chains by encouraging their suppliers to transition to systems of value creation that rely on the development of worker human capital.

Determinants of Russia’s Sovereign Risk

This paper presents an empirical analysis of the determinants of Russia’s sovereign risk. The spreads on sovereign Russian credit default swaps (CDS) were used as a measure of risk. Based on the accuracy of out-of-sample forecasts, the factors that influence Russian CDS were selected: the implied volatility of the rouble exchange rate, the size of foreign exchange reserves relative to GDP, and the average spread on other emerging market CDS as a proxy for global factors. In turn, the CDS of emerging market countries are determined by the volatility of their currencies, the slope of the US government bond curve, and also by the increments of the dollar index.

The impact of artificial intelligence (AI) finance on financing constraints of non-SOE firms in emerging markets

PurposeThis study investigates the impact of AI finance on financing constraints of non-SOE firms in an emerging market.Design/methodology/approachUsing a sample of non-SOE listed companies in China from 2011 to 2018, this research employs the cash–cash flow sensitivity model to examine the effect of AI finance on financing constraints of non-SOE firms.FindingsWe find that the development of AI finance can alleviate the financing constraints of non-SOE firms. Further, we document that such effect is more pronounced for smaller firms, more innovative firms and firms in developing areas.Practical implicationsThis study suggests that emerging market countries can ease the financing constraints of non-SOE firms by promoting AI finance development.Originality/valueThis study, to the best of our knowledge, is the first one to explore the relationship between AI finance development and financing constraints of non-SOE firms in emerging markets.

Output Losses from Currency Crises and the Role of Central Bank

Generally, one of the important issues related to currency crises is the output losses caused by these phenomena. In this study, determinants of output losses and particularly the role of the central bank will be evaluated during currency crises. Moreover, the paper tries to investigate the roles of macroeconomic variables and also monetary, fiscal and exchange rate policies on the output losses during currency crises. In this regard, an econometric model with panel data has been used for emerging market countries during 1980-2016. The results show that currency crises accruing have a positive and significant effect on output losses. While the successful defence of central bank has had the negative effects on the output losses, but it is positive for the unsuccessful defence and the non-intervention or immediate depreciation. However, the role of the macroeconomic condition is important where total foreign reserves can be considered as a buffer against the output losses, while inflation and deviation of the real exchange rate from its trend have had positive effects on the output losses. Finally, the output losses can be reduced by an active monetary, fiscal and exchange rate policies.

Determinant of Residential Property Price Index in Five Asian Emerging Market Countries: A Demand and Supply Approach

This study aims to analyze the factors influencing the Residential Property Price Index (RPPI) from the demand and supply sides in five Asian emerging market countries. The data used are semi-annual data from the first semester of 2009 until the second semester of 2019 because this study aims to denote the impact of RPPI toward the demand and supply indicators after the global crisis in 2008. The dependent variable of this study is the RPPI, while the independent variables include the number of workers, real interest rate, economic growth, and the Real Effective Exchange Rate (REER). The Fixed Effects Model (FEM) is thus the applied method to process the data. In the end, the results indicate that all independent variables are significant toward the RPPI. The number of workers, real interest rate, and REER negatively affect the RPPI, while economic growth positively affects the RPPI.

Measuring the housing sector’s contribution to GDP in emerging market countries

Purpose This paper aims to document the economic importance of the housing sector, as measured by its contribution to gross domestic product (GDP), which is not fully recognized. In response to the joint economic and health crises caused by the COVID-19 pandemic, there is an opportunity for emerging market countries to develop and implement inclusive housing strategies that stimulate the economy and improve community health outcomes. However, so far housing does not feature prominently in the recovery plans of many emerging market countries. Design/methodology/approach This paper uses national account data and informal housing estimates for 11 emerging market economies to estimate the contribution of housing investments and housing services to the GDP of these countries. Findings This paper finds that the combined contribution of housing investments and housing services represents between 6.9% and 18.5% of GDP, averaging 13.1% in the countries with information about both. This puts the housing sector roughly on par with other key sectors such as manufacturing. In addition, if the informal housing sector is undercounted in the official national account figures used in this analysis by 50% or 100%, for example, then the true averages of housing investments and housing services’ contribution to GDP would increase to 14.3% or 16.1% of GDP, respectively. Research limitations/implications Further efforts to improve data collection about housing investments and consumption, particularly imputed rent for owner occupiers and informal activity require national government to conduct regular household and housing surveys. Researcher can help make these surveys more robust and leverage new data sources such as scraped housing price and rent data to complement traditional surveys. Better data are needed in order to capture housing contribution to the economy. Practical implications The size of the housing sector and its impact in terms of employment and community resilience indicate the potential of inclusive housing investments to both serve short-term economic stimulus and increase long-term community resilience. Originality/value The role of housing in the economy is often limited to housing investment, despite the importance of housing services and well-documented methodologies to include them. This analysis highlights the importance of housing to the economy of emerging market countries (in addition to all the non-GDP related impact of housing on welfare) and indicate data limitation that need to be addressed to further strengthen the case for focusing on housing as part of economic recovery plans.