Asian Economic and Financial Review

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No.4

Entrepreneurial Empowerment of Agriculture and Industrial Sector in Rural Areas of Semarang Regency Indonesia


Pages: 723-733
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Entrepreneurial Empowerment of Agriculture and Industrial Sector in Rural Areas of Semarang Regency Indonesia

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.723.733


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Edy Dwi Kurniati 
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Edy Dwi Kurniati  (2015). Entrepreneurial Empowerment of Agriculture and Industrial Sector in Rural Areas of Semarang Regency Indonesia. Asian Economic and Financial Review, 5(4): 723-733. DOI: 10.18488/journal.aefr/2015.5.4/102.4.723.733
Sources of income of farmers not only from the agricultural sector, but farmers often also work in other sectors such as in the non-agricultural sector. In this regard, the economic empowerment of farmers should also consider the development of the capacity of farmers outside the agricultural sector. This research aims to develop a general model of entrepreneurial empowerment in agriculture and non-agriculture industry based on factors that affect economic welfare of farmers who sought in agriculture and non-agricultural industries in rural areas in Semarang Regency. The study was conducted by distributing questionnaires to 342 farmers who only work in agriculture and farmers have a second job in the agro-processing industry sector. The analysis was performed by multiple linear regression analysis approach. The results found in this study is the empowerment of poor rural farmers not only can be done by increasing the capacity of physical resources (land tenure, irrigation networks), but also non-physical resource capacity (capacity management, social capital, entrepreneurship), and the relationship between business sectors farmer. The implications of the results of this study are farmers with low agricultural land tenure and no access to irrigation should be encouraged to self-employed in the industrial sector in addition to the agricultural sector to increase their revenue through the development of management and entrepreneurial capacity.
Contribution/ Originality

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Microeconomic Gasoline Consumption Anomalies in Mexico: 1997-2007


Pages: 709-722
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Microeconomic Gasoline Consumption Anomalies in Mexico: 1997-2007

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.709.722


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Thomas M. Fullerton, Jr. --- Jorge Ibarra Salazar --- Mario Elizalde 
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Thomas M. Fullerton, Jr. --- Jorge Ibarra Salazar --- Mario Elizalde  (2015). Microeconomic Gasoline Consumption Anomalies in Mexico: 1997-2007. Asian Economic and Financial Review, 5(4): 709-722. DOI: 10.18488/journal.aefr/2015.5.4/102.4.709.722
Economic expansion in Mexico has caused fuel consumption to increase.  Because Mexico does not have sufficient refinery capacity, over 40 percent of total gasoline consumed is imported.  This has implications for the balance of payments.  In this paper, gasoline demand is empirically examined using cointegration and error correction approaches.  The sample period utilized contains a complete business cycle, but does not include the atypical 2008 financial market collapse downturn.  Results indicate that long-run equilibrium in the Mexican gasoline market may not exist during the sample period in question.  This is potentially attributable to the regulatory regime that governs energy markets in Mexico.  Regulated price adjustments that are not consistent with prevailing market conditions run the risk of misallocating resources.  Effective gasoline subsidies currently cost Mexico several billion dollars per year.  Permitting greater flexibility in private gasoline retail markets may prove beneficial in Mexico.  Parameter estimates indicate that gasoline is a normal good.  More provocatively, the demand curve for gasoline is found to be upward sloping.  That implies that, over the course of the sample period analyzed, the income effect exceeds the substitution effect.  Given recent policy changes in Mexico, the latter outcome is not expected to persist.
Contribution/ Originality
This study contributes in the existing literature by using cointegration and error correction modeling techniques to study short and long – run characteristics of gasoline demand in the price regulated setting, and fuel subsidizing setting of Mexico.
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Financial Crisis and Financialization Acuity on the Diversification Benefits of Commodities: A Stochastic Asset Allocation Framework


Pages: 693-708
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Financial Crisis and Financialization Acuity on the Diversification Benefits of Commodities: A Stochastic Asset Allocation Framework

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.693.708


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Velappan Shalini --- Krishna Prasanna P 
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Velappan Shalini --- Krishna Prasanna P  (2015). Financial Crisis and Financialization Acuity on the Diversification Benefits of Commodities: A Stochastic Asset Allocation Framework. Asian Economic and Financial Review, 5(4): 693-708. DOI: 10.18488/journal.aefr/2015.5.4/102.4.693.708
This research investigates the portfolio diversification benefits of commodities in the backdrop of uncertainty caused by the financial crisis, increased Financialization and speculation in commodity markets. Portfolios are formed out of varied asset classes comprise of equity, bond, infra structure, commodity spot & futures indices and sectoral indices such as agri, metals and energy sectors over a period 2005-2013. It employed stochastic mean-conditional value at risk (CVaR) optimization model. CVaR quantifies downside risk and helps to minimize extreme losses. The ex-post stability of the results and the robustness of the model are validated through back testing. Different performance measures such as Sharpe ratio, modified Sharpe ratio with conditional value at risk, opportunity cost and maximum draw down are employed to compare the results of multi asset portfolios. The results support the evidence of the diversification benefit in commodity futures indices than in spot indices. It also highlighted the significance of Agri commodities in offering portfolio diversification than energy and metal commodities. The diversification benefit of later are found to be reduced with the advent of financial crisis. It also provides empirical evidence that the diversification benefits of energy and metal commodities were reduced during the financial crisis and this can be attributed to the observed increase in Financialization and cross-asset market integration during the crisis period.
Contribution/ Originality
This study uses new estimation methodology to evaluate the diversification benefit of commodity by addressing the uncertainty in the asset returns, the time varying nature of correlation-covariance structure and extreme distribution losses, by modelling through scenario based Mean - CVaR (Conditional Value at Risk) stochastic optimization.
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The Relationship between Growth and Employment Intensity: Evidence for Developing Countries


Pages: 680-692
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The Relationship between Growth and Employment Intensity: Evidence for Developing Countries

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.680.692


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Sarra Ben Slimane 
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Sarra Ben Slimane  (2015). The Relationship between Growth and Employment Intensity: Evidence for Developing Countries. Asian Economic and Financial Review, 5(4): 680-692. DOI: 10.18488/journal.aefr/2015.5.4/102.4.680.692
The main objective of this paper is to contribute to the literature on employment-GDP elasticities by assessing the determinants of cross-country variations in employment elasticities, focusing particularly on the role of demographic and macroeconomic variables. Long-term employment?GDP elasticities are estimated using an unbalanced panel of 90 developing countries from 1991 to 2011 using a two steps estimation strategy. The most important results are: (i) Elasticity estimates vary considerably across countries. (ii) Employment elasticities tend to be higher in more advanced and closed countries. (iii) Macroeconomic policies aimed at reducing macroeconomic (price) volatility are found to have significant effect in increasing employment elasticities. (vi) Employment intensity of growth tends to be higher in countries with a larger service sector. (v) Countries with a higher share of urban population are typically characterized by larger employment elasticities. 
Contribution/ Originality
This study is one of very few studies which have investigated the macroeconomic determinants of employment-output elasticities in developing countries. This paper seeks to address these gaps in the literature by taking advantage of an extensive cross-country panel dataset and by using an original two steps estimation strategy.
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Sources of Exchange Rate Fluctuation in Vietnam: An Application of the SVAR Model


Pages: 671-679
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Sources of Exchange Rate Fluctuation in Vietnam: An Application of the SVAR Model

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.671.679


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Nguyen Van Phuong 
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Nguyen Van Phuong  (2015). Sources of Exchange Rate Fluctuation in Vietnam: An Application of the SVAR Model. Asian Economic and Financial Review, 5(4): 671-679. DOI: 10.18488/journal.aefr/2015.5.4/102.4.671.679
Vietnam has been implementing the export-oriented economy, in which the central bank of Vietnam, well-known as the State Bank of Vietnam (SBV), has adopted the managed float exchange rate regime since 1990. Therefore, the exchange rate movement plays an important role in stimulating the Vietnamese export activities. By using the long-run SVAR model, pioneered by Blanchard and Quah (1989), this study examines how the real and nominal shocks impact the nominal and real exchange rate (USD/VND) in Vietnam. We use monthly data on the USD/VND exchange rate, the price levels in Vietnam and the United States from May 1995 to December 2013. Our empirical results reveal that the real shock primarily leads the real and nominal exchange rate (USD/VND) to fluctuate over time. Meanwhile, the nominal shock has a temporary effect on the movement of the real exchange rate in Vietnam. Our research also finds that the long-run Purchasing Power Parity (PPP) does not hold in Vietnam.
Contribution/ Originality
Vietnam has been implementing the export-oriented economy, in which the central bank of Vietnam, well-known as the State Bank of Vietnam (SBV), has adopted the managed float exchange rate regime since 1990. Therefore, the exchange rate movement plays an important role in stimulating the Vietnamese export activities. By using the long-run SVAR model, pioneered by Blanchard and Quah (1989), this study examines how the real and nominal shocks impact the nominal and real exchange rate (USD/VND) in Vietnam. We use monthly data on the USD/VND exchange rate, the price levels in Vietnam and the United States from May 1995 to December 2013. Our empirical results reveal that the real shock primarily leads the real and nominal exchange rate (USD/VND) to fluctuate over time. Meanwhile, the nominal shock has a temporary effect on the movement of the real exchange rate in Vietnam. Our research also finds that the long-run Purchasing Power Parity (PPP) does not hold in Vietnam.
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  9. King, R.G. and M.W. Watson, 1997. Testing long-run neutrality. FRB Richmond Economic Quarterly, 83(3): 69-101.
  10. Ok, S., M. Kakinaka and H. Miyamoto, 2010. Real shock or nominal shock? Exchange rate movements in Cambodia and Lao PDR. The Singapore Economic Review, 55(04): 685 – 703.
  11. Tao, W., 2005. Sources of real exchange rate fluctuations in China. Journal of Comparative Economics, 33(4): 753 – 771.

Oil Price and Exchange Rate in Malaysia: A Time-Frequency Analysis


Pages: 661-670
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Oil Price and Exchange Rate in Malaysia: A Time-Frequency Analysis

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.661.670


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Aviral Kumar Tiwari 
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Aviral Kumar Tiwari  (2015). Oil Price and Exchange Rate in Malaysia: A Time-Frequency Analysis. Asian Economic and Financial Review, 5(4): 661-670. DOI: 10.18488/journal.aefr/2015.5.4/102.4.661.670
The study analyzed the Granger-causal relationship in the time-frequency framework between return series of real oil price (ROP) and real effective exchange rate (REER) for Malaysia. In doing so, study relied on time-frequency framework of the Granger-causality, which is based on continuous wavelet approach. We found that the causal and reverse causal relations between oil price and  real exchange rate vary across scale and period viz., during late 1989, in the time scale of 8~10 months, both variables were in phase and ROP was leading and both variables were out of phase and ROP was leading (a) in 1990-1991, in the time scale of 12~16 months, (b) in 1997 -1998 in the time scale of 10~16 months, (c) in 2001-2003, in time scale of 9~15 months, and (d) in 2005 and early 2006, in the time scale of 2~7 months. Further, evidence shows that during 1989-1998, in 32~48 months scales, variable were in phase and ROP was lagging and throughout the study period, in 60~64 months scale, variables were in phase and ROP was leading. Hence, our evidence show that there is evidence of both cyclical and anti-cyclical relationship between ROP and REER at shorter time scales however, throughout study for higher scales REER was lagging and receiving cyclical effects of ROP shocks. Findings obtained in the study have implications for central monetary authority of Malaysia in the formulations of appropriate monetary and exchange rate policies and for traders in the formulations of effective risk management. 
Contribution/ Originality
This is the first study for the Malaysian economy in the context studied using the wavelet approach. Hence, results obtained may offer more insights for central monetary authority as well as risk managers from the policy perspectives. 
  1. Aguiar-Conraria, L. and M.J. Soares, 2011. Oil and the macroeconomy: Using wavelets to analyze old issues. Empirical Economics, 40(3): 645-655.
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  9. Grinsted, A., J.C. Moore and S. Jevrejeva, 2004. Application of the cross wavelet transform and wavelet coherence to geophysical time series. Nonlinear Processes in Geophysics, 11(5/6): 561-566.
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The Impact of Life Expectancy on Economic Growth in Developing Countries


Pages: 653-660
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The Impact of Life Expectancy on Economic Growth in Developing Countries

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.653.660


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Ngwen Ngangue --- Kouty Manfred 
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Ngwen Ngangue --- Kouty Manfred  (2015). The Impact of Life Expectancy on Economic Growth in Developing Countries. Asian Economic and Financial Review, 5(4): 653-660. DOI: 10.18488/journal.aefr/2015.5.4/102.4.653.660
Will the improvement of life expectancy contributes to economic growth in a country? The response to this question is essential in the debates on health policy in the world in general and in developing countries (DC) in particular. The objective of this study is the impact of life issue through an analysis of the impact of life expectancy on the growth of Gross National Income (GNI) per capita in DC. Using a dynamic panel of 141 DC over the period 2000- 2013, the study concludes that the improvement in life expectancy positive affects economic growth in DC. However, the results are mixed when classifying DC according to their level of income. We observe that the effect is not significant in the middle-income DC.
Contribution/ Originality
This study contributes in the existing literature by using another estimation methodology in panel data: dynamic panel. This estimation methodology helps to address the endogeneity issue. The findings indicate that economic growth is positively affected par life expectancy
  1. Acemoglu, D. and S. Johnson, 2007. Disease and development: The effect of life expectancy on economic growth. Journal of Political Economy, 115(6): 925-985.
  2. Aghion, P. and P. Howitt, 1992. A model of growth through creative destruction. Econometrica, 60(2): 323-351.
  3. Aghion, P., P. Howitt and F. Murtin, 2012. The relationship between health and growth: When lucas meets Nelson-Phelps. Review of Economics and Institutions, 2(1):1-24.
  4. Barro, R., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy, 98(S5): 103-125.
  5. Barro, R., 1997. Determinants of economic growth. A cross country empirical study. Cambridge, MA: MIT Press.
  6. Barro, R. and S. Sala-i-Martin, 1992. Convergence. Journal of Political Economy, 100(2):223-251.
  7. Barro, R.J., 1996. Three models of health and economic growth. Unpublished Manuscript, Harvard University, Cambridge, MA.
  8. Barro, R.J. and J.W. Lee, 2010. A new data set of educational attainment in the world, 1950-2010. NBER Working Paper N° 15902.
  9. Bloom, D., D. Canning and P. Malaney, 1999. Demographic change and economic growth in Asia. CID Working Paper, 15: 1-60.
  10. Bloom, D. and J.D. Sachs, 1998. Geography, demography and economic growth in Africa. Harvard Institute for International Development, Harvard University, (2): 207-273.
  11. Bloom, D.E., D. Canning and J. Sevilla, 2001. The effect of health on economic growth: Theory and evidence, NBER Working Paper No. 8587.
  12. CEA, 2013. Rapport économique sur l’Afrique 2013 : Tirer le plus grand profit des produits de base africains: l’industrialisation au service de la croissance, de l’emploi et de la transformation économique. Addis-Abeba, Éthiopie.
  13. Deaton, A., 2001. Health, inequality, and economic development. Document n° WG1:3 préparé pour le Groupe de travail 1 de la Commission Macroéconomie et Santé.
  14. Fogel, R.W., 1994. Economic growth, population theory and physiology: The bearing of long-term processes on the making of economic policy. American Economic Review, 84(3): 369-395.
  15. Gallup, J.L., J.D. Sachs and A.D. Mellinger, 1999. Geography and economic development. International Regional Science Review, 22(2): 179(232).
  16. Lorentzen, P., J. Mcmillan and P. Wacziarg, 2008. Death and development. Journal of Economic Growth, 13(2): 81-124.
  17. Lucas, R., 1988. On the mechanics of economic development. Journal of Monetary Economics, 22(1): 3-42.
  18. Madsen, J., 2012. Health, numan capital formation and knowledge production: Two centuries of international evidence. NBER Working Paper, N°18461.
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  21. Schultz, P.T., 1999a. Health and schooling investments in Africa. Journal of Economic  Perspectives, 13(3): 67-88.
  22. Schultz, P.T., 1999b. Productive benefits of improving health: Evidence from low income countries. Yale University, Hartford, CN. Processed.
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  24. Schultz, P.T. and Tansel, 1992. Measurement of returns to adult health: Mortality effects on wage rates in Côte d’Ivoire and Ghana. Dicussion Paper 663, Yale University, Economic Growth Center, New Haven, CT.
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  26. Weil, D.N., 2005. Accounting for the effect of health on economic growth. NBER Working Paper No. 11455: 1-58.

Firms Life Cycle and Ohlson Valuation Model: Evidence from Iran


Pages: 641-652
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Firms Life Cycle and Ohlson Valuation Model: Evidence from Iran

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.641.652


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Hossein Etemadi --- Forough Rahimi Mougouie 
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Hossein Etemadi --- Forough Rahimi Mougouie  (2015). Firms Life Cycle and Ohlson Valuation Model: Evidence from Iran. Asian Economic and Financial Review, 5(4): 641-652. DOI: 10.18488/journal.aefr/2015.5.4/102.4.641.652
Ohlson prediction and valuation models Ohlson (1995) are based on firm book value, accounting profit and the assumption of "randomized, balanced and stabilized abnormal earnings". On the other hand, the significance of risk and performance indicators during the firm?s life cycle is different according to the life cycle theory. This literature represents the linkage of these indicators with the firm?s value in different life cycle stages. In this study which is aimed to review the ability to improve the Ohlson valuation model considering the firm?s life cycle variable, a sample of 110 firms listed in Tehran Stock Exchange between 2003 and 2013 was selected. Using Anthony and Ramesh (1992) variables and Park and Chen (2006) methodology, the life cycle was divided into three stages and then, considering the firm?s place in the life cycle, prediction models of abnormal earnings and Ohlson firm?s valuation Ohlson (1995) were adjusted and afterward the adjusted models were compared with the initial model in two short-term and long-term estimation periods of 5 and 10 years, respectively. The results show that during both estimation periods, the adjusted model has a better performance in predicting abnormal earnings and firm?s valuation compared to the initial model. During the 10-year estimation period, the two models? estimated values were significantly less than actual values. The probable reason for this difference is the sharp rise in the value of stocks during the final years of the period especially between 2012 and 2013.

Contribution/ Originality
The paper’s primary contribution is providing a superior model for firm valuation by considering firm’s life cycle. While previous studies have shown the relationship between the accounting variables with firm value at different stages of the life cycle, none of them addressed adjustment the valuation model using this variable.
  1. Aharony, J., H. Falk and N. Yehuda, 2006. Corporate life cycle and the value relevance of cash flow versus accrual financial information. School of Economics and Management Bolzano ,Italy, Working Paper. No. 34.
  2. Anthony, J. and K. Ramesh, 1992. Association between accounting performance measures and stock prices: A test of the life cycle hypothesis. Journal of Accounting and Economics, 15(2-3): 203- 227.
  3. Black, E.L., 1998. Life-cycle impacts on the incremental relevance of earnings and cash flow measures. Journal of Financial Statement Analysis, 4(1): 40-56.
  4. Callen, J.L. and M. Morel, 2001. Linear accounting valuation when abnormal earnings are AR (2). Review of Quantitative Finance and Accounting, 16(3): 191-203.
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  7. Dickinson, V., 2011. Cash flow patterns as a proxy for firm life cycle. The Accounting Review, 86(6): 1969-1994.
  8. Feltham, G.A. and J.A. Ohlson, 1995. Valuation and clean surplus accounting for operating and financial activities. Contemporary Accounting Research, 11(2): 689-731.
  9. Francis, J., P. Olsson and D. Oswald, 2000. Comparing the accuracy and explain ability of dividend, free cash flow, and abnormal earnings equity value estimates. Journal of Accounting Research, 38(1): 45–70.
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  12. Giner, B. and R. Iniguez, 2006b. An empirical assessments of  the Feltham-Ohlson models considering the sign of abnormal earnings. Accounting and Business Research, 36(3): 169-190.
  13. Jenkins, D.S., G.D. Kane and U. Velury, 2004. The impact of the corporate life cycle on the value relevance of disaggregated earnings components. Review of Accounting and Finance, 3(4): 5-20.
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  15. Khodadadi, V. and M.R. Emami, 2010. Comparative assessment of Fetham-Ohlson sign oriented and traditional models. International Research Journal of Finance and Economics, 36(2): 59-73.
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  18. McCrae, M. and H. Nitsson, 2001. The explanatory and predictive power of different specifications of the Ohlson (1995) valuation models. The European Accounting Review, 10(2): 315-341.
  19. Myers, J., 1999. Implementing residual income valuation with linear information dynamics. Accounting Review, 74(1): 1-28.
  20. Ohlson, J.A., 1995. Earnings book values and dividends in equity valuation. Contemporary Accounting Research, 11(2): 661-687.
  21. Ota, K., 2002. A test of the Ohlson (1995) model: Empirical evidence from Japan. The International Journal of Accounting, 37(2): 157-182.
  22. Park, Y. and K. Chen, 2006. The effect of accounting conservatism and life-cycle stages on firm valuation. Journal of Applied Business Research, 22(3): 75-92.
  23. Penman, S. and T. Sougiannis, 1998. A comparison of dividend, cash flow and earnings approaches to equity valuation. Contemporary Accounting Research, 15(3): 343–383.
  24. Xu, B., 2007. Life cycle effect on the value relevance of common risk factor. Review of Accounting and Finance, 6(2): 162-175.

Determinants of Capital Structure of Banks: Evidence from Sub-Sahara Africa


Pages: 624-640
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Determinants of Capital Structure of Banks: Evidence from Sub-Sahara Africa

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.624.640


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Ebenezer Bugri Anarfo 
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Ebenezer Bugri Anarfo  (2015). Determinants of Capital Structure of Banks: Evidence from Sub-Sahara Africa. Asian Economic and Financial Review, 5(4): 624-640. DOI: 10.18488/journal.aefr/2015.5.4/102.4.624.640
This study seeks to examine the determinants of capital structure of banks in Sub-Sahara Africa. This study has employed the use of panel data techniques to analyze the determinants of capital structure of banks in sub-Sahara Africa The dependent  variables used in the study were short-term debt ratio (STDR), long-term debt ratio (LTDR) and the total debt ratio (TDAR). The independent variables were: return on asset (ROA), asset tangibility (TANG), Size of the bank (SIZE), growth rate of total assets (GROWTH), corporate marginal tax rate (TAX ), GDP growth rate (GDPGR), interest on loans (INTEREST), inflation rate (INFLR)The results from Levin-Lin-Chu and Im-pesaran-shin unit root test show that all the variables were stationary in levels. The results also indicate that, the return on asset, size, asset tangibility, growth rate of banks and inflation rates are statistically significant in determining the capital structure of banks in Sub-Sahara Africa. However, corporate marginal tax rate, GDP growth rate and the interest rate on loans are not statistically significant in determining banks capital structure in Sub-Sahara Africa.
Contribution/ Originality
Most empirical studies that examine the determinants of capital structure have been done for developed or specific country and there is little evidence in Sub-Sahara Africa. This study contributes in the existing literature by examining the determinants of capital structure of banks in Africa thereby closing the gap in the literature. This study uses new estimation methodology by first of all determining the best method of estimating the panel regression model by examining fixed and random effects. This study originates new formula by controlling for macroeconomic variables as determinants of capital structure of banks. This study is one of very few studies which have investigated the determinants of capital structure of banks in Sub-Sahara Africa. This study contributes by determining the significant variables that determines banks capital structure in Africa.
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Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study


Pages: 601-623
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Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study

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DOI: 10.18488/journal.aefr/2015.5.4/102.4.601.623


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Sandip Chattopadhyay --- Ranjan Dasgupta  
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Sandip Chattopadhyay --- Ranjan Dasgupta  (2015). Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study. Asian Economic and Financial Review, 5(4): 601-623. DOI: 10.18488/journal.aefr/2015.5.4/102.4.601.623
Investor behavior and investment activities are strongly influenced by the risk tolerance level of individual investors. International evidence suggests that lower risk tolerant investors are generally risk averse. However, their demographic characteristics and socioeconomic factors drive their risk attitudes. This study aims at investigating the critical role that age, gender, marital/social status, number of dependents, educational qualifications, employment and income status, savings pattern, future monetary planning, investments amount and returns from investments play in influencing risk tolerance and thereby finding whether the individual investors are risk averse or risk prone. To fulfill these objective 12 questions representing hypotheses were asked to 200 individual investors investing regularly in the Indian stock markets. A risk tolerance points scale is prepared to analyze the risk attitudes overall and each factor wise, and a Binary Logit Model is applied to validate these results. On an overall basis, this study finds that the responded investors have a lower risk tolerance level which makes them highly risk averse. In line with the hypotheses drawn, this study proves that aged investors are more risk averse than their younger, inexperienced counterparts; married investors with children and other dependents are more risk averse than their unmarried and with less dependents counterparts; higher education brings risk tolerance attitude and thereby makes investors risk prone; higher income and savings also decrease risk aversion whereas future planning approach increases risk aversion. It is also found under this study that higher investments amount and returns from such investments increase the risk tolerance level and thus reduces risk aversion of these investors. However, contradictorily with the undertaken hypotheses, this study finds that women investors are more risk prone than their male counterparts, and employment status of the respondents is immaterial in regard to their risk attitude. Binary Logit Model results also mostly validate the above results except that it finds no impact of number of dependents, educational qualifications, employment status, FMP and investments amount on the risk tolerance levels of the respondent Indian investors.
Contribution/ Originality
This study is one of very few studies which have investigated investors’ prominent demographic characteristics like gender, age, marital/social status, employment status, income status and educational qualifications to find out their respective role in influencing Indian investors’ risk tolerance levels and thereby their risk attitudes.
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Economic and Social Duality in Iran (Using Fuzzy TOPSIS Decision-Making)


Pages: 591-600
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Economic and Social Duality in Iran (Using Fuzzy TOPSIS Decision-Making)

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Jalil Khodaparast Shirazi 
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Jalil Khodaparast Shirazi  (2015). Economic and Social Duality in Iran (Using Fuzzy TOPSIS Decision-Making). Asian Economic and Financial Review, 5(4): 591-600. DOI: 10.18488/journal.aefr/2015.5.4/102.4.591.600
One of the planners and policy-makers? aims on the one hand is optimum allocating and distributing of credits and facilities among regions and on the other hand is providing and compiling a suitable model aiming at achieving economic and social equity as well as creating reasonable and real economic growth. Paying attention to the balanced regional development, decreasing regional and district duality and inequities, regional policy-making and planning for achieving objectives, which change according to structural characteristics, facilities and limitations of each region require studying and identifying of each region according to its position in the whole province. In this study, economic and social duality means differences among provinces of Iran in relation to each other that are determined with four indices of per capita income, export?s relation to production, unemployment rate and Gini coefficient. Fuzzy Topsis Decision-making method for the year 2013 has been used owing to the existing complexities in the development indices.
Contribution/ Originality
This study compared provinces in Iran based on sustainable development indices of per capita income, export’s relation to production, unemployment rate and Gini coefficient through Fuzzy Topsis system in 2013. The results revealed that a significant difference still exists between Iranian provinces.
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Terms of Trade Instability, Economic Vulnerability and Economic Growth: The Role of Institutions in Sub-Saharan Africa


Pages: 579-590
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Sana Zaouali --- Amira Zaouali
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Sana Zaouali --- Amira Zaouali(2015). Terms of Trade Instability, Economic Vulnerability and Economic Growth: The Role of Institutions in Sub-Saharan Africa. Asian Economic and Financial Review, 5(4): 579-590. DOI: 10.18488/journal.aefr/2015.5.4/102.4.579.590
Economists have a long argue that institutions and implementation of good governance are important for economic growth. The main objective of this research is to demonstrate that one of positive institutions effects is its ability to mitigate the negative effect of economic vulnerability linked to terms of trade fluctuations on economic growth. The impact of the economic vulnerability and implementation of good governance is estimated for a panel of 15 Sub-Saharan-Africa countries over the period 1996-2011. The results show that good institutional quality helps to undermine the negative effects of economic vulnerability on economic growth. It is also clear from this analysis that the interaction terms between trade openness and institutions can reduce the negative effects of economic vulnerability and that trade openness has a positive effect on economic growth only until a certain level of institutional quality.
Contribution/ Originality
The main contribution of the paper is to show that the introduction of good governance and the development of good quality of institutions reduce significantly the negative effect of economic vulnerability on economic growth of 15 Sub-Saharan-Africa countries which are largely dependent on primary product exports.
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