Journal Of Developing Areas最新文献

{"title":"Analysis of Non-Oil Exports – Economic Growth Relationship in Nigeria: The Role of Institutional Qualities","authors":"Odebode Adedapo","doi":"10.1353/jda.2023.a908649","DOIUrl":"https://doi.org/10.1353/jda.2023.a908649","url":null,"abstract":"ABSTRACT: One of the primary policy issues over the years in the context of the Nigerian economy has been how to enhance the performance of the non-oil export sector of the economy in order to diversify the country's export base and contribute more to GDP (gross domestic product). Rather than a lack of policy initiatives, the noticeably abysmal performance of Nigerian non-oil exports has been increasingly attributed to poor policy implementation. However, the question of whether such poor implementation is due to the quality of institutional settings, particularly in a developing economy such as Nigeria, has been largely unexplored. To the best of our knowledge, none of the previous studies deemed it necessary to control for the role of institutional quality in the non-oil export-growth nexus from the perspective of the Nigerian economy. To bridge this important gap in the literature, we hypothesize that institutional qualities matter in the relationship between economic growth and non-oil exports. Motivated by a desire to diversify Nigeria's economy away from its reliance on oil exports, this study re-examines the export-led growth hypothesis from the standpoint of non-oil exports while accounting for the role of institutional qualities. We employ the ARDL estimation technique as the best econometric model for the study given its suitability for variables of mixed order of integration in terms of the series' stationarity. More so, the ARDL technique enables us to simultaneously capture both the short-run and long-run dynamics of the nexus. Empirically, we show results that suggest that improved institutional qualities have the potential to boost the positive effects of non-oil exports on economic growth. We also find that the extent to which institutional quality matters for enhancing the effects of non-oil exports on economic growth depends on the institutional quality indicators chosen. On the whole, we expand on the export-led growth hypothesis by considering the role of institutional characteristics and conclude that improving institutional qualities should be prioritized in the path to Nigerian economic diversification.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"90 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640189","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}

{"title":"How Effective is Military Expenditure in the Terrorism and Tourism Nexus? Insights from Africa","authors":"Chimere Iheonu","doi":"10.1353/jda.2023.a908647","DOIUrl":"https://doi.org/10.1353/jda.2023.a908647","url":null,"abstract":"ABSTRACT: Terrorism has become an alarming issue in Africa due to its potential negative impact on the economy. The escalation of terrorist activities in the region has the capacity to discourage tourists from visiting Africa. This has led to the government increasing military expenditure for counterterrorism with the objective of combating the adverse effects of terrorism on the tourism industry and other sectors of the economy. The purpose of this research is to explore the effectiveness of military spending in offsetting the negative impact of terrorism on tourism in Africa. The study utilized data from 24 African countries between 2001 and 2018 and employed Prais-Winsten regression and Driscoll and Kraay-type Fixed Effects models. Both estimation strategies account for cross-sectional dependence, serial correlation, and heteroskedasticity. The Fixed effect model also accounts for unobserved heterogeneity, which can cause estimation bias when not accounted for. The study also utilizes the first lag of the explanatory variables as instruments for the endogenous variables in the Fixed Effects model to cushion the effect of simultaneity or reverse causality in the modeling. The findings show that both the number of terrorist incidents and the number of terrorist fatalities have negative effects on the number of tourist arrivals into Africa in the absence of military expenditure and when unobservable heterogeneity is considered. Further findings reveal that military expenditure is effective in offsetting the negative impact of the fatalities that arise from terrorism on the number of tourist arrivals in Africa, as revealed by both the interactive and net effects. Additionally, the analysis is expanded using disaggregated tourist data, and the results show that European tourists are more responsive to the use of military expenditure in offsetting the negative impact of terrorism than tourists from America, East Asia, and the Pacific. The policy implication of this study is that African countries must increase military expenditure if they are to effectively offset the negative effect of terrorism on the tourism industry. However, it is also crucial that essential expenditures on education and health are not foregone due to their long run influence on economic development.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135641311","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}

{"title":"Earnings Announcement and Stock Prices of Quoted Deposit Money Banks in Nigeria in the Era of COVID-19 Pandemic","authors":"Idowu Bosede Fasola, Oluseun Paseda","doi":"10.1353/jda.2023.a908650","DOIUrl":"https://doi.org/10.1353/jda.2023.a908650","url":null,"abstract":"ABSTRACT: The study examined the effectiveness of the signaling theory and the efficient market hypothesis in Nigeria during the period of the COVID-19 pandemic which has been an underexplored investigation in the Nigerian capital market. The broad objective of the study was to assess how earning announcements could affect the stock prices of deposit money banks in Nigeria. Specifically, the study sought to analyse the trend of stock prices and examine the reactions of stock prices of quoted DMBs to earnings announcements during a pandemic period in Nigeria. The study employed secondary data from daily closing stock prices of 13 selected banks and the All Share Index (ASI) between 2019 and 2020, sourced from the Nigerian Stock Exchange. The Log-in model, Event-study methodology and the Augmented Dickey-Fuller (ADF) test were used to analyse the data. The event-study methodology employed the market model to estimate the expected returns and abnormal returns during the event window. For the weak form of the market efficiency test, ADF was used to test for the presence of unit roots in the time series. Findings from the study showed that 69.23% of banks' stocks in the Nigerian capital market had negative growth, while 30.77% had positive growth during the period. That abnormal returns around announcement days were not statistically significant as abnormal returns of banks that announced an increase or decrease in earnings were -0.01007 (-0.00533) with t-stat values of -0.30355 (-0.16428) respectively. The implication of the findings is that investors could not earn cumulative abnormal returns during the event window and the abnormal returns of most of the banks had an inverse relationship with earnings announcements. Based on these findings, the study recommended, amongst others, that investors should avoid mispriced stocks while investing in index funds in order to earn market average returns and that regulatory authorities should monitor banks listed on the Nigerian stock exchange to guard against abuse of insider information to the detriment of investors.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640184","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}

{"title":"Monetary Policy Shocks and Unemployment in Emerging Market Economies in Africa","authors":"David Mautin Oke, Ismail Aremu Muhammed","doi":"10.1353/jda.2023.a908656","DOIUrl":"https://doi.org/10.1353/jda.2023.a908656","url":null,"abstract":"ABSTRACT: Unemployment remains a global challenge that requires additional ways of dealing with it. Therefore, the role of Reserve or Central Banks in reducing unemployment is of recent seeking more attention. This paper examines monetary policy shocks and unemployment nexus in the emerging market economies in Africa. The models of this study are designed within the panel vector autoregressive (PVAR) framework. The models majorly rely on the New Keynesian model. Given the nominal rigidities of the New Keynesian model, the monetary policy can therefore, serve as an important tool which can have a reasonable leverage on real variables. As claimed by Bernanke (2007) that the stance of monetary policy was appropriate to prevent deflation and high unemployment and as it has been empirically tested for developed economies, this paper provides a quantitative evaluation of an aspect of such statement in the context of emerging economies of Africa. We used annual data series on five emerging economies in Africa over the period 1991 to 2020, making 150 balanced panel data observations. The countries include, Egypt, Mauritius, Morocco, Nigeria and South Africa. The selection was based on those African countries identified as emerging markets by various international bodies such as the International Monetary Fund (IMF), James O'Neill, Financial Times Stock Exchange (FTSE), S&P Global Ratings, EM Bond Index, Dow Jones, Russell, Columbia University and Cornell University. The findings of the study revealed that unemployment falls for at most four periods in response to contractionary monetary policy shocks while the response dissipates afterwards. Individually, unemployment rate in Mauritius and Nigeria rose in response to contractionary monetary policy shocks while in South Africa, Egypt and Morocco, it falls in response to contractionary monetary policy shocks. By and large, the results seem to show credence to the effectiveness of monetary policy in each country to achieve desired macroeconomic targets. The main implication of the results is that, expansionary monetary and fiscal policy undertaken by policymakers of emerging economies in Africa can enhance the labor market to recover from the downturns recently experienced in these economies.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640194","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}

{"title":"The Influence of Innovativeness on the Financial and Non-Financial Performance of Retail Smes in Tshwane Metropole","authors":"Katlego Mogashoa, Vivence Kalitanyi","doi":"10.1353/jda.2023.a908657","DOIUrl":"https://doi.org/10.1353/jda.2023.a908657","url":null,"abstract":"ABSTRACT: SMEs play a crucial role in the economy by creating jobs, alleviating poverty, innovating, and driving economic growth and development. However, they frequently fail due to business challenges such as poor performance. Grounded in the innovation literature and the Resource-Based View Theory (RBV), this study empirically investigates the influence of innovativeness as a dimension of entrepreneurial orientation (EO) on retail SMEs' performance indicators (financial and non-financial performance) in Tshwane Metropolitan Municipality. Saunders' research onion model was used to frame the methodology. The study adopted a quantitative research design while following a deductive approach. A survey method was used as a research strategy to collect data from 196 SMEs with the measuring instrument adapted from recent literature and from previously tested instruments. The questionnaire used a five-point Likert scale, ranging from 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = disagree, 5 = strongly agree. The \"neutral\" response was added to assure respondents that they need not feel compelled to answer every question. The Statistical Package for the Social Sciences (SPSS) was used for data analysis. The results revealed that innovativeness positively and significantly affects both financial and non-financial SMEs' performance directly and that representatives (managers/owners) of Tshwane Metropolitan Municipality retail SMEs believe that if their team is open to new ideas and changes, the implementation of innovation in practice within SMEs will rise. Furthermore, managers recognize and value fresh ideas to encourage staff to \"think outside the box\" and share their creativity, which facilitates and encourages the actual implementation of innovation. Lastly, the study found that the more open SME managers/owners are to innovation, accept new ideas, and support new resources for innovation, the higher the innovation will take place in the organization. Operationalization of the vague term innovativeness is also a contribution to the literature. This research is crucial for developing countries and regions such as the Tshwane Metropolitan Municipality, Gauteng province, South Africa, wherein such studies are lacking, despite the retail sector's significant role in this country's economy. SME managers/owners must regard innovation as an intrinsic aspect of their strategy in this line.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135641156","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}

{"title":"Tobacco Prevalence and Economic Growth: Evidence from Low and Lower-Middle-Income Countries","authors":"Samuel F. Gamtessa, Harminder Guliani","doi":"10.1353/jda.2023.a908653","DOIUrl":"https://doi.org/10.1353/jda.2023.a908653","url":null,"abstract":"ABSTRACT: The economic costs of tobacco use are substantial particularly in developing countries. While much has been written on healthcare costs from tobacco use related diseases, little is known on the macro-economic impacts of tobacco-related productivity loss. The objective of the current research is to understand the macroeconomic burden of tobacco use in developing countries. Using World Bank's development indicators database for 44 low-and lower-middle-income countries, most of which are African, this paper assesses the relationship between tobacco consumption and economic growth. Specifically, using the fixed effect regression approach, we examined whether tobacco prevalence affects long-run growth rate in the real gross domestic product (GDP) per capita. We adopted an empirical framework from the growth literature by including the national tobacco prevalence rate as one of the determinants of long-run growth in the real GDP per capita. The tobacco prevalence rate varies across countries ranging from 5% in Ethiopia to almost 50% in Myanmar. The prevalence rate is much higher among males than females in almost all countries, with Myanmar males having above 70%. The regression results indicate the existence of a statistically significant negative relationship between the prevalence of tobacco and economic growth after controlling for other determinants of growth, including the initial level of GDP per capita, gross fixed capital formation, trade, resource revenues, institutional quality, a human capital indicator, and infrastructure capacity. A 1% increase in the total tobacco prevalence rate reduces the economic growth rate by almost 2%, all else equal. These findings are robust even after running separate models for male and female tobacco prevalence rates. The results on the other determinants of growth are consistent with the previous empirical studies on economic growth in the context of developing countries. The findings of this study provide additional support to the existing body of empirical economic research on the role of better health, as a form of human capital, in increasing economic output. Thus, actively targeting tobacco control interventions, both in and outside of the workplace, can likely improve workers' productivity and hence economic growth.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640195","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}

{"title":"The Effect of R&D on Economic Growth: Evidence from Cross-Country Panel Data","authors":"Rudra P. Pradhan","doi":"10.1353/jda.2023.a908655","DOIUrl":"https://doi.org/10.1353/jda.2023.a908655","url":null,"abstract":"ABSTRACT: Research and Development (R&D) in particular and innovation in general are the best drivers of long-run sustainable economic growth and spending in R&D has been recognized as one of the means to the economic accomplishment of both developed and developing countries. However, the sustainability of the association between R&D & economic growth exclusively depends upon the performance of other macroeconomic determinants. Hence, we examine the effect of R&D on economic growth in the existence of five important macroeconomic determinants. The study focusses on 151 selected countries, including both developed and developing, over the period 1996-2020 and focused on the macro-level analysis. Our research is based on the deployment of system Generalized Method of Moments (GMM) technique. The GMM technique encompasses longitudinal data; and is gathered by pooling time-series across a pool of cross-sectional units, specifically country-wise. The biggest advantage of using the GMM technique is that it allows for addressing the endogeneity problem using lagged explanatory variables as instrumental variables. We have three samples in our analysis, namely pool of developed countries, pool of developing countries, and the pool of both developed and developing countries. Our study deploys four proxies of R&D to work the nexus between R&D and economic growth in presence of five important macroeconomic determinants. In each of these three samples, we run four GMM models, depending upon the deployment of four R&D activities that we used in this study. We observe an evidence that R&D plays a significant role in economic growth when the selected macroeconomic determinants are used as control variables. Our findings are mostly robust to R&D specifications, country specifications, model specifications, and estimation strategies. Most importantly, the effect of lagged economic growth is highly positive, signifying that economies with higher economic growth in the previous years tend to grow faster in presence of R&D intensity. The behaviour of other macroeconomic variables is having diverse nature. Some of these variables behave positively, while others behave negatively. This study suggests that policymakers should focus on improving R&D activities and strengthening the chosen macroeconomic determinants to facilitate economic development. Hence, it contributes to the ongoing policy debate, that is with reference to R&D effect on economic growth, on the finest strategies for attaining sustainable economic growth in all these selected countries. Hence, we can use these findings to develop a targeted policy that promotes R&D intensity in the phases of economic development.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"104 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640973","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}

{"title":"Some Recent Trends and Implications of Foreign Direct Investment in Bangladesh","authors":"Tanbir Ahmed Chowdhury, Nishat Tamanna Snigdha","doi":"10.1353/jda.2023.a908654","DOIUrl":"https://doi.org/10.1353/jda.2023.a908654","url":null,"abstract":"ABSTRACT: This study was carried out to evaluate the recent trends and implications of foreign direct investment (FDI) in Bangladesh. Due to its cost-effective workforce, potential market, rapidly growing economy, advantageous geographical location, and other pertinent factors Bangladesh has become one of the most enticing developing countries for foreign direct investment (FDI). Both quantitative and qualitative analyses were used. The trends and implication of FDI was assessed through different variables such as Net FDI inflow in Bangladesh, FDI inflows as percentage of GDP of Bangladesh, sectoral FDI inflow in Bangladesh, net FDI inflows from top 10 countries and by sectors, net FDI flow by EPZ and non-EPZ areas, no. of employment by FDI, FDI inflow by components, GDP, export, import, balance of payment, foreign exchange rate, inflation and corporate tax rate, which were then analyzed using different statistical measures, such as growth percentage, trend equations, the square of the correlation coefficient and correlation matrix. Thirteen trend equations and R-squared were tested for different relevant variables of FDI. To estimate the implication of FDI in Bangladesh, seven hypotheses has also been tested. Among them, the trend values were positive for eleven variables. The square of correlation coefficient (R-squared) of most of the equations is more than 0.7, indicating well fitted trend equations. According to the results of this analysis, FDI has positive correlation between GDP growth, exports, imports, employment in EPZs, and exchange rates. However, there is a significant negative correlation between corporate tax rate and inflation rate. By introducing beneficial FDI policies, providing substantial investment incentives, streamlining pertinent regulations, minimizing bureaucratic procedures, and through better infrastructure Bangladesh must act swiftly to entice more foreign investors. Despite adopting lenient FDI regulations, the government musthave to ensure facilities like more export processing zones, easy access to IT facilities, maintaining stable foreign exchange rates, encourage FDI from leading nations, an attracting new foreign investment source. By implementing these policies into practice, Bangladesh can boost up economic growth and may attract more FDI. This study proves that there is room for FDI to increase in the future and supporting economic growth of Bangladesh.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135641313","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}

{"title":"Patterns and Determinants of Households' Energy Choices for Cooking as Well as Their Implications for Poverty Eradication in Nigeria","authors":"Uche M. Ozughalu","doi":"10.1353/jda.2023.a908652","DOIUrl":"https://doi.org/10.1353/jda.2023.a908652","url":null,"abstract":"ABSTRACT: Adequate access to environmentally-friendly energy sources is crucial for addressing the problems of environmental degradation and adverse climate change as well as other developmental challenges. The literature on the patterns and determinants of households' energy choices for cooking is very scanty. Essentially, the scanty literature, in general, did not adequately cater for household composition and economies of scale in household consumption as well as give adequate consideration to the impact of ownership of education/entertainment appliances and means of communication by households on households' energy choices for cooking. It is very important to utilize adult equivalence scales and estimate of economies of scales in household consumption in the analysis of household consumption in order to make such analysis highly robust. It is also very important to include ownership of education/entertainment appliances and means of communication in the analysis of households' energy choices for cooking because they (the appliances and means of communication) are expected to provide adequate awareness on the harmful effects of dirty energy sources and such awareness can influence households' energy choices. Furthermore, none of the studies in the scanty literature discussed the major implications for poverty eradication of the patterns and determinants of households' energy choices for cooking. This study adequately addressed the highlighted research gaps. The study analyzed the patterns and determinants of households' energy choices for cooking in Nigeria and discussed their implications for poverty eradication in the country using, among other things, descriptive statistics and multinomial logistic regression technique. The study was based on a nationally representative survey data, obtained from the National Bureau of Statistics. The study found that the patterns of households' energy choices for cooking in Nigeria exhibit the operation of energy ladder hypothesis. The study also found that increased educational level of household head, ownership of electric food preservation appliance by household and satisfactory housing condition are among the factors that increase the likelihoods of the uses of transition fuels and very clean energy sources as well as reduce the likelihood of the use of traditional biomass fuels. Adequate measures should therefore be put in place to sufficiently increase households' incomes and guarantee optimal access to environmentally-friendly energy sources for cooking in the country; this will pave the way for poverty eradication in the country.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640817","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}

{"title":"The Interdependence of Financial Markets in Turbulent Periods: A Comparative Analysis of the China–US Cases","authors":"Elias A. Udeaja, Kazeem O. Isah, Ganiyu K. Sanni","doi":"10.1353/jda.2023.a908661","DOIUrl":"https://doi.org/10.1353/jda.2023.a908661","url":null,"abstract":"ABSTRACT: There has been a growing hypothesis linking the recent widespread declines in financial markets to the outbreaks of the COVID-19 pandemic. What is, however, unclear is whether the influence of the COVID-19 pandemic on the dynamics of the financial markets is as severe as those associated with traditional financial crises. Using the cases of the USA and China to represent developed and emerging economies, we examine the returns and volatility dynamics of financial market interdependence amid economic and financial crisis periods of divergent origins. Following careful consideration of relevant tests and model selection criteria, we find the VARMA-CCC-GARCH model to be the best approach for modelling financial market returns and volatility spillovers during a crisis. Employing daily financial market returns, we partitioned the study period into two sub-periods: the Great Recession (GFC) and the Great Lockdown (COVID-19), to arrive at the following empirical findings: First, we find that regardless of the type of crisis—the GFC or COVID-19—unanticipated events in the financial markets in the current period fuel high volatility in the market in the preceding period. Second, while financial markets in developed economies were by far the most affected by the 2008/2009 GFC, the great lockdown associated with COVID-19 appears to have left a permanent shock on both developed and emerging economies' financial markets. It then follows that the extent to which an economy is endowed with the ability to fend off external risks may be sensitive to the origin and nature of the crisis. In this light, it is necessary for policymakers to acknowledge that while some of the instruments used to mitigate the impact of external shocks on financial markets during the GFC may still be applicable during COVID-19 in the case of developed economies, the same appears to not be entirely true in the case of emerging financial markets during COVID-19. On the whole, financial experts and academics may want to be wary of the fact that the past realizations of both returns and volatilities matter for enhancing the forecastability of the future value of financial instruments during a crisis period.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135640975","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}