Asian Economic and Financial Review

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Online ISSN: 2222-6737
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Total Citation: 1219

No.6

Firm Level Job Creation Rates Over The Business Cycle


Pages: 837-852
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Firm Level Job Creation Rates Over The Business Cycle

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Werner Holzl --- Peter Huber
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Werner Holzl --- Peter Huber (2014). Firm Level Job Creation Rates Over The Business Cycle. Asian Economic and Financial Review, 4(6): 837-852. DOI:
We study the evolution and cyclical dependence of the cross sectional distribution of firm level job creation rates from 1975 to 2004 for the Austrian private sector. The share of firms not adjusting has declined over time, but the share of entries, exits, growing and declining firms increased. The share of firms adjusting is higher in upswings than in downturns and the higher order moments of the job creation distribution follow distinct cyclical patterns. The smallest firms and firms at the extremes of the growth rate distribution are largely unaffected by the business cycle.
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Is Pakistan Stock Market Moving towards Weak-Form Efficiency? Evidence from The Karachi Stock Exchange and the Random Walk Nature of Free-Float of Shares of KSE 30 Index


Pages: 808-836
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Is Pakistan Stock Market Moving towards Weak-Form Efficiency? Evidence from The Karachi Stock Exchange and the Random Walk Nature of Free-Float of Shares of KSE 30 Index

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Ushna Akber --- Nabeel Muhammad
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Ushna Akber --- Nabeel Muhammad (2014). Is Pakistan Stock Market Moving towards Weak-Form Efficiency? Evidence from The Karachi Stock Exchange and the Random Walk Nature of Free-Float of Shares of KSE 30 Index. Asian Economic and Financial Review, 4(6): 808-836. DOI:
In this study, we have attempted to seek evidence for weak-form of market efficiency for KSE 100 Index because over the last five years KSE 100 Index has shown substantial growth as compared to other emerging stock markets. Index returns have been studied from 1st January, 1992 to 30th April, 2013. For further analysis, return series has been divided into sub-periods. The paper has made use of primarily Non-Parametric tests as well as Parametric tests. For further analysis, Runs test has also been run on 20 companies return series for comparison purpose with the results of index return series. In addition, from KSE 30 Index, 20 companies return series based on the free-float of shares have also been analyzed through Runs test to check if increase in numbers of floating shares does increase the randomness in return series or not. To our knowledge, this paper is the first one on KSE 100 Index to study the overall time frame of return series of KSE 100 Index of 22 years with the several random walk and weak-form efficiency tests to ensure the consistency of results; and to compare the results of runs test of index return series with the results of runs test on companies return series from KSE 100 and KSE 30 Indexes. Overall KSE 100 Index has been found to be weak-form inefficient, but unlike other studies, our study illustrates how the last 4 years have shown some signs of efficiency. Companies return series from KSE 30 Index are found to be more random than companies return series from KSE100 Index.
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Closed Form Solution for Heston PDE By Geometrical Transformations


Pages: 793-807
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Closed Form Solution for Heston PDE By Geometrical Transformations

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Mario Dell’Era
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Mario Dell’Era (2014). Closed Form Solution for Heston PDE By Geometrical Transformations. Asian Economic and Financial Review, 4(6): 793-807. DOI:
One presents and discusses an alternative solution writeable in closed form of the Heston’s PDE, for which the solution is known in literature, up to an inverse Fourier transform. Since the algorithm to compute the inverse Fourier Transform is not able to be applied easily for every payoff, one has elaborated a new methodology based on changing of variables which is independent of payoffs and does not need to use the inverse Fourier transform algorithm or numerical methods as Finite Difference and Monte Carlo simulation. In particular, one will compute the price of Vanilla Options for small maturities in order to validate numerically the Geometrical Transformations technique. The principal achievement is to use an analytical formula to compute the prices of derivatives, in order to manage, balance any portfolio through the Greeks, that by the proposed solution one is able to compute analytically. The above mentioned numerical techniques are computationally expensive in the stochastic volatility market models and for this reason is usually employed the Black Scholes model, that is unsuitable, as it has been widely proven in literature to compute the sensitivities of a portfolio and the price of derivatives. The present article wants to introduce a new approach to solve PDEs complicated, such as, those coming out from the stochastic volatility market models, with the achievement to reduce the computational cost and thus  the time machine; besides, the proposed solution is easy to be generalized by adding jump processes as well. The present research work is rather technical  and one does wide use of functional analysis. For the conceptual simplicity of the technique, one confides which many applications and studies will follow, extending the applications of the Geometrical Transformations technique to other derivative contracts of different styles and asset classes.
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Is Globalisation A Potent Driver of Economic Growth? Investigating the Nigerian Non-Oil Exports


Pages: 781-792
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Is Globalisation A Potent Driver of Economic Growth? Investigating the Nigerian Non-Oil Exports

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Godwin Ukaiji Okpokpo --- Innocent Abanum Ifelunini --- Fidelis Osuyali 
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Godwin Ukaiji Okpokpo --- Innocent Abanum Ifelunini --- Fidelis Osuyali  (2014). Is Globalisation A Potent Driver of Economic Growth? Investigating the Nigerian Non-Oil Exports. Asian Economic and Financial Review, 4(6): 781-792. DOI:
Many countries have gained from integrating into the global economy while some have not been as much fortunate. Some have come to see globalisation as a weapon for improved economic growth. With the progressive increase in the poverty level in Nigeria, there is the doubt as to whether globalisation has improved the fortune of Nigeria. More so as there have been contradictory studies on the impact of globalisation in Nigeria. This study interrogated globalisation as a potent driver of economic growth in Nigeria using the non-oil (Agricultural and Manufacturing) export as reference point. Unit root test (Augmented Dickey-Fuller test) was exploited to check the integration order of the variables. Using data from 1970 -2011 and employing Ordinary Least Square regression, the study found that globalisation had no significant impact on non-oil export within the period under study. The study concludes that globalisation has not been a potent driver of growth of non-oil export in Nigeria. The however, recommends that government should provide adequate and functional infrastructure; improve security and as well  provide consistent policy and demonstrate political will to encourage domestic and foreign investment into the Nigerian non-oil sector.
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Micro Credit and Promotion of Small and Medium Enterprises in Informal Sector of Ghana: Lessons from Experience


Pages: 768-780
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Micro Credit and Promotion of Small and Medium Enterprises in Informal Sector of Ghana: Lessons from Experience

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Kwaku D. Kessey
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Kwaku D. Kessey (2014). Micro Credit and Promotion of Small and Medium Enterprises in Informal Sector of Ghana: Lessons from Experience. Asian Economic and Financial Review, 4(6): 768-780. DOI:
SMEs in developing countries play significant role in the economic activities of those nations.   SMEs provide income for many low income households especially in the informal sector.  Notwithstanding their contributions, SME entrepreneurs face serious financial challenges which have led to poverty among them. For SMEs to overcome their financial challenges, Micro Finance Institutions have emerged with the view to providing micro credit and other financial products for SMEs. .Also, Public micro credit was given to SMEs as subsidized loans. Unfortunately, that  programme has collapsed. To revive public support for SMEs and low income households the government of Ghana introduced in 1993, Act 328, which established Non Bank Financial Institutions (NBFIs) to support SMEs and low income households. Donors, also, supported that programme, in 2003, under the Ghana Poverty Reduction Strategy (GPRS).Generally, SME activities in Ghana are dominated by women who constitute 75 per cent of total entrepreneurs. Notwithstanding their low earnings, SMEs have to repay borrowed funds with high interest of 3 per cent per month or 34 per cent per annum. The low income and high interest rate have led to high default rate among SMEs borrowers. The study showed that among SME entrepreneurs who repay credit on monthly basis there is a default rate of 2. 8 per cent where as those who repay annually have default rate of 6.5 per cent. It would be necessary for Micro Finance Institutions to extend other products such business advisory products and social products to SMEs to raise their productivity and improve upon their performance. An observation is that only Micro Credit would not take SMEs out of poverty in developing countries.
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  2. Kessey, K.D. and A. Felix, 2013. Urbanization and intensive use of space in central business district. Decongestion programme as city service response: An Appraisal Journal of Developing Country Studies. New York: IISTE Publication, 3(6): 89-96.

Analyzing the Effect of Economic Variables on Total Tax Revenues in Iran


Pages: 755-767
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Analyzing the Effect of Economic Variables on Total Tax Revenues in Iran

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Mehdi Basirat --- Fatemeh Aboodi --- Abdulmajid Ahangari
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Mehdi Basirat --- Fatemeh Aboodi --- Abdulmajid Ahangari (2014). Analyzing the Effect of Economic Variables on Total Tax Revenues in Iran. Asian Economic and Financial Review, 4(6): 755-767. DOI:
As the government’s source of revenue, taxes play a major role in the construction and economic development of a country. Accurate knowledge of factors affecting tax revenues provides the policymakers with a clear horizon for economic planning. This study mainly aimed to examine the effect of economic variables on total tax revenues between 1974 and 2011. Accordingly, the Auto regression Distributed Lag (ARDL) Model was used. Results indicated that exchange rate with 0.71398, import with 0.53781, and the value-added of industry sector with 1.0841 had a positive significant relationship with total tax revenues. Moreover, the value-added of agriculture sector with 1.1801 had a negative significant relationship with total tax revenues.
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The Impact of Trade Liberalization on Demand and Price Volatility in Pakistan: Co Integration Approach for Compensation Hypothesis


Pages: 744-754
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Hira Mujahid --- Shaista Alam
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Hira Mujahid --- Shaista Alam (2014). The Impact of Trade Liberalization on Demand and Price Volatility in Pakistan: Co Integration Approach for Compensation Hypothesis. Asian Economic and Financial Review, 4(6): 744-754. DOI:
The important modification of the compensation hypothesis rests on the principle; increased trade openness increase the domestic economic volatility. The economic theory recommend increase of international trade require integration into huge, even markets, and involve risk diversification, in fact it may support rather than reduce stability. By the same indication, however, economic theory also suggests that smaller economies should familiar with greater levels of volatility than larger economies, this study quantify the relationship proposed in case of Pakistan containing dataset since 1966-2009. The verification presented here suggests that the level of domestic economic volatility is not only because of international trade integration, there are some other factors too; however trade integration may have eased rather than emphasizing on creating domestic economic volatility.
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The Short - And Long -Term Effects of Trade Taxes on Vertical Specialization


Pages: 732-743
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Deniz AYTAC --- Sabiha KILIC
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Deniz AYTAC --- Sabiha KILIC (2014). The Short - And Long -Term Effects of Trade Taxes on Vertical Specialization. Asian Economic and Financial Review, 4(6): 732-743. DOI:
The aim of this study is to evaluate the effects of taxes on international trade in the short- and long-term on vertical specialization in the case of Turkey, which signed the GATT agreement and entered into the customs union in the process of its accession to the EU. Balassa’s measure of relative exports-imports has been used in the study as the measure of vertical specialization. The relationship between the measure of vertical specialization and customs and import duties has been tested with the ARDL approach for the period 1989-2012. This analysis has shown that there is not a statistically significant relationship between the variables in the short term but that there is a positive and significant relationship between them in the long term. In this sense, it may be stated that taxes on international trade have in Turkey a limited but positive effect on vertical specialization in the long term, even if not in the short term.
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Integration and Dynamic Linkages of the Indian Stock Market with Bric - An Empirical Study


Pages: 715-731
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Ranjan Dasgupta
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Ranjan Dasgupta (2014). Integration and Dynamic Linkages of the Indian Stock Market with Bric - An Empirical Study. Asian Economic and Financial Review, 4(6): 715-731. DOI:
The interrelationships, interdependencies, integration, and dynamic linkages in between countries, regions including BRIC, country-region, and developing-developed stock markets had been thoroughly researched in the literature. This study aims at investigating above relationships both in short and long-run with special reference to India. It undertakes daily closing values of the BRIC indices from 1st January 2003 to 31st December 2012. This study has used Jarque-Bera test, and ADF and PP tests for judging the normality and stationarity of the data series. Based on the above results this study undertakes Johansen and Juselius’s and Engle and Granger’s cointegration tests, and pairwise Granger causality tests to investigate short and long-run interrelationships and integration of the BRIC stock markets. To make this study more reliable the Vector Autoregression in the form of Impulse response functions and Variance Decomposition analysis are also used. This study has found that they are non-normal and non-stationary at level, but integrated of order 1 [i.e., I(1)]. It has found only one cointegration, i.e., long-run relationships and also short-run bidirectional Granger relationships in between the Indian and Brazilian stock markets. Also, the Chinese stock market Granger causes the Brazilian stock market which in turn has a causal effect on the Russian stock market. Based on the above results, it is found that the Indian stock market has strong impact on Brazilian and Russian stock markets. The interdependencies (mainly on India and China) and dynamic linkages are also evident in the BRIC stock markets. Overall, this study has found that BRIC stock markets are the most favourable destination for global investors in the coming future and among the BRIC the Indian stock market has the dominance.
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Growth Effects of Health Inputs and Outcomes in Sub-Sahara African Countries (1995-2011)


Pages: 705-714
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Apanisile Olumuyiwa Tolulope --- Akinlo Taiwo
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Apanisile Olumuyiwa Tolulope --- Akinlo Taiwo (2014). Growth Effects of Health Inputs and Outcomes in Sub-Sahara African Countries (1995-2011). Asian Economic and Financial Review, 4(6): 705-714. DOI:
The study examined the contribution of health inputs and outcomes to growth process in the Sub-Saharan Africa. Panel data of 30 countries from the sub-region from 1995 to 2011was used in a dynamic Generalized Method of Moment (GMM) modeling framework. The study used secondary school enrolment and government expenditure on health as health inputs while child mortality rate was used as a proxy for health outcomes. Results showed that education has statistically significant positive effect on economic growth while both government expenditure on health and mortality rate have statistically significant negative effects. The coefficients of the variables revealed that health (reduction in child mortality rate) is relatively more effective in promoting economic growth than education as an input in the growth process as the effects of health overwhelmingly supersedes the effects of education in the dynamic endogenous growth model estimated. This implies while both education and health care are crucial and important in the growth process, in a situation of resources constraints, emphasis should first be placed on adequate and efficient healthcare delivery and then provision of higher education
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