Purpose Since the strike of the 2007-2008 global financial crises, financial stability has been discussed with immense interest in academic and policy circles. Following this essence, this paper aims to investigate the nexus of financial inclusion, competition concentration and financial stability. Design/methodology/approach To analyze this relationship, this study uses different inclusion indices constructed by principle component analysis, Boon indicator, different concentration measures and Z-score, for a sample of 92 countries and subsamples based on income and economic grouping of those countries as well as for pre- and post-crisis episodes over the period of 2004-2014. This study also investigates the variation in inclusion–stability relationships in the presence of competition and concentration. This study uses two-step system-generalized method of moments (GMM) and two-stage least square to address the endogeneity. Findings The study finds that competition contributes to stability; however, there is evidence of fragility in the presence of concentration in the banking industry. Moreover, this study finds a U-shaped inclusion–stability relationship. The overall results of this study support the competition–stability view and a trade-off between inclusion and stability, which are consistent and robust to alternative econometric tests. Research limitations/implications Financial inclusion should be endorsed with caution in low-income, middle-income and emerging countries, and prudent policies should be taken to govern the market concentration to maintain financial stability. Originality/value To the best of the authors’ knowledge, this paper is the first to explain the impact of financial inclusion on financial stability in the presence of market heterogeneity.
Price-to-Earnings ratio, one of the most widely used tools for stock selection, a relative valuation technique which always remained as a center concern of investors and market analysts. Variations of P/E ratio have significant impact on investor's perception and several factors are responsible for the variations of P/E ratio. This paper is an attempt to identify the major determinants for P/E ratio of manufacturing companies listed in Dhaka stock exchange. Descriptive statistics, correlation matrix and regression analysis are used to accomplish the objectives of this paper. Results reveal that dividend yield, leverage, size and net asset value per share are significant determinants of P/E ratio where dividend yield and size have negative influence but leverage and net asset value per share have positive influence on P/E ratio. This paper is an evidence for fundamental analysts or decision makers to evaluate determinants that explain variations in Price-to-Earnings ratio of manufacturing firms of Bangladesh.
PurposeDespite numerous evidence of policy trade-off in financial inclusion-stability nexus, little is known about the role of governance quality to align policy goals and maximizing the social benefits. Therefore, to fill the gap, this study focuses to investigate the moderating effect of country governance (CG) in the interplay between financial-inclusion (FI) and financial-stability (FS), using a large panel of 84 economies covering the years 2004–2017.Design/methodology/approachFor attaining this objective, the study constructs several indexes for FI, FS and CG using principal component analysis (PCA) and examines how FI influences FS at different CG levels applying advanced econometrics. FindingsThe results show that CG plays a very crucial role in eradicating the trade-off and strengthens the synergy between FI and FS. The findings are insensitive to several robustness validations and could be constructive for policymakers to devise policies and to ensure financial stability.Originality/valueAs far as the authors are aware, this is the only paper that empirically explains CG's role in FI-FS nexus.
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