Journal of Economics, Finance and Administrative Science

Abstract Purpose: The study aims to use individuals using the internet and fixed broadband subscriptions as a proxy for digitalization to empirically assess the effects of Foreign Direct Investment (FDI), digitalization, their interaction on income inequality in developed and developing countries from 2002 to 2019. Design/methodology/approach: The paper used the system general method of moments (GMM) estimators for 30 developed and 35 developing countries. Findings: FDI increases income inequality in developed countries but decreases it in developing countries, digitalization reduces income inequality in both groups, interaction term narrows income inequality in developed countries but widens it in developing countries. Originality/value: The paper is the first to introduce digitalization into the FDI - income inequality relationship. Furthermore, it provides empirical evidence to show the difference in the role of digitalization in this relationship between developed and developing countries.

Abstract Purpose: The present study aimed to examine the relationship between information and communication technologies (ICT) diffusion, financial development and economic growth in the panel of developing countries for 2005-2019. Design/methodology/approach: The study employed the principal component analysis (PCA) to extract the index of ICT diffusion. First-generation panel unit root tests such as Levine Lin Chu (LLC), Im Pesaran Shin (IPS), Augmented Dickey-Fuller (ADF) and Phillips and Perron (PP) were employed to check the stationarity of the variables. Pedroni and Kao co-integration techniques were used to examine the existence of the long-run relationship, and co-integration coefficients were estimated using FMOLS and dynamic ordinary least squares (DOLS). The panel Granger causality approach examined the short-run and long-run causality. Findings: The results confirmed that ICT diffusion, financial development and trade openness accelerate growth, whereas inflation dampens economic growth. Further, the causality test showed bidirectional causality between ICT growth and financial development growth but a unidirectional causality from financial development to ICT diffusion in developing countries. Originality/value: The study recommends synchronizing public and private sector investment for a synergistic effect on ICT infrastructure and adequate investment in the financial sector to increase the growth rate in developing countries. Economic policies should be adopted toward incentives and subsidies to ensure affordable ICT services for disadvantaged communities. Also, training programs focussing on enhancing digital literacy to enable all segments of the population to use digital platforms for financial services are recommended.

Abstract Purpose: The purpose of this paper is to determine the impact of corporate investments in corporate social responsibility (CSR), measured by the environmental, social and government (ESG) rating, on the market valuation of a firm's stocks and to explain the regional differences in the degree of this influence. Design/methodology/approach: The empirical study uses linear and non-linear panel regression models for a panel sample of 951 firms listed in Asia, North America and Europe operating in innovative industries. Findings: The CSR score was found to be significant in terms of stock excess return on the regional level. However, this finding cannot be extrapolated to the global scale. ESG rating is priced by the European and North American markets negatively, while in the Asian market, it is positive. This penalty (negative influence) is greater than the reward for one point increase in ESG rating. Practical implications: The results of this empirical study could be used by firms' managers to adjust strategies aimed at stock value growth and by investors to select an investment strategy to maximize return. Originality/value: The impact of investments in CSR on stock excess return over a defined benchmark is assessed. The study reveals regional differences in the impact of CSR investment using a sample of Asian, European and North American firms. The authors apply a more advanced lagged CSR performance (d.ESG) assessment based on the methodology of Zhang and Rajagopalan (2010).

Abstract Purpose: This research aims to analyse the variables related to the purchase intention of COVID-19 rapid tests in Monterrey, Mexico's metropolitan area. Design/methodology/approach: The chosen method was probit regression. The results show that purchase intention depends on the consumer's perceived value and the perception of having a potential contagion and/or presenting symptoms related to the virus. Regarding limitations, the sampling method used in this investigation is a nonprobabilistic convenience approach delivered through a digital platform, which may not be the first option in other contexts. Findings: The findings indicate that the probability of the purchase intention of rapid COVID tests increases when consumers perceive symptoms of the disease and when they have higher education or are female rather than concerning price or income, as suggested by classical demand theory. Research limitations/implications: Probabilistic sampling was impossible due to the difficulty of collecting surveys during the COVID-19 pandemic. Instead, a nonprobabilistic sample of a representative random selection of different zip codes from the responses received was considered. Originality/value: The originality of the paper is its contribution to consumer behaviour during the COVID-19 pandemic in a Latin American context.

Abstract Purpose: This paper measures different market risk impacts on options portfolios under the new Fundamental Review of the Trading Book (FRTB) regulation, issued in Basel and coming into effect in 2023. Design/methodology/approach: This paper first suggests an algorithm for implementing the FRTB standardised approach via the sensitivities-based method to estimate a portfolio's risk capital and presents an illustration applied to an option position. Second, it proposes a methodology to estimate the expected shortfall in options portfolios from the FRTB internal models approach. In this regard, an application is developed to measure expected shortfall (ES) and value at risk (VaR) impacts under FRTB versus conventional VaR in a currency option position by considering stress scenarios from the 2007-9 and 2020-1 crises and back-testing procedures. Findings: The suggested algorithm satisfactorily captures impacts via the sensitivities-based method, and higher risk capital demands are expected for emerging economies. Also, the planned FRTB methodology to measure ES and VaR is appropriate; in particular, historical metrics perform well. Astonishingly, their revealed impacts are more significant under the 2020-1 pandemic crisis than the 2007-9 financial crisis. Originality/value: The proposals developed weave a communication bridge between the standardised and internal approaches of FRTB regulation, which can be scaled up technologically and institutionally.