This paper aims to test jointly two economic puzzles: the effect of financial development and Inf... more This paper aims to test jointly two economic puzzles: the effect of financial development and Information and Communication Technology (ICT) on economic growth. Theories predict a positive effect of financial development and ICT on growth but empirical studies on these relationships produced mixed results. Further, we investigate the interaction between financial development and ICT Diffusion to test whether the impact of financial development on growth is strengthened by better ICT infrastructure. In this paper we assess empirically these relationships in some MENA countries. The empirical study is based on estimation of a dynamic panel model with system GMM estimators. There are three main findings. First, our empirical results join empirical literature that find a negative direct effect of financial development on economic growth. This ambiguous relationship may be linked to many phenomenons but there aren’t yet clear explanations of this puzzle. Second, the estimates reveal a positive and significant direct effect of ICT proxies on economic growth. This implies that MENA countries need to reinforce their ICT policies and improve using of new Information and Communication Technology. Finally, the interaction between ICT penetration and financial development is found positive and significant in the growth regression. This implies that economies in Mena region can benefit from financial development only once a threshold of ICT development is reached.
This paper investigates the impact of banks' characteristics, financial structure and macroeconom... more This paper investigates the impact of banks' characteristics, financial structure and macroeconomic indicators on banks' net interest margins and profitability in the Tunisian banking industry for the 1980-2000 period. Individual bank characteristics explain a substantial part of the within-country variation in bank interest margins and net profitability. High net interest margin and profitability tend to be associated with banks that hold a relatively high amount of capital, and with large overheads. Size is found to impact negatively on profitability which implies that Tunisian banks are operating above their optimum level. On the other hand, we found that macroeconomic variables have no impact on Tunisian bank's profitability. Turning to financial structure and its impact on banks' interest margin and profitability, we find that stock market development has a positive effect on bank profitability. This reflects the complementarities between bank and stock market growth. We have found that the disintermediation of the Tunisian financial system is favourable to the banking sector profitability. On the ownership side, we reach the conclusion that private banks tend to perform better than state owned ones. Finally, interest rate liberalization has contrasting effect on net interest margins. In fact, partial liberalization has a negative impact on the interest margin whereas complete liberalization strengthens the ability of Tunisian banks to generate profit margins.
Consistent with theoretical predictions, we find that both a higher level of financial leverage a... more Consistent with theoretical predictions, we find that both a higher level of financial leverage and a faster speed of adjustment of leverage toward the shareholders' desired level are associated with better corporate governance quality as defined by a more independent board featuring CEO-chairman separation and greater presence of outside directors, coupled with larger institutional shareholding. In contrast, managerial incentive compensation on average discourages use of debt or adjustments toward the shareholders' desired level, consistent with its entrenchment effect. The effect of corporate governance on leverage adjustments is most pronounced when initial leverage is between the manager's desired level and the shareholders' desired level where the interests of managers and shareholders conflict.
This study uses panel regression tests to examine the impact of the economic performance on the f... more This study uses panel regression tests to examine the impact of the economic performance on the financial one. The retained measures for the economic performance and the financial one are, respectively, the operational efficiency score estimated with data envelopment analysis and the return on assets. This investigation leads to four major conclusions. First, the test results confirm that hotel financial performance is linked to its economic performance that is evaluated by its technical efficiency. Second, hotels affiliated to an international chain, hotels operating under a franchise contract, and hotels located in coastal areas or situated in scenic areas present a better financial performance than others. Third, the managers’ high intellectual level positively affects financial performance. However, hotel size and indebtedness have negative impacts. Fourth, hotel financial performance is linked to its contextual factors such as the tourism region attractiveness. Finally, this study ensures the significant impact of national and international crises, such as terrorist attacks on hotel financial performance.
This paper is concerned with the estimation of firm and time-varying technical efficiency. The ap... more This paper is concerned with the estimation of firm and time-varying technical efficiency. The approach used to measure efficiency is different from the conventional static and stochastic frontier approach. We focus here on dynamic adjustment in attaining a target level of production. Technical inefficiency is modeled via an error correction type model. The main objective is to investigate the development of efficiency over time, the rate of technical change and the productivity growth. Estimation of a dynamic error components model is considered. The empirical analysis is based on an unbalanced panel data consisting of 388 firms from the Tunisian textile, clothing and leather industries (TCL) observed during 1983-1994. The mean efficiency score is found to be of 63 percent and there is no evidence of continuous increase in efficiency. We observe a technical regress during the period. We find that exporting firms are more efficient than the non-exporting ones and that the decline in efficiency is more pronounced for the non-exporting firms. Productivity growth rates are negative with a mean of-4 percent
This study combines the stochastic production frontiers approach with the efficiency wage approac... more This study combines the stochastic production frontiers approach with the efficiency wage approach to identify two technical inefficiency components. The first component is observable and varies over time. It measures the technical inefficiency resulting from an inadequate wage incentive. The second component remains stable over time and concerns unobservable company-specific technical inefficiency. This paper sets out to estimate the time-stable technical efficiency component whilst controlling the company-specific effects using instrumental variable techniques applied to incomplete panels. Labour and capital production factors are measured by some of their qualitative characteristics, i.e. technological progress incorporated into equipment and manpower by skills level. The study then empirically checks the wage-productivity relationship before estimating the technical inefficiency attributable to a lack of effort. The empirical analysis considers a non-cylinder panel of 619 Tunisian textile companies studied from 1983 to 1994. The estimation results point to a decline in autonomous technological progress from 1983 to 1990. Moreover, productivity gains are generated by technological progress incorporated into equipment and manpower skills. The unobservable efficiency is approximately 61% on average. The inefficiency ascribable to a lack of effort is approximately 4% on average.
Ce rapport a été réalisé avec le soutien financier de l'Union Européenne au travers du Femise. Le... more Ce rapport a été réalisé avec le soutien financier de l'Union Européenne au travers du Femise. Le contenu du rapport relève de la seule responsabilité des auteurs et ne peut en aucun cas être considéré comme reflétant l'opinion de l'Union Européenne. This document has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.
This paper adds to the recent literature on finance and employment creation by exploring the effe... more This paper adds to the recent literature on finance and employment creation by exploring the effect of finance on the labour market, using data on 143 countries from 1995 to 2015. We also examine whether the impact of financial development on labour is significantly different before and after the 2008 global financial crisis. This paper has five main findings. First, the analysis confirms the positive relationship between financial institution efficiency and access, as well as the employment rate in the linear specification. Second, the marginal returns to employment from further financial institution inclusion diminish at high levels of inclusion and turn negative when an inclusion point is reached. Third, the effects of financial market access on employment show a “U‐Shaped” relationship. Fourth, the positive effect of financial development on employment strengthens with the country's institutional quality. And fifth, there is strong support for a negative impact of financial ...
We use two panel data techniques in a novel large dataset to assess the dynamic interactions of h... more We use two panel data techniques in a novel large dataset to assess the dynamic interactions of household and enterprise credit with growth in developed and developing countries. Panel vector autoregressive (VAR) results reject the hypothesis that finance only follows economic growth. Instead, both panel techniques provide strong evidence that higher allocations of household credit are an impediment to economic growth regardless of a country's level of development. Otherwise, empirical results confirm that firm credit expansions are conducive to economic growth; however, this effect is not immediate in developing countries but it appears with a 1‐year delay. Our results provide evidence that the credit‐growth nexus changes over time and during the development process. These findings may explain the ambiguous and vanishing effect of finance on growth in recent literature.
This paper investigates the cost efficiency levels of the banking sectors of the Gulf Cooperation... more This paper investigates the cost efficiency levels of the banking sectors of the Gulf Cooperation Council (GCC) countries for the period from 2001 to 2015 and provides a comparison of conventional and Islamic banks. We obtain measures of efficiency using a stochastic frontier model and the meta-frontier approach. The evidence demonstrates that Islamic banks are less efficient and have a weaker level of production technology than conventional banks. The cost efficiency of banks varies significantly across the six Gulf countries and over time. We adopt the results drawn from the meta-frontier model that allow to take into account the differences between the studied countries, and empirically examine the bank-specific, financial, macroeconomic, and political determinants of banking efficiency. The results provide evidence of the differential effects of the selected variables on the efficiency of conventional and Islamic banks. These variables affect the performance of the two types of banks in different ways and with different magnitudes. Keywords GCC countries • Conventional and Islamic banks • Meta-frontier approach • Cost efficiency • Determinants of bank performance JEL Classification C23 • C61 • D21 • G21 B Ihsen Abid
ABSTRACT The standard Hecksher-Ohlin-Samuelson framework claimed that foreign trade benefits deve... more ABSTRACT The standard Hecksher-Ohlin-Samuelson framework claimed that foreign trade benefits developing countries, but many empirical studies suggest otherwise. After analyzing data on income deciles from the World Income Distribution Database for 66 developing countries, we found that trade openness benefits underprivileged people in affluent countries but not in developing countries. Also, external financial flows and democracy in conjunction do not exert significant effects, suggesting that these variables might affect income distribution through different channels. Finally, we reinforce the Kuznets inverted-U hypothesis; namely, the presence of an economic development threshold beyond which low-income deciles would increase.
Abstract: The ability to accurately predict potential corporate distress and to provide early war... more Abstract: The ability to accurately predict potential corporate distress and to provide early warnings has become of interest not only to managers but also to external stakeholders of a company. In this way, and since there are very distinct differences in the accounting ...
Determinants of Differences in interest margins reflect differences in bank Commercial Bank Inter... more Determinants of Differences in interest margins reflect differences in bank Commercial Bank Interest characteristic-acros M argins and P rofitability economic conditions, existing financial structure and taxation, regulation, and
Institutions and Macroeconomic Policies in Resource-Rich Arab Economies
This chapter contributes to the literature on fiscal-monetary interdependence in resource-depende... more This chapter contributes to the literature on fiscal-monetary interdependence in resource-dependent economies in the Arab World, specifically during the post-mid-1990s oil boom. It also provides empirical evidence on threshold effects for oil rents per capita. These findings support differentiated exchange rate regime choices in economies with low rent per capita, such as Sudan and Yemen, relative to wealthier Gulf Cooperation Council (GCC) economies and Algeria. The first group suffers from fiscal dominance, which explains their choice of soft pegged exchange rate regimes and their failure to sustain credible exchange rate-based stabilization programs. GCC countries, however, managed to maintain credible de facto pegged exchange rate regimes and convertible currencies, while Algeria graduated to a successfully managed exchange rate regime. Nevertheless, in contrast to Chile and Norway, Arab oil economies still need to establish credible fiscal rules for conducting monetary policy i...
This paper aims to test jointly two economic puzzles: the effect of financial development and Inf... more This paper aims to test jointly two economic puzzles: the effect of financial development and Information and Communication Technology (ICT) on economic growth. Theories predict a positive effect of financial development and ICT on growth but empirical studies on these relationships produced mixed results. Further, we investigate the interaction between financial development and ICT Diffusion to test whether the impact of financial development on growth is strengthened by better ICT infrastructure. In this paper we assess empirically these relationships in some MENA countries. The empirical study is based on estimation of a dynamic panel model with system GMM estimators. There are three main findings. First, our empirical results join empirical literature that find a negative direct effect of financial development on economic growth. This ambiguous relationship may be linked to many phenomenons but there aren’t yet clear explanations of this puzzle. Second, the estimates reveal a positive and significant direct effect of ICT proxies on economic growth. This implies that MENA countries need to reinforce their ICT policies and improve using of new Information and Communication Technology. Finally, the interaction between ICT penetration and financial development is found positive and significant in the growth regression. This implies that economies in Mena region can benefit from financial development only once a threshold of ICT development is reached.
This paper investigates the impact of banks' characteristics, financial structure and macroeconom... more This paper investigates the impact of banks' characteristics, financial structure and macroeconomic indicators on banks' net interest margins and profitability in the Tunisian banking industry for the 1980-2000 period. Individual bank characteristics explain a substantial part of the within-country variation in bank interest margins and net profitability. High net interest margin and profitability tend to be associated with banks that hold a relatively high amount of capital, and with large overheads. Size is found to impact negatively on profitability which implies that Tunisian banks are operating above their optimum level. On the other hand, we found that macroeconomic variables have no impact on Tunisian bank's profitability. Turning to financial structure and its impact on banks' interest margin and profitability, we find that stock market development has a positive effect on bank profitability. This reflects the complementarities between bank and stock market growth. We have found that the disintermediation of the Tunisian financial system is favourable to the banking sector profitability. On the ownership side, we reach the conclusion that private banks tend to perform better than state owned ones. Finally, interest rate liberalization has contrasting effect on net interest margins. In fact, partial liberalization has a negative impact on the interest margin whereas complete liberalization strengthens the ability of Tunisian banks to generate profit margins.
Consistent with theoretical predictions, we find that both a higher level of financial leverage a... more Consistent with theoretical predictions, we find that both a higher level of financial leverage and a faster speed of adjustment of leverage toward the shareholders' desired level are associated with better corporate governance quality as defined by a more independent board featuring CEO-chairman separation and greater presence of outside directors, coupled with larger institutional shareholding. In contrast, managerial incentive compensation on average discourages use of debt or adjustments toward the shareholders' desired level, consistent with its entrenchment effect. The effect of corporate governance on leverage adjustments is most pronounced when initial leverage is between the manager's desired level and the shareholders' desired level where the interests of managers and shareholders conflict.
This study uses panel regression tests to examine the impact of the economic performance on the f... more This study uses panel regression tests to examine the impact of the economic performance on the financial one. The retained measures for the economic performance and the financial one are, respectively, the operational efficiency score estimated with data envelopment analysis and the return on assets. This investigation leads to four major conclusions. First, the test results confirm that hotel financial performance is linked to its economic performance that is evaluated by its technical efficiency. Second, hotels affiliated to an international chain, hotels operating under a franchise contract, and hotels located in coastal areas or situated in scenic areas present a better financial performance than others. Third, the managers’ high intellectual level positively affects financial performance. However, hotel size and indebtedness have negative impacts. Fourth, hotel financial performance is linked to its contextual factors such as the tourism region attractiveness. Finally, this study ensures the significant impact of national and international crises, such as terrorist attacks on hotel financial performance.
This paper is concerned with the estimation of firm and time-varying technical efficiency. The ap... more This paper is concerned with the estimation of firm and time-varying technical efficiency. The approach used to measure efficiency is different from the conventional static and stochastic frontier approach. We focus here on dynamic adjustment in attaining a target level of production. Technical inefficiency is modeled via an error correction type model. The main objective is to investigate the development of efficiency over time, the rate of technical change and the productivity growth. Estimation of a dynamic error components model is considered. The empirical analysis is based on an unbalanced panel data consisting of 388 firms from the Tunisian textile, clothing and leather industries (TCL) observed during 1983-1994. The mean efficiency score is found to be of 63 percent and there is no evidence of continuous increase in efficiency. We observe a technical regress during the period. We find that exporting firms are more efficient than the non-exporting ones and that the decline in efficiency is more pronounced for the non-exporting firms. Productivity growth rates are negative with a mean of-4 percent
This study combines the stochastic production frontiers approach with the efficiency wage approac... more This study combines the stochastic production frontiers approach with the efficiency wage approach to identify two technical inefficiency components. The first component is observable and varies over time. It measures the technical inefficiency resulting from an inadequate wage incentive. The second component remains stable over time and concerns unobservable company-specific technical inefficiency. This paper sets out to estimate the time-stable technical efficiency component whilst controlling the company-specific effects using instrumental variable techniques applied to incomplete panels. Labour and capital production factors are measured by some of their qualitative characteristics, i.e. technological progress incorporated into equipment and manpower by skills level. The study then empirically checks the wage-productivity relationship before estimating the technical inefficiency attributable to a lack of effort. The empirical analysis considers a non-cylinder panel of 619 Tunisian textile companies studied from 1983 to 1994. The estimation results point to a decline in autonomous technological progress from 1983 to 1990. Moreover, productivity gains are generated by technological progress incorporated into equipment and manpower skills. The unobservable efficiency is approximately 61% on average. The inefficiency ascribable to a lack of effort is approximately 4% on average.
Ce rapport a été réalisé avec le soutien financier de l'Union Européenne au travers du Femise. Le... more Ce rapport a été réalisé avec le soutien financier de l'Union Européenne au travers du Femise. Le contenu du rapport relève de la seule responsabilité des auteurs et ne peut en aucun cas être considéré comme reflétant l'opinion de l'Union Européenne. This document has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.
This paper adds to the recent literature on finance and employment creation by exploring the effe... more This paper adds to the recent literature on finance and employment creation by exploring the effect of finance on the labour market, using data on 143 countries from 1995 to 2015. We also examine whether the impact of financial development on labour is significantly different before and after the 2008 global financial crisis. This paper has five main findings. First, the analysis confirms the positive relationship between financial institution efficiency and access, as well as the employment rate in the linear specification. Second, the marginal returns to employment from further financial institution inclusion diminish at high levels of inclusion and turn negative when an inclusion point is reached. Third, the effects of financial market access on employment show a “U‐Shaped” relationship. Fourth, the positive effect of financial development on employment strengthens with the country's institutional quality. And fifth, there is strong support for a negative impact of financial ...
We use two panel data techniques in a novel large dataset to assess the dynamic interactions of h... more We use two panel data techniques in a novel large dataset to assess the dynamic interactions of household and enterprise credit with growth in developed and developing countries. Panel vector autoregressive (VAR) results reject the hypothesis that finance only follows economic growth. Instead, both panel techniques provide strong evidence that higher allocations of household credit are an impediment to economic growth regardless of a country's level of development. Otherwise, empirical results confirm that firm credit expansions are conducive to economic growth; however, this effect is not immediate in developing countries but it appears with a 1‐year delay. Our results provide evidence that the credit‐growth nexus changes over time and during the development process. These findings may explain the ambiguous and vanishing effect of finance on growth in recent literature.
This paper investigates the cost efficiency levels of the banking sectors of the Gulf Cooperation... more This paper investigates the cost efficiency levels of the banking sectors of the Gulf Cooperation Council (GCC) countries for the period from 2001 to 2015 and provides a comparison of conventional and Islamic banks. We obtain measures of efficiency using a stochastic frontier model and the meta-frontier approach. The evidence demonstrates that Islamic banks are less efficient and have a weaker level of production technology than conventional banks. The cost efficiency of banks varies significantly across the six Gulf countries and over time. We adopt the results drawn from the meta-frontier model that allow to take into account the differences between the studied countries, and empirically examine the bank-specific, financial, macroeconomic, and political determinants of banking efficiency. The results provide evidence of the differential effects of the selected variables on the efficiency of conventional and Islamic banks. These variables affect the performance of the two types of banks in different ways and with different magnitudes. Keywords GCC countries • Conventional and Islamic banks • Meta-frontier approach • Cost efficiency • Determinants of bank performance JEL Classification C23 • C61 • D21 • G21 B Ihsen Abid
ABSTRACT The standard Hecksher-Ohlin-Samuelson framework claimed that foreign trade benefits deve... more ABSTRACT The standard Hecksher-Ohlin-Samuelson framework claimed that foreign trade benefits developing countries, but many empirical studies suggest otherwise. After analyzing data on income deciles from the World Income Distribution Database for 66 developing countries, we found that trade openness benefits underprivileged people in affluent countries but not in developing countries. Also, external financial flows and democracy in conjunction do not exert significant effects, suggesting that these variables might affect income distribution through different channels. Finally, we reinforce the Kuznets inverted-U hypothesis; namely, the presence of an economic development threshold beyond which low-income deciles would increase.
Abstract: The ability to accurately predict potential corporate distress and to provide early war... more Abstract: The ability to accurately predict potential corporate distress and to provide early warnings has become of interest not only to managers but also to external stakeholders of a company. In this way, and since there are very distinct differences in the accounting ...
Determinants of Differences in interest margins reflect differences in bank Commercial Bank Inter... more Determinants of Differences in interest margins reflect differences in bank Commercial Bank Interest characteristic-acros M argins and P rofitability economic conditions, existing financial structure and taxation, regulation, and
Institutions and Macroeconomic Policies in Resource-Rich Arab Economies
This chapter contributes to the literature on fiscal-monetary interdependence in resource-depende... more This chapter contributes to the literature on fiscal-monetary interdependence in resource-dependent economies in the Arab World, specifically during the post-mid-1990s oil boom. It also provides empirical evidence on threshold effects for oil rents per capita. These findings support differentiated exchange rate regime choices in economies with low rent per capita, such as Sudan and Yemen, relative to wealthier Gulf Cooperation Council (GCC) economies and Algeria. The first group suffers from fiscal dominance, which explains their choice of soft pegged exchange rate regimes and their failure to sustain credible exchange rate-based stabilization programs. GCC countries, however, managed to maintain credible de facto pegged exchange rate regimes and convertible currencies, while Algeria graduated to a successfully managed exchange rate regime. Nevertheless, in contrast to Chile and Norway, Arab oil economies still need to establish credible fiscal rules for conducting monetary policy i...
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