Nigeria's external and domestic debt have been rising very rapidly in recent years despite the crushing weight of debt burden that almost crippled its economy in previous decades. This study examines the likely determinants of public debt in Nigeria over the period 1970-2020 with a focus on the effects of armed conflict, arms imports, and military spending. Unlike most previous studies that focus only on external debt, this study employs the three separate measures of public debt, namely, government gross debt, external debt, and domestic debt. In addition to being more applicable to the case of Nigeria, this also allows us to investigate whether the drivers of public debt vary with the measure of debt used. Employing the ARDL approach to cointegration and a number of robustness checks, findings suggest that whereas conflict, arms imports, and military spending have statistically positive effects on external debt, they do not have a significant effect on domestic debt. Conflict and arms import have positive effects on gross government debt which is unsurprising given that gross debt includes foreign currency denominated debt. Policy recommendations based upon these findings are discussed.

Abstract In recent years, there have been growing concerns around the implications of large fiscal imbalances in sub-Saharan African countries (SSA). An ongoing debate focuses, among other things, on the determinants of public debt in the sub-region. Much of the recent work has, however, employed descriptive methods in quantifying the extent of the debt problem and in explaining the drivers thereof. Moreover, most studies only consider macroeconomic factors. Instead of focusing only on macroeconomic factors, this study considers the influence of conflict and governance as important drivers of public debt in SSA countries given that most of them have experienced (or are still experiencing) conflict and poor governance. Focusing on a sample of 38 SSA countries over the period 1996–2019, it employs a variety of panel methods, namely, the pooled OLS, one- and two-way fixed effects, and instrumental variables fixed effects to facilitate the comparison of results. The study finds compelling evidence showing that conflict and governance are important determinants of SSA’s public debt in addition to the economic factors. Policy recommendations based on the findings are discussed.

South Africa is the second largest military spender in Sub-Saharan Africa and has the most developed arms industry, which has seen considerable change since the end of the "apartheid" regime that was in place over the period 1948–1994. This Chapter provides an overview of the evolution of the industry and an analysis of the present nature of the industry and its performance and behaviour. It finds an industry that has changed considerably since the end of Apartheid and is a shadow of its previous self. It did see some benefits from a major arms deal with offsets, though at questionable cost and with a corrupting influence on the young democracy. There has been an increasing involvement of foreign defence companies, with SA companies becoming part of international supply chains, and state-owned Denel the only large comprehensive systems integrator in decline and struggling. Declining domestic procurement has led to pressures to export that have now led to problems and pressures on arms export control regulations. Given the problems with the public sector resulting from state capture, relatively low economic growth, and the extremely high unemployment rate, the Government is unlikely to remove support from Denel anytime soon.

The damaging economic effects of the debt crises on Africa in the late 1980s encouraged considerable research on the determinants of external debt in developing economies. Although sub-Saharan Africa's (SSA) debt was cut by two-thirds by 2008, through two debt relief programmes, debt in the region has since been rising at an increasingly rapid pace. This study provides an empirical analysis of the determinants of external debt in SSA over the period 1960-2016, using dynamic panel methods. It also considers two potentially important factors that have received relatively little attention. One is military spending, rarely considered, despite a number of well-publicised scandals over the procurement of unnecessary and expensive high-tech weapons systems. A second, is the possibility that the countries studied have been involved in conflict. The empirical results point to a positive impact of military spending on external debt, but with some evidence of heterogeneity across the countries. Furthermore, findings indicate that the positive effect of military expenditure on debt becomes more marked in countries that have been affected by conflict. These results imply that policies to improve security and reduce military spending could be beneficial in reducing external debt and, potentially, improving economic performance in the region.

This paper investigates the macroeconomic determinants of credit risk in the banking system of 22 Sub-Saharan African economies. We measure credit risk as the ratio of non-performing loans to total gross loans (NPLs) and employ dynamic panel data methods over the period 2000–2016. Using a variety of specifications, the results show that an increase in real GDP growth rate has a statistically and economically significant reducing effect on the ratio of non-performing loans to total gross loans. Furthermore, inflation rate, domestic credit to private sector by banks as a percent of GDP, trade openness, VIX as a proxy of global volatility, and the 2008/2009 global financial crisis, all have positive and significant impact on NPLs.

Determining the factors that influence external indebtedness in developing countries became an important focus for research following the damaging external debt crises of the early 1970s. While the resulting research has provided valuable insights, there has been a tendency to rely solely on economic factors and surprisingly little concern has been given to political factors that may be important determinants of debt. This paper investigates the main contributing factors to debt accumulation using panel data methods and focusing on a group of 36 Sub Saharan Africa countries (SSA) over the period 1975 to 2012. Instead of relying only on economic variables, the paper introduces a number of political variables that are found to be important and show the need to nuance the economic arguments. Democratically administered governments in the region are found to accumulate more debt than autocratic ones and parliamentary systems seem to accumulate more debt than presidential democracies. Furthermore, countries with a constrained executive and countries with more open and competitive electoral systems tend to lead to the accumulation of less debt. Finally, countries that received debt relief seem to accumulate less debt relative to those that did not while economic activity and openness are important in reducing debt in the region.

This study uses the ARDL approach to cointegration to identify the factors affecting credit risk in the Italian banking system over the period 1997Q4-2017Q1. The ratio of new bad loans to the outstanding amount of performing loans in the previous period is the selected proxy of credit risk whereas a wide range of explanatory variables are included in the study. Compared to the previous studies, a wider timeframe is investigated, which captures the booming period, the global financial crisis and the ongoing Eurozone sovereign debt crisis. The findings suggest that macroeconomic cyclical, bank-specific, and financial market variables affect the flow of new bad loans in the Italian banking system. The high significance of the sovereign debt crisis risk proxy signals the important link between banking and sovereign debt crisis.

Banking systems in Sub-Saharan Africa (SSA) have grown notably over the past decades due to benign macroeconomic, regulatory and financial trends. Nonetheless, downside risks remain elevated by structural issues, commodity price fluctuations, reversal of capital flows and spill-over effects from external shocks in a manner similar to the Central East and South East European (CESEE) countries. In the light of the 2008–2009 Global Financial Crisis, great attention has been given to understanding the causes of banking instability with most of the research focusing on advanced economies and, to a lesser extent, large emerging markets while little attention has been paid to the bank-based financial sectors of Sub-Saharan Africa. Furthermore, there is scarcity of studies aiming at knowledge-sharing among different emerging economies. This paper aims to identify the determinants of bank credit risk by focusing on five SSA countries: Kenya, Namibia, South Africa, Zambia and Uganda. Using the ARDL approach to cointegration, findings indicate that increased money supply conditions have a decreasing effect on NPLs in all counties, banking industry-specific variables play a significant role in the case of South Africa and Uganda while NPLs are driven by country-specific variables in the case of Kenya, South Africa and Zambia. The effect of the Global Financial Crisis is evidenced indirectly. Drawing on evidence from CESEE countries with long experience in banking crises, reforms and financial deepening process, the paper provides lessons for SSA countries and offers policy recommendations in the direction of strengthening banks’ balance sheets to ensure financial stability.

This article first compares old with newly updated and extended SIPRI military expenditure data for Greece, Portugal, and Spain. Using the new data to confirm or reject earlier findings, it then replicates a Solow growth model application employed in a 2012 study by Dunne and Nikolaidou. In addition, the article provides new evidence on the military expenditure–economic growth nexus for these three countries using the extended data that now cover the post-global financial crisis and European debt crisis years. The use of the new SIPRI data does not lead to rejection of the earlier findings for Greece and Portugal but does reject the formerly negative and statistically significant effect of military burden on growth for the case of Spain.

Despite the vast amount of empirical work performed on the defense–growth relationship, the impact of military expenditure on public debt is a largely neglected topic. The recent Greek debt crisis brought to the forefront the role of military expenditure as well as the inefficiencies and the inability of the EU to deal with the European debt crisis. This article investigates the role of military expenditure (among other factors) in the evolution of the Greek debt over the period 1970-2011. Greece is a particularly interesting case in this regard, given its high military burden since 1974 and the recent debt crisis that led the country to sign a bail-out package presented by the European Union, the European Central Bank, and the International Monetary Fund, which involves extreme austerity measures and cuts in public spending. Employing the ARDL approach to cointegration, this article concludes that military expenditure and arms imports have had an adverse (i.e., increasing) effect on Greek public debt in the short-run, while investment has helped to reduce debt both in the short- and the long-run.

Using an autoregressive distributed lag model, this paper examines the factors that influence the credit risk of the Bulgarian banking system over the decade 2001–2010, as measured by non-performing loans. Recent papers aim to identify the determinants of non-performing loans using a cross-country modelling framework. As the South East European region (SEE) is non-homogeneous, our analysis is country-specific and captures the timeline between the bank privatisation era up to the global financial crisis and the ensuing Greek crisis. The contribution of our paper is twofold: it uses the ARDL modelling framework that is scarcely employed in related studies but also investigates spillover effects from the Greek crisis in view of the material presence of Greek banks in Bulgaria. In accordance with previous studies, the findings suggest that the credit risk determinants of Bulgarian banks should be sought endogenously in macroeconomic variables and industry-specific factors but also in exogenous factors. We evidence a pronounced role of the global financial crisis and the country’s bank regulatory framework. The Greek debt crisis appears to play an immaterial role indicating that Greek banks have not been a Trojan horse in the Bulgarian banking system.

This special issue includes papers that stem from the 13th Annual International Conference on Economics and Security that was held at CITY College in Thessaloniki, Greece from 24 to 26 June 2009. The conference was organised by the Business Administration and Economics Department of CITY College and had the support of the University of the West of England, Economists for Peace and Security (UK), Economists for Peace and Security (US), The British University in Egypt (BUE) and the South-East European Research Center (SEERC) in Thessaloniki, Greece. The Conference covered a wide range of topics – both theoretical and applied in nature – on economics and security. Participants included scholars and researchers from academic institutions and research centres in Greece, Turkey, the UK, the USA, Israel, Portugal, Slovenia, Bulgaria, the Czech Republic, Italy, France, Sweden, Switzerland, Egypt, Australia, South Africa, Spain, Germany, the Netherlands, Norway, Belgium, China, Colombia and Sweden. Among defence and peace economists, an issue that remains unresolved and as such still attracts a lot of research interest is the economic effects of defence spending and the potential corruption and inequality that are associated with military spending. Drawing on this, this special issue includes five papers that attempt to give answers to questions like: does defence spending promote or hinder economic growth? Is there a trade-off between defence spending and other forms of public expenditure (i.e. education, health)? Is the impact of military spending different in developed and non-developed countries and countries that face various conflicts? And finally, is defence spending associated with corruption, and if so, what is the impact on the countries’ economic growth? Specifically, the first paper by Dunne and Nikolaidou provides empirical evidence on the defence–growth relationship by focusing on the 15 core European Union countries (EU15). The paper argues that despite the importance of this region in the global economic scene and despite the continuous discussions for a common European defence policy, the issue of the economic effects of defence spending has been under-researched for this region. The authors following Dunne et al. (2005) and Knight et al. (1996) estimate an augmented Solow growth model with Harrod-neutral technical progress over the period 1961–2007. They highlight the degree of heterogeneity among the 15 countries in terms of economic development, military spending and defence industries, and as such, they do not consider a simple pooling of the data appropriate. Instead, in order to allow for unobserved heterogeneity across countries, they use fixed and random effects methods and they also provide individual time series estimates for each of the 15 countries where the possibility of country-specific dummies is taken into consideration. Their results are relatively consisDefence and Peace Economics, 2012 Vol. 23(6), December, pp. 533–535

Over the last 30 years there has been an impressive amount of empirical work on the defence-growth nexus, using different methodologies, models and econometric techniques and focusing on individual case studies, cross-country studies or panel data studies. Despite the number and the variety of studies, the evidence on the defence-growth relationship is still far from conclusive. Rather surprisingly, very limited work has been published in the relevant literature for the European Union despite the continuous discussions for a Common European Defence Policy that would require an assessment of the economic effects of defence in this region. To fill in the gap in the literature, this paper employs an augmented Solow-Swan model and estimates it both with panel and time series methods to provide empirical evidence on the economic effects of defence spending in the EU15 over the period 1961-2007. Overall, evidence derived from both panel and time series methods is consistent and suggests that military burden does not promote economic growth in this region.

This paper provides empirical evidence on the determinants of credit risk in the Romanian banking system over the period December 2001 to November 2010 by employing the Autoregressive Distributed Lag (ARDL) approach to cointegration. This approach allows us to investigate both the long-run and the short-run determinants of credit risk and has only recently been employed in the relevant literature. Empirical findings indicate that bank specific factors (credit growth) as well as macroeconomic activity factors (money supply and unemployment) all have a significant impact on Romania’s credit risk both in the short and in the long-run. Furthermore, the findings strongly support our hypothesis that the Greek crisis has a significant impact on Romanian non-performing loans.

This paper aims to investigate the determinants of nonperforming loans in the Romanian banking sector by means of time series modelling. It is motivated by the hypothesis that macroeconomic‐cyclical indicators, monetary aggregates, interest rates, financial markets, and bank‐specific variables influence the nonperforming loans in the Romanian banking system. Using monthly series that span from December 2001 to November 2010, we cover both the booming period and the recent financial crisis. Given the significant presence of the Greek banks in Romania, the novelty of the paper lies in the introduction of variables that proxy the Greek crisis. Thus, we examine the existence of a potential transmission channel to the Romanian banking system by investigating the impact of the Greek crisis to the Romanian nonperforming loans. Our findings indicate that macroeconomic variables, specifically the construction and investment expenditure, the inflation and the unemployment rate, and the country′s external debt to GDP and M2 jointly with Greek crisis‐specific variables influence the credit risk of the Romanian banking system. The results have several implications for policymakers, regulators, and managers as the most recent published stress tests on the Romanian banking system are based on end 2008 data.

This paper aims to investigate the credit determinants in the Bulgarian banking sector by means of time series modelling approach. It is motivated by the hypothesis that macroeconomic - cyclical indicators, monetary aggregates, interest rates, financial markets’ and bank-specific variables have a role to play on the non-performing loans in the Bulgarian banking system. Using monthly series that span from January 2001 to December 2010, we provide evidence based on data that covers both the booming period and the recent global financial turmoil. Given the significant penetration of the Greek banks in the Bulgarian financial system, the novelty of the paper is the

Richardson’s action-reaction model of an arms race has prompted a considerable body of research which has attempted to empirically estimate such models. In general these attempts have been unsuccessful. This paper reconsiders the estimation issues using some recent developments in time-series econometrics, illustrating the issues with estimates for Greece and Turkey and India and Pakistan. Whereas there is little evidence for a Richardson type arms race for Greece and Turkey, India and Pakistan show a stable interaction with a well determined equilibrium.

This is the second Special Issue that includes papers that stem from the Tenth Annual International Conference on Economics and Security, which was held at CITY College in Thessaloniki, Greece on t...

In recent years, there has been a growing number of studies that investigate the economic effects of military spending using a variety of estimation methods and focusing either on individual countries or on groups of relatively homogeneous countries. The situation is not the same as far as the demand for military expenditure is concerned, where less attention has been given and the majority of empirical studies have focused on individual countries, with only a few focusing on groups of countries and employing cross-sectional or panel data approaches. A region that has not attracted any research interest regarding the determinants of military expenditure is the European Union (EU) with the exception of individual country studies (mainly for the UK, Greece, France, Spain, Portugal). This paper argues that understanding the determinants of military spending in these countries is very important, especially given the discussions in recent years towards the development of a Common European Security and Defence Policy (CESDP). It then follows Dunne et al. ( 2003) and employs the Autoregressive Distributed Lag (ARDL) approach to cointegration to estimate a general model of aggregate defence spending for each of the 15 core EU countries over the period 1961-2005. The findings indicate that there is very little uniformity in the factors that determine each country's demand for military expenditure, something that needs to be borne in mind by policy makers when burden-sharing issues are considered in the development of the CESDP.

"INTRODUCTION: THE ECONOMIC AND POLITICAL ASPECTS OF STATE TERRORISM, DEFENCE SPENDING, WARS AND INTERNATIONAL CONFLICTS." Defence and Peace Economics, 18(5), pp. 403–404