Objective: To empirically analyze the link between nonperforming loans and investments along with the role of political governance. The estimation technique used is the fixed effects model including both the country and timMethods: e fixed effects. The dataset consists a panel of 103 countries with annual data over the period from 2000 to 2017. A unique composite political governance index has been prepared combining the six existing governance indicators via Principal Component Analysis (PCA). Findings: It is found that NPL has significant negative impact whereas, governance has significant positive impact on investments as per expectations. However, it is found that the negative impact of NPL on investment gets stronger in presence of good governance. This is a paradoxical result and further attempts has been made to rationalize the outcome. Applications: The study empirically proves the theory of negative impacts of NPL on investment in the economy. Furthermore, the role of political governance has been scrutinized. No prior works have been carried out on this topic. The paradoxical result in this study has opened up new areas for research. An extensive literature review has been provided along with a detailed discussion on the possible measures to tackle with the problems. JEL Classification: C3, E6, G0. Keywords: NPL; investment; political governance institutions; fixed effects model; composite political governance index
Objectives: To analyze the dynamic impacts of trade openness on economic growth in India. Methodology: This study extensively examines the dynamic impact of trade openness on economic growth in India using ARDL Bounds Test approach. A complex trade openness index is constructed using PCA (Principal Component Analysis) and a time dummy variable is used in an effort to capture the Economic Reform Policy dynamics of 1991 in India. Per capita GDP growth rate has been used as a standard measure of economic growth. Annual time series data has been used for estimation over the period of 1960- 2018 Findings: It is found that the trade openness has negative impact on economic growth in India in both the short and long run. The result conforms to several findings on the same topic. Applications: This study incorporates measures to control for the shocks by the new economic policy of 1991. It is also discussed why trade openness might have had a negative impact on the economy of India in spite of it being a desirable phenomenon. Keywords: ARDL; India; economic growth; development; trade openness; new economic policy of 1991
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