Economic NotesPub Date : 2022-01-07DOI: 10.1111/ecno.12198
Madhur Bhatia, Rachita Gulati
{"title":"Are boards ‘substitute’ or ‘complement’ dividend payout? Econometric evidence for Indian banks","authors":"Madhur Bhatia, Rachita Gulati","doi":"10.1111/ecno.12198","DOIUrl":"https://doi.org/10.1111/ecno.12198","url":null,"abstract":"<p>This study econometrically tests the ‘substitution’ versus ‘outcome’ hypotheses by examining the impact of board governance on the dividend payout policy in the Indian banking industry. The analysis is confined to the period from 2005 to 2018. The results reveal a significant positive influence of overall board quality on the magnitude of payouts, supporting the ‘outcome hypothesis’. At the disaggregated level, independent directors, female directors, chief executive officer duality, and board meetings significantly influence the dividend policy of Indian banks. Our further investigation of the board-dividend nexus at the ownership level shows that this complement relation is only visible in private banks (PBs). While the ‘substitution hypothesis’ holds in public sector banks (PSBs). The results suggest that good governed PBs use dividends as a complementary measure of monitoring mechanism. In contrast, governed boards of PSBs take conservative financial decisions and declare a low dividend. The findings are robust at disaggregate level, corroborating our main findings and additional analyses, including propensity score matching depicting that our conclusions are not beset by endogeneity or selection bias.</p>","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"51 2","pages":""},"PeriodicalIF":1.5,"publicationDate":"2022-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72142446","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-12-30DOI: 10.1111/ecno.12200
Julien Pinter
{"title":"Monetarist arithmetic at COVID‐19 time: A take on how not to misapply the quantity theory of money","authors":"Julien Pinter","doi":"10.1111/ecno.12200","DOIUrl":"https://doi.org/10.1111/ecno.12200","url":null,"abstract":"The COVID-19 crisis has revived an old heated debate on whether significant increases in the money supply ultimately lead to higher inflation. Some observers have alluded to the quantity theory of money for that purpose, though in our view, this has sometimes been in a misleading way. Against this background, this paper seeks to clarify several aspects of the quantity theory of money, which are useful to apply it fairly in the current world. First, we review the meaning of the velocity term in the quantity equation. We argue that it has no relevance as a behavioural concept: there is no such thing as a 'desired velocity'. Rather, income velocity should be seen as a variable deriving from a system of parameters and variables related to money demand, as the monetarist approach clearly puts it, with no intrinsic relevance. Second, we clarify the practical relevance that the quantity theory approach can bear in the 21st century. Third, we review the channels and assumptions underlying the asserted quantity theory link between money growth and inflation. In light of our analysis, we conclude that the high money growth rates seen since the pandemic outbreak are unlikely to translate into higher inflation rates.","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"21 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83721831","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-12-30DOI: 10.1111/ecno.12200
Julien Pinter
{"title":"Monetarist arithmetic at COVID-19 time: A take on how not to misapply the quantity theory of money","authors":"Julien Pinter","doi":"10.1111/ecno.12200","DOIUrl":"https://doi.org/10.1111/ecno.12200","url":null,"abstract":"<p>The COVID-19 crisis has revived an old heated debate on whether significant increases in the money supply ultimately lead to higher inflation. Some observers have alluded to the quantity theory of money for that purpose, though in our view, this has sometimes been in a misleading way. Against this background, this paper seeks to clarify several aspects of the quantity theory of money, which are useful to apply it fairly in the current world. First, we review the meaning of the velocity term in the quantity equation. We argue that it has no relevance as a behavioural concept: there is no such thing as a 'desired velocity'. Rather, income velocity should be seen as a variable deriving from a system of parameters and variables related to money demand, as the monetarist approach clearly puts it, with no intrinsic relevance. Second, we clarify the practical relevance that the quantity theory approach can bear in the 21st century. Third, we review the channels and assumptions underlying the asserted quantity theory link between money growth and inflation. In light of our analysis, we conclude that the high money growth rates seen since the pandemic outbreak are unlikely to translate into higher inflation rates.</p>","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"51 2","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecno.12200","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72169535","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-12-28DOI: 10.1111/ecno.12199
Bhanu Pratap Singh, Anup Kumar Yadava
{"title":"Technical efficiency of financial inclusion and human development: Insights from the Indian states","authors":"Bhanu Pratap Singh, Anup Kumar Yadava","doi":"10.1111/ecno.12199","DOIUrl":"https://doi.org/10.1111/ecno.12199","url":null,"abstract":"","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"26 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83571393","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-12-28DOI: 10.1111/ecno.12199
Bhanu Pratap Singh, Anup Kumar Yadava
{"title":"Technical efficiency of financial inclusion and human development: Insights from the Indian states","authors":"Bhanu Pratap Singh, Anup Kumar Yadava","doi":"10.1111/ecno.12199","DOIUrl":"https://doi.org/10.1111/ecno.12199","url":null,"abstract":"<p>Financial inclusion programs are used as a major economic development tool in emerging economies. Human development is the major determinant of financial inclusion, creating opportunities for people to better access financial services. The study's major aim is to examine the technical efficiency of financial inclusion of Indian states by Data Envelopment Analysis using human development as input. To achieve this objective, a 3-dimensional Financial Inclusion Index (FII) is constructed for 28 major Indian states from 2010 to 2017. Empirical findings suggest most Indian states are under low and medium financial inclusion, and states with better human development have better FII status. Crucially, technical efficiency results reveal states with better human development perform better in terms of FII. The inconsistency in FII and human development ranks is majorly found in North-eastern and high-income Indian states. Therefore, policymakers in India should focus on promoting human development in low Human Development Index states.</p>","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"51 2","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72192244","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-11-19DOI: 10.1111/ecno.12197
Guangdong Xu
{"title":"From financial structure to economic growth: Theory, evidence and challenges","authors":"Guangdong Xu","doi":"10.1111/ecno.12197","DOIUrl":"https://doi.org/10.1111/ecno.12197","url":null,"abstract":"<p>This paper surveys the theoretical and empirical literature on the contributions of financial structure to economic growth. Whereas the theoretical literature clarifies the channels through which banks and financial markets may affect resource allocation and hence economic performance, the empirical evidence on the connection between financial structure and economic growth is mixed. There are several methodological problems inherent in the literature, including disparate studies that have been frequently mixed and confused, unsolved econometric issues (endogeneity, heterogeneity and omitted variables) and failure to consider the interaction between banks and capital markets. More rigorous single-country studies are called for.</p>","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"51 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecno.12197","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72190513","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic NotesPub Date : 2021-11-13DOI: 10.1111/ecno.12196
A. Fayman, Su-Jane Chen, Timothy R. Mayes
{"title":"Community banks versus non‐community banks: Post the Great Recession","authors":"A. Fayman, Su-Jane Chen, Timothy R. Mayes","doi":"10.1111/ecno.12196","DOIUrl":"https://doi.org/10.1111/ecno.12196","url":null,"abstract":"","PeriodicalId":44298,"journal":{"name":"Economic Notes","volume":"17 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2021-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87855965","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}