Why do economies that undertake broadly similar industrial and institutional reforms follow markedly different growth trajectories? This study reassesses the manufacturing-led growth hypothesis by examining whether the gains from structural transformation vary across growth regimes and are shaped by institutional quality and resource dependence. Using an annual panel of 217 economies for 1981–2024, the analysis combines MICE imputation, two-state Markov-switching AR(1) regime classification, regime-specific two-step System GMM, observed-WGI validity checks, conservative instrument tests, lambda-sensitivity analysis, and an MI20 consistency check. Given the observational macro-panel design and the use of internal instruments, the estimates are interpreted as dynamic conditional associations, rather than causal effects. Manufacturing intensity does not emerge as a robust predictor of growth performance: in the adjusted baseline model, it is negatively associated with growth in the high-growth regime and weakly negative in the low-growth regime, while losing statistical significance in the observed-WGI, conservative-instrument, post-2000, and MI20 checks. Institutional quality is a more consistent growth-supporting correlate, operating primarily through a direct institutional growth channel rather than through manufacturing-based moderation.
The Ghanaian FX market has undergone significant transformation over the past decade, characterised by rising trading volumes and episodes of exchange rate volatility. This study utilises high-frequency daily data from 2018 to 2023, covering both calm and turbulent market conditions. Employing the BK-18 spillover index within a time–frequency framework, the analysis uncovers interconnectedness between order flows and exchange rates, with dynamics largely driven by short-term interactions and a regime-dependent relationship. Under calm market conditions, exchange rates, particularly USD/GHS tend to drive trading behaviour, while order flows play a prominent role in influencing exchange rate movements during turbulent periods, especially in the short to medium term. Across currency pairs, the EUR/GHS emerges as a dominant transmitter of shocks, exerting spillover effects, thereby highlighting the importance of cross-currency linkages in the Ghanaian FX market. Furthermore, the findings indicate that connectedness intensifies during periods of market stress and increased interdependence consistent with liquidity constraints and uncertainty. Overall, the study underscores the importance of market microstructure factors in explaining exchange rate behaviour beyond traditional macroeconomic fundamentals. These findings carry important implications for FX policy design, market surveillance, and regulatory oversight in Ghana, particularly in the context of managing volatility and strengthening market resilience.
This article assesses how financing scale and financing cost relate to the performance of small and medium-sized firms (SMEs) listed on Malaysia’s ACE and LEAP markets from 2020 to 2024. Based on information asymmetry and pecking order theory, it analyses the realised scale of financing (the natural logarithm of total debt) and realised cost of financing (the ratio of interest expense to total debt) as equilibrium outcomes reflecting financing constraints. It also examines their independent, interactive and nonlinear effects on performance. A two-way fixed-effects panel was estimated using 181 SMEs and 905 firm-year observations from LSEG Workspace and Bursa Malaysia. The main finding is that within-firm performance depends on debt composition rather than aggregate scale or contemporaneous cost. Short-term debt is significantly and negatively associated with return on assets, whereas aggregate financing scale and contemporaneous financing cost are not statistically significant. Asset tangibility is consistently negatively associated with performance, potentially reflecting operating rigidity, sectoral capital intensity or inefficient asset use. Financing cost has a marginally negative effect on larger SMEs, while robustness tests indicate a delayed financing-cost effect. The findings offer cautious implications for Bank Negara Malaysia, SME Corporation Malaysia and the Securities Commission.
Public investment in agriculture is widely regarded as a lever for growth, yet its effectiveness depends on how spending is allocated across categories such as research, extension, and infrastructure. This study examines the relative effectiveness of five disaggregated categories of agricultural public expenditure in Burkina Faso over 2006–2023, using an ARDL bounds-testing approach suited to a short annual time series. Only agricultural research expenditure yields a statistically robust long-run relationship with agricultural performance, with an elasticity of 0.339 and a bounds F-statistic of 8.24, exceeding the Pesaran-Shin-Smith upper bound at the 5% level. Agricultural infrastructure, rural infrastructure, extension services and private investment show positive but statistically non-significant associations with agricultural output. CUSUM stability tests and Chow breakpoint tests find no evidence of parameter instability, and Variance Inflation Factors indicate no severe multicollinearity. We recommend prioritising agricultural research as the most statistically defensible policy lever, and offer elasticity-informed guidance for reallocating scarce public resources across the four remaining expenditure categories, while also flagging the small-sample constraints that should shape future panel-data or instrumental-variable extensions of this strand of analysis.
This study examines the applicability of the Kuznets Curve and Financial Kuznets Curve hypotheses and investigates the factors affecting income inequality in Egypt under the neoliberal Washington Consensus development model. Using data from 1960–2019, dynamic 2SLS and IV-GMM models are employed to account for endogeneity and ensure robust estimation. The findings reject the conventional Kuznets Curve and Financial Kuznets Curve hypotheses, revealing U-shaped relationships between inequality and both economic and financial development. For Financial Kuznets Curve, the estimated turning point occurs earlier for the rich strata, at 18.48% when inequality is measured by the Palma ratio, compared with 25.43% using the Gini coefficient. For Kuznets Curve, the turning point is $2252-2421 GDP level per capita. The key factors stimulating such outcomes include: weak labor market adaptability, persistence of high inequality prior to the financial depth expansion, and weak enforcement for financial inclusion prior and alongside financial depth expansion deriving a “too much excludable” banking system. To avoid steepening the 2nd phase of the curves and to trigger restoring inequality-narrowing potentials, the findings suggest policy actions promoting financial inclusion and inclusive growth practices while rebuilding the middle-class. The optimal window for policy reforms is determined by the estimated turning points.
Micro, Small and Medium-sized Enterprises (MSMEs) play a central role in developing economies but face persistent credit frictions. In Morocco, only 6% of MSMEs have ever taken out a bank loan, in an economy where they represent more than 99.8% of enterprises and generate over 73% of total employment. This constitutes a first-order impediment to investment and firm growth. Using the 2019 World Bank Enterprise Survey, this paper examines the determinants of MSMEs’ credit outcomes and whether corporate website adoption attenuates information asymmetries in bank lending. Credit access is modelled as a sequential need–approval process: a multinomial logit classifies firms by credit status, a sample selection probit corrects for non-random entry into credit need, and an instrumental-variable probit addresses website endogeneity and selection jointly, with an extended probit as robustness check. Across specifications, website ownership robustly raises the probability of credit approval, alongside firm size, training, export orientation, and female ownership. The website premium is largest for domestic, female-owned, and informationally opaque firms, consistent with signalling theory. These findings suggest that firm-level digitalization constitutes a scalable complement to traditional financial inclusion instruments for narrowing the funding gap. The paper contributes by incorporating discouraged borrowers, separating need from approval, instrumenting digital adoption, and uncovering a complementarity between female ownership and digital signalling in an emerging-market context.
The relationship between schooling and economic growth remains empirically contested: average associations in cross-country panels are often small and unstable. This paper examines whether income inequality conditions the association between schooling and economic growth. Using fixed-effects growth regressions for 97 countries observed over six non-overlapping 5-year periods (1980–2009), the analysis allows the schooling–growth slope to vary across inequality environments. The results show that average within-country schooling–growth associations are imprecise, but a clear pattern emerges once heterogeneity by income inequality is taken into account. In low-inequality environments, schooling is positively associated with growth, and this association attenuates monotonically as inequality rises, becoming weak or negative in the most unequal environments. The attenuation is strongest and most precisely estimated for primary education and, when disaggregated by development level, is concentrated among low-income countries. The pattern is robust to standardized and continuous specifications, alternative human-capital measures, dynamic (lagged-dependent-variable and system-GMM) estimators, country-specific trends, and alternative samples. The analysis documents systematic heterogeneity in schooling–growth associations across inequality environments. The findings suggest that unstable average schooling–growth relationships mask substantial heterogeneity across distributional contexts and that the growth relevance of educational expansion depends critically on the broader inequality environment.
The current study investigates fiscal sustainability across European Union Member States over the 1995–2024 period, with a comparative focus on 1995–2019 to assess the fiscal implications of the COVID-19 pandemic and the Russia-Ukraine war. Unlike prior studies that do not distinguish between accession cohorts, end their analysis before 2019, or apply a single estimator, this study employs CCEMG and AMG estimators simultaneously across EU27, Old Member States (OMS), and New Member States (NMS), over a timeframe that uniquely captures post-pandemic and wartime fiscal dynamics, while also providing a systematic country-level sustainability classification for all EU member states. The results confirm weak fiscal sustainability across all samples, with panel-level β coefficients ranging from 0.43 (EU27) to 0.46 (OMS) and 0.50 (NMS) under CCEMG, all statistically significantly different from both 0 and 1. Comparative analysis shows that recent crises have not fundamentally altered overall sustainability patterns, though New Member States exhibit greater vulnerability to external shocks relative to OMS, consistent with structural differences in energy dependence, automatic stabilizers, and fiscal buffers. These findings highlight the need for policy reforms focused on controlling public expenditure growth, improving institutional quality, and enhancing revenue collection efficiency to ensure long-term fiscal balance, while maintaining the capacity to respond to heightened security and economic pressures.
This study examines the effects of sustainability uncertainty originating from the United States of America and China, two major trading partners of Vietnam, on the investment decisions of Vietnamese firms. The results reveal that sustainability uncertainty originating from the U.S. positively affects corporate investment decisions, while China-based uncertainty exerts a negative effect. In-depth analysis further reveals the moderating effect of investment irreversibility and potential non-linear relationships between sustainability uncertainty and investment decisions. Lastly, such effects are more prominent for firms operating in intensive carbon-emitting industries. The results suggest that economic-related sustainability uncertainties originating from vital trading partners can act as a key driver of firms’ investment decisions of Vietnamese firms. The empirical findings of the study offer important policy recommendations for the Vietnamese government and the corporate sector.
Digital transformation has become a strategic priority for commercial banks seeking to improve operational efficiency and competitiveness. This study examines the determinants of digital transformation in Vietnamese commercial banks by considering bank-specific characteristics, macroeconomic conditions and banking market concentration. Using panel data from 25 commercial banks over the period 2013–2024, the study employs pooled ordinary least squares, fixed effects model, random effects model, robust random effects estimation and the two-step system generalized method of moments. The results show that bank size and GDP growth positively influence digital transformation, whereas inflation has a significant negative effect. Profitability, non-performing loans and state ownership do not exhibit robust effects across different estimation methods. More importantly, banking market concentration, measured by the Herfindahl–Hirschman index, has a consistently negative and significant impact, indicating that stronger market competition encourages banks to accelerate digital transformation. These findings extend the existing literature by highlighting banking market structure as an important external determinant of digital transformation. The study provides practical implications for policymakers and commercial banks in promoting digital transformation through a competitive banking environment, macroeconomic stability and sustained technological investment.
Environmental, social, and governance (ESG) has received much attention in recent years, and the operation of enterprises has also changed from the early pursuit of maximizing shareholder benefits, and further needs to incorporate the well-being of all stakeholders, even the environment and the community, into the sustainable development plan of the enterprise. However, ESG investment will inevitably increase the cost of enterprises, and extending from the current discussion of related issues affecting corporate investment in ESG, we examine ESG performance of companies at different competition levels. Based on a total of 11,265 annual data from 2015 to 2021 and relatively complete and comparative ESG evaluations, the empirical results reveal that there is a significant inverse relationship between the degree of competition in the industry and the ESG performance of the companies, which is reflected in both the samples of enterprises and industries. Further analysis from environmental, social and governance perspectives shows that the inverse relationship also has significant differences in the level, revealing that the impact on different markets may not be the same. This research provides important additional details for regulators, firms, and investors to better understand the ESG performance among firms in different industries.
This study examines the relationship between shareholder activism and ESG performance among NIFTY 500 companies in India and investigates whether industry risk moderates this relationship. Using a balanced panel of 470 firms over 2018–2024, the study employs Fixed Effects and System GMM estimations to address firm-specific heterogeneity and potential endogeneity. Shareholder activism is measured using a composite index based on proposal intensity, voting dissent, and rejection rates, while ESG performance is measured using standardized information from Refinitiv, MSCI, and BRSR disclosures. The findings indicate that shareholder activism is positively associated with ESG performance. The Fixed Effects estimate shows that a one-unit increase in activism is associated with a 1.45-point increase in ESG performance, while the System GMM estimate remains positive and significant. Industry risk significantly strengthens this relationship, with the effect being stronger in high-risk industries. Robustness tests using alternative ESG measures, activism proxies, ownership subsamples, reverse-causality tests, and pre- and post-BRSR comparisons produce consistent results. The findings highlight shareholder activism as an important external governance mechanism for strengthening ESG performance, particularly in high-risk industries.
This study examines the firm’s performance predictability from the behavioural perspective in the context of an emerging economy which has not been relatively addressed. We extract positive and negative news-based media sentiments using the GDELT project and a dataset consisted of aggregated market index in addition to a sample of 84 company’ return from 2005 to 2025. Further, we include a sample of 31 banks from the financial sector and about more than 400 listed companies of the nonfinancial sector of Pakistani market covering yearly observations from 2014 to 2023. Using VAR and the system Generalized Method of Moments, we discover that news-based media sentiments have a detrimental influence on future returns, return on assets, and liquidity, thereby confirming the mean reversion effect in the Pakistani market. Consequently, the asymmetric impact of news media sentiment is persistent in the presence of asset growth used as a moderating variable in our empirical analysis. Our empirical findings also reveal that investors overreact as new information arrives in the stock market thereby leads to taking the price beyond its fundamental value. Further, the empirical findings indicate that the impact of news media sentiment is significant for both the short and long horizons.
Archipelagic economies face a distinct interaction between climate risk and spatial inequality, as disruptions to sea connectivity can simultaneously reduce earnings and increase the cost-of-living in isolated islands. This article establishes a climate-enhanced New Economic Geography framework in which climate exposure affects welfare through two interrelated mechanisms: a connectivity channel that raises effective trade and logistics costs, consequently increasing the local price index, and an agglomeration channel that reduces market access and local income potential in peripheral regions. The model highlights a fiscal policy dilemma within a limited budgetary context: subnational governments must allocate scarce resources among connectivity investments, resilience expenditures and social protection initiatives. A stylized quantitative calibration, implemented in a two-region core–periphery environment, shows that heightened exposure can increase poverty risk even when nominal output changes only modestly, because price differentials raise the cost of basic consumption in remote areas. The numerical results are model-implied predictions rather than estimates for a specific country, and they illustrate how combinations of policy instruments can outperform single-instrument strategies: connectivity investment reduces delivered-cost wedges, resilience lessens the severity and duration of disruptions and adaptive social protection stabilizes welfare during shocks. These predictions are intended to inform measurement and policy development in archipelagic settings, such as Indonesia.
This study examines the impact of urbanization, unemployment, information and communication technology and climate change on Somalia’s economic growth using annual data from 1991–2022. The Autoregressive Distributed Lag (ARDL) model was employed to estimate the short-run and long-run relationships, while FMOLS, DOLS, and CCR estimators are used to verify the robustness of the long-run results, alongside Granger causality analysis. The findings reveal a stable long-run relationship, with temperature and unemployment exerting significant negative effects on economic growth, whereas urbanization has a significant positive effect. Internet shows a positive but statistically insignificant effect in the ARDL model, although robustness estimators generally support a positive long-run association. Based on these findings, the study recommends strengthening climate adaptation measures, implementing employment creation and skills development programs, promoting sustainable urbanization, and expanding digital infrastructure and ICT capacity to foster sustainable economic growth in Somalia.
This article analyzes the relationship between social capital and rural households’ access to formal finance in Burkina Faso. Social capital is understood through household membership in groups or associations. Given the possibility of a simultaneous relationship between association membership and access to formal finance, the analysis employs a conditional mixed-effects model as the primary analytical tool and a recursive bivariate probit model for robustness. The data used come from the harmonized survey on household living conditions conducted in 2021. The results show that membership in a group or association is significantly associated with a higher probability of access to formal finance. They also reveal that the gender of the household head, income and education level are significantly associated with this access. These results suggest that rural community organizations can be an important lever for promoting financial inclusion, provided they strengthen their governance, inclusiveness and links with financial institutions. This research contributes to a better understanding of the factors associated with financial inclusion in rural areas and highlights the potential role of social capital in improving access to formal financial services.
This study examines whether metaverse ecosystem tokens provide incremental diversification benefits in mixed portfolios or primarily amplify cryptocurrency-related risk. Using daily data (2021-2025), we construct a base portfolio (NASDAQ-100, Bitcoin, Ethereum) and an augmented portfolio including an equally weighted metaverse token basket (MANA, SAND, RNDR, AXS, ENJ). Portfolio efficiency is evaluated using mean-variance optimization, efficient frontier analysis, Huberman-Kandel (1987) spanning tests, regime-based robustness tests and downside risk measures (VaR, CVaR and drawdown). The results reject spanning, indicating an expansion of the investment opportunity set. While metaverse tokens improve risk-adjusted performance, they also increase volatility and tail risk. Regime-based analysis shows that metaverse tokens become more strongly linked to major cryptocurrency factors during stressed market conditions, potentially weakening diversification benefits. Regression evidence further shows that Bitcoin and Ethereum factors largely drive returns, with limited independent alpha. Overall, the findings suggest that metaverse tokens contribute structurally through covariance effects rather than distinct return premia.
For an energy import-reliant economy, changes in renewable energy output, crude oil prices, inflation, exchange rates, and the trade deficit during periods of uncertainty must be analysed to determine how the energy transition will affect the open-economy factors. The paper evaluates time-varying interactions among crude oil returns, renewable energy production growth, trade deficit growth, inflation growth and currency volatility within the Indian economy using a time-varying parameter vector autoregression. The results reveal inflation growth is the dominant net transmitter of shocks, highlighting its central role in propagating disturbances across the energy–macroeconomic nexus.Renewable energy growth is now a major macroeconomic driver, acting as a core system transmitter rather than just a passive variable. In contrast, the trade deficit acts as the principal net receiver, reflecting its sensitivity to developments in energy markets, inflationary pressures and exchange-rate conditions. The connectedness structure is highly regime-dependent, with the COVID-19 period exhibits the highest level of connectedness.Structural changes in spillover dynamics of the variables are also observed a. These findings suggest that strengthening price stability, monitoring renewable energy deployment, and reducing dependence on imported fossil fuels and resorting to currency hedges can enhance resilience to external shocks and mitigate trade deficits and exchange-rate pressures.
Many African economies continue to face persistent development challenges, including poverty, food insecurity, limited access to education and healthcare, and significant regional disparities. Despite innovation being recognised as a key driver of structural transformation, limited empirical evidence exists on its contribution to inclusive development in Africa, particularly through cross-border spillovers. This study investigates the relationship between innovation and inclusive development across 41 African countries from 2008 to 2020 using both non-spatial and spatial econometric models. Innovation is measured through research and development (R&D) expenditure as a share of GDP based on UNCTAD data. The findings reveal that innovation significantly improves inclusive development domestically while also generating positive spillover effects across neighbouring countries. Foreign direct investment, institutional quality, urbanisation, and ICT penetration further strengthen the regional diffusion of innovation and inclusive development. Robustness checks using the Human Development Index (HDI) confirm the consistency of the results. The study highlights the importance of regional innovation coordination under initiatives such as the African Continental Free Trade Area. Strengthening cross-border ICT infrastructure, harmonising regulations, and improving institutional capacity can enhance innovation spillovers and accelerate inclusive development, contributing to the achievement of SDGs 9 and 10 across Africa.
China has continually reformed its refined oil pricing system to balance market efficiency with policy stability. This study revisits the pricing mechanism, emphasizing market reforms, policy thresholds, and regional heterogeneity. The regression analysis employs panel econometric and ARDL models, utilizing an unbalanced panel dataset spanning from June 2000 to October 2025. The dataset incorporates key variables, including two international crude oil prices, four refined product prices, exchange rates, and pipeline networks. Results show that shortening the adjustment cycle improved transmission timeliness. Ceiling and floor prices thresholds disrupt transmission under extreme conditions. Volatility control is stronger during price increases, with enhanced filtering under the WTI benchmark and further reinforced by policy thresholds. Regional heterogeneity is significant, with notable differences in both short- and long-term effects. Overall, market forces operate within defined policy limits, yielding varied outcomes across benchmarks and regions.
