Do better institutions offset the adverse effect of a financial crisis on investment? Evidence from East Asia

Eslamloueyan, Karim; Jafari, Mahboubeh

doi:10.1016/j.econmod.2018.10.011

Cited by 18 publications

(15 citation statements)

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“…Policy makers have to address short-comings in institutional quality, particularly in terms of the labor regulation burden, in order to successfully meet the targets of their recovery and resilience plans. In addition, according to previous research findings (Eslamloueyan and Jafari, 2019), improvements in the quality of the institutional environment will also play a key role in retaining the levels of investment in the case of unexpected developments leading to an economic crisis. Policy makers of the four euro area states analyzed in this study, should prioritize the improvement of institutional quality, considering the severe economic hardships suffered during the "ten-year" European economic crisis.…”

Section: Discussionmentioning

confidence: 75%

“…The level of institutional quality plays a key role in retaining the levels of investment during times of economic crisis, as countries with higher institutional quality are less prone to the adverse effects of financial crises on their fixed capital formation (Eslamloueyan and Jafari, 2019). Stronger institutions are also associated with higher rates of R&D investment (Brown et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

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The effect of institutions on R&D investment: the case of four mediterranean euro area states

Vlachos

2022

JAAR

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PurposeThis study investigates the impact of institutional factors on firms investing in R&D.Design/methodology/approachThe study uses data from the World Bank's Enterprise Surveys for the Republic of Cyprus, Greece, Italy and Portugal. A model with institutional factors as explanatory variables and firm performance factors as control variables is estimated with weighted least squares heteroscedasticity corrected regression. The reverse causality problem is addressed by using a two-stage least squares regression approach.FindingsThe findings indicate that institutional quality has a significant influence on firms' R&D expenditure. The results have several implications in relation to findings of previous research.Research limitations/implicationsThe inclusion of more countries that were affected by the European economic crisis will probably give more insights about the effect of institutional factors on R&D.Practical implicationsPolicy makers have to address short-comings in institutional quality, particularly in terms of the labor regulation burden. Policy makers should prioritize anti-corruption measures to foster an environment that would attract more R&D in the Republic of Cyprus and Greece.Originality/valueThis study contributes to the growing body of literature investigating the impact of institutional factors on R&D. It focuses on four developed European countries that bore the brunt of the European economic crisis and have to implement their recovery and resilience plans successfully, in order to recover from the effects of the COVID-19 pandemic on their economic activity.

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Section: Discussionmentioning

confidence: 75%

Section: Introductionmentioning

confidence: 99%

The effect of institutions on R&D investment: the case of four mediterranean euro area states

Vlachos

2022

JAAR

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“…On the other hand, the 100 countries under study are selected based on the World Bank’s criteria. The rationale behind to club all these countries in the analysis is that in the literature, the focus is on the individual country (Su and Bui, 2017; Sergi et al , 2018) or a group of countries (Percoco, 2012; Égert, 2018; Bouchoucha and Benammou, 2018; Mingo et al , 2018; Eslamloueyan and Jafari, 2019; Alam et al , 2019; Gorynia et al , 2019) which renders no consensus on overall panel data analysis, and hence, are unable to illustrate the world’s situation regarding institutions and PI nexus especially in this globalization era. However, developed countries are also the group unneglectable especially when one is comparing the timing of economic development (Lerner and Tag, 2013).…”

Section: Empirical Model and Methodsmentioning

confidence: 99%

The role of institutions in private investment: panel data evidence

Chen

Law

Wong

et al. 2021

SEF

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Purpose This study aims to examine the effects of institutions on private investment (PI) using panel data analysis, where the sample countries consist of 100 countries around the world and the time period is covering from 2007 to 2016. The system generalized method of moments (GMM) estimator, introduced by Arellano and Bond (1991) and further developed by Blundell and Bond (1998) is used to analyze the data sets. Design/methodology/approach This study uses the panel data approach to estimate the empirical model due to the panel nature of the data. In particular, due to the presence of lagged dependent variables and the ability to capture individual country-specific effects, the system GMM estimator, introduced by Arellano and Bond (1991) and further developed by Blundell and Bond (1998), is adopted to analyze the roles of institutions in PI. The system GMM is developed specifically to solve the problems of weak instruments and persistency (Blundell and Bond, 1998). Jointly, they suggest to adopt additional moment conditions where lagged difference of the dependent variable is orthogonal to the level form of the disturbances. The system GMM estimator is able to combine the moment conditions for the different models, as well as the level model, thereby (is capable of) generate consistent and efficient parameters. Due to the dynamic nature of the data, this study uses one-step and two-step system GMM to investigate the roles of institutions in PI. Findings The empirical results based on the two-step system GMM demonstrate that the quality of institutions plays an important role in stimulating PI. The finding is reinforced by the analysis of the institutional sub-components’ effects on PI. Originality/value This study is unique as its measurement of institutions is multi-dimensional (including law and order, rules and regulation, government stability, bureaucratic quality, control of corruption, socio-economic condition, etc.), and hence are more comprehensive. Second, it is different than the previous studies as its sample of countries includes both democracies and non-democracies, as well as both developed and non-developed economies in which policy implications are widely acceptable. Third, this study contributes to the policymakers especially those in the debt-ridden economies where governments are budget-tightening (limited capacity for public investment), as to which practical direction should be focused on so as to attract PI and eventually sustainable growth can take place.

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“…In order to improve the deficiencies of variance model, Eslamloueyan and Jafari introduced conditional value-at-risk to measure asset investment risk and established a multiobjective investment optimization model. Experiments show that the model can improve the ability of investors to manage investment risks [ 15 ]. Based on the subjective expected utility theory, Corradin constructed the dynamic prospect theory value objective function model by using the dynamic aversion coefficient and the wealth reference point; at the same time, considering the opportunity constraints to ensure the capital security of investors, the multifrequency vibration mutation particle swarm algorithm was used to analyze the model.…”

Section: Related Workmentioning

confidence: 99%

Optimization Model of Financial Market Portfolio Using Artificial Fish Swarm Model and Uniform Distribution

Xiao

2022

Computational Intelligence and Neuroscience

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The central issue in finance is how to select a portfolio in the financial market. The traditional artificial fish swarm algorithm (AFSA) is optimized in this paper, and the improved AFSA is used to solve the portfolio model. This model generates a uniform distribution operator using uniform distribution and combines it with the basic fish swarm algorithm. Uniform variation occurs when the variance of the optimal value of continuous convergence is within the allowable error. In this manner, the fish can escape the trap of the local extremum, obtaining the global optimal state. To validate the feasibility of improving AFSA, this paper conducts simulation experiments on portfolio problems using MATLAB tools. Experiments show that this model has an accuracy of 93.56 percent, which is 8.43 percent higher than that of the NSGA-II model and 3.76 percent higher than that of the multiobjective optimization model. The experiment shows that the algorithm in this paper can solve these types of problems well and that, using this model, the optimal portfolio investment decision scheme satisfying investors can be obtained. The optimized AFSA presented in this paper can serve as an important reference for investment portfolios and has a wide range of application possibilities in the investment market.

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Do better institutions offset the adverse effect of a financial crisis on investment? Evidence from East Asia

Cited by 18 publications

References 50 publications

The effect of institutions on R&D investment: the case of four mediterranean euro area states

The effect of institutions on R&D investment: the case of four mediterranean euro area states

The role of institutions in private investment: panel data evidence

Optimization Model of Financial Market Portfolio Using Artificial Fish Swarm Model and Uniform Distribution

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