Financial Economics
Hamid Reza Arbab; Hamid Amadeh; Amin Amini
Abstract
This study investigated the factors that leads to economic uncertainty which may influence the petrochemical companies returns in various market conditions regarding their various levels of capital. To meet this object, we used quarterly data on government’s current expenditures, general government ...
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This study investigated the factors that leads to economic uncertainty which may influence the petrochemical companies returns in various market conditions regarding their various levels of capital. To meet this object, we used quarterly data on government’s current expenditures, general government revenues, liquidity, GDP, and exchange rate, as the political variables for the years 1384-1397. Considering the type of available time series, we exercised the ARIMA-GARCH model to create an indicator to show the uncertainty of economic policies. We used the result to estimate the quantile regression model, along with other factors affecting corporate returns, including the price of the OPEC oil basket and the real rate of returns and market exchange rate. The results of this study indicated that in the bearish market, the greatest negative effect of each economic policy uncertainty is on the companies with lesser capital. Moreover, the intensity of this effect decreases as the market tends to change from bearish to bullish, and finally the economic policy uncertainty will have the least impact on companies with bigger capital.
Macroeconomics
Mohammad Ali Aboutorabi; Mehdi Hajamini; Sahar Tohidi
Abstract
In recent decades, the effect of financial development on real sector growth has been discussed from different aspects. This paper focuses on financial structure and explains the role of bank-based and market-based financial structures on economic growth by classifying the literature. Using the FMOLS ...
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In recent decades, the effect of financial development on real sector growth has been discussed from different aspects. This paper focuses on financial structure and explains the role of bank-based and market-based financial structures on economic growth by classifying the literature. Using the FMOLS method for the period 1979-2016, the effects of financial structure and banking structure on per capita GDP and sectors’ growth (agriculture, industry, and services) in Iran are estimated. Empirical findings indicate that discriminating policies and bias in financial structure in favor of a specific sector has a negative effect on real sector growth, especially agriculture and industry. Therefore, in support of the design of a balanced financial structure, it is recommended that the state should avoid any intervention or discrimination in favor of a specific sector. In the case of banking structure, the findings show that increasing the financial strength of banks encourages economic growth.
Banking
Farshad Momeni; Abbas Shakeri; Javad Taherpoor; Behnam Ezati Ekhtiar
Abstract
In some economic theories emphasizing the positive relationship between financial and real sector development in economy, privatization of financial markets and institutions and increasing private sector share is the dominant approach to financial development. However, private banks performance in some ...
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In some economic theories emphasizing the positive relationship between financial and real sector development in economy, privatization of financial markets and institutions and increasing private sector share is the dominant approach to financial development. However, private banks performance in some countries have shown different results compared to the goals had been set. Lack of proper economic and institutional environment has led to adverse results of private banks. Considering mentioned issues, this study aims to assess the impact of private banking on the economic growth rate in Iran based on the seasonal data form 2003 till 2018 using Autoregressive Distributed Lag (ARDL) technique. Results of the study have shown that financial development has a positive impact on the growth rate of economy, while, as the market share of private banks has increased, it had a negative effect on the economic growth. The main cause of this negative relationship is undesirable institutional environment which private banks are working in. Therefore, preparing suitable institutional framework is a condition to gain the private banks’ advantages. Central bank constant supervision alongside the enforcement authority prohibiting private banks from managing economic firms and the presence in the alternative markets are the main preconditions.
Mahdie Rezagholizade; Malihe keyvanpor
Abstract
One important aspect of financial development in oil-exporting countries is how to allocate oil income during periods of oil price fluctuations. Financial development in these countries affects their current accounts in two ways: directly through the impact on savings and investment and indirectly ...
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One important aspect of financial development in oil-exporting countries is how to allocate oil income during periods of oil price fluctuations. Financial development in these countries affects their current accounts in two ways: directly through the impact on savings and investment and indirectly through the impact on the relationship of oil prices and current account. Considering the importance of this issue, this study investigates the role of financial development in the relationship between oil price and current account using a nonlinear Smooth Transition Regression model (STR) during the period of 1978-2016 in Iran. Based on the relevant tests, it is concluded that there is a nonlinear relationship between the current account and world oil price. Financial development is chosen as the best transition variable and the nonlinear Smooth Transition Regression model with a two-regime logistic transition function (LSTR1) has been chosen as the best model for this relationship. The results of estimation show that the oil price appearing in the form of a two-regime structure with a threshold level (1.5386) in the first regime (when financial development is less than it’s threshold value (1.5386)) has a positive and significant effect on Iran’s current account; The intensity of this positive effect increases by crossing the threshold level entering to the second regime (when financial development is higher than its threshold value (1.5386).
Mahdieh Rezagholizadeh; Amirhossein Alami
Abstract
Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development ...
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Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development and tax evasion and provide an answer to this question: can financial development in Iran reduce tax evasion? This study estimates the volume of tax evasion in Iran by using multiple-indicators -multiple causes (MIMIC) model and maximum likelihood method in AMOS software, for the period of 1978-2016. Then the effect of financial development on tax evasion is investigated by using ARDL Bounds test method. The results show that despite some fluctuations, volume of tax evasion has been generally increasing over the underlying period. The results of the estimation of the effect of financial development on the tax evasion indicate that financial development in Iran in long-run and short-run (with one lag) has a negative and significant impact on the tax evasion. Also, findings show that an increase in inflation, increases tax evasion and increase in GDP reduces tax evasion.
Javad Harati; Gholamreza Zamanian; Hojat Tagizadeh
Abstract
Energy, one of the most essential and important factors of production and the final product, has an important role in the growth and economic development. This research examines the dynamic relationship between financial development and energy consumption based on GMM estimation in 53 developing countries ...
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Energy, one of the most essential and important factors of production and the final product, has an important role in the growth and economic development. This research examines the dynamic relationship between financial development and energy consumption based on GMM estimation in 53 developing countries and 47 advanced countries over the period 2000-2014. The results showed the positive impact of direct foreign investment and national income on energy consumption in the two groups of countries. Energy prices had a completely opposite effect on energy consumption in developing and advanced countries. The results also indicated that in both developed and advanced countries the money market plays a more effective role in reducing energy consumption in comparison with the capital markets. While the effect of financial development through the money market on energy consumption is U- inverse shape in both groups of countries, this effect through the capital market is U-shape and U-shape inverse for developing countries and advanced countries, respectively. These results might have important policy implications for energy management policymakers and authorities to achieve sustainable development in different countries.
Mahdi Taghavi; Abbas Shakeri; Teimour Mohammadi; Ali Akbar Sadeqi
Abstract
This paper investigates the effects of income per capita, financial development and openness on energy intensity for MENA selected countries for the period of 1980 - 2011 applying the panel smooth transition regression model. The linearity test results indicate strongly nonlinear relationship among variables ...
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This paper investigates the effects of income per capita, financial development and openness on energy intensity for MENA selected countries for the period of 1980 - 2011 applying the panel smooth transition regression model. The linearity test results indicate strongly nonlinear relationship among variables under consideration. The optimum nonlinear model includes one transition function and one threshold parameter that represents a two-regime model. The results from the PSTR model indicated that the slope parameter of the transition function is equal to 19.99 and the location of regime switching is 9254.8 dollars. Also, the estimated coefficients of the variables in both regimes indicated that per capita income leads to an increase in the energy intensity. Openness in the second regime leads to a decrease, and financial development leads to a rise in energy intensity.
Seyed-nezamuddin Makiyan; Mohammad Reza Izadi
Abstract
Among the important factors that affect on economic growth such as physical and human capital, openness of economy etc., the role of financial intermediaries on economic growth has been overlooked. This research aims to investigate the role of financial structure and development as the indices of financial ...
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Among the important factors that affect on economic growth such as physical and human capital, openness of economy etc., the role of financial intermediaries on economic growth has been overlooked. This research aims to investigate the role of financial structure and development as the indices of financial system development on economic growth. To this end, the study uses a regression analysis applying FMOLS method for the period of 1989 to 2011 for the selected Islamic countries. The results indicate that variables of financial structure and financial development have significant positive effects on economic growth. According to the findings, financial system based on market approach is more effective concerning the economic growth. Furthermore, the Granger Causality test indicates that there is a one-way causal relation between development of financial system and economic growth in the short run; however, this relationship has a two-way direction in the long run confirming the Patrick’s viewpoint of development.
Hosein Mohammadi; Mahboubeh Narouei
Volume 19, Issue 61 , February 2015, , Pages 149-171
Abstract
Many economists insist that the financial market is a key factor in economic growth due to the role of financial markets in financing and capital formation in different countries. With the development of endogenous growth models in recent decades, researchers pay more attention to the relation between ...
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Many economists insist that the financial market is a key factor in economic growth due to the role of financial markets in financing and capital formation in different countries. With the development of endogenous growth models in recent decades, researchers pay more attention to the relation between financial markets and economic growth. In this study, the empirical relationship between Foreign Direct Investment in dealing with financial development on economic growth investigated in 25 Islamic countries over the period 1990 to 2012 using Generalized Method of Moments (GMM). The results show that the interaction between foreign direct investment and market-based indicators of financial development causes economic growth.
Karim Eslamloueyan; Emad Aldeen Sakhaei
Volume 16, Issue 46 , April 2011, , Pages 61-76
Abstract
Using panel data error correction models, we investigate the short- and long-run causality between financial development and economic growth in the Middle East. Three different indicators are used to measure financial developments. Generalized Least Square (GLS) method with cross-section Seemingly Unrelated ...
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Using panel data error correction models, we investigate the short- and long-run causality between financial development and economic growth in the Middle East. Three different indicators are used to measure financial developments. Generalized Least Square (GLS) method with cross-section Seemingly Unrelated Regression (SUR) and fixed effects in cross dimension is used to estimate the models. Our estimation results suggest that there is bidirectional causality between financial development and economic growth in both the short- and long run. The result underscores the feedback between finance and growth and hence advocates the third view that emphasizes on mutual causality between financial development and economic growth. In other words, finance can promote growth and in turn output growth will enhance financial development in the Middle East. This result can have important policy implications for both policymakers and international institutions.
Mohammad Rasti
Volume 15, Issue 45 , February 2011, , Pages 25-47
Abstract
The main objective of this paper is to determine the causal relationship between trade openness and financial development in non oil and oil exporting developing countries using a VAR model. The results indicate that there is a variety of causal directions in these countries. Therefore, we cannot conclude ...
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The main objective of this paper is to determine the causal relationship between trade openness and financial development in non oil and oil exporting developing countries using a VAR model. The results indicate that there is a variety of causal directions in these countries. Therefore, we cannot conclude on one causal direction for all countries or a group of countries (such as developing countries, non oil and oil exporting countries).
Morteza Naderi
Volume 5, Issue 17 , February 2004, , Pages 147-174
Abstract
Due to negative effects of financial crises on the real sectors of the economy, and the consequent recessionary impacts of them, the idea of forecasting financial crises via an early warning system has become a subject of interest to researchers. Financial crises of 1997 in South East ...
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Due to negative effects of financial crises on the real sectors of the economy, and the consequent recessionary impacts of them, the idea of forecasting financial crises via an early warning system has become a subject of interest to researchers. Financial crises of 1997 in South East Aisa, and the fear of similar crises in the process of globalization has brought the subject to the attention of economists to a greater extent. This paper introduces an early warning system for detection and forecasting of financial crisis as an impirical diagnostic tool of macroeconomic policy in Iran. The system is developed with reference to literature review in other countries, and on the basis of “Signal Extraction” and “Financial Crises Probability Forecasting Methods”. In a simulation test our system was effective in detecting the crisis of 1993 two years ahead. This system may be further supplemented by using alternative econometric methods for future forecastings.
Morteza Naderi
Volume 5, Issue 15 , July 2003, , Pages 37-62
Abstract
In this paper, we study the literature of financial development and economic growth. The financial systems in respect to their operations and their effects on real sector are considered.The result of an empirical study about the financial crises and their effects on the economic growth and determinants ...
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In this paper, we study the literature of financial development and economic growth. The financial systems in respect to their operations and their effects on real sector are considered.The result of an empirical study about the financial crises and their effects on the economic growth and determinants of real sector adjustment after the financial crises are analyzed.The study shows that the financial crises have a short-run negative affect on the real sector of economy. Also the export orientation policies, external and internal environments, and financial depth have permanent and significant effects on the real sector adjustment after crises. It is depicted that the other variables have a temporary effects on the real sector adjustment after crises.
