Intellectual capital, bank stability and risk-taking: evidence from Asian emerging markets

Dalwai, Tamanna; Singh, Dharmendra; Ananda, Sintia

doi:10.1108/cr-03-2021-0031

Cited by 17 publications

(11 citation statements)

References 116 publications

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“…The correlation coefficient between all the explanatory variables is less than 0.5, thus suggesting no multicollinearity. This is also confirmed by the variance inflation factor (VIF) analysis (not shown due to brevity), which reflects a threshold value of less than 10 (Dalwai et al ., 2021, 2022; Velte, 2019; Scafarto et al ., 2023).…”

Section: Resultsmentioning

confidence: 99%

Impact of economic policy uncertainty on financial flexibility before and during the COVID-19 pandemic

Dalwai

2023

JABES

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PurposeThis study examines the influence of economic policy uncertainty on financial flexibility before and during the coronavirus disease 2019 (COVID-19) pandemic. Few prior studies have examined this association specifically for debt and cash flexibility.Design/methodology/approachUsing quarterly data from 2016 to 2022, 1014 observations were collected from the S&P Capital IQ database for listed tourism companies in India. The pre-pandemic period is defined as 2016 Q1 to 2020 Q1, whereas the pandemic period is from 2020 Q2 to 2022 Q3. The data are analysed using ordinary least squares, probit, logit and difference-in-difference (DID) estimation.FindingsThe evidence of this study suggests a negative association of economic policy uncertainty with debt flexibility during the COVID-19 pandemic. The findings also suggest that COVID-19 induced economic policy uncertainty results in high cash flexibility. This meets the expectations for the crisis period, as firms are likely to hold more cash and less debt capacity to manage their operations. The results are robust for various estimation techniques.Research limitations/implicationsThis study is limited to one emerging country and is specific to one non-financial sector. Future research could extend to more emerging countries and include other non-financial sector companies.Practical implicationsThe findings of this research are useful for tourism sector managers as they can effectively manage their cash and debt flexibility during crisis periods. They will need to prioritise cash flexibility over debt flexibility to manage operations effectively. Policymakers need to provide clear and stable economic policies to help firms manage their debt levels during a crisis.Originality/valueTo the best of the author's knowledge, no existing studies have investigated the influence of economic policy uncertainty on the financial flexibility of tourism companies before and during the COVID-19 pandemic. Furthermore, this study establishes a novel set of critical determinants, such as economic policy uncertainty.

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Section: Resultsmentioning

confidence: 99%

Impact of economic policy uncertainty on financial flexibility before and during the COVID-19 pandemic

Dalwai

2023

JABES

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“…As observed by Zhao et al . (2021), Dalwai et al . (2021) and Sarpong-Kumankoma (2021), the GMM technique controls for potential endogeneity, unobserved heterogeneity, dependent variable persistence and heteroskedasticity problems.…”

Section: Methodsmentioning

confidence: 99%

“…The GMM estimation technique helps in controlling for potential endogeneity problems. As observed by Zhao et al (2021), Dalwai et al (2021) and Sarpong-Kumankoma (2021), the GMM technique controls for potential endogeneity, unobserved heterogeneity, dependent variable persistence and heteroskedasticity problems. The GMM approach is thus appropriate for the study.…”

Section: Econometric Specificationmentioning

confidence: 99%

Political environment, employee tenure security and firm performance in middle-income economies

Boamah

Ofori-Yeboah

Appiah

2023

JED

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PurposeThe study investigates the effect of political instability and employee tenure security on the performance of firms in middle-income economies (MIEs) after controlling for the influence of corruption, international quality certification, external auditor services and firm age. It examines whether ownership and sector effects matter in the explored relationships.Design/methodology/approachThe study adopts the generalized method of moments estimator and collects firm-level cross-sectional data from 77 MIEs.FindingsThe evidence shows that political uncertainty, employee tenure security and firm age negatively impact firm performance. Also, external quality assurance mainly improves firm performance. Additionally, foreign-owned firms benefit from corruption more than their domestic counterparts. Moreover, there are ownership and sector effects in the firm performance drivers.Practical implicationsThe findings suggest the need for MIE firm managers to implement policies and programs to improve permanent employees' efficiency, commitment and honesty. Policy makers and political actors must work toward a stable political environment in MIEs. The policy must also focus on at least minimizing corruption.Originality/valueThe study shows the contributions of employee tenure security, political instability and corruption to the performance of MIE firms. It documents sector and ownership effects in the factors influencing firm performance.

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“…Therefore, to obtain unbiased and consistent estimates after addressing the issue of endogeneity (Moudud-Ul-Huq et al , 2018), we use a two-step system generalized method of moments (GMM) of Blundell and Bond (1998) with Windmeijer’s (2005) finite sample correction for dynamic panel data. We do not use the fixed effects estimation technique within our dynamic panel framework as it provides inconsistent and biased results for dynamic relationships (Dalwai et al , 2021; Goswami, 2021). The first step under the GMM procedure involves differencing the equation to eliminate any bias arising due to time-invariant unobserved heterogeneity.…”

Section: Methodology and Datamentioning

confidence: 99%

Bank competition, risk-taking and financial stability: insights from an emerging economy

Srivastava

Singh

Jain

2022

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Purpose Amidst the backdrop of a wide array of structural developments that have revolutionized the competitive landscape of Indian commercial banking, this paper aims to empirically examine the role of two external monitoring mechanisms – competition and concentration on financial stability and further highlights the significance of bank-level heterogeneity in the nexus. Design/methodology/approach The study uses the Lerner index, defined through a translog specification, as a measure of market power. A system generalized method of moments technique accounts for the dynamic associations among the competition-concentration-stability nexus. The study further examines the moderating effect of ownership, size and capitalization on the nexus. The study also uses the Boone indicator and comments on the competition-bank stability relationship after controlling for bank governance. Findings The findings indicate that banks are less stable in a more competitive and higher concentrated environment. Exploring bank-level heterogeneity, first, the authors report that as competition increases, state-owned banks have greater incentives to undertake risky activities than private and foreign banks, which point to implicit sovereign guarantees that characterize the former. Second, the authors document an adverse influence of competition on the soundness of larger banks consistent with the “too-big-to-fail” assertion. Third, results corroborate the disciplinary role of regulatory capital and lend support to stricter capital norms under Basel III in a more competitive environment. Originality/value This paper is perhaps the first to capture competition and concentration in a single model; to reconcile conflicting evidence on competition-risk nexus; to shed light on the joint effect of competition and Basel accords for Indian banks.

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Intellectual capital, bank stability and risk-taking: evidence from Asian emerging markets

Cited by 17 publications

References 116 publications

Impact of economic policy uncertainty on financial flexibility before and during the COVID-19 pandemic

Impact of economic policy uncertainty on financial flexibility before and during the COVID-19 pandemic

Political environment, employee tenure security and firm performance in middle-income economies

Bank competition, risk-taking and financial stability: insights from an emerging economy

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