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Vol.3 No.3
September 2015

 Page Number

 Article Information

1-16

Finance and Inequality – Evidence from East Asia

Mohamed Salah Mansour and Miriam Wendel

DOI: 10.15604/ejef.2015.03.03.001

Abstract

The economic debate about inequality has occupied a huge place in the scientific discourse of the last decades. Several factors have been identified as causes for the rising wealth and income inequality in various regions such as economic growth, capital return and intergenerational wealth. In this paper, East Asia is chosen as a regional focus for the analysis due to the region’s specific characteristics and history regarding inequality. Until the end of the 1980s, the region experienced a period of so-called “growth with equity” where high economic growth rates were associated with decreasing poverty and inequality. In recent years, however, growth in East Asia has gone hand in hand with inequality.  This shift from “growth with equity” to “growth with inequality” makes the region worth investigating. The paper focuses particularly on the size of the financial sector, analyzing its role and impact on the development of inequality. Therefore, the theoretical connection and the natural relationship between poverty, inequality, economic growth as well as the size of the financial sector are discussed. Indicators, proxies and measurements for these variables are identified, based on existing literature. The main analysis delivers an answer to the research question of whether and how financial development affects the inequality in a society. For the analysis, cross-country and panel data for the ASEAN+3 countries from 1960-2012 are used.

Keywords: Inequality, Financial Sector, Poverty, East Asia, Financial Intermediation, Financial Education, Financial Regulation

17-24

Worldwide Growth Convergence in the New Millennium: An Empirical Investigation

Lawrence J. Gomes

DOI: 10.15604/ejef.2015.03.03.002

Abstract

Economic growth is an important ingredient for reducing poverty and achieving the Millennium Development Goals proposed by United Nations in 2000. Meeting these goals by the proposed 2015 target data depends on the ability of poor nations to grow their economies and improve their standards of living. Neoclassical and new growth theory suggests that there should be a negative relationship between a nation’s initial income and subsequent growth giving rise to either absolute convergence (income levels of all nations converge over time) or conditional convergence (each nation converges to its unique steady-state income level). Using the most recent (2000-2013) World Bank data and cross-country regression techniques, I evaluated whether convergence has been occurring in the world in the last decade. My results showed a robust negative relationship between starting income level and subsequent growth. Savings and education were also associated with growth whereas trade was not. Overall, these results support the notion of convergence which is an encouraging finding as the world approaches the 2015 post-development agenda.

Keywords: Economic Growth, Convergence, Millennium Development Goals

25-34

Consumers’ Perceptions of Banks Country of Origin in the UAE

Mohammad Naim Chaker

DOI: 10.15604/ejef.2015.03.03.003

Abstract

The overarching objective of this research paper is to undertake an analysis of the Country of Origin (COO) influence on banking services. The paper assesses consumers’ perceptions and selection of banking services in the UAE. This study is based on a survey exercise conducted across UAE. Based on a review of literature, several research propositions were formulated. These relate to consumers’ choice of and factors considered in choosing two categories of banks: local and foreign banks. Empirical research was used to test the propositions. The country of origin may be an important element in the perceptions consumers have of banking services especially where little other information is known in the context of a developing country. Analysis shows that the local bank services were perceived to have “higher prices in general” and to offer “more value for money” than the foreign bank services. This study is important as it has great implications for decision making and the literature focusing on banking services in the Middle East.

Keywords: Country of Origin, Perception, Banking, Service Quality, UAE

35-44

Are Independent Fiscal Institutions Really Independent?

Slawomir Franek

DOI: 10.15604/ejef.2015.03.03.004

Abstract

In the last decade the number of independent fiscal institutions (known also as fiscal councils) has tripled. They play an important oversight role over fiscal policy-making in democratic societies, especially as they seek to restore public finance stability in the wake of the recent financial crisis. Although common functions of such institutions include a role in analysis of fiscal policy, forecasting, monitoring compliance with fiscal rules or costing of spending proposals, their roles, resources and structures vary considerably across countries. The aim of the article is to determine the degree of independence of such institutions based on the analysis of the independence index of independent fiscal institutions. The analysis of this index values may be useful to determine the relations between the degree of independence of fiscal councils and fiscal performance of particular countries. The data used to calculate the index values will be derived from European Commission and IMF, which collect sets of information about characteristics of activity of fiscal councils.

Keywords: Public Finance, Fiscal Governance, Public Budgeting

45-64

Openness of Economy, Foreign Investment Inflows and the Phenomenon of Rent Seeking Corruption

Syed Toqueer Akhter and Fahad Manzoor

DOI: 10.15604/ejef.2015.03.03.005

Abstract

Rent seeking behavior has been amongst noticeable obstacles in path of economic growth and development for developing communities. Due to this the study aims at testing the hypothesis that the Rent seeking behavior among bureaucracy is being influenced by the openness of economy as well as inflows of foreign investment significantly. Model estimations imply that reforms may have an insignificant impact upon impact upon curtailing the rent seeking behavior among bureaucracy in a time series setting therefore this research will use two statistical econometric models to show the effect of corruption on the foreign direct inflow received in Pakistan. In order to pretest the impact of all the mentioned variables on rent seeking behavior generalized least square was used because its results were unbiased, consistent and the problem of Serial correlation was solved by using it. In order to quantify rent seeking behavior among bureaucracy different aspects of misuse of public offices appearing in form of petty and grand corruption were used using the variables informal sector, tax evasion, judicial outlay, G.D.P and F.D.I as percentage of G.D.P. All of the variables had proper signs aligned with the theory and all of the variables appeared to be significant except judicial outlay proving that the judiciary has been incompetent and ineffective. The robust regression showed all the same signs except in it every variable was appearing to be significant. Rent seeking corruption has been highly affecting Pakistan in adverse ways and this paper will show how many factors like judiciary is not playing effective role in limiting corruption and also how the economy is being affected by rent seeking behavior.

Keywords: Rent Seeking Corruption, Foreign Direct Investment, Economic Growth, Judicial Outlook, Generalized Least Square, Robust Regression

65-71

The State and Development of Housing and Communal Sector of Russia

Svetlana Shulepina

DOI: 10.15604/ejef.2015.03.03.006

Abstract

Reforming of housing and communal services in Russia led to the emergence of new social and economic problems in the industry. The authors identified the main tasks of the reform of housing and communal complex of Russia in article. An important result of the industry reforming has been the emergence of household organizations. Results of research revealed that currently active process of the new household organizations emergence and privatization of existing one passed. Statistical data analysis showed that the overall growth rate of the number of organizations providing services to housing maintenance, below the rate of entry into use of apartment buildings. This fact proves that today the market of housing maintenance has moved from the stage of formation to the stage of evolution. At this stage the existing economic unities will be actively compete and develop mechanisms to increase market share, reducing costs and maximizing profits. Key performance indicators of household organizations in Russia analyzed. Finally, in the article the main goals of household organizations activities in the current crisis of industry are presented.

Keywords: Householding Organization, Housing and Communal Service, Reforming, Statistical Data

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