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This study applies the PSM-DID approach to investigate whether the energy price has been impacted by the Russia-Ukraine war among OECD countries during 1999–2022. Compared with previous studies, we obtain robust and heterogeneous results by considering endogeneity from the perspective of quantitative policy assessment. It concludes the Russia-Ukraine war has significantly raised energy prices, leading to a 9% increase in energy prices in OECD countries. The heterogeneity results show that the Russia-Ukraine war impacted the energy prices of EU and NATO members but not those of non-EU and non-NATO countries. Additionally, only the energy prices in Southern and Western European countries have been significantly increased by the Russia-Ukraine war, in which Southern Europe has been the most affected, rising by 22%. These findings have great practical significance for analyzing the degree of influence of war on fluctuations in energy prices and geopolitical risks in regions. [ABSTRACT FROM AUTHOR]

We examined the impact of compulsory disclosure regulations on the relationship between the Environmental, Social and Governance (ESG) and firm-specific extreme risk. We used a difference-in-difference approach to solve endogenous concerns and found that the negative impact of the ESG score on extreme risk is more significant after announcing compulsory disclosure regulations. Additionally, we demonstrated that this effect becomes more substantial when firms issue green bonds. Finally, the subsample tests showed that the compulsory influence of the government is more evident in firms with high financial transparency and firms with low crash risk. Our empirical findings had policy implications for governments, regulators, and investors. [ABSTRACT FROM AUTHOR]

The rapid growth of online media and communities has increased and accelerated the spread of unverified and false information ("fake news"), with significant political, economic, and social impacts, leading the European Commission to promulgate a "Code of Practice on Disinformation." Identifying and countering such false information is time- and labor-intensive, and could benefit from the development of tools that automatically identify and flag such information. This study explores the use of deep learning techniques to detect fake news, using decreases in the incidence of emotional vocabulary and subjectivity to enhance detection accuracy, and examines potential correlations between the emotional sentiment of news content and the movement of stock price indexes. Empirical results show that deep learning techniques can be used to effectively detect fake news, with multiple trainings effectively improving detection accuracy and reducing the loss rate. In addition, increased objectivity and the use of fewer words with high emotional sentiment increases news credibility. Finally, news sentiment was found to be correlated with the movement of three of five stock indexes examined. [ABSTRACT FROM AUTHOR]

Previous studies document that investing in research and development is a key factor to keep firm survive in the long-run. This study instead focuses on the relationship between managerial role and R&D decisions. Specifically, we investigate whether more talented managers facilitate firms' R&D investment. Using the MA-score as a proxy for managerial ability, we find that more able managers increase R&D spending. Furthermore, the results show that more talented managers decide to invest more in R&D investment depending on several conditions, such as whether firms are financially unconstrained or in non-crisis period. Other conditions include whether firms are facing lower default probability, in competitive industries, and with some CEOs' characteristics, such as male, young age, higher granted stock option and higher salary. [ABSTRACT FROM AUTHOR]

This study offers additional evidence on the self-employment of rural-to-urban migrants from the perspective of cultural barriers in China. By employing seven waves of the China Migrants Dynamic Survey data from 2010 to 2016, we find that cultural distance has a negative and significant effect on the self-employment of rural-to-urban migrants in eight subdivision industries. In particular, such negative effect is greater in the service sectors. [ABSTRACT FROM AUTHOR]

The digital economy has a significant influence on the financial behavior of enterprises. According to the panel data of A-share listed enterprises in the manufacturing industry from 2010 to 2020, we discuss how manufacturing enterprises allocate their financial assets in the process of digitalization from the perspective of operating profit and risk taking. The results reveal that ICT investment significantly reduces financial asset allocation, while digital transformation improves the financial asset allocation of manufacturing enterprises. Because ICT investment increases operating profit from the main business, manufacturing enterprises reduce the allocation of short-term and long-term financial assets. We thus propose two phenomena: precautionary saving and substitutional investment. As digital transformation increases risk taking, financial assets are elevated by manufacturing enterprises for the precautionary saving motivation, boosting the short-term financial assets in their portfolios. These findings are further supported by the heterogeneity of innovation characteristics and ownership. [ABSTRACT FROM AUTHOR]

This study investigates the impact of the COVID-19 pandemic on economic uncertainty and its spillover network based on social network analysis. The study constructs the inter-provincial Chinese economic uncertainty spillover network using a mixed frequency dataset and the provincial social network using microblog user data. Furthermore, the temporal exponential random graph model is used to analyze the impact of COVID-19 and social network during three periods. The results show that the COVID-19 pandemic significantly affects China's provincial economic uncertainty and social network significantly hinders economic uncertainty spillover networks. The inhibitory effect of social networks on uncertainty spillover network has regional heterogeneity, which is more significant in provinces severely affected by the pandemic and strictly controlled. [ABSTRACT FROM AUTHOR]

This research investigates the role of China's exchange rate policy uncertainty in manufacturing corporate performance using the fixed effect model and quantile regression model. The findings indicate that an exchange rate policy fluctuation constrains better-performing corporates, but is adverse for those with inferior performance. Government subsidy appears to explain the positive impact, and the effect is enhanced or alleviated somehow by corporate governance, growth, and financial constraints. Exchange rate policy fluctuation also significantly pushes corporates to adjust and upgrade their business, which improves their performance accordingly. Additionally, positive shocks significantly stimulate corporate performance, while negative shocks including global financial crisis and COVID-19 epidemic hinder corporate development. Overall, the risk confrontation ability of Chinese manufacturing enterprises presents a positive upward trend. The China government should thus issue more positive exchange rate policies that could send positive signals to the market and increase the openness of its manufacturing industry. More corporate-friendly policies can be launched, such as adjusting the amount of subsidies for manufacturing enterprises in a timely manner and helping manufacturing enterprises, especially more mature ones, deal with exchange rate policy uncertainty risks. [ABSTRACT FROM AUTHOR]

This paper investigates the risk-sharing and risk-taking effects of multidimensional globalization and government regulation on multifaceted country risk by using a panel data of 77 countries over the period 1984–2015. To gain further insights into this issue, we also examine the roles of banking activities, economic development, and geographic regions on the relationship between globalization, government regulation, and country risk. Our main empirical results show that a higher level of globalization and less restricted government regulation of the financial sector significantly decrease country risks, supporting the risk-sharing hypothesis in our study. In addition, bank performance, bank concentration, and economic development play an essential role as conditional factors to influence the country risk. This finding offers several useful insights for policymakers and researchers. [ABSTRACT FROM AUTHOR]

This research utilizes ultimate controlling shareholders to examine whether ultimate ownership structure (bank, industrial company, mutual fund, financial company, and state) and/or income diversification affect bank performance via a total sample of 6,053 commercial banks in six regions (advanced countries, Asia, Latin America, the Middle East and North Africa, Sub-Saharan Africa, and Transit countries). First, taking the group of advanced countries for example, banks can increase their profit under the ownership types of banking institution, mutual fund, and financial company, whereas the interaction of income diversity and ownership is negatively linked with bank performance. Second, the ownership types of banking institution and state help reduce banks' risk taking, but non-interest income diversity is adversely favorable for risk. Third, banks with mutual funds as controlling shareholders exhibit higher risk, while non-interest income diversity mitigates their risk-taking behavior. [ABSTRACT FROM AUTHOR]

Building a stronger modern socialist country is China's second centenary goal, and ecological beauty is the innovation of the connotation of modernization. How to realize the drive toward modernization with green development is an urgent topic. Based on the municipal panel data of the Yangtze River Economic Belt from 2009–2019 in China and selecting the air circulation coefficient and river network density as instrumental variables, this research examines the impact mechanism of green development on modernization. The results show the following: (1) green development significantly promotes modernization; (2) green development indirectly promotes the improvement of modernization through technological innovation, foreign capital flow, and talent attraction; and (3) the promotion of green development to modernization is affected by the urban size, and medium-sized cities benefit most. The study results provide empirical support and a decision-making basis for promoting the win-win situation of green development and modernization construction. [ABSTRACT FROM AUTHOR]

This study investigates the effects of Hofstede's four cultural indices (power distance, individualism, uncertainty avoidance, and masculinity) on bank liquidity creation using an international sample of 26,539 banks across 58 countries. We find that power distance, uncertainty avoidance, and masculinity decrease asset-side and off-balance sheet liquidity, but increase liability-side liquidity. By contrast, individualism increases asset-side and off-balance sheet liquidity but decreases liability-side liquidity. After excluding U.S. banks, our findings remain robust, suggesting that national culture is an important determinant of bank liquidity creation and that bank risk-taking has important implications that link national culture and bank liquidity creation. Regarding policymaking, our results indicate that the government should introduce regulations that restrict off-balance liquidity. [ABSTRACT FROM AUTHOR]

There are different types of margin requirements for margin buying and this paper focuses on setting both initial and maintenance margin levels. By using the data of stock portfolio returns over the period from March 31, 2010 to December 31, 2020, the research computes and compares margins derived by several margin setting methods using extreme value theory (EVT) for margin buying in China. Important findings are summarized as follows. First, the VaR-x method generates more accurate forecasts of both unconditional and conditional margin levels than the parametric and the Hill non-parametric methods particularly given lower probabilities of margin violation. This is robust to different portfolios, market conditions and sample periods. Second, margins derived actually vary over time, becoming higher (lower) when market volatility increases (decreases). The findings have important economic and practical implications. [ABSTRACT FROM AUTHOR]

This research assesses the effect of short sales on investment efficiency in China by applying the DID method. Results show that short sales can improve investment efficiency and that the effect is more pronounced for companies with low information transparency, low governance capacity, low audit quality, and high management performance pressure. Evidence reveals that the impact of short sales varies under different market sentiments. Our findings support the beneficial role of short sales on the information and governance environment. Governments and investors can thus pay more attention to short sales, as they help in their role of accelerating information dissemination. [ABSTRACT FROM AUTHOR]

Using the data of China's service trade and diplomatic events with 45 countries, this paper examines the effects of diplomatic relations on service trade based on the gravity model. Through an empirical analysis, the results proved that good diplomatic relations can significantly promote the export of China's service trade and that the effects of diplomatic relations on trade have a clear distinction regarding different political positions. Our results support the view that diplomatic relation does an important role in international trade. [ABSTRACT FROM AUTHOR]

This research investigates the dynamic correlation between China's policy uncertainty and the crude oil markets (i.e. domestic and international markets) using monthly time-series data from May 2003 to December 2018. To consider the non-linear and dynamic properties, we adopt the time-varying parameter structural vector autoregression model (TVP-SVAR) to estimate the dynamic correlations between the time series. By employing four categorical policy uncertainty indices, i.e. monetary policy uncertainty index (MYPU), fiscal policy uncertainty index (FLPU), exchange rate policy uncertainty index (EXER), and trade policy uncertainty index (TEPU), our results reveal that the correlation between China's policy uncertainty and real crude oil returns is time-varying and non-linear. Specifically, the independence between policy uncertainty and oil returns varies more constantly and at a high degree while the time-varying interaction between policy uncertainty and global oil production (global economic activity) varies at a lower frequency and at a low level. Furthermore, regarding the associations between categorical policy uncertainty and global oil returns, the average correlation of EXER (negative) is the strongest one, followed by FLPU (negative), then MYPU (positive), and finally TEPU (negative). Moreover, it is noteworthy that WTI (Daqing) crude oil prices are utilized to increase the robustness of our conclusions. Finally, we generally confirm the dynamic and negative correlation between China's geopolitical risk and crude oil returns. It is evidently clear from the results that investors should pay close attention to the policy uncertainty to avoid the adverse impact of specific policy uncertainty on crude oil returns. [ABSTRACT FROM AUTHOR]

Using a dataset that includes 24 developing and developed countries for the period 1984–2017, this research adopts outstanding deposits with commercial banks to GDP ratio and research and development (R&D) expenditure to GDP ratio as main proxies of financial inclusion and R&D, respectively. The empirical results suggest that promoting financial inclusion or R&D can offset the harmful effects of uncertainty on economic performance and that the impact of R&D with uncertainty is statistically significantly greater than the impact of financial inclusion with uncertainty. Moreover, our subsample analyses indicate that the mitigating effects of financial inclusion and R&D exist in nonfinancial crisis periods, developed countries, and the European region. To address endogeneity concerns, we employ six instrumental variables in a two-stage least squares regression (IV-2SLS). Our findings have useful policy implications to government for dealing with economic policy uncertainty for the economy's benefit. [ABSTRACT FROM AUTHOR]

This research first adopts three indicators to measure the systemic risk of different financial industries in China. Second, we employ the Time Varying Parameter-Stochastic Volatility-Vector Auto Regression (TVP-SV-VAR) model to investigate the time-varying relationship among COVID-19 epidemic, crude oil price, and financial systemic risk. The results herein not only help us grasp the current level of systematic risk in China, but also can assist at improving the early warning risk indicators and enhance the risk management system. Lastly, this research can also help investors to make reasonable asset planning. [ABSTRACT FROM AUTHOR]

This research hand-collects data on family CEOs of family-controlled firms (named family management) to investigate the relation between family management and corporate bond spreads in Taiwan with a sample of 1,660 firms for the period 1996–2015. We show new evidence on the impact of financial constraints and CEOs' characteristics on corporate bond spreads. Results find an impact of family management on increasing corporate bond spreads after considering firms' and bonds' characteristics. Moreover, the effect of family management on higher bond spreads is offset by firms under foreign or government ownership, as interacting family management with such ownership effect would give outside investors more assurance and protect minority shareholders from exploitation. Finally, firms' financial constraints and CEOs' weak characteristics lead to a detrimental impact of family management on bond spreads. [ABSTRACT FROM AUTHOR]

Should firms decrease or increase their debt capacity after professional CEO succession? Examining a sample of all publicly traded firms from 1991 to 2016 in Taiwan, this research finds that firms with professional CEO successors tend to raise less debt and consider the succession of professional managers to be more conservative because they are afraid of being monitored more severely. From the perspectives of firms' characteristics, those with professional CEO successors and high cash holdings and investment levels are more likely to increase their debt capacity, while those of a larger size and higher post-succession profitability volatility decrease their ability at raising debt. Finally, we hand-collect data and develop a novel method to identify the real founders and reconfirm our empirical evidence. Our findings present financial implications for boards of directors which they can evaluate firms' cash holdings, investment level, firm size, and profit volatility before deciding on whether to name a CEO successor to take over their firms. [ABSTRACT FROM AUTHOR]

As the literature has studied the financing method of Chinese-listed firms for a long time, but with inconclusive indications, this research thus adopts non-financial Chinese-listed firms' data from 2003 to 2015 to investigate the relationship between long-term debt financing and financing deficit. We pay particular attention to three channels (ownership concentration, market timing, and state ownership) that potentially affect the adoption of long-term debt financing when there is a financing deficit. The empirical analysis documents a positive relationship between financing deficit and changes in the long-term debt ratio in our sampled firms for both static and dynamic panel models. Moreover, among the three channels we show that state ownership has the strongest positive impact on the adoption of long-term debt financing, followed by ownership concentration, while the weakest channel is the market timing's negative effect. In general, our empirical analysis finds that the important external financing method of long-term debt is most likely to be impacted by the state ownership aspect. [ABSTRACT FROM AUTHOR]

By applying the non-linear quantile unit-root test and Fourier quantile unit-root test, this research investigates the hysteresis properties and growth stability of total and disaggregated renewable energy productions in the U.S. from 1973:01 to 2019:08. Unlike traditional unit-root tests that fail to reject the unit-root hypothesis, our results indicate that all renewable energy production series are stationary, but the degrees of persistence for positive and negative shocks are energy source-specific. In most cases, the negative shocks have more long-lasting effects than positive shocks. Evidence also shows that the growth rates in total biomass, hydroelectric power, wind, and biofuel energies have experienced a slowdown/meltdown, while other types of renewable energies have exhibited increasing growth rates in the current decade. Knowledge of these hysteresis/stability properties can help prevent governments from initiating a 'one-size-fits-all' policy. [ABSTRACT FROM AUTHOR]

This research investigates the role of high-frequency data in volatility forecasting of the China stock market by particularly feeding different frequency return series directly into a large number of GARCH versions. The contributions of this research are as follows. 1) We provide clear evidence to support that the superiority of traditional time series models in volatility forecasting remains by taking advantage of high-frequency data. 2) We incorporate different distribution assumptions in GARCH models to capture the stylized facts of high-frequency data. The result shows that: 1) data frequency in GARCH application substantially influence the accuracy of volatility forecasting, as the higher the frequency is of the return series, the better are the forecasts provided; 2) non-normal distributions such as skewed student-t and generalized error distribution are more capable at reproducing the stylized facts of both intraday and daily return series than normal distribution; and 3) GARCH estimated by 5-min returns not only outperforms other GARCH alternatives, but also considerably beats RV-based models such as HAR and ARFIMA at volatility forecasting. [ABSTRACT FROM AUTHOR]

This study examined symmetric and asymmetric causal relationships among financial systems, regulatory quality, and economic performance in selected African countries. The patterns of causality and impulse responses were found to vary across the selected countries, and the following were confirmed: symmetric demand-following, symmetric supply-leading, symmetric feedback, and neutrality hypotheses. Also confirmed were negative and positive demand-following hypotheses, negative and positive supply-leading hypotheses, and negative and positive feedback hypotheses. Overall, our recommendation is that in cases where supply-leading hypothesis is confirmed, policy target should be financial development so as to either stimulate economic growth or prevent economic decline, whereas in cases where demand-following hypothesis is confirmed, emphasis should be placed on growth-enhancing policies in order to either achieve financial development or prevent crisis in the financial system. We also argue that the quality of regulation plays an important role in the finance-growth nexus as it has a mediating effect on both the real and financial sectors. We further argue that it is important to consider asymmetric dynamics when testing causality in finance-growth relationships. It is possible that the economy (financial system) would react differently to changes in financial system (economy), depending on whether the changes are positive or negative. [ABSTRACT FROM AUTHOR]

This research provides empirical evidence on bank-firm relationships from firms' role in discussing their dependence on banks from the perspectives of bank competition. Using a rich dataset of loans, we find that firms reduce their dependence on banks when banks operate in a more competitive environment. These effects are more pronounced when firms are financially distressed and constrained. Moreover, firms with active family control exhibit less dependence on lenders in a competitive environment. Our evidence provides specific strategies and self-consideration of borrowers and lenders. [ABSTRACT FROM AUTHOR]

This research aims at investigating the response of the stock market to the WHO announcement on 11th of March 2020 which officially declares the spread of the COVID-19 virus as a global pandemic. A total of 77 countries' major indices have been examined by this research. The results show that (1) the pandemic announcement provides considerable negative shock on the global stock market; (2) country with different income presents a different response to the announcement. In general, the stock market in higher-income country tends to be overreacted at the beginning and bounds back more rapidly than lower-income country. [ABSTRACT FROM AUTHOR]

This article investigates the dynamic connectedness and spillover effects between category policy uncertainty and WTI crude oil returns for oil-importing countries. To overcome the shortcomings of the traditional rolling-window method and obtain rigorous results, we adopt the TVP-VAR-based connectedness approach, apply it to full samples, and then estimate the dynamic spillovers between the series. Regarding the whole sample, the results reveal that economic policy uncertainty is as a net transmitter, and by employing four categorical policy uncertainty indices we reach the same conclusions. In particular, spillovers of fiscal policy uncertainty on crude oil returns are the most dominant ones, followed by exchange rate policy uncertainty, then monetary policy uncertainty, and finally trade policy uncertainty. And it is noteworthy that the network plots are employed by our article, which provides clearer evidence for the connectedness between variables. On a final note, Brent crude oil returns are utilized to increase the robustness of our conclusion. [ABSTRACT FROM AUTHOR]

This paper examines the impact of economic policy uncertainty on firm-level capital investment, by not only delving into the long-term investment-uncertainty relation like previous studies, but also analyzing the short-term investment-uncertainty relation for the U.S. market. The empirical investigations show that firms decrease short-term, long-term, and total firm investments when encountering higher economic policy uncertainties. The research also explores the non-linear investment-uncertainty relation based on various theories. Our findings present a U-shaped relationship between short-term, long-term, and total investments and uncertainties. Policy implications are provided from our empirical results. [ABSTRACT FROM AUTHOR]

In this study, we look not only to provide empirical evidence to investigate the direct impact of financial crises on economic growth, but also to examine the roles of insurance development, financial liberalization, financial institution, and crisis intervention policies on the relationship between the two. We employ a panel data framework from 50 countries by applying the dynamic panel generalized method of moments model. Our main empirical results show that financial crises do have a significantly negative impact on economic growth. In addition, governments or authorities are encouraged to further enhance their insurance sector in order to help spur economic growth when financial crises arise. The government intervention policy choice is also an important factor influencing economic growth during crises. [ABSTRACT FROM AUTHOR]

The purpose of this study is to examine the effect of the Severe Acute Respiratory Syndrome (S.A.R.S.) epidemic on the long-run relationship between China and four Asian stock markets. To this end, we first employ the advanced smooth time-varying cointegration model to investigate the existence of a time-varying cointegration relation among these markets and then employ the difference-in-differences approach to analyse whether or not the S.A.R.S. epidemic impacted the long-run relation between China and these four markets during the period 1998-2008, covering 5 years before and after the S.A.R.S. outbreak. Our results support the existence of a time-varying cointegration relation in the aggregate stock price indices, and that the S.A.R.S. epidemic did weaken the long-run relationship between China and the four markets. Therefore, stockholders and policy makers should be concerned about the influence of catastrophic epidemic diseases on the financial integration of stock market in Asia. [ABSTRACT FROM AUTHOR]

This paper examines the beginning and end of potentially speculative explosive public debt patterns occurring in 29 major OECD countries. The method we use is most appropriate for practical implementation with a time series and delivers a consistent date-stamping strategy for the origination and termination of multiple explosive behaviors. Our results also test that most OECD countries, except for Israel, Luxembourg, and Turkey, have experienced periods of explosive public debt. The stationarity of public debt varies by country. Approximately two-thirds of the explosive periods occurred prior to 2012. Based on the scale, structure, and safety of government debt for dynamic monitoring and evaluation, governments can improve risk management measures. [ABSTRACT FROM AUTHOR]

We explore what firm and macroeconomic factors assisted Chinese firms to resist the global financial crisis. We find that firms with higher top ten shareholder ratios or firms that are older exhibited saliently higher performance during the crisis, but performed poorly during the non-crisis period. Firm size has a notably negative impact on firm performance. Firms audited by the Big Four accounting firms have a significantly negative correlation with performance. During the crisis, stock markets became less efficient in incorporating firm-specific information into stock prices, signifying that the determinants of firm performance vary across non-crisis and crisis periods. [ABSTRACT FROM PUBLISHER]

Through the existence of supply chain relationships among BRICS (Brazil, Russia, India, China and South Africa), we explore the industry return co-movements of the BRICS markets and the impacts of BRICS-related events on the time-varying conditional correlation and volatility. We find that BRICS-related events have increased industry co-movements and substantially reduced volatility. An asymmetry in industry return co-movements shows a strong response to good news. The first formal BRICS summit in 2009 is the most dominant event influencing BRICS industry co-movements, while there is a significant decline in correlations during the 2013 BRICS event. The financial industries of BRICS have the highest co-movements among sampled industries. [ABSTRACT FROM AUTHOR]

Scholars believe that higher social expenditures are usually linked with higher government debts, whereas higher debts reduce social expenditures. However, it is reasonable to speculate that higher government debt may contribute to higher social spending, while fiscal deficits occur during a recession, which commonly creates greater demand for social expenditure. For a deeper investigation, this paper revisits the dynamic relationship between social spending and public debts in the time-frequency domain, using the novel wavelet-coherency analysis as well as the phase-difference technique to derive the co-moved and causal relationships between social spending and public debts in 13 OECD countries. The evidence identifies a dynamic relationship between variables. While higher social expenditures increase government debts, the shocks from government debts to social expenditures are conversely uncertain. We discover that higher government debt does reduce social expenditures, but it may be linked to higher social spending. The robustness of partial coherency and phase-difference discovers the role of a political party in the decision over social welfare programmes in the sample countries. [ABSTRACT FROM PUBLISHER]

Insurance and credit markets share some common roles in stimulating economic growth, whether they are complementary or not is worth researching further. Based on the generalized method of moments, this paper investigates the synergistic effects between insurance and credit markets on economic growth in Chinese different regions using an interaction term in the regression model. Moreover, to understand the different economic roles of life and nonlife insurance sectors, we include them into estimation model as well. The results indicate that total insurance and credit markets are substituted, life insurance and credit markets are substituted, and nonlife insurance and credit markets are complementary in the whole region. Specifically, the synergistic effects between insurance and credit markets on economic growth vary considerably across different regions. These findings offer several useful insights for policy-makers. [ABSTRACT FROM AUTHOR]

This study revisits the long run and dynamic causal linkages between defense spending and economic growth in 15 selected European countries for the period 1988–2010 by utilizing recent developments in non-stationary panel data analysis. To this end, the series properties of per capita defense spending, per capita real capita stocks, and per capita real GDP are investigated by the panel unit root tests with and without breaks that support evidence on unit root. The panel cointegration tests with and without breaks are also subsequently employed to investigate whether there exists a long-run equilibrium relationship between these three variables. Finally, our causality analysis from panel vector error-correction model suggests that there is a feedback relation between real capital stock and real GDP in both short and long run, a one-way Granger causality running from real GDP to defense spending in both short and long run, and defense spending only Granger causes real capital stock in the long run. [ABSTRACT FROM AUTHOR]

This paper investigates the stability of the steady-state growth process in East Asian region using a novel panel stationarity test, which allows us to control for (a) unobserved heterogeneity in form and date of potential structural breaks in a trend function, (b) the cross-sectional dependence among countries in the panel bootstrapping methods, and (c) the serially correlated errors. Evidence shows that a large majority of countries exhibit slowdowns in economic growth after their structural breaks and thus could not recover from negative shocks and return original balanced growth path. [ABSTRACT FROM AUTHOR]

Unlike most previous works which commonly define globalization as a strict economic characteristic, using the overall globalization index and its three sub-dimensions – economic, social and political integrations to proxy openness, this paper examines the effect of globalization on economic growth associated with autocratic institutional in China, using the a two-step dynamic panel generalized method of moments technique in a panel of 30 provinces, municipalities and the autonomous regions over the period of 1970–2006. We find that different globalization indices have different impacts on regional economic growth. Also, autocracy may harm regional development, but these conclusions are very sensitive to different globalization variables specifications. Further, considering the interactive effects between globalization and economic growth, we show that in the period of higher global integration, the higher democracy (lower autocracy) may harm economic growth in the case of China. We emphasize that democracy is clearly not a necessary condition for the purpose of economic growth in China. [ABSTRACT FROM PUBLISHER]

This study applies the bootstrap panel Granger causality test to test whether insurance activity promotes economic growth, using data from 10 OECD countries over the period of 1979–2006. Empirical results indicate that one-way Granger causality running from all insurance activities to economic growth for France, Japan, Netherlands, Switzerland, and the UK, and economic growth Granger causes insurance activities in Canada (for life insurance), Italy (for total and life insurance) and the USA (for total and non-life insurance). There is a two-way Granger causality between life insurance activity and economic growth in the USA, while no causality between insurance activities and economic growth is found in Belgium (for all insurance), Canada (for total and non-life insurance), Italy (for non-life insurance) and Sweden (for life insurance). Our results also confirm the finding of Ward and Zurbruegg [Does insurance promote economic growth? Evidence from OECD economies.Journal of Risk and Insurance67, no. 4: 489–506] showing that the insurance–growth nexus varies across countries, since their paper have previously demonstrated heterogeneity in this vein. In an analysis of a broader, though overlapping 17-country sample and taking into account banking activities, the results suggest the importance of including banking activities when investigating the insurance–growth relationship. [ABSTRACT FROM AUTHOR]

Employing an advanced bootstrap VAR model with a fixed rolling window, we investigate the causal nexus between insurance activities and banking credit in China. Parameter stability tests show that none of the traditional VAR models have stable parameters, and hence the full sample results are unreliable. Rolling window results indicate the time-varying causal nexus between them in various subsamples in China and two key structural change points – the years 2002 and 2008. [ABSTRACT FROM PUBLISHER]

This study revisits the causal linkages between military spending and economic growth in China and G7 countries (i.e. Canada, France, Germany, Italy, Japan, the UK, and the USA) by focusing country-specific analysis for the period 1988–2010. The panel causality analysis, which accounts for both cross-country dependency and heterogeneity across countries, is employed in this study. Our results find evidence of the neutrality hypothesis for Italy, France, and Germany, the military spending–growth detriment hypothesis for both Canada and the UK, and one-way Granger causality running from economic growth to military spending for China. Furthermore, we find a feedback between military spending and economic growth in both Japan and the USA. Thus, our results do not support that one size fits all. [ABSTRACT FROM AUTHOR]

This article employs second-generation random coefficient (RC) modeling to investigate the time-varying behavior and the predictability of the money demand function in Taiwan over the period from 1982Q1 to 2006Q4. The RC procedure deals with some of the limitations of previous studies, such as unknown functional forms, omitted variables, measurement errors, additive error terms, and the correlations between explanatory variables and their coefficients. Our main findings are as follows. First, the empirical results indicate that the values of the elasticities in the RC estimation are significantly different from those in other studies, because of the use of coefficient drivers. Second, by observing the time-varying behavior of the coefficients, we find some specific points in our time profile of coefficients; that is, we can make an association with real events occurring in Taiwan, such as the financial liberalization after 1989 and the Asian financial crisis of 1997–1998. Finally, we compare the predicted values via the time intervals and different specifications and find that we should adapt different specifications of the RC model to estimate each interval. [ABSTRACT FROM AUTHOR]

This paper uses firm-level data to examine whether investors follow each other into and out of the same industries in China’s A-share markets. Our study is a significant addition to the literature that investigates herding behaviour in an industry context with asymmetric herding effects with respect to different market states, different stock exchanges, and the role of the information technology sector. Using recent daily data from 17 May 2001 through 16 May 2011, we demonstrate strong evidence of industry herding in the A-share markets. Evidence further supports that stock return dispersions from the information technology sector play a significant role in explaining the other sectors’ herding activity. After examining bull and bear markets, herding is more profound in some sectors during a bull market. Finally, industry herding is more prevalent in the Shenzhen stock exchange, while for some sectors in the Shanghai stock exchange herding is more prevalent during a bull market state. [ABSTRACT FROM PUBLISHER]

This article explores whether there is support for the stationarity hypotheses of life and non-life insurance premiums during the period 1979–2007 for 40 heterogeneous countries. The stationarity of insurance premiums affects insurance companies’ prediction on their future inflow of premium income, which affects the liquidity of insurance companies and their investment plans and thus is relevant to the insurers’ operation. This article employs the advanced nonlinear panel unit-root test with a sequential panel selection method to classify the entire panel into two groups: stationary countries and non-stationary countries. We apply Monte Carlo simulations to derive empirical distributions of the test, which allows us to correct for the finite-sample bias and to consider the cross-country effects. We find relatively stationary life insurance premiums in countries from the following groups: high-income, Europe, and common law origin; relatively stationary non-life insurance premiums exist in the following groups: low-income, Middle East and Africa, and common law origin. Evidence herein shows that different classifications, including income levels, geographic regions, regionally or economically integrated blocs, and legal system, affect the stationarity of life and non-life insurance premiums. [ABSTRACT FROM AUTHOR]

The purpose of this article is to measure the impact of military technology transfer on economic growth for 67 selected countries during the period 2000 to 2005 through the application of the Malmquist productivity index, which is broken down into efficiency change and technical change. Our main findings are as follows. First, technology diffusion is all-pervading in half of the sampled countries due to pure efficiency and scale efficiency changes. Second, a higher-income level and an excess of arms imports lead to innovative activities. Third, middle-income countries have higher efficiency and pure efficiency changes; these contribute to higher total productivity change. Finally, after separating the impact of capital investment from that of arms imports, the diffusion of military technology has a more positive and substantial impact on economic growth, thereby revealing the presence of externalities between countries. [ABSTRACT FROM AUTHOR]

This paper adopts an advanced panel cointegration method which incorporates multiple structural breaks to examine the long-run relationship between real output (RGDP) and the Konjunkturforschungsstelle (KOF) index of globalization (overall and its three main sub-indices), employing annual data of G7 countries from 1970 to 2006. Our empirical findings provide strong evidence that overall globalization and its social dimension are cointegrated with RGDP, and most of the structural break points are discovered during the period of the oil crisis (the mid-1970s) and the process of European Union integration. In addition, in evaluating whether or not the structural breaks affect the RGDP through globalization, we discover that both the overall globalization index and the social globalization index have a directly positive impact on RGDP but indirectly exhibit negative impacts on real output via the channel of social globalization. [ABSTRACT FROM AUTHOR]

The aim of this paper is to explore the role of globalization (the overall level as well as its three dimensions of economic, social, and political integration) in promoting economic growth and examine if the incumbent political party influences the relation between the two variables. We attempt to investigate the evidence of long-run equilibrium in terms of the relationship between globalization and economic growth in the period 1990-2006 while also considering the influences of the incumbent political party. In this paper we thus divide Europe into two groups based on political regime characteristics, using ten former communist countries (FCCs) and eighteen Organization for Economic Cooperation and Development (OECD) members as the study samples. The results of our empirical test confirm our expectations that globalization contributes to economic growth, but it is also sensitive to specific institutional factors, like an incumbent political party. Globalization has a larger impact on real gross domestic product per capita in FCCs than in OECD countries. Although the FCCs and OECD countries are in geographic proximity, the difference in their level of economic development is very large. [ABSTRACT FROM AUTHOR]

The secularization thesis is based on the idea that a country becomes more secular as it becomes richer and more industrialized. In order to investigate whether this hypothesis is valid, we examine the relationship between religion in Taiwan and economic development across 23 counties by adopting the panel data approach for the period 1998 to 2003. We select six religious activity proxy variables and five economic development variables in a cross-county panel data framework. The evidence indicates that the ratio of females to males has a significantly positive effect and that the literacy rate and population density each have a significantly negative effect on the religious variables. Finally, except for the Christian culture, the unemployment rate has a positive effect on the religious variables. Our findings thus support the view that the religious secularization hypothesis is valid in Taiwan. [ABSTRACT FROM AUTHOR]

While voters may punish governments for worsening economic conditions, they may not reward them symmetrically for improving conditions. We examine whether US macroeconomic conditions affect Presidential approval asymmetrically using quarterly data from 1961_I to 2009_II. The results suggest that the relationship between Presidential approval and economic aggregates is nonlinear. Long-run causality runs from the economic variables to Presidential support. The speed of adjustment towards long-run equilibrium relationship also differs when conditions worsen from when they improve. Finally, we explore the impact of other factors, such as war and Presidential scandal on Presidential approval. [ABSTRACT FROM AUTHOR]

Globalization is commonly defined as a strict economic path by most previous works, but it is really a fuzzy concept with unrestrained dimensions. While the ideological location of an incumbent political party is a powerful predictor of its policy position, the role of a political party in the globalization-growth nexus has never been fully empirically investigated. By applying Pedroni's panel cointegration technique instead of a time-series or traditional panel data approach, this paper aims to empirically re-examine the co-movement and the causal relationship among economic growth, the overall globalization index, and its three main dimensions—economic, social, as well as political integrations—by using panel data for 23 Organization for Economic Cooperation and Development (OECD) countries for 1970 to 2006. Certainly, the political party variable is taken into account as the advanced test is promoted, and we finally discover that all variables move together in the long run. Based on the results of the panel causality test, though the evidence of short-run causality is very weak, it does show long-run unidirectional causality running from the overall index of globalization, economic globalization, and social globalization to growth. Finally, the critical role of the political party is deeply discussed in relation with our results. [ABSTRACT FROM AUTHOR]