International Journal of Applied Economics, Finance and Accounting

Empowering Entrepreneurship: How Remittances Drive New Business Creation and in Africa's Top Recipient Nations

2025-04-08T09:35:12+00:00

This study aims to investigate the relationship between remittances and new business creation in the top remittance-receiving countries in Africa (Nigeria, Ghana, Senegal, and Mali). To investigate the relationship between remittances and new business creation in the top remittance-receiving countries between 2006 and 2021, the study first applied the Autoregressive Distributed Lag (ARDL) model in a stepwise manner, followed by the use of the Panel Fully Modified Least Squares (FMOLS) method. The study's findings indicate that increased remittances lead to the creation of more new businesses, as evidenced by the statistically significant positive coefficient of remittances across all models. Control variables such as Gross Domestic Product (GDP) and institutional quality are statistically significant with positive coefficients, highlighting that economic growth and high-quality institutions promote new business creation. On the other hand, economic globalization has a negative coefficient and is statistically significant, indicating that economic globalization prohibits local business creation. The study concludes that increased remittances promote new business creation in top remittance-receiving African countries. These results present an opportunity for the government and policymakers to enact policies that promote the inflow of remittances and create a conducive environment for new business creation and entrepreneurial activities to flourish.

ESG Ratings and Firm Performance with Moderating Role of Corporate Governance Mechanism: Evidence from Thai Settings

2025-04-08T09:48:17+00:00

This paper aims to add empirical evidence to the existing literature in the arena of Environmental, Social, and Governance (ESG) information, firm performance, and stock market participation within a Thai context. Based on the dynamic analysis with the two-step system generalized method of moments, the instruments consist of the corporate governance mechanism. Results have indicated that the association between ESG scores and firm performance is statistically significant, with the moderating role of corporate governance. ESG-driven firms tend to have higher firm performance relative to non-ESG-driven firms. The overall result suggests that firm performance is more pronounced when the firm implements ESG policy. However, I argue that results should be interpreted with caution because 1) firm-specific factors may influence the outcome of ESG investment and 2) the outcome of ESG strategies may require a longer time to be identified. This paper also examines whether and how the stock market incorporates ESG information for its decisions. There is a negative association between excess returns and ESG performance. The result suggests that the stock market views ESG information as being able to mitigate information asymmetry. Two different ESG measures based on the Stock Exchange of Thailand and the third-party criteria are employed for the analysis, and I posit that the results based on those measures are qualitatively similar. This will endorse the usefulness of ESG information.

The Influence of Capital Adequacy, Cost-to-Income Ratio, Debt-to-Equity Ratio, Loan-to-Deposit Ratio, and Bank Size on the Performance of Jordanian Banks

2025-04-08T11:49:21+00:00

The study aims to examine the impact of key financial factors, including capital adequacy, cost-to-income ratio, loans compared to deposits ratio, debt-to-equity ratio, and bank size, on the performance of banks in Jordan during the period from 2006 to 2023. Upon determining that all variables in the study were binary, either zero or one, through the Im, Pesaran, Shin, and Philip-Perron tests, we analyzed the banks' annual data utilizing autoregressive distributed lag (ARDL) methodology. The study's findings indicated that capital sufficiency and cost-to-income ratios adversely affect Jordanian banks' short- and long-term profitability. The loan-to-deposit ratio positively impacted the long-term performance of Jordanian banks while leaving their short-term performance unaffected. The size of the bank positively influenced both its long-term and short-term success. The debt-to-equity ratio did not influence their performance in the long term versus the short term. According to the authors, investors should consider capital adequacy, loan-to-deposit ratio, cost of capital, and bank size when making investment selections. The management of Jordanian banks should not retain excessive capital. The administration of Jordanian banks must achieve an equilibrium between profitability and liquidity goals by implementing appropriate lending policies.

Financial Inclusion and Bank Stability in the MENA Region: What Role Does Institutional Quality Play?

2025-04-08T11:57:24+00:00

This paper has three main objectives. First, it explores how financial inclusion (FI) affects the stability of banks. Second, it examines the influence of institutional quality (IQ) on bank stability. Third, it analyzes whether IQ mediates the relationship between financial inclusion and bank stability. The Middle East and North Africa (MENA) region’s 68 conventional banks are the sample used in the study, which spans the years 2005–2020. For a more in-depth analysis, the MENA region is divided into two sub-regions: 33 banks in Gulf Cooperation Council (GCC) countries and 35 banks in non-GCC countries. The empirical approach utilized is the System Generalized Method of Moments (SGMM). The results show that bank stability is negatively impacted by financial inclusion, while institutional quality enhances bank stability in MENA banks. Additionally, the results show that MENA banks benefit from the connection between financial inclusion and institutional quality, a conclusion consistent across the full sample, the two sub-regions, and three different measures of bank stability.

Economic Globalisation and Stock Market Returns in Nigeria

2025-04-08T12:05:54+00:00

The purpose of this study is to investigate the effect of economic globalization on stock market returns in Nigeria from 1986 to 2022, employing autoregressive distributed lag modeling and bound testing cointegration. Preliminary tests were conducted, including multicollinearity checks and unit root tests for stationarity. The findings reveal that, in the long run, several key variables of economic globalization significantly influence stock market returns. Notably, Foreign Portfolio Investment (FPI) has a substantial positive effect (coefficient = 0.076497, p-value = 0.0020), whereas Foreign Direct Investment (FDI) demonstrates a weak but positive impact (coefficient = 0.073460, p-value = 0.0676). Financial Liberalization (FIL) significantly enhances stock market returns (coefficient = 0.194983, p-value = 0.0095), while Net Capital Flow (NCF) shows an insignificant negative effect (coefficient = -0.278998, p-value = 0.7447). Interest Rate (INTR) positively influences returns (coefficient = 0.050224, p-value = 0.0000), but Credit to the Private Sector (LCPS) exhibits a significant negative effect (coefficient = -0.184135, p-value = 0.0015). In the short run, FDI presents a negative impact (coefficient = -0.105272, p-value = 0.0923), while FPI remains positively influential (coefficient = 0.138874, p-value = 0.0000). The study concludes that FPI and FIL significantly influence stock market returns. This implies that governments should implement robust financial reforms that would encourage sustainable FPI for stock market development.

Unravelling Financial Statement Fraud in Emerging Markets: Insights from Vietnam with the Fraud Diamond Framework

2025-04-08T12:15:59+00:00

This study examines factors influencing financial statement fraud (FSF) in Vietnamese listed companies using the Fraud Diamond Framework and explores how the COVID-19 pandemic shapes these factors in emerging markets. Logistic regression analysis was conducted on data from 216 companies listed on the HOSE and HNX stock exchanges between 2017 and 2021, analyzing key variables across pre-COVID-19 and COVID-19 periods. The results reveal six significant factors associated with FSF. External pressure and financial stability positively correlate with FSF, while financial targets have a negative impact. Ineffective monitoring and director changes are positively linked to FSF, whereas frequent auditor changes mitigate fraud risks. The COVID-19 period intensified financial pressures, highlighting the dynamic nature of fraud determinants during crises. The findings emphasize the need for adaptive governance strategies to address FSF during economic uncertainty. The study provides recommendations for strengthening governance frameworks and fraud detection measures to improve transparency and investor trust in emerging economies. This study uniquely applies the Fraud Diamond Framework in a growing economy, offering insights on FSF mitigation during crises and the interplay between governance and economic factors.

Analysis of the Small and Medium-Sized Enterprises ESG Rating in Hungary

2025-04-08T12:24:13+00:00

In the past decade, numerous studies have established a positive relationship between ESG and financial performance; however, significantly less attention has been directed toward SMEs, the causal relationship, and the industries driving ESG changes. This study aims to identify which industries are associated with ESG changes among Hungarian SMEs and to examine whether there is a relationship between financial performance and ESG changes. The assumption of a causal relationship has so strongly dominated the research that the possibility of a reverse effect has rarely been considered, namely that companies with a strong financial background could become leaders in ESG. This study, addressing the above research gap, analyzes a sample of 1,200 SMEs and provides evidence that, in terms of ESG and its individual components, companies with a strong financial position are more likely to perform well than those with weaker financial performance. Analysis of companies' financial data shows a link between financial results and changes in ESG ratings. It is found that improving revenue, profit, and ROE from 2022 to 2024 statistically significantly reduces the likelihood of a decrease in the company's ESG rating and increases the probability of an increase in the ESG rating. Our findings suggest the importance of integrating ESG goals into strategic financial planning for practitioners. SMEs with higher financial performance are better positioned to adopt ESG initiatives, emphasizing the need for robust financial health as a foundation for sustainability.

The Keynesian Hypothesis in Vietnamese Provinces: The Instrumental Effect of Tax Revenues

2025-04-08T12:40:59+00:00

The Keynesian Hypothesis posits that public spending fosters economic growth by enhancing infrastructure, healthcare, education, and social welfare. While studies focusing on provincial governance are essential for understanding local policy impacts, the current literature often faces limitations due to data availability. This study is the first to revisit the Keynesian Hypothesis using data from 63 Vietnamese provinces spanning 2012 to 2019. A two-stage least squares approach was used to account for the instrumental role of taxation in the public spending–economic growth nexus. The study confirmed the hypothesis at the provincial level, emphasizing the importance of taxation and budgeting in mediating and sustaining the positive impacts of public spending on economic development. The study indicated that Vietnam continues to operate as a labor-intensive economy, highlighting the urgent need for a transition to a more capital-intensive model. Among other factors, provincial governance competitiveness is crucial for attracting and facilitating businesses, thereby promoting local and national economic growth. Several implications can be drawn regarding the optimization of tax structures, enhancing the effectiveness of public spending, investing in human capital development, and strengthening local governance to create a more favorable business environment. These insights are vital for policymakers aiming for sustainable economic advancement.

Impact of Geographical Diversification on Bank Liquidity: Empirical Evidence from Vietnamese Commercial Banks

2025-04-08T12:47:15+00:00

This study investigates the effects of geographical diversification on liquidity within Vietnamese commercial banks from 2008 to 2023. Using panel data regression methods, including fixed-effects regressions to measure the relationship between bank liquidity, geographical diversification, and control variables, the generalized method of moments (GMM) to address endogeneity issues, and quantile regression to assess whether this interaction differs across different quantiles of bank liquidity, we present empirical evidence regarding the relationship between bank liquidity and geographical diversification. These findings indicate that geographical diversification reduces bank liquidity, as banks expanding into various locations complicate liquidity management due to differing economic conditions and regulations. Furthermore, inefficiencies in monitoring and resource allocation among geographically dispersed branches may intensify liquidity limitations, necessitating the adoption of strong risk management measures by banks. Nonetheless, for banks that have an abundance of liquidity, much of the adverse effect is ameliorated compared to those with less liquidity, suggesting that banks experiencing low liquidity would find it more difficult to manage liquidity across branches that are spread over a wide area. The study provides important practical implications for bank management and policymaking, including (i) developing stricter risk management strategies when expanding bank branch networks to maintain stable liquidity and (ii) establishing appropriate supervisory frameworks to mitigate liquidity risks arising from geographical diversification.