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Journal of Banking and Financial Economics


JBFE No 2/2018

Potential and Actual FDI Spillovers in Global Value Chains

The Role of Foreign Investor Characteristics, Absorptive Capacity and Transmission Channels

Deborah Winkler

 

ABSTRACT

Using unique survey data on direct supplier-multinational linkages in Chile, Ghana, Kenya, Lesotho, Mozambique, Swaziland, and Vietnam, this paper fi rst evaluates how foreign investors differ from domestic producers in terms of their potential to generate positive spillovers for local suppliers. It finds that foreign firms outperform domestic producers on several indicators, but have fewer linkages with the local economy and offer less supplier assistance, resulting in offsetting effects on the spillover potential. The paper also studies the relationship between foreign investor characteristics and linkages with the local economy as well as assistance extended to local suppliers. It finds that foreign investor characteristics matter for both. Additionally, this paper examines the role of suppliers’ absorptive capacities in determining the intensity of their linkages with multinationals. The results indicate that several supplier characteristics matter, but these effects also depend on the length of the supplier relationship. Finally, the paper assesses whether assistance or requirements from the multinational influence spillovers on suppliers. The results confirm the existence of positive effects of assistance (including technical audits, joint product development, and technology licensing) on foreign
direct investment spillovers, while we find no evidence for demand effects.

 

JEL classification: F1, F2
Keywords: Foreign direct investment, vertical spillovers, linkages, global value chains, foreign firm characteristics, absorptive capacity, transmission channels, agri-business, apparel, mining.

DOI: 10.7172/2353-6845.jbfe.2018.2.1

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Good Practices in Empirical Corporate Finance and Accounting Research

Marek Gruszczyński

 

ABSTRACT

This paper presents the risks of quantitative research pertaining to corporate finance and accounting. These is followed by a survey-like catalogue of good practices in modelling. All considerations are rooted in financial microeconometrics, the field for examining both practical and theoretical questions of applying econometric techniques in corporate finance and accounting research based on the use of microdata (Gruszczyński 2018a). Two major parts of the paper include: (1) discussion of the typical drawbacks in applying regression-type models, like causality vs. correlation, selection of explanatory variables and endogeneity, and (2) list of good practices in microeconometric applications to corporate finance and accounting research, based on Faff (2017), Kennedy (2002), Adams (2017), Hyndman (robjhyndman.com/) and author’s own experience. Catalogue of good practices in microeconometric applications to corporate finance and
accounting may serve as the checklist for students and researchers.

 

JEL classification: C50, C58, G30, M40
Keywords: financial microeconometrics; empirical corporate finance; applied accounting; good
practices in research.

DOI: 10.7172/2353-6845.jbfe.2018.2.2

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Sustainability and Equity Challenges to Pension Systems: The Case of Lebanon

Mariusz Jarmuzek, Najla Nakhle

 

ABSTRACT

Reform of Lebanon’s pension system is indispensable. The country already faces fiscal sustainability risks, which will be compounded in the future by significantly higher pension- related spending and liabilities, mainly reflecting adverse demographics. In addition to sustainability issues, the pension system also suffers from equity shortcomings – Lebanon is the only MENA country that does not offer social security for retirees in the private sector. While several reform proposals have been formulated since the early 2000s, none has been implemented to date. Costs mount with every year of delay, so action is required soon to address these challenges.

 

JEL classification: E62, H55, J11
Keywords: ageing, demographics, equity, pensions, pension reform, fiscal policy, sustainability

DOI: 10.7172/2353-6845.jbfe.2018.2.3

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Sovereign Debt Restructurings in Grenada: Causes, Processes, Outcomes, and Lessons Learned

Tamon Asonuma, Mike Xin Li, Michael G. Papaioannou, Saji Thomas, Eriko Togo

 

ABSTRACT

This paper documents the two debt restructurings that Grenada undertook in 2004–06 and 2013–15. Both restructurings emerged as a consequence of weak fiscal and debt situations, which became unsustainable soon after external shocks hit the island economy. The two restructurings provided liquidity relief, with the second one involving a principal haircut. However, the first restructuring was not able to secure long-term debt sustainability. Grenada’s restructuring experience shows the importance of (1) establishing appropriate debt restructuring objectives; (2) committing to policy reforms and maintaining ownership of the restructuring goals; and (3) engaging closely and having clear communications with creditors.

 

JEL classification: F34, G15, H63
Keywords: Sovereign Debt; Sovereign Defaults; Sovereign Debt Restructurings; Serial Debt Restructurings; Serial Defaults; Grenada; Disaster Clause

DOI: 10.7172/2353-6845.jbfe.2018.2.4

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Comparison on Efficiency of Foreign and Domestic Banks Evidence from Algeria

Ishaq Hacini, Khadra Dahou

 

ABSTRACT

The study investigates the differences in technical, pure technical, and scale effi ciencies of domestic and foreign banks in Algeria over the period of 2000–2012. The study uses annual data of 10 foreign banks and 05 domestic banks operated in Algeria. The input-oriented Data Envelopment Analysis model is used to measure the banks’ effi ciency score. In addition, a set of parametric and non-parametric tests are used for investigating the differences in efficiency between foreign and domestic banks. The fi ndings reveal that the banks in Algeria could improve their technical effi ciency by 23%. In addition, it seems that banks in Algeria suffer from the scale inefficiency. On the other hand, the foreign banks are more technically effi cient than domestic banks. The superiority of foreign banks in technical effi ciency is due to their superiority in the scale efficiency.

 

JEL classification: C14, G21, G28
Keywords: Algeria, Data Envelopment Analysis, Effi ciency, Domestic banks, Foreign banks

DOI: 10.7172/2353-6845.jbfe.2018.2.5

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