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Analysis of the Impact of Regional Expenditure on Human Development: A Study of Jambi Province, Indonesia

Author(s): Muslim MUSLIM,Hefrizal Handra,. Sjafrizal,Sofyardi SOFYARDI / Language(s): English Issue: 65/2019

The development of a region is not only focused on physical development, but human development is also an important factor for achieving prosperity, because humans are agents who become economic actors. Regions in Indonesia have limitations in carrying out human development which in turn is a human development index that is relatively low. This study aims to analyze regional expenditure and population growth towards human development. The study was conducted at the regency/municipal governments in Jambi Province, namely 9 Regencies and 2 Cities. This type of research is explorative. The type of data analyzed is panel data. The variable of this research is human development as a dependent variable. Regional expenditure and population growth are independent variables. The data analysis technique to test the hypothesis is panel data regression.Research findings prove that: 1) Regional expenditure has a significant effect on human development, 2) Population growth has a significant effect on human development. This study uses a quantitative method to analyze population growth variables towards human development which is still rarely done from previous research.

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The Effect of Double Tax Treaties on Foreign Direct Investment Inflows: The Study on the Indonesia Treaties Network

Author(s): Gunawan PRIBADI,... Gunadi,Haula ROSDIANA / Language(s): English Issue: 65/2019

This paper examines the impact of the Indonesia double tax treaties (DTTs) network with developed countries on Indonesia’s inward foreign direct investment (FDI) for the period 2005-2017 and investigates the causes of the result. Using Indonesia DTTs as a dummy variable and other data under the Capability Maturity Model (CMM) framework over 41 sample countries, this paper finds that the Indonesia DTTs network with developed countries does not have any statistically significant correlation with the inward FDI. When the analysis is extended to examine the effect of the DTTs in three and six years after the implementation of the DTTs, the results remain the same. This paper finds also that, in the case of Indonesia, DTTs do not affect the inward FDI because foreign investors consider more on the non-tax factors and most of Indonesia’s DTTs were not negotiated for economic reasons.

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Is There Any Theory that Explains the Swedish Krona (SEK)?

Author(s): Christos Papahristodoulou / Language(s): English Issue: 65/2019

This paper investigates if the value of the Swedish krona (SEK) against the US dollar ($) and the Euro (€) can be explained by some standard theories and fundamentals, such as the purchasing power parity, the interest rate parity, the debt-ratio and the trade balance ratio, using monthly data since February, 1993. All of them fail to explain why the SEK is so “weak”. The lower inflation rate in Sweden over the recent years has not strengthened the currency. Similarly, the theoretically stronger SEK implied by the lower interest rates in Sweden as the uncovered interest rate parity predicts, has not emerged yet. Finally, neither the persistent trade balance surpluses, nor the declining and very low debt ratio in Sweden has had any positive effects on the currency. It seems that the traders and investors ignore the fundamentals, speculate against the currency and keep it undervalued. Moreover, a number of simulated paths, predicted from various ARIMA-processes, based on the historic exchange rates, show that the worse exchange rates have already gone and by the end of 2020 the $ and the € will cost around 8 and 9.8 SEK respectively.

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European Leveraged Buyout Exit Strategies: Market Timing versus Pseudo Market Timing

Author(s): Fadoua Kouk,Olfa Benouda / Language(s): English Issue: 65/2019

In this paper, the impact of Market Timing versus Pseudo Market Timing on the choice of exit from a Leveraged Buyout (LBO) is studied. Initial Public Offering (IPO) and acquisition waves and the exit choices of 3237 European Buyout-Backed over a period from 2004 through 2018 are also investigated. Initially, the main factors that influence the exit strategy of an LBO, namely the economic conditions and the stock market returns at the time of the exit are discussed. Thereafter, details of exit choices and the acquisition and IPO "waves" are studied. These different tests are carried out, first, on the global sample, and second, on several European countries (France, Germany and the United Kingdom). The obtained results partially support the Pseudo Market Timing assumptions and confirm both the application of Market Timing and et the ability of funds investment to time the market successfully. Indeed, the results of the cross-sectional regression show that market returns in the two quarters preceding the exit are higher than the post-exit returns in the cases of IPOs and acquisitions. Nevertheless, post-IPO returns are negative while post-acquisition returns remain positive. Moreover, the study of exit choices using Probit regression shows that the increase in exit probability via an IPO is associated with the increase in market returns during the two quarters preceding the exit and the lower subsequent returns.

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Analysis of the Determinants of Non-Performing Loans in Thailand: Empirical Study of the SMEs Non-Performing Loans

Author(s): Saranya Raksong,Byungho Yu,Yaowanuch Raksong / Language(s): English Issue: 65/2019

Non-Performing Loans or NPLs is an essential banking performance indicator and it reflected credit risk and bank’s asset quality. An increasing in NPLs level leads to unstable of banking system. Therefore, several literatures examine the various aspects of NPLs.This paper aims to investigate the determinants of the NPLs in Thailand banking system, focusing on the NPLs from SMEs. The paper was conducted by using the secondary data in the period from 2008Q1 to 2018Q4. The results found that debt ratio (DEB), loan to deposit ratio (DEP), Gross Domestic Product (GDP), domestic interest rate (INT), inflation rate (INF) and unemployment rate (UNEMP) had significant impact on total non-performing loan (NPL_T), corporate non-performing loan (NPL_CO), and customers non-performing loan (NPL_CU). In addition, the research indicated that Gross Domestic Product (GDP) seems to be the most important factor that affects the total non-performing loan (NPL_T) and corporate non-performing loan (NPL_CO), while it is a second greatest factor influencing Customer non-performing loan (NPL_CU).

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Arbitrage Profits in Thai Warrants

Author(s): Kamphol Panyagometh / Language(s): English Issue: 65/2019

This study analyzed the data of 90 warrants traded on the Stock Exchange of Thailand from January, 2013 to March, 2018 for arbitrage profits. The findings revealed the opportunity for arbitrage profits at 4.20% with a mean arbitrage profit of 10.029 Baht. The maximum arbitrage profit was 60.92 Baht and the minimum arbitrage profit was 0.072 Baht.

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Drivers of Equity as a Performance Measure. A Dynamic Panel Data Analysis for Russian Firms

Author(s): Marius Sorin Dincă,Fitim Deari,Valeriya Lakshina,Gheorghiţă Dincă / Language(s): English Issue: 65/2019

The purpose of this study is to find whether equity can be a performance indicator, since it is usually considered mostly as an input by investors and other interested parties. The study using empirical data tests the dynamics of equity for 201 unlisted Russian firms for the 2000 to 2015 period. A dynamic panel data analysis using GMM as proposed in Arellano and Bond (1991) is performed. The study finds that equity evolution is affected by lagged itself. The general adjustment process was quite slowly and results were affected by 2008 financial crisis. Some industries were closer to the target equity financing than others. Also, the firms’ characteristics are confirmed to be drivers of equity financing. The study provides empirical results which can be used for methodological purpose, as well as for managers/specialists in view of improving and adjusting company financing policies.

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Happiness Flight with Institutional Capabilities: Evidence of the Effects of Economic Freedom on Subjective Well-Being in Developing Countries

Author(s): Muhammad Nadeem,Yang JUN,Yu TIAN,Zahid HUSSAIN,Muhammad YOUSUF / Language(s): English Issue: 65/2019

Recent empirical studies show that institutions are related to the elevation of subjective well-being in developing countries. Most of these studies use the change or increase in economic freedom and its impact on subjective well-being. None the less, the relative version of economic freedom is also feasible and none of the authors have analyzed this possibility. Furthermore, not much is discussed about the individual aspects of institutional capabilities valued by the citizens and how these preferences change the level of subjective well-being in developing countries. This study empirically analyzes whether institutional capabilities are conducive or detrimental to subjective well-being in a panel data of 30 countries between 1995 and 2014. This study attempts to close these gaps by conducting Random Effects analysis as an empirical strategy. Results show that both changes in economic freedom and its relative version are positively significant toward subjective well-being. The further finding indicates that the citizens of lower-middle-income and upper-middle-income countries are more sensitive to the access to sound money as compared to the citizens from higher-income countries.

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Unconditional Basic Income: Who gets it? Who pays for it? A social Accounting Approach to Distribution

Author(s): Utz Peter REICH,Susana Santos / Language(s): English Issue: 66/2019

Unconditional basic income is not a new topic in political economy, and it gains new momentum as more and more research is being devoted to it. The discussion focusses on the adequacy and effects such a policy measure may entail for a person and his socio-economic situation, usually. Object of investigation is the individual, and the corresponding theory is of micro-economic descent. In this paper, in contrast, we develop a method of how to assess feasibility and consequences of an unconditional basic income for a modern, open economy, on the macroeconomic level, using concepts and statistics of a Social Accounting Matrix (SAM) as our main tool. A SAM-based approach can measure, and perhaps model, the impact on the economic activity of a country, and on its economic institutions of new policy measures such as introducing an unconditional basic income. The economic activity of a country is expressed in monetary flows as registered in the National Accounts. So their underlying principles and definitions are adopted. However, the habitual way of putting an economy into a sequence of institutional accounts connecting each institution’s income to the cost, - similar to business accounting - reveals only one, namely the inner-institutional half of the economic circuit. The other, outer half, namely, how the costs of one institution generate income for another one is better captured by the format of a Social Accounting Matrix. In the paper, the impact of an unconditional basic income is quantified, for macroeconomic aggregates of institutional sectors and socio-economic groups of households, taking the German and the Portuguese economies as examples. Purpose of the paper is not to argue for, or against, an unconditional basic income, but to offer a scientific tool with which to calculate and assess possibilities and consequences of the proposal, for a national economy as a whole.

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Factors Affecting Local Own-Source Revenue in Provinces in Indonesia

Author(s): Yass Andria,Elfindri ELFINDRI,Hefrizal Handra,Endrizal RIDWAN / Language(s): Danish Issue: 66/2019

This study observed the influence of non-economic factors (democracy, politics, corruption and governance) on Local Own￾Source Revenues (PAD) in 30 Indonesian Provinces during the period of 2010-2017, and compares with economic factors (investment factors and development inequality), where the data obtained from BPS Indonesia was processed using Eviews 8 Software regarding the Fixed Effect Model regression showing that non-economic factors (factors of democracy, political factors, corruption factors and governance factors) had a significant effect and explained PAD by 79.18% in 30 provinces of Indonesia.

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Activation Mechanisms and Government Performance Efficiency: Evidence from Iraq

Author(s): Mohammed Dhannoon Mohammed,Sarah Akram Khattab,Faris Jarullah Nayyef / Language(s): English Issue: 66/2019

This study examines the impact of government spending (education, health, infrastructure, economic stability and justice distribution) on economic performance in Iraq. The study employs the Iraqi government expenditure data from 2005 to 2018 and conduct a regression analysis to find the significant level of each dimension under the five sectors in Iraq. The results showed that life expectancy at birth, size of health spending, percentage of population connected to sewerage networks, number of internet service providers, infant mortality rate, size of spending on education and registration in primary education have significant effect on government performance. Therefore, government should provide good education, health, infrastructure, economic stability and justice distribution to the citizens in order to achieve increase in GDP growth rate or growth rate per capital and the employment rate.

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The Influence of the Business Environment and Managerial Competence on the Decision to Choose Funding for a Small Craft Business

Author(s): Hotman PANJAITAN,Sumiati Sumiati,Mega Darmi NOVITA,Feliks Anggia Binsar Kristian PANJAITAN / Language(s): English Issue: 66/2019

This paper discusses the causal relationship between the internal and external environment of business with managerial competence in the effort of deciding on choosing a craft small business funding. The researcher proposes a new concept and wants to explain the role of managerial competence as an intermediate variable. Using structural equations in 384 respondents drawn proportionally from a population of 36,343 handicraft entrepreneurs in East Java. Criteria for respondents are entrepreneurs who have actively conducted business activities for at least 1 year, while the sampling method uses proportional random sampling. The findings indicate that the proposed concept is accepted, and shows that the internal environment has no bearing on the decision to choose a craft small business funding. External environment, dominantly influences the decision to choose funding. Research also proves that managerial competence is an intermediate variable, and contributes positively to the decision to choose business funding. The novelty in this research is, the use of indicators: understanding the organization, leading and managing people, managing resources, and communicating effectively as indicators of managerial competence.

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Organizational Innovation Implementations to Achieve Development Goals: Evidence from Indonesia

Author(s): Rudy BADRUDIN,Yosefa Maria Juita HALE / Language(s): English Issue: 66/2019

Regional autonomy which has been running for almost 18 years has not been able to realize inclusive economic development and there are still many districts that are underdeveloped in Indonesia. This study analyzes the effect of organizational innovation success on district government on the achievement of development goals in districts in Indonesia based on data from 2005 to 2014. This study reveals the need for a reliable management system to manage regional government organizational innovations. Analysis method using Klassen Typology and Partial Least Square. The success of regional autonomy is influenced by independent variables, the position of the district in the four quadrants in the Klassen Typology, and the bureaucratic obstacles in implementing government organization innovations. The conclusion of this study is to implement the innovations of government organizations that are needed in the achievement of regional autonomy, the requirements for quality bureaucracy and a reliable government management system are needed.

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The Dynamic Link between Bank Competition Access to Finance and Economic Growth in Selected Asian Countries

Author(s): Amaluddin Amaluddin / Language(s): English Issue: 66/2019

The dynamic causal relationship between bank competition, financial access, and economic growth has been widely studied in many countries both developed and developing countries. However, the results of a lot of studies demonstrate a controversial point of view and diverse conclusions. This study aims, firstly to investigate the short-run dynamic causal relationship between bank competition, access to finance and economic growth. Secondly, to examine the long-run effect and causality relationship between bank competition, financial access, and economic growth. This study applied the quantitative method approach by employing PVECM, FMOLS, and DOLS. All data was collected from the Asia Development Bank (ADB) and World Development Indicators (World Bank) in the panel data set of 25 selected Asian countries during the period 1995-2018. This empirical study found strong evidence of the long-run effect that supports the market power hypothesis, which predicts that low competition adversely affects access to finance which consequently reduces economic growth. In addition, this study revealed that there was a long-run feedback causal relationship between access to finance and economic growth. Hence the financial access is one of the long-run engines of growth, in turn, economic growth also has a long-term significant effect and positively related to financial access.

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Investigating the Effects of Trade Facilities on Exports: A Case Study of Mongolian Economy

Author(s): Tsogkhuu TSETSENZAYA,Asma Raheem,Zahid HUSSAIN,Mohammad YOUSAF / Language(s): English Issue: 66/2019

This study examines relationship between trade facilitations and exports in Mongolian economy with its 45 trading partner’s countries from Asian regions. To evaluate relationship, we construct trade facilitation indicators from different primary variables by employing the econometrics techniques principal component (PCA) and factor analysis (FA) namely cost, custom efficiency, shipment and time as well as period from 2001 to 2017. Findings show most trade facilitations have higher impact on Mongolian’s exports such as cost, custom efficiency, shipment and time. Cost and time indicators have negative relation with exports level and the probability of the exports. Similarly, custom efficiency and shipment have also impact on exports level and probability. According to findings, cost and time indicators in US$ and days should be reduced by implementing the state policies respectively. Furthermore, custom efficiency and shipment should have higher values to improve the custom clearance and other border agencies at border of Mongolia. Domestic trade facilitations may enhance the exports level and probability to enter the other firms into markets with other trading partners that including in this model. Traditional gravity variable distance has negative impact on export level and probability. Results show that higher distance in kilometer cause higher cost and reduce the exports volume, while geographical factor common border with Russia and China has larger impact on Mongolian’s exports level and probability.

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Analysis Effect of Macroeconomic Surprises to Stock Return via Market Liquidity and Earnings Surprises

Author(s): Noldy TAKALIUANG,Bernhard Tewal,Sri Murni,Ivonne Stanley Saerang / Language(s): English Issue: 66/2019

The major objective of this research is to examine the effect of macroeconomic surprises factors on stock return intervening by market liquidity and earnings surprises; this research focused in the financial sector firms in Indonesia Stock Exchange, the study’s period from 2012 to 2016 and using purposive sampling for 59 company. The data was analyzed using software AMOS 24 and SPSS 24 with technique Path Analysis. The study’s found out that surprises money supplies significant effect to earnings surprises and market liquidity effect to stock return. The findings can help the decision makers or financial managers to consider implement money supply, earnings surprises and market liquidity to increase stock return.

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The Impact of Monetary and Fiscal Policy on Poverty in Indonesia

Author(s): Ahmad Albar TANJUNG,Murni DAULAY,Dede Ruslan / Language(s): English Issue: 66/2019

The aim of this research is to analyze monetary and fiscal policy impacts on poverty in Indonesia. The data used are secondary data from World Bank, BPS, and Indonesia Bank from 1980 to 2017. The estimation method used is the two-step Error Correction Model. The research results in showing that the economic growth has a significant negative impact on poverty; monetary policy proxied with interest rate has a significant negative impact on poverty; fiscal policy proxied with government expenditure has insignificantly impacted on poverty. Exchange depreciation positively and significantly impacts on poverty; inflation has a positive and significant impact on poverty; the economic crisis has a positive and significant impact on poverty. Indonesian poverty decrease is dominated by the monetary policy while fiscal policy insignificantly drops poverty number compared to the impact of monetary policy.

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The Simultaneous Effects of Investment and Trade: A Perspective of Manufacturing Growth in Asian Economies

Author(s): Zahid HUSSAIN,Mohammad YOUSAF,Asma Raheem,Imran Ur Rahman / Language(s): English Issue: 66/2019

This study examines the relationship between manufacture value-added growth and trade openness in Asian economies. For this purpose, we choose 18 years’ panel data set including suitable variables for estimation econometric strategies such as Ordinary Least Square, Fixed Effect and Random Effect models including GMM aims at how to do trade openness and investment affect manufacture value-added in Asian regions. Findings reveal that trade openness must be improved along with investment in different sectors. The coefficient value of product R&D and investment in transport, ICT and energy sectors decline manufacture value-added growth. R&D more contributes to manufacturing of value-added growth rather than trade openness. In addition, the impact of public investment in transport and ICT is lower on manufacture value-added growth by 11%, 10% respectively. Therefore, trade openness square adversely impacts on manufacture value-added growth than trade openness.

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The Triple Helix Model for Thai Small and Medium-Sized Enterprises Export Promotion: Healthy Snacks to Singapore-Malaysia-Indonesia Markets

Author(s): Chirawan Chaisuwan,Orachorn Maneesong,Khongphu Nimanandh,Jairat Jaturapataraporn / Language(s): English Issue: 66/2019

Small and Medium-Sized Enterprises (SMEs) need enablers to build export capacity to access international markets. This study aims to explore the application of Triple Helix Model of government-university-business collaboration for Thai snackSMEs exporting to the highly competitive Singapore-Malaysia-Indonesia markets. This study means to improve marketing activities as well as product and packaging development for snack exporters under the opportunities brought by ASEAN Economic Community (AEC). The various market research methods are employed including secondary research, consumers survey, competitors survey, field trials, observations, focus group interview, product testing and business matching. Under the going AEC project initiated by Industrial Promotion Centre Region 1 and three R&D centres of Chiang Mai University, snack recipes, health benefits, packaging, export terms and conditions are improved to better meet the market needs and the business intermediaries.

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Dynamic Influences, Government Debt, Subsidies on Fiscal Deficits in Indonesia

Author(s): Teuku ZULKARNAIN,Yusri HAZM,Raja Masbar,. Aliasuddin,. NAZAMUDDIN / Language(s): English Issue: 66/2019

This study aims to identify effects of government debt, subsidies and macroeconomic variables on fiscal deficits. Macroeconomic variables as inflation, exchange rates, and Bank Indonesia rates. Fiscal deficit is measured using the ratio of fiscal deficit GDP. This study uses time series data: 1975-2017. The ARDL model is used to identify short-term effects, while long-term effects are carried out using the Cointegration Long Run Bounds Test. From the ARDL test results, government debt, subsidy expenditure and macroeconomic variables have a significant effect on the fiscal deficit. Government debt now has a negative and significant effect on fiscal deficits. Subsidies have a negative and significant effect on fiscal deficits. Inflation and Bank Indonesia rates have a positive and significant effect on the fiscal deficit, while the exchange rate has a negative and significant effect on the fiscal deficit. The results of the Long Run Bounds Cointegration Test show that government debt has a negative and insignificant effect on the deficit. Subsidy spending has a positive and insignificant effect on the fiscal deficit. Inflation and the exchange rate have a positive and insignificant effect on fiscal deficits. Meanwhile, Bank Indonesia rates have a positive and significant effect on the fiscal deficit.

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