Journal of Economics & Development - National Economics University - Hanoi, Vietnam
Ownership structure and demand for independent directors: evidence from an emerging market
Purpose In this study, we examine how ownership structure affects the use of independent directors in Vietnam – an emerging stock market. Design/methodology/approach We develop logit and tobit regression models to investigate the effects of ownership structure on the propensity to use independent directors and the number of independent directors on the board, respectively. Insider ownership and the use of independent directors are proposed to have a non-linear relationship. Findings With a sample of 1,318 observations collected from 192 listed firms over the period from 2008 to 2017, we find that insider ownership and independent director appointment have a U-shaped relationship. It is positive when insiders hold a small proportion of shares, and turns out to be negative when insiders hold a large percentage of shares. In addition, both state ownership and foreign ownership are negatively related to firm decisions of appointing independent directors. Practical implications Our findings imply that minority shareholders should have appropriate actions to reduce agency costs and protect their own interests. In addition, policymakers should improve the effectiveness of corporate governance legislation to increase the presence of independent directors in order to protect minority shareholders. Moreover, government agencies also need to increase the number of independent directors in state-controlled firms as a means to improve their corporate governance. Foreign investors may be a substitute for independent directors; therefore, firms without independent directors are able to improve their corporate governance by attracting foreign investors. Originality/value While the extant literature shows that independent directors can help firms decrease agency costs of equity in financial decisions and performance, there are relatively few studies investigating corporate decisions to use independent directors. This paper contributes to the literature of corporate governance mechanisms through independent directors in emerging markets.
Modelling the synergy between fiscal incentives and foreign direct investment in Ghana
Purpose The purpose of the paper was to investigate the role of fiscal incentives in driving foreign direct investment (FDI) inflows into the Ghanaian economy based on data from 1975 to 2017 with the Eclectic paradigm as the theoretical basis. FDI inflows was the dependent variable whiles trade openness, corporate tax rate, exchange rate and market size were the independent variables with corporate tax rate as the main explanatory variable of interest. Design/methodology/approach The autoregressive distributed lag (ARDL) bounds test technique was employed to investigate Cointegration in the model. The results showed the presence of cointegration among the variables. Findings The results revealed that corporate tax rates have a significant negative impact on FDI inflows into the Ghanaian economy in the long run and significant positive impact on FDI inflows in the short run. In the context of Ghana, the positive short-run relationship observed is attributed to the lag effect of tax policy on FDI inflows. Research limitations/implications One obvious limitation of the research is that, it does not identify the specific foreign businesses that are more deserving of a low corporate rate and to what extent can that boost FDI inflows in Ghana. Another limitation is that the data analyzed in the paper is exclusively for Ghana and the findings may not be generalized for other countries. Practical implications Based on the research findings, it is recommended that the Ghana Revenue Service (GRA) restructures the corporate tax regime in the country to deal with the policy lapses. It is also recommended that low corporate rates should be maintained especially in respect of foreign companies that are into the production of goods and services for which indigenous companies in Ghana have a comparative disadvantage in order to drive FDI into the Ghanaian economy. Originality/value This paper is unique for providing up to date and dynamic insights into the tax incentive and FDI nexus in the Ghanaian context
A mixed data sampling approach to the asymmetric impacts of world oil price on macroeconomic variables in Vietnam
Purpose This paper aims to analyse the asymmetric impacts of world oil price on macroeconomic variables in Vietnam, including domestic oil price, inflation and output growth. Design/methodology/approach The mixed data sampling (MIDAS) approach is employed to examine the impact of world oil price changes on macroeconomic variables as the former is high-frequency data (daily), and the latter is low-frequency data, usually monthly or quarterly. Findings Changes in world oil price cause asymmetric impacts on domestic oil price and inflation, but no significant effects on output growth. In terms of magnitude, a positive change in world oil price causes a stronger effect than a negative change in world oil price. In terms of timing, a positive change in world oil price causes a slow pass-through impact on domestic oil price and inflation. Meanwhile, domestic oil price and inflation decrease quickly following a negative change in world oil price. Originality/value This study investigates the asymmetric impact of oil price on the Vietnam economy in terms of both magnitude and timing, which is not explored by previous studies. In addition, it exploits daily information of oil price changes to analyse macroeconomic variables in lower frequency by employing MIDAS approach.
Assessing the influence of exchange rate on agricultural commodity export price: evidence from Vietnamese coffee
Purpose The purpose of this paper is to evaluate the influence of VND/USD exchange rate on Vietnamese coffee export price (PVN). Design/methodology/approach The study uses cointegration test, Granger causality test and vector autoregression (VAR) model. Findings The results reveal that there is no co-integrating equation between two variables. It means the exchange rate does not have an effect on PVN in the long run. Furthermore, there is one Granger causality relationship between VND/USD exchange rate and PVN in the short run, but not vice versa. The study suggests that the first previous period of PVN is the most closely related variable which has the greatest impact on the variation of PVN among the selected variables, meanwhile the effect of VND/USD exchange rate on it, contrarily, is positive and very trivial. Originality/value In overall, the impact of VND/USD exchange rate on Vietnamese coffee export price (PVN) has been analyzed deeply in this research by applying new approaches.
Population growth, income growth and savings in Ghana
Purpose The study explores the relationship among economic growth, population growth, gross savings and energy consumption over the period 1987– 2017. Design/methodology/approach The autoregressive distributed lag (ARDL) bounds test approach by Pesaran et al. (2001) was employed to investigate variables for the study. Findings In the key findings, both gross savings and population growth negatively affect economic growth. However, energy consumption has positive impact on economic growth. Practical implications These findings call for policy portfolios to address the impacts of gross savings and population growth on economic development. In particular, the financial sector needs to be revamped to be more efficient in channeling funds from the surplus units to the deficit units. It is recommended that investment be made in financial and technological innovation to provide efficient access to credits and other financial products even though individual savings may not move with economic growth. Originality/value Many studies have explored the nexus between savings and economic growth without considering population growth and energy consumption. In this study, the relationship among savings, economic growth, population growth and energy consumption provide additional knowledge in policy formulation.
Corruption and SME financing structure: the case of Vietnamese manufacturing
Purpose Corruption has been evidenced as one of the major factors that drive a firm's dynamics and growth. This study examines the relationship between corruption and financing structure decisions of small and medium-sized enterprises (SMEs) in Vietnam. Design/methodology/approach The authors use a longitudinal data set from the Vietnam's SME Survey in the period 2007–2013 and adopt the two-stage least squares method to deal with endogeneity. Findings After controlling for endogeneity and firm heterogeneity, the authors find that, overall, corruption does significantly affect the decisions of financing sources. Given that, corruption increases the use of informal debt and decreases the levels of formal debt, owner's equity and retained earnings. Practical implications The findings suggest implications for corruption-combating actions and policies. Originality/value Different from previous studies that either provide evidence of government corruption and a firm's capital structure at the country level or focus on corruption and debt only, we deliver a more comprehensive analysis on the nexus between corruption and various financing sources.
Interdependence between banking earnings, banking security and growth achievement: case study in the ASEAN community
Purpose The main purpose of this paper is to examine the existence of interdependence amongst banking earnings, banking security and growth performance across the Association of Southeast Asian Nations (ASEAN) region. Design/methodology/approach This paper utilizes a panel autoregressive distributed lag method with the annual data of nine ASEAN members over 1996–2017. Findings Only the short-run Granger causal impact of banking profitability on economic expansion is supported, while the long-run Granger causality between all the variables is strongly recognized. Increased banking well-being supports economic development, while higher banking security might have inverse impacts. However, increasing the banking profit without the corresponding better soundness can be detrimental to the economic growth in the short run and much more in the long run. Thus, improving banking profitability and stability simultaneously has positive net effects on the economic development. Research limitations/implications This research is restricted to unavailable data and limited measurements of both banking profitability and stability. Further inclusion of other macro-economic variables, other banking development aspects or even non-banking indicators should also be considered. Practical implications National governments should emphasize a convenient financial environment, which can strongly enhance the positive relationship between banking earnings, banking safeness and output growth. Also, the relevant policies on higher banking well-being and stricter security obligations have to be simultaneously maintained. Originality/value Few papers have inspected the interrelationship between banking stability, banking profitability and economic growth, particularly in the ASEAN region. This causes the banking literature shortage, as well as insufficient insights for the financial policymakers into their endogenous dynamics. Thus, the study is the first attempt to fulfil the research gap.
Financial integration and macroeconomic volatility in Zimbabwe
Purpose Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets may have both positive and negative impact on the performance of the economy. One of the concerns of international financial integration is macroeconomic volatility which may affect both monetary and real sectors. Zimbabwe has chosen to pursue a financial liberalization strategy in the form of imperfect financial integration following periods of excessive domestic shocks. An upsurge of capital flows since the epic of economic crisis in the 2000s has been observed with varying macroeconomic impacts. This study empirically examines the impact of partial international financial integration on the volatility of macroeconomic variables. Design/methodology/approach The study utilized an ARDL Model suggested by Pesaran et al., (2003) which is appropriate for short time periods. Findings The results show that financial integration has a negative effect on output volatility while insignificant on consumption volatility. Practical implications The study recommends that the country should gradually liberalize the capital account and properly sequence financial development reforms in order to minimize losses from global financial integration. Originality/value The study used time series for Zimbabwe during a period of external imbalance, repeated economic cycles, sudden stops in capital flows and limited scope of imperfect financial integration. Findings in such an economy will be a referral for policymakers in other economies that would want to pursue international financial integration.
The cost efficiency of Vietnamese banks – the difference between DEA and SFA
Purpose The paper aims to enrich previous findings for an emerging banking industry such as Vietnam, reporting the difference between the parametric and nonparametric methods when measuring cost efficiency. The purpose of the study is to assess the consistency in issuing policies to improve the cost efficiency of Vietnamese commercial banks. Design/methodology/approach The cost efficiency of banks is assessed through the data envelopment analysis (DEA) and the stochastic frontier analysis (SFA). Next, five tests are conducted in succession to analyze the differences in cost efficiency measured by these two methods, including the distribution, the rankings, the identification of the best and worst banks, the time consistency and the determinants of efficiency frontier. The data are collected from the annual financial statements of Vietnamese banks during 2005–2017. Findings The results show that the cost efficiency obtained under the SFA models is more consistent than under the DEA models. However, the DEA-based efficiency scores are more similar in ranking order and stability over time. The inconsistency in efficiency characteristics under two different methods reminds policy makers and bank administrators to compare and select the appropriate efficiency frontier measure for each stage and specific economic conditions. Originality/value This paper shows the need to control for heterogeneity over banking groups and time as well as for random noise and outliers when measuring the cost efficiency.
Threshold effects of public debt on economic growth in Africa: a new evidence
Purpose The purpose of this study is to seek to re-examine the threshold effects of public debt on economic growth in Africa. Design/methodology/approach This study applies panel smooth transition regression approach advanced by González et al. (2017). The method allows for both heterogeneity as well as a smooth change of regression coefficients from one regime to another. Findings A debt threshold in the range of 62–66% is estimated for the whole sample. Low debt is found to be growth neutral but higher public debt is growth detrimental. For middle-income and resource-intensive countries, a debt threshold in the range of 58–63% is estimated. As part of robustness checks, a dynamic panel threshold model was also applied to deal with the endogeneity of debt, and a much higher debt threshold was estimated, at 74.3%. While low public debt is found to be either growth neutral or growth enhancing, high public debt is consistently detrimental to growth. Research limitations/implications The findings of this study show that there is no single debt threshold applicable to all African countries, and confirm that the debt threshold level is sensitive to modeling choices. While further analysis is still needed to suggest a policy, the findings of this study show that high debt is detrimental to growth. Originality/value The novelty of this study is twofold. Contrary to previous studies on Africa, this study applies a different estimation technique which allows for heterogeneity and a smooth change of regression coefficients from one regime to another. Another novelty distinct from the previous studies is that, for robustness checks, this study divides the sample into low- and middle-income countries, and into resource- and nonresource intensive countries, as debt experience can differ among country groups. Further, as part of robustness checks, another estimation method is also applied in which the threshold variable (debt) is allowed to be endogenous.
Impacts of higher tobacco tax on output and employment in Vietnam
Purpose The purpose of this study was to evaluate how higher tax on tobacco would influence output and employment in Vietnam. Design/methodology/approach The authors used micro-simulation techniques proposed by Walbeeck (2010). Both national data (from Input–Output Table) and household data (Vietnam Household Living Standard Survey) were utilized. Findings The results showed that any increase in the excise tax for tobacco would have positive net impacts on both national output and employment. The tobacco industry would not be significantly affected due to its small contribution to national economy and employment. More importantly, money released from reduced tobacco consumption would be reallocated to other goods and services, and thus outputs and jobs in nontobacco sectors would increase. Research limitations/implications The key limitation of this study was due to unavailability of updated data, especially Input–Output Table as well as household living standard survey. Practical implications This study concluded that government should increase tax on cigarette along with a well-planned roadmap to avoid unexpected consequences on income and employment of laborers in this sector. Originality/value This study replicated a popular approach in order to verify an important government policy (i.e. effect of tax on tobacco on output and employment) under Vietnamese context.
Purpose The purpose of this article is to investigate the impact of Confucianism on growth under different political regimes. Design/methodology/approach The empirical specification adopts a two-regime panel threshold model proposed by Hansen (1999) to endogenously divide our country sample into two-regime-types – autocracy and democracy – according to a country's democratic stock or experiences. Findings The results show that the effect of Confucianism on growth exhibits an asymmetrical pattern depending on the status of a country's political democracy. Only when a moderate level of freedom has already been attained can Confucianism have a positive effect on growth. Conversely, for autocracies whose democratic institutions cannot pass a certain threshold, Confucianism has a very limited effect in terms of changing economic activity. Research limitations/implications If the data with different sample years and/or different sample countries are used, the research results may lack generalizability. Further tests of the two-regime model with different data sizes are encouraged. Originality/value The authors use the World Values Survey (WVS) map to identify the countries under the influence of Confucianism. The authors emphasize that focusing only on political geography may overlook the information from the spread of cultural traits that accompanied the migration of people. So, based on the Confucian countries suggested by the WVS and the migration matrix of Putterman and Weil (2010), an immigration-based Confucianism variable was constructed. To accommodate different effects of Confucianism on growth in different phases of political development, the empirical specification adopts an asymmetrical pattern to investigate the impact of Confucianism on economic performance.
Does regional trade promote economic growth? Evidence from Economic Community of West African States (ECOWAS)
Purpose This paper examines the impact of regional and non-regional trade on economic growth using annual data from Economic Community of West African States (ECOWAS) member countries for the period 2007 to 2017. Design/methodology/approach Trade data were decomposed into regional (trade among ECOWAS Member States) and non-regional (trade between ECOWAS Member States and the rest of the world). We used the dynamic system GMM to estimate the models and introduced exchange rate, unemployment rate, population growth and gross capital formation as controlled variables. Findings The results revealed that the estimated coefficient of ECOWAS regional trade is statistically significant and positive in predicting growth, while the non-regional trade coefficient is negative and not statistically significant in predicting growth. Other predictors of growth introduced into the model as controlled variables, such as exchange rate, unemployment rate, population growth and gross capital formation, displayed mixed results. More importantly, population growth, unemployment and exchange rate depreciation hurt economic growth, while gross capital formation promotes economic growth. Practical implications The findings provide strong support in favour of the Krugman (1991) hypothesis that regional trade agreements (RTAs) are a better alternative to global trade. Originality/value Our decision to disaggregate ECOWAS trade is unique and influenced largely by the objective of the study, which is to establish the type of ECOWAS trade that is a good predictor of growth. The evidence from our findings support the theory that RTAs are a better catalyst to economic growth.
A meta-analysis: capital structure and firm performance
Purpose The paper aims at providing insights on the relationship between capital structure and performance of the firm by employing meta-analytical approach to obtain a synthesized result out of controversial studies as well as the sources for such inconsistency. Design/methodology/approach Using secondary data, the analysis is divided into two main parts with concerns to the overall strength of the relationship, the effect size and the potential paper-specific characteristics influencing the magnitude of impacts between leverage and firm performance (moderators of the relationship). Overall, a total number of 32 journals, reviews and school presses were selected besides online libraries and publishing platforms. There were 50 papers with 340 studies chosen from 2004 to 2019, of which data range from 1998 to 2017. Findings Using Hedges et al. (1985,1988), descriptive and quantitative analysis have been conducted to confirm that corporate performance is negatively related to capital decisions, which inclines toward trade-off model with agency costs and pecking order theory. The estimation induces rather small effect size that implies sufficiently large sample size to be effectively investigated. In terms of moderator analysis, random-effects meta-regression models of three different techniques are used to increase the robustness in research findings, showing statistically significant elements as publication status, factor of industry and proxy of firm performance. Originality/value This paper is one of the first papers presenting meta-analysis in capital structure and performance for two languages, Vietnamese and English, providing a consistent result with previous worldwide papers.
Infrastructure development and industrial sector productivity in Sub-Saharan Africa
Purpose The purpose of this study is to examine whether the state of infrastructure development in Sub-Saharan Africa actually stimulates industrial sector productivity, using a panel data set of 17 countries spanning from 2003 to 2018. Design/methodology/approach The study used panel least square estimation technique to examine the relationship between the variables. Findings The result of the study indicates that the major factor that influences industrial sector productivity in Sub-Saharan Africa is their quantity and quality of telecommunication infrastructure. Analysis shows that the relatively low level of industrial sector productivity in Sub-Saharan Africa is largely due to their poor electricity and transport infrastructure and underutilization of water supply and sanitation infrastructure. Practical implications The government should partner with other developed countries of the world such as Germany, Japan, Sweden, Netherlands, Austria, Singapore, United States of America, United Kingdom, Switzerland and United Arab Emirates, which are the top ten countries in infrastructure ranking as currently released by the World Bank, to equally extend their quality infrastructure to their own country for enhanced industrialization. Originality/value The novelty of this research lies on the fact it is a cross-country study as against the few empirical studies that focused only on a single country. Also, the study made use of the four main indicators of infrastructure development in an economy, which are electricity infrastructure, transport infrastructure, telecommunication infrastructure and water supply and sanitation infrastructure, to examine its effect on industrial sector productivity in Sub-Saharan Africa.
Determinants of the result of new rural development program in Vietnam
Purpose The purpose of this paper is to identify the determinants of the proportion of communes that met all national new rural criteria (hereafter NRD communes). Design/methodology/approach First, the method of propensity score (PS) stratification is used to classify 63 provinces into the subgroups. Second, the ordinary least squares (OLS) model is used with the subgroups classified from the PS stratification method as one of explicative variables. The dependent variable in the OLS model is the proportion of NRD communes. Findings With the sample of 63 provinces of Vietnam, the author found that per capita income growth rate, high growth of gross regional domestic product (GRDP) and effort of the provincial authority have positive impact on the proportion of NRD communes. Practical implications This research suggests that the provincial authority should actively participate in the NRD program, and the economic development is key factor for success implementation of the NRD program. Originality/value This research contributes to understand the factors impacting the result of the NRD program and then help to identify the measures to support this program.
The effects of financial inclusion on agricultural productivity in Nigeria
Purpose Farmers are the largest group of financially excluded persons in Nigeria, thereby highlighting the supply shortfall in finance to agriculture in Nigeria. Availability of finance would go a long way in improving output and productivity in agriculture, and consequently help in reducing poverty. This study conducts an empirical investigation of the effects of financial inclusion on agricultural productivity in Nigeria. Design/methodology/approach This study makes use of the Living Standards Measurement Study–Integrated Surveys on Agriculture (LSMS-ISA). This is a new data set on agricultural households which contains information on agricultural activities and various household activities, including banking, savings and insurance behaviour. Considering the data are such that there are observations for households over three time periods, the study exploits the time series and cross-section dimension of the data by using panel data estimation. Findings The empirical results of the study show that financial inclusion, irrespective of how it is measured, has exerted positive and statistically significant effects on agricultural productivity in Nigeria. Originality/value While considerable research has been conducted to examine how finance affects broad macroeconomic aggregates, little is known about the effects of finance at the household and individual level. It is important to explicitly account for financial inclusion when examining the effects of finance on individuals and households. This study improves on existing research and offers new insights into the effects of financial inclusion on the economic activities of agricultural households in Nigeria.
Impact of credit rationing on capital allocated to inputs used by rice farmers in the Mekong River Delta, Vietnam
Purpose The purpose of this paper is to estimate the impact of credit rationing on the amount of capital allocated to inputs used by rice farmers in the Mekong River Delta (MRD). Design/methodology/approach Based on the literature review, the authors propose nine hypotheses on the determinants of access of rice farmers to credit and four hypotheses on the impact of credit rationing on the amount of capital allocated to inputs used by rice farmers in the MRD. Data were collected from 1,168 farmer households randomly selected out of 10 provinces (city) in the MRD. Findings Step 1 of propensity score matching (PSM) with probit regression shows that land value, income, education, gender of household head and geographical distance to the nearest credit institution affect the degree of credit rationing facing rice farmers. Step 2 of PSM estimator identifies that the amount of capital allocated to inputs such as fertilizer and hired labour increases when credit rationing decreases while that allocated to seed and pesticide is not influenced by credit rationing because rice farmers use these inputs adamantly regardless of effectiveness. Originality/value This paper sheds light on the impact of credit rationing on the amount of capital allocated to inputs used by rice farmers, which is largely different from the main focus of the extant literature just on the determinants of credit rationing facing farmers in general and rice farmers in particular.
Sustainability of the rice-shrimp farming system in Mekong Delta, Vietnam: a climate adaptive model
Purpose Agricultural systems in Mekong Delta have transformed to cope with climate change. Various researches pointed out that integrated agriculture-aquaculture (IAA) farming systems (i.e., rice-shrimp, rice-fish…) emerged as potential climate adaptive practices. However, limited studies are attempting to assess the sustainability of these agricultural practices. Therefore, it is essential to assess whether or not these systems will be sustainable in the context of climate change and what can be done to make it sustainable. The present study conducted the sustainability assessment of the rice-shrimp system to identify potential areas for improvement as well as policy implication to increase resilience and adaptation of coastal IAA system which could contribute to the understanding of other coastal agricultural deltas around the globe. Design/methodology/approach This study used a quantitative approach including the assessment protocol of van Asselt et al. (2014), the assessment framework of Vanloon et al. (2005), and the MCA methodology to flexibly and holistically assess the sustainability level of agricultural systems. Findings Results concluded that rice-shrimp systems have the potential to improve livelihood, food security, and adaptation of coastal farmers. Major improvements should be considered for productivity, efficiency, and equity themes, while minor improvements can be made for stability, durability, and compatibility themes. Originality/value This research could be used as a guideline for sustainability assessment in a context-specific case study of IAA, which showed a potential for the application of other climate-smart IAAs in similar contexts around the globe.
Spillover effects of the US monetary policy normalization on African stock markets
Purpose – We study the contemporaneous effects of US monetary policy normalization on African stock market using panel data from six African countries. Design/methodology/approach – Daily data from May 1, 2013 to December 31, 2018 were used in order to accommodate the announcement effects since the US monetary policy normalization announcement was made in May 2013, while the rate hike was in December 2015. The study used the FE, RE and PMG models. Findings – The results revealed that US 10-year bond yield and Treasury bill rate shocks negatively affect stock prices in Africa. S$P500 shock positively affects African stock prices.The result revealed that the integration of African financial market to the global financial market is a major source of vulnerability. The finding that US Treasury bill rate is a major depressant of the African stock prices reveals the short-termism of foreign polio inflows into African economies. Originality/value – We provide inexorably insight into the interplay of financial systems globally. It can be useful for the purposes of generalization in developing economies in the shape of African countries. More so, this study could be replicated in another economic bloc or region with the aim of further exposing the farreaching spillover effects of the US monetary policy normalization.
A longitudinal study of audit quality differences among independent auditors
Purpose The purpose of this paper is to investigate the differences of audit quality of financial statements among auditors, including Big 4 and non-Big 4 auditors. Design/methodology/approach By employing cross-sectional analysis of compliance (a proxy of audit quality) of goodwill impairment testing of listed firms in the context of Hong Kong, the variation of audit quality of financial statements of auditees has been shown. Findings Audit quality of Big 4 auditors is viewed to be higher than that of non-Big 4 audit firms and the homogeneity of audit quality among Big 4 auditors is not long accepted, but variation. Practical implications Even though unqualified opinions have been given on the auditors' reports, the quality of financial statements audit is a skeptical issue because of the high level of non-compliance of goodwill impairment testing under International Financial Reporting Standards. Originality/value This study does emphasize the higher audit quality of financial statements of Big 4 auditors than that of non-Big 4 auditors and stresses the variation of audit quality among Big 4 auditors.
Qualification mismatch in the labor market and the impact on earnings: evidence from Vietnam
Purpose The purpose of this paper is to investigate the incidence and earning effects of the vertical mismatch between attained and required educational qualifications in a developing country's labor market. Design/methodology/approach Following Duncan and Hoffman (1981), this paper uses the augmented Mincerian wage equation to decompose the actual years of education of a person into years of over-education, years of required education and years of under-education. These years of education are then fitted in an ordinary least squares model to measure the earning effects of an employee when his/her attained educational qualifications are higher or lower than the required educational level in his/her job. Findings Unlike studies in developed countries, this paper finds that Vietnam has a higher incidence of under-education than over-education due to a large proportion of the population in rural and remote areas not having access to formal education. Further, qualification mismatch has an asymmetric effect on earnings in the sense that the wage rate is flexible downward but rigid upward. In particular, years of schooling that are in excess or in deficit of the required level for the job are not compensated with higher earnings. This paper concludes that although qualification mismatch incidence in Vietnam is different from that in developed countries, mismatched workers also suffer from significant wage penalty. Originality/value This paper makes a significant contribution by providing the first evidence from a developing country to the vertical mismatch literature which has already been overwhelmed with studies from advanced economies.
Productivity growth and job reallocation in the Vietnamese manufacturing sector
Purpose The purpose of this paper is to measure TFP growth and job reallocation in the Vietnamese manufacturing industry after the Doimoi period. Design/methodology/approach The study uses firm-level panel data from Vietnam's annual enterprise survey data for 2000-2016 period in the Vietnamese manufacturing industry using Olley-Pakes static and dynamic productivity decomposition methods. Findings The aggregate productivity estimated from the WRDG method increased 2.323 percent, of which over 40 percent is due to the reallocation toward more productive firms. Olley-Pakes dynamic decomposition according to ownership, scale and industry shows that the contribution of private and state-owned firms and the contribution of small and medium firms and large firms to the TFP growth are 133, -33 percent, 58.56 and 41.44 percent, respectively. The within-firm productivity and net entry components are the main reasons for TFP growth rather than reallocation. The results show that the composition of the aggregate TFPs, estimated from WRDG, OP, LP and ACF, is correlated very high (over 80 percent) except for net entry components. Research limitations/implications The major limitation of this study is that the authors compute an aggregate productivity index using actual employment-based shares (still misallocation in labor), rather than optimal employment-based shares (no misallocation in labor). Originality/value Job reallocation between industries is attracting attention in developing countries, especially transition economies. However, knowledge about job reallocation among industries is limited. This paper assesses the level of job reallocation among private and state-owned firms, small and medium firms and large firms in Vietnam.
The effect of internal control on tax avoidance: the case of Indonesia
Purpose The purpose of this paper is to analyze the effect of internal control on tax avoidance analyzing internal (family ownership) and external (environmental uncertainty) factors on the effectiveness of internal control in preventing tax avoidance. Design/methodology/approach First, the authors examine the direct effect of the effectiveness of internal control on tax avoidance. Second, the authors examine the effect of moderation of family ownership and environmental uncertainty on the relationship of the effectiveness of internal control on tax avoidance. Third, the authors divide the full sample into two groups, high and less effectiveness of internal control to examine the direct effect of internal control effectiveness on tax avoidance and when considering moderating variables. Fourth, the authors use two different measures of the effectiveness of internal control. Findings This research found that effective internal control can reduce tax avoidance. Family ownership affects the relationship between internal control and tax avoidance, but environmental uncertainty does not influence the relationship between internal control and tax avoidance. Practical implications Internal control increases compliance with rules and policies, so companies must design and implement effective internal control to prevent tax avoidance activities in violation of tax regulations. Originality/value In contrast to previous studies, this study measures the effectiveness of internal control using the index of internal control practice disclosure and considers internal and external factors that can affect the effectiveness of internal control to prevent tax avoidance.
Exchange rate pass-through into inflation in Vietnam: evidence from VAR model
Purpose The purpose of this paper is to examine and analyze the exchange rate pass-through into inflation (ERPT) in Vietnam. Design/methodology/approach The paper examines and analyzes the ERPT in Vietnam by applying vector autoregression model over the period 2008‒2018. Findings The key finding of the research is that from the impulse response results, the transmission of exchange rate shocks to inflation is significant in Vietnam, and this is incomplete exchange rate pass-through. Moreover, the evidence from variance decompositions argues that exchange rate is an important factor to explain the fluctuation of inflation. Originality/value In overall, the depreciation or appreciation of exchange rate in Vietnam will considerably impact inflation.
Stock market activity and Google Trends: the case of a developing economy
Purpose The purpose of this paper is to investigate the impacts of investor attention on stock market activity. Design/methodology/approach The authors employed the Google Search Volume (GSV) Index, a direct and non-traditional proxy for investor attention. Findings The results indicate a strong correlation between GSV and trading volume - a traditional measure of attention - proving the new measure's reliability. In addition, market-wide attention increases both stock illiquidity and volatility, whereas company-level attention shows mixed results, driving illiquidity and volatility in both directions. Originality/value To the best of the authors' knowledge, Nguyen and Pham's (2018) study has been the only previous study identifying investor attention in Vietnam by using GSV as a proxy and examining the impacts of broad search terms about the macroeconomy on the stock market as a whole - on stock indices' movements. The paper will contribute to this by quantifying GSV impacts on each stock individually.
An investigation into the relationship between materialism and green purchase behavior in Vietnam and Taiwan
Purpose The purpose of this paper is to investigate the impact of materialistic values on purchase intention (PI) toward green products among consumers in Vietnam and Taiwan, two Asian countries with different levels of economic development. Design/methodology/approach This research employs the extended theory of planned behavior (TPB) with an integration of materialism. To serve the purpose of this study, two consumer surveys were conducted in Hanoi (Vietnam) and Taipei (Taiwan). The structural equation modeling was employed to test the proposed model and hypotheses. Findings This study examined the impact of some antecedents of green PI among consumers in Vietnam and Taiwan, focusing on the indirect impact of materialistic values (through attitude). All five hypotheses received support from the Vietnam data, confirming the significant impacts of materialistic values (i.e. success and happiness) on attitude, and all three antecedents from the TPB model (i.e. attitude, subjective norms and perceived behavioral control) as positive predictors of green PI. For the Taiwan data, the findings were similar to those from the Vietnam data, except insignificant impact of success value on attitude toward buying green products. Originality/value This research is expected to contribute to the extant literature by enriching the knowledge of the interesting and important relationship between materialistic values and green purchase behavior among consumers in two Asian markets where, to the author's best understanding, only modest research effort has been given to explore this topic.
The relationship between organizational learning capability and business performance: The case of Vietnam firms
Purpose The purpose of this paper is to explore the relationship between organizational learning capability and business performance of Vietnamese firms. Design/methodology/approach Based on the literature review, the authors proposed five hypotheses covering the relationships between different dimensions of organizational learning capability and business performance. Data collected from a survey of 160 Master of Business Administration students working in different firms in Vietnam were analyzed to test the proposed hypotheses. Findings The results confirmed that organizational learning capability has positive effect on business performance. Moreover, two out of four dimensions of organizational learning capability are having positive relationship with business performance (management commitment to learning and "knowledge transfer and integration"). Practical implications The paper gives some suggestions for firms to improve their business performance through enhancing organizational learning capability. Originality/value This study provides important insights into the recognized yet under-researched relationship between organizational learning capability and business performance and confirms that organizational learning capability has a positive impact on business performance in Vietnam context.
Trade credit use by shrimp farmers in Ca Mau province
Purpose The purpose of this paper is to investigate the determinants of the amount of trade credit granted to shrimp farmers in Ca Mau. Design/methodology/approach Based on the literature review, the authors proposed six hypotheses on the determinants of the amount of trade credit granted to shrimp farmers. Data collected from 120 shrimp farmers in Ca Mau were used to test the proposed hypotheses. Findings Two out of six determinants, i.e. the size of input order (a pulling factor) and the competition among input suppliers (a pushing factor), are significantly positively associated with the amount of trade credit granted to shrimp farmers. No impact of the other determinants was found. The findings imply that shrimp farmers should join cooperatives to enhance access to trade credit and mitigate the risk for input suppliers. Originality/value This paper sheds light on the fact that trade credit is still granted to such risky buyers as shrimp farmers, which has not been explored by previous studies.
The interest rate sensitivity of output and prices with different levels of financial inclusion: Evidence from developing economies
Purpose he purpose of this paper is to evaluate the interest rate (IR) sensitivity of output and prices in developing economies with different levels of financial inclusion (FI) for the period 2007Q1-2017Q4. Design/methodology/approach By using the PCA method to construct an FI index for each country, the author divides the sample into two groups (high and low FI levels). Then, with panel vector autoregressions on per group estimated to assess the strength of the impulse response of output and prices to IR shock. Findings The findings show that the impact of an IR shock on output and inflation is greater in economies with a higher degree of FI. Practical implications The finding indicates the link between FI and the effectiveness of IRs as a monetary policy tool, thereby helping Central banks to have a clearer goal of FI to implement their monetary policy. Originality/value This study emphasizes the important role of FI in the economy. From there, an FI solution is integrated into the construction and calculation of its impact on monetary policy, improving the efficiency of monetary policy transmission, contributing to price stability and sustainable growth.