International Journal of Economic Policy in Emerging Economies
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International Journal of Economic Policy in Emerging Economies (6 papers in press)
OPTIMIZING THE VALUE-AT-RISK MODEL IN BANKS IN INDIA TO ADEQUATELY QUANTIFY MARKET RISKS IN EMERGING MARKETS by Fakhraddin Akhmedov, Shaker Zeitoun Abstract: Market risk tends to be extreme in its development and violent in its impact. This study gives consideration to the case study of banks in India in optimising the value-at-risk (VaR) model in emerging markets believing that the case study of these banks is not just the story of individual banks but a window into the structural issues of the entire market risk models in emerging markets. This study uses the parametric method to optimise the value-at-risk model based on probabilities and mathematical expectations to adequately quantify the expected worst-case loss that a financial institution may sustain under normal market conditions, at a predefined confidence level, over a given time horizon and for a given asset portfolio after taking into consideration the expected recovery rate of assets. The recommendations set out in this study provide emerging markets with an optimised estimation of the value-at-risk model to adequately quantify market risk. Keywords: Emerging Markets; Banking; Banks in India; Market Risk; Value-at-Risk Model (VaR); Asset Portfolio. DOI: 10.1504/IJEPEE.2019.10023149
Are interest rates alone enough to understand stock returns in the Islamic Republic of Pakistan? by Imtiaz Badshah, Maaheen Ahmad, Khalifa Hmood Jaber Abstract: The purpose of this paper is to understand the volatility of interest rates and the relationship between interest rates and stock returns under three political regimes in Pakistan. The wealth of literature discussing the volatility of interest rates and stock returns provided the theoretical basis for this inquiry. This research is therefore deductive in nature and situated within a positivist philosophical paradigm. This research is unique in its methodological approach, dividing the study period into three short periods (2002-2008, 2008-2013 and 2013-2016) based upon the political regimes in the country, which leads to interesting findings. Regression analyses are used to investigate the relationship between interest rates and stock returns. This research contributes additional insights into the relationship between interest rates and stock returns in Pakistan. Factors, such as political regimes, the relationship between political regimes and international investors and organisations, and the law and order situation etc play greater role. Keywords: interest rates; stock returns; volatility; quantitative approach; politics; monetary policy; Pakistan. DOI: 10.1504/IJEPEE.2019.10021562
Regional economic integration and the backward integration of ECOWAS sub-region into global value chains by Barnabas Olusegun Obasaju, Wumi Kolawole Olayiwola, Henry Okodua, Babatunde Sunday Adekunle Abstract: This paper examines the impact the economic community of West African States (ECOWAS) as a regional economic community (REC) has exerted on the backward integration of her member states into global value chains between 2007 and 2012. The conventional indicator of regional economic integration is compared vis-á-vis a relatively newly proposed indicator in order to investigate which one performs better in respect of economic expectations. Using the systems generalised method of moments, this study finds that the newly proposed indicator, which uses the rest of the world as the benchmark rather than the world while measuring the indicator of regional economic integration, outperforms its counterpart. Estimates also show that although ECOWAS as a REC has contributed positively to her members' backward integration into GVCs, this contribution is not statistically significant. To enhance members' access to the needed quality inputs via the backward integration, more intensified efforts are needed from this REC. Keywords: regional economic integration; global value chains; GVCs; backward integration; systems GMM. DOI: 10.1504/IJEPEE.2019.10021561
Adapting ICT in higher education in the developing world: influencing dynamics by Abdelghani Remache, Abdelhafid Belarbi Abstract: The frenzy of information and digital communications marked the 21st century by modernising societies and levering living standards. Policy makers of all economic spheres in the developed world reckon that information and communication technology (ICT) investment fosters economic development and performance. Recent studies in the USA and Europe indicate that investing in ICT helps achieve high growth rates in every sector of the economy. Building on recent literature reviews, this paper argues for the importance of ICT integration in higher education institutions (HEIs) in the developing world and proposes some of the major influencing factors that can help translate ICT integration into reality and serve as a major stimulant for economic development. The paper also reveals how investing in ICT enhances economic performance while focusing on the specific opportunities and the challenges obstructing the acquisition and adoption of ICT by the developing nations. Keywords: ICT integration; economic growth; higher education; influencing dynamics; developing countries. DOI: 10.1504/IJEPEE.2019.10023041
Joint venture as a risk management tool: experience from construction sector by Mangirdas Morkunas, Artiom Volkov, Elze Rudiene, Viktorija Skvarciany Abstract: This study aims at examining the possibility of using a joint venture as a risk management tool for companies engaged in the construction business. Based on completely different risk map of a stand-alone and joint venture companies and using the analytical hierarchy process model method for evaluating the importance of particular risk factors for both cases we found, that depending on a company's ability to deal with different types of business risks, joint venture can be used as a risk management tool in particular situations. The results deviation from classical risk management literature has been found, that can be attributed to new theory applicable to small open economies in Central and Eastern Europe. Keywords: business risk; joint venture; construction; analytical hierarchy process. DOI: 10.1504/IJEPEE.2019.10022432
Economic stagnation in emerging market countries: should this justify Keynes's law? by Sri Indah Nikensari, Purbayu Budi Santosa, F.X. Sugiyanto Abstract: This study aims to determine the aggregate demand factors that affect economic stagnation in middle-income emerging market countries, and whether Keynes's law can be a solution to solve the problem with increase demand. Using panel data from official sources such as the World Bank, several factors were tested to determine the effect on economic stagnation, at the 2010-2015 and 2010-2016 periods. By employing panel data modelling (with fixed effect model), the findings suggest that the decrease in household consumption, weak foreign investment, inefficient government spending and decreased export competitiveness have a significant positive effect on economic stagnation, while a low inflation rate has an insignificant effect on household consumption, as well as high lending interest rate have an insignificant effect on the decrease in the inflow of foreign direct investment. Therefore, Keynes's law must be applied appropriately by increasing aggregate demand to encourage declining economic growth through government interference. Keywords: stagnation; emerging market; aggregate side; Keynes's law. DOI: 10.1504/IJEPEE.2019.10023038