International Journal of Sustainable Economy (24 papers in press)
Climate finance and hunger among Non-Annex-1 parties: A lens on Sub-Saharan Africa
by Isaac Doku, Andrew Phiri
Abstract: Our study seeks to find out whether climate finance is helping reduce hunger among 43 Sub-Saharan Africa (SSA) countries, using system generalised method of moment, pooled OLS and fixed effect models for the period 2006 to 2018. Three main hunger variables are used in the study; global hunger index (GHI), undernutrition (Under-N) and birthweight (Birth-W). The findings indicate that climate finance exerts a very small effect on all hunger variables. Similarly, other external forms of financing such as foreign direct investment and developmental aid are found to exert little effect on hunger. Notably, domestic factors such as social and economic readiness are found to be more significant in reducing hunger levels.
Keywords: climate finance; hunger; Sub-Saharan Africa; SSA; developmental aid; foreign direct investment; FDI.
CORPORATE TAX AGGRESSIVENESS AND CORPORATE GOVERNANCE: CASE OF CITIZEN FIRMS
by Khaoula Aliani, Sihem Bouguila
Abstract: Firms have an inherent intention to minimise their tax burden. These implicit or explicit plans may harm the reputation of citizen firms. Since they are under higher visibility from stakeholders, citizen firms have to adopt an ethical and responsible tax behaviour. The aim of this study is to analyse whether the tax policy is more/less likely to be aggressive in the best 100 corporate citizens. In this paper, the influence of social responsibility on tax policies has been meticulously explored by two methods: a combined effect and an instrumentalist approach. The sample is composed of the best 100 US corporate citizens during 2020. The empirical results reject the direct effects of the corporate social responsibility score and its combined effect with governance variables on tax aggressiveness. However, the moderation effect, which supposes an instrumentalist approach, was supported.
Keywords: corporate social responsibility; CSR; tax aggressiveness; corporate governance; corporate citizens.
Economic and Financial Analysis of a Grid-Connected PV System in Rio de Janeiro for Residential and Commercial Supply
by Marcos Filardy Curi, Priscila De Jesus Freitas Pinto, João Pedro Duveen Da Cunha, Rodrigo Rodrigues De Freitas
Abstract: Sustainable development and renewable energy sources are topics that have attracted global attention together with greater awareness of the need to preserve the planets natural resources while still supplying energy demand. This paper presents an economic and financial analysis of a PV grid-connected system for residential and commercial supply located in the state of Rio de Janeiro. The model is evaluated considering technical aspects like energy security, compatibility, energy production optimisation and economic payback forecasting where the real options theory (ROT) is applied for economic analysis. The economic viability and the technical potential of a grid-connected system rated at 2.7 kWp and 11.7 kWp PV for residential and commercial scale, respectively, were examined. Demonstrating that for a system expected to last 25 years, the payback time results occur in 6 years, minimum, at residential scale and 5 years at commercial scale, proving the investment viability.
Keywords: renewable energy; solar energy; sustainability; engineering; financial and economic analysis.
Purchase Intention of Energy Efficient Appliances of Households-A Meta Analysis of studies based on Theory of Planned Behavior.
by Rajesh Gangakhedkar, Jaspreet Kaur, M. Karthik
Abstract: The purpose of this research is to make a meta-analytic review of studies that have applied theory of planned behaviour to study the purchase intention of energy efficient appliances of households. Results of 30 studies that met the inclusion criteria have been synthesised in the meta-analysis. A moderator analysis is also made in order to examine the reasons for heterogeneity in the studies. Analysis of publication bias is also made. The findings revealed that all the three variables of TPB have medium to large associations with PI of energy efficient appliances. Attitude was found to have strongest relationship with r = 0.571, followed by perceived behavioural control with r = 0.465 and subjective norms with r = 0.443. Moderator analysis gave mixed results. This meta-analytic review is first of its kind in the domain of adoption of energy efficient appliances by households. The study gives valuable insights to policy makers and researchers into the prediction of PI of energy efficient appliances of households.
Keywords: theory of planned behaviour; meta-analysis; energy efficient appliances; forest plot; effect sizes; fixed effect; random effect; publication bias; funnel plot; heterogeneity; moderator.
A cross country analysis of the role of service sector in the relationship between CO2 emissions and economic growth using machine learning techniques
by Karthikeyan Chandramohan, Ramasamy Murugesan
Abstract: The study aims to explore the relationship between CO2 emissions per capita, service sector share in GDP and GDP per capita using decision tree, multiple, ridge and lasso regression techniques on cross-sectional data of 175 countries. GDP per capita is a better determinant of the CO2 emissions of a country than the share of services in GDP. The fit between emissions and income improves on account of service sector share in GDP. The study finds that an increase in service sector share in high income countries leads to decrease in emissions while in low income countries it leads to an increase in emissions. A N shaped relationship is found between CO2 emissions and income across the countries. Service sector share acts as a moderator in this relationship.
Keywords: service sector; CO2 emissions; economic growth; decision tree; lasso regression; ridge regression.
Sustainable Development Goals in Latin America: A mechanism that improves financial performance
by Manuela Echeverri-Pimienta, Santiago Valencia-Herrera, Diego Andrés Correa-Mejía
Abstract: The sustainable development goals (SDGs) are intended for different organisations around the world to guide their actions towards the benefit of society and the sustainability of the planet. The purpose of the SDGs is for different organisations around the world to orient their actions and processes towards the benefit of society and the sustainability of the planet. The aim of this study is to determine the impact of prioritising the people-related SDGs on the financial performance of Latin American firms. The analysis was conducted based on corporate reports between 2016 and 2019 of 76 firms from Colombia, Chile, Mexico and Peru, which were analysed using a panel data methodology. The results of this research show that the commitment of the different firms to the SDGs associated with people generates a positive impact on financial performance. This paper develops a recent topic at global level and contributes to the existing literature, as it analyses the relationship between SDGs and financial performance in emerging economies, specifically in Latin America.
Keywords: Sustainable development goals; financial performance; corporate reports; corporate social responsibility.
Understanding Socially Responsible Investing-a scientific mapping and bibliometric analysis
by Deepmala Jasuja, JAYA M. PROSAD, Neeraj Nautiyal
Abstract: Research on socially responsible investing (SRI) has gained momentum in recent years. Pursuant to the gap of comprehensive review, the current study aims to identify the main areas and the current dynamics of the SRI research and suggest future research directions. Using a blend of bibliometric methods on visualisation of similarities (VOS) viewer and Biblioshiny on a sample of 1,073 articles from the Scopus database from 1985, we find the most influential articles, authors, sources, and publications within the network. Current themes were explored and impediments to growth in literature were identified. SRI research revolves around Performance Evaluation of socially responsible investment avenues, green finance, socially responsible investment implications, triangulating corporate social responsibility (CSR), SRI and corporate performance, and environment and sustainability. Future research directions concluded the bibliometric review. This study would be notable work for the readers to gain a quick understanding of recent trends and knowledge gaps in the SRI area. Managers can apply sustainability management practices, CSR investment, and environment, social, and governance (ESG) investment with the present study as the motivation principles.
Keywords: bibliometric analysis; citation network; ESG investing; scientific mapping; Scopus; socially responsible investing; SRI; systematic literature review.
Macroeconomic Variables and IPO Activities: An Empirical investigation in Indian Market
by Pritpal Singh, Seshadev Sahoo
Abstract: The present study intends to examine the effect of selected macroeconomic variables on the initial public offerings (IPO) activity (i.e., volume of IPOs) issued during 2011 to 2020 in the Indian capital market. This study used seven macroeconomic factors, i.e., gross domestic product at constant prices, business confidence index, foreign direct investment in equity inflow, yield on five-year corporate bonds, yield on three-month T-Bills on the secondary market, interbank rate, and performance of the Bombay Stock Exchange, India sensitivity index (BSE Sensex as market benchmark) as independent variables. Econometric tools like vector auto regression, variance decomposition test, and impulse response functions were applied to the selected time series data. We find that the business confidence index, gross domestic product, BSE index performance, and foreign direct investment have significant effects on IPO activities. Furthermore, these macroeconomic variables show their impact over a period.
Keywords: Indian capital market; IPO activity; macroeconomic variables; VAR; initial public offerings.
Economic policy uncertainty and exchange market pressure in Nigeria: a quantile regression analysis
by Terver Kumeka, Olabusuyi R. Falayi, Adeniyi Adedokun, Francis O. Adeyemi
Abstract: The present study examines the relationship between economic policy uncertainty (EPU) and exchange market pressure (EMP) in Nigeria using the Quantile regression econometric technique, and monthly data from 1996 to 2019. For robust analysis, this study investigates the effect of both global and domestic economic policy uncertainties on EMP in Nigeria. The evidence from the results implies that there is structural independence between global EPU and EMP in Nigeria on one hand and between domestic EPU and EMP on the other hand, especially in periods when the market is experiencing bearish and tranquility conditions. Regardless of the possible impacts global and domestic EPU may have on EMP, the co-movement of EPU and EMP in Nigeria is unaffected. However, the effect of the association strengthens for the upper quantiles.
Keywords: exchange market pressure; EMP; economic policy uncertainty; EPU; quantile regression; Nigeria; exchange rate.
Examining the Antecedent Role of Biosphere Value, Environmental Usefulness and Ecotourism Involvement: An Empirical Study
by Santanu Mandal, Arun Chandran, Meenakshi Kanakaraj, Sourav R, Payel Das
Abstract: While recently there has been the increasing importance of ecotourism and sustainable behaviour, studies have not been able to address substantially the generation of individual dimensions of ecotourism behaviour. The current investigation explores the role of perceived biosphere value, perceived environmental usefulness, and ecotourism involvement for understanding the growth of socio-cultural beneficial behaviour, economically beneficial behaviour and environmental friendly behaviour. The study has seven latent variables that were operationalised in a first order. All the constructs were developed based on established scales, complemented with pre-test and expert feedback. The data were collected from individuals who are frequent travellers to nature-based destinations. The study had 108 usable responses. The study used partial least squares in R-Studio to validate the proposed associations. Results suggest a prominent role of ecotourism involvement and perceived biosphere value in shaping the different variants of ecotourism behaviour.
Keywords: biosphere value; ecotourism involvement; ecotourism behaviour; tourist behaviour.
Analysing the Impact of Quality of Government Expenditure on Economic Growth: Evidences from Indian States
by Vandana Bhavsar, Pradeepta Samanta
Abstract: Proliferation of endogenous growth theories has engendered different models connecting government expenditure with a country's long-term growth. Numerous studies based on this growth theory revealed that different components of government expenditure have distinct impact on economic growth due to their differing productivity. Following fiscal consolidation measures in India, the quality of states government expenditure has been compromised periodically. Therefore, overarching purpose of this study is to empirically examine which component of government expenditure more productively contributes to states economic growth using a panel data of 29 states/union territories over a period 2004 to 2005 to 2019 to 2020. Empirical findings ratify a priori, that capital (revenue) expenditure is productive (unproductive) and positively (negatively) impacts states economic growth, whereas, economic and social services expenditures are unproductive. The findings have some policy implications in order to sustain and enhance the regional economic growth and to maintain fiscal discipline while persevering with fiscal consolidation.
Keywords: government expenditure; capital expenditure; revenue expenditure; generalised method of moments; GMM; state; economic growth.
Re-examining the relationship between Carbon Performance and Carbon Disclosure: Empirical Evidence from Select International Companies
by Leo Themjung Makan, Kailash Chandra Kabra
Abstract: The purpose of the paper is to examine the bidirectional relationship between carbon performance and carbon disclosure. To this end, the study used data of 138 international companies during the period 2013 to 2014 to 2018 to 2019. The carbon performance was measured as negative carbon intensity, and carbon disclosure was measured by creating a disclosure score and by employing content analysis. The findings of the paper revealed that carbon performance negatively affects carbon disclosure. On the other hand, it is also found that carbon disclosure positively influences subsequent carbon performance. Conducted in the context of large international firms and in a period marked by heightened climate scrutiny, the findings of the study provide important insight for policy purposes and managerial implications. To the authors knowledge, this current study is one of the first to investigate the bidirectional association between carbon performance and carbon disclosure.
Keywords: carbon disclosure index; CDI; carbon intensity; climate change; greenhouse gas.
ESTIMATING THE SIZE OF NIGERIAS OUTPUT CONNECTEDNESS WITH CHINA, INDIA AND USA: A NORMALIZED GENERALIZED FORECAST ERROR VARIANCE DECOMPOSITION APPROACH
by Anthony Orji, Ikenna Paulinus Nwodo, Jonathan Ogbuabor, Onyinye Anthony-Orji
Abstract: This paper investigated the size of Nigerias output connectedness with China, India and USA, with particular focus on Nigerias latest democratic era that began in 1999. The study used the normalised generalised forecast error variance decomposition (GFEVD) of the underlying vector error correction (VEC) model to construct the connectedness measures. The findings reveal that India and China are the largest contributors of spillover index in the system. Overall, the size of the connectedness index of the economies is 34.55%, which shows remarkable output spillovers among these countries. The policy implication of these results is that Nigerian economic authorities should closely monitor the output fluctuations around the world, especially those of Nigerias top trade partners like India and China in order to mitigate adverse output shocks.
Keywords: connectedness; VAR model; democratic era; Nigeria; China; India; USA.
Bankruptcy Risk, Firm Size, and Firm Profitability: A Dynamic Panel Data Approach
by Muhammad Yousaf
Abstract: The main purpose of this study is to examine the impacts of bankruptcy risk of small and medium enterprises (SMEs) and large firms on firm profitability. By employing the secondary data from the CRIBIS database of the Czech firms from the ten sectors, the bankruptcy risk is measured by Altman Model and Springate Model. This is the first study examining the impacts of the firm size on firm profitability by simultaneously employing the Altman and Springate models. We employed the two-step system generalised method of moments (GMM) to estimate the regression models. The findings revealed three important results: 1) there is a positive relationship between the bankruptcy Models and firm profitability; 2) SMEs earn more profits than large firms; 3) the bankruptcy risk for SMEs is higher than the large firms.
Keywords: firm size; large firms; Altman model; Springate model; COVID-19.
DOES FINANCIAL DEVELOPMENT SUPPORT RENEWABLE ENERGY OR CARBON EMISSIONS? A PANEL DATA ANALYSIS ON EMERGING COUNTRIES
by S. Burak Arzova, Bertac Sakir Sahin
Abstract: We investigate the effect of financial development on renewable energy supply rate and CO2 emissions in the period of 1997 to 2016. Domestic credit to the private sector, stock market traded value and foreign direct investment are proxies of financial development variables. Fixed and random effects models are estimated with the Parks Kmenta method for 19 emerging countries. According to empirical results, domestic credit to the private sector is statistically insignificant. Stock market development harms renewable energy supply. Unlike the first model, domestic credit to the private sector positively affects emissions. However, stock market development has no impact on emissions. Foreign direct investments reduce both the renewable energy supply rate and emissions. Foreign direct investments are one of the important financial elements of the emerging market countries by providing energy savings. Our findings provide a financial perspective to policymakers on renewable energy and low carbon in emerging countries.
Keywords: renewable energy; financial development; emerging countries.
The impact of ECB's Pandemic Emergency Asset Purchase announcements on sovereign bond markets: Evidence from Euro area countries
by Tarek Chebbi, Waleed Hmedat
Abstract: This paper presents a comprehensive event study analysis to trace the impact of the announcements of the ECBs asset purchases during the COVID-19 pandemic period on major euro area sovereign bond markets. The findings indicate that such impact differs considerably across types of assets and countries. For instance, the monetary easing news perform a strong impact on the long- and medium-term sovereign debt yields. We find also that ECBs monetary actions have been effective in lowering the return volatility for the short-term interest rates. In addition, the reducing effect of monetary news during the COVID-19 crisis remains strong and significant for Italy and Spain, even after controlling for macroeconomic surprises. Furthermore, while the sovereign yields may not reveal significant responses to monetary news which are not related to asset purchases undertaken by the ECB, our findings highlight significant stabilisation and destabilisation impacts of these announcements. Finally, a split between early PEPP and subsequent (June and December) announcements indicates that the decline in the sovereign bond yields is driven by the March announcements. The stabilisation effect in the short-term bond market shown for the whole sample is mainly explained by the June and December announcements.
Keywords: ECB; asset purchases; sovereign bond yields; COVID-19 pandemic.
Investment certainty in ESG investing due to COVID-19: Evidence from India
by Peeyush Bangur, Ruchi Bangur, Pratima Jain, Abhikrati Shukla
Abstract: This article analyses the impact of COVID-19 on the volatility of ESG investing in India. Furthermore, it assesses the investment certainty in ESG related activities in India after detecting the first case of disease. A generalised autoregressive conditional heteroscedasticity model has been applied to the S&P BSE 100 ESG Index returns. The results show that after COVID-19, the risk related to the market price of the S&P BSE 100 ESG Index has increased, and the certainty of investment decreased. Further, the result of the GARCH (1, 1) model estimation indicates the presence of a large degree of persistency in the S&P BSE 100 ESG index. In addition, after reporting the first case of COVID-19, unconditional variance has been increased by 211.98%.
Keywords: ESG investing; investment certainty; volatility; COVID-19; ARCH; GARCH; India.
The impact of COVID-19 infections on money demand: a cointegration analysis in euro area
by Leonidas Zangelidis
Abstract: Nowadays, there is a structural change that affects the economy and its impact on money demand needs to be addressed. The COVID-19 pandemic negatively (positively) affects the transaction (speculative) motive, while lock-down measures additionally reduce consumption. The purpose of this paper is to empirically estimate for the first time the impact of the COVID-19 recession on euro area (EA) money demand. It uses the money-in-utility and the concept of standard gamble to introduce a health factor in the model. Results show large fluctuations in 2020 to the long-run money demand relationship. New cases of infection in EA have reduced money demanded from the public, suggesting a negative effect of consumption decrease due to fear or inconvenience. Precautionary effect is also evident when the effect of new cases in big EA countries is examined. The impact of lockdown measures had a negative effect on real GDP.
Keywords: money demand; COVID-19 recession; structural break; cointegration analysis; error correction model; ECM; vector error correction; long-run equilibrium.
Convergence Hypothesis: A Systematic literature Review with Bibliometric Analysis
by Prakarti Sharma, Nidhi Sharma
Abstract: The study presents a systematic literature review with bibliometric analysis of the existing literature on convergence hypothesis sourced from the Scopus database over two decades spanning 2000 to 2020. Literature review based on year, source, affiliation, country, and contributing authors is done, along with bibliographic coupling, thematic evaluation and content analysis. Findings suggest that the existing literature mainly focuses on the developed world for examining convergence and its implications. This reflects a severe lacuna as the research on convergence with emerging economies as a focal point is meagre. In conclusions, the authors suggest ways to deal with this critical research gap.
Keywords: systematic literature review; SLR; bibliometric analysis; income gap; development economics; convergence.
Modelling the global prevalence of COVID-19: evidence from multiple wave scenarios
by Wasiu Adekunle, Feyisayo Oyolola, Oluwafemi A. Atolagbe, Ademola A. Abdulbasit, Taiwo H. Odugbemi, Yusuff O. Ashiru
Abstract: Nearly all economies of the world suffered from the sudden outbreak of the coronavirus pandemic that originated from the Wuhan City of China. In this study, with the aid of the OLS estimator, we uncovered the socio-economic conditions that drove the prevalence of COVID-19 across four continents: Africa, Asia, America and Europe, covering three sub-sample periods of the first wave, second wave and vaccine roll-out. While the only significant and positive driver of the pandemic across continents is life expectancy, higher healthcare spending is prevalence reducing. We also established the prevalence impacts of out-of-pocket spending, net migration, distance and international arrivals for Africa, America, Asia and Europe, respectively. We, finally, obtained forecast graphs for the six predictive models per continent, and our results showed that both the linear and nonlinear specifications are best fit predictive models, particularly for the vaccine roll-out era. We suggest useful policy options.
Keywords: COVID-19; global; prevalence; cross-section; ordinary least squares; OLS; waves; vaccination.
How do the terms of trade influence economic growth? Empirical evidence from Bangladesh
by Md. Gias Uddin Khan, Mohammad Abdul Hannan Pradhan
Abstract: The terms of trade reflect the gain from international trading through its link with different stylised factors. However, maintaining proper terms of trade is one of the prime challenges for least developed and developing countries as this may hurt the growth performance. This paper analyses how the terms of trade impact the economic growth of Bangladesh utilising the yearly time series data throughout the time of 1981 to 2018. The autoregressive distributed lag (ARDL) bounds testing approach corroborates the existence of cointegration between economic growth and terms of trade. The results uncover that the terms of trade significantly affect economic growth in an opposite direction throughout the sample period in both the short-run and long-run. Moreover, labour influences economic growth in the long-run only. The capital, however, does not have any short-run and long-run influences on the GDP growth for Bangladesh.
Keywords: terms of trade; TOT; economic growth; autoregressive distributed lag; ARDL; Bangladesh.
Systematic literature review and future research directions: drivers of environmental sustainability practices in small and medium-sized enterprises
by Mohammad Imtiaz Hossain, Tze San Ong, Mosab I. Tabash, May Ling Siow, Ridzwana Mohd Said
Abstract: Due to SMEs crucial and dynamic role in the country's economic growth, exploring the important drivers is crucial to motivate the proper implementation of environmental sustainability (ES) practices in small and medium-sized enterprises (SMEs). The study's objectives are to identify relevant drivers of ES practices in SMEs and provide future research directions. The systematic literature review (SLR) methodology proposed by Tranfield et al. (2003) has been adopted with some modifications in this study. The authors have undertaken extensive literature review (n = 22) published between 2009 to 2020 in reputable journals and developed a framework. After analysing the relevant articles critically, 87 drivers have been identified and categorised under two main clusters (internal and external) and eight dimensions. This study contributes to the extant literature by highlighting the importance and current practices of ES in SMEs and proposed a framework integrated with multi-dimensional drivers which provide directions to sustainability scholars.
Keywords: environmental sustainability practices; drivers; small and medium-sized enterprises; SMEs; systematic literature review; SLR.
Why governments should tax animal production: a system approach to internalise the externalities of agriculture
by Stefan Mann
Abstract: This theoretically motivated opinion paper starts by showing that reducing the production intensity of agriculture locally or nationally, while reducing the negative externalities in the region, may increase production intensities at other places, resulting in a zero-sum game. By collecting different literatures and linking them, I argue that the crucial variable for agricultural sustainability is the conversion efficiency between inputs and outputs and that by far the greatest lever to increase this efficiency is the reduction of animal production. As animal products are not only detrimental for the environment, but also demerit goods from health and moral perspectives, it is due time for governments to identify strategies to reduce animal density in agriculture globally.
Keywords: agricultural policy; agricultural systems; extensification.
Future firm performance, corporate governance, information asymmetry and insider trading – a systematic literature review using PRISMA
by Yasmin Jamadar, Tze San Ong, Fakarudin Kamarudin, Asna Atqa Abdullah
Abstract: The purpose of this literature revision is to systematically review and analyse the current research on the effects of future firm performance and corporate governance on insider trading with the interaction of information asymmetry following the preferred reporting item guidelines (PRISMA). This study synthesises 25 journal articles published between 2005 and 2020. The abnormal returns earned from insiders' trades are primarily tied to preferential and favourable superior private information about firms' future performance. In addition, insiders generate significant abnormal returns in the companies with weak corporate governance rules. This review also reveals that the interaction of information asymmetry influences the relationship between future firm performance and insider trading and the relationship between corporate governance and insider trading. Hence, this study emphasises related asymmetric information conditions that lead to greater involvement in insider trading to earn abnormal profit. However, corporate governance contributes to the deterrence of insider trading. This study provides valuable information to assist market participants in the stock market.
Keywords: insider trading; information asymmetry; future earnings; corporate governance.