Institutions and Economies

Demystifying the Role of Governance Quality and Fiscal Space on Nonperforming Loans in Zimbabwe

Blessing Katuka, Calvin Mudzingiri, Edson Vengesai — Mon, 01 Apr 2024 00:00:00 +0800

The paper examines the effects of governance quality and fiscal space on
non-performing loans (NPLs) in Zimbabwe. We estimated pooled ordinary least squares
(OLS) and quadratic regressions with panel-corrected standard errors (PCSE) and
Driscoll-Kraay standard errors using the full dollarisation era dataset for 13 banks from
2009 to 2017. We noted that all the governance indicators are on average negative (bad)
and that improvement in the rule of law, political stability and control of corruption
stimulates reduction in NPLs if the indicators improve beyond -1.654, -0.876 and
-1.361, respectively. More interestingly, the results revealed that an improvement in
the interaction terms of political stability and control of corruption with rule of law,
governance index and voice and accountability significantly reduces NPLs, which is
new empirical evidence in the literature. Regarding fiscal space, we find evidence that
fiscal balance positively and significantly affects NPLs. We contribute to the literature
by providing new evidence on the role of governance quality in NPLs formation in
Zimbabwe, especially when corruption and political stability interact with all governance
indicators. We recommend that the Zimbabwean government improve political stability,
control of corruption, voice and accountability and the rule of law to reduce NPLs.

Quantifying the Volatility of Stock Price Changes in the Indian Market Using the Moving Average Envelope and Bollinger Bands

Arkaprava Chakrabarty, Ayan Majumdar, Moumita Chatterjee — Mon, 01 Apr 2024 00:00:00 +0800

A trading system in any stock market is built on long-term, intermediate-term,
and short-term indicators. Some ‘lagging’ indicators, such as the simple and exponential
moving averages, can be used to determine the direction of a medium- to long-term
trend. Some ‘leading’ oscillators, on the other hand, can tell a trader whether or not a
trend is losing momentum. This paper examines how well moving average envelopes and
Bollinger Bands measure stock price volatility, and how useful these technical analysis
tools are for short-term horizons. The paper then attempts to evaluate the speed of these
indicators in order to explain the sensitivity and response time of data collected from a
secondary survey in the Indian capital market. The article concludes that moving average
envelopes outperform Bollinger Bands in real trading settings, since technical trading
rules are generally designed for short-term investments. Bollinger Bands can detect
abrupt price fluctuations, however they are not more effective than moving average
envelopes to measure profitability.

CEO Power and ESG Performance: The Mediating Role of Managerial Risk-Taking

Ai-Xin Lee, Chee-Wooi Hooy — Mon, 01 Apr 2024 00:00:00 +0800

Business sustainability calls for responsibility in the context of the
environmental, social, and governance (ESG) agenda. According to the upper echelons’
theory, a firm’s activities and business outcomes are charted by top management.
However, how the Chief Executive Officer (CEO) balances the firm’s profit maximisation
objectives while serving the ESG agenda remains unexplored. Therefore, this study
takes a holistic approach to examine how CEO power affects the business sustainability
of a firm through managerial risk-taking. We augment the upper echelons theory of
Hambrick and Mason (1984) by incorporating the CEO power framework of Finkelstein
(1992) with the managerial risk-taking framework of Hoskisson et al. (2017). We find
that CEO power is associated with greater managerial risk-taking and poorer business
sustainability. The ownership power, expert power and prestige power of the CEO are
important in explaining the managerial risk-taking and firm sustainability. Specifically,
financial leverage and research and development (R&D) expenses partially mediate CEO
power in explaining a firm’s ESG performance.

Exploring ‘Employee Voice’ of Informal Female Workers of the Textiles Industry in Pakistan: A Grounded Theory Approach

Erum Shafi, Evelyn S. Devadason, VGR Chandran Govindaraju — Mon, 01 Apr 2024 00:00:00 +0800

Firm restructuring and labour subcontracting has paved the way for the rise
of informalisation in the female-dominated textiles industry of Pakistan after the expiry of
the Agreement on Textiles and Clothing (ATC). Despite the emergence of low quality of
employment available for women in the informal economy, there is a dearth of knowledge
on their position at the workplace, namely ‘employee voice.’ This study therefore explores
the employee voice of informal female workers of the stitching and ginning sections of
the textiles industry in Pakistan in the post ATC period. A grounded theory approach,
involving 25 in-depth interviews with informal female workers and employers, is used to
explore employer-employee interactions. The findings reveal that the core requirements
of the ‘capability for voice’ of informal female workers centre on ‘decisions of employers’,
‘bearing of tradition’ and ‘worker performance’. The grounded theory clarifies the
procedure and identifies the interaction of the above categories to form the contextual
conditions that direct the expectations of employers and female workers in the informal
labour market. The expectations of a ‘perfect fit’ of informal female workers, within the
hierarchy of the textiles industry, gives rise to a situation of ‘tolerance/no voice’, despite
the negative workplace culture. The findings indicate that strategies to advance gender
equality in Pakistan must consider informalisation of the labour market through a gender
perspective.

Remittances and Investment Choices at the Household Level: Empirical Evidence from Bangladesh

Sarah Salahuddin, Muhammad Mehedi Masud, Kwek Kian Teng — Mon, 01 Apr 2024 00:00:00 +0800

In developing countries like Bangladesh, foreign capital inflows, such as
remittances, are a vital source of funds that can bridge the domestic investment gap.
Previous empirical results from developing countries show that remittances are widely
consumed and seldom used for investment purposes. Therefore, the objective of this
study is to identify the link between remittances and investment at the household
level in Bangladesh. Based on a large-scale and nationally representative crosssectional
secondary data set of the Bangladesh Bureau of Statistics and employing
the ordinary least square (OLS) regression model, this study helps to explore the link
between remittances and investment at the household level in Bangladesh. The result
of this study reveals that remittances positively affect the housing, land, agriculture,
business, and valuable investment decisions at the household level, and significantly
impact various types of investment. Therefore, it can be said that in the least developed
countries like Bangladesh, remittance does act as credit insurance and works as a riskspreading
strategy to secure and increase income and acquire capital for investment. The
demographic characteristics of the household head, such as gender and marital status,
have a significant impact on household investment.