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Dancing with Uncertainty: Unraveling Firm Investment Inefficiencies in the Asia Pacific Region Rita Juliana; Liza Handoko; Nicholas Lee
Journal of Economics, Business, and Accountancy Ventura Vol. 27 No. 1 (2024): April - July 2024
Publisher : Universitas Hayam Wuruk Perbanas

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.14414/jebav.v27i1.4096

Abstract

This study explores the intricate relationship between uncertainty and corporate investment inefficiencies in the Asia-Pacific region, utilizing data from non-financial firms between 2008 and 2021. The method used in the study is fixed effect regression with Driscoll-Kraay robust standard error. The empirical analysis unveils that uncertainty leads to overinvestment. This phenomenon is more pronounced in middle and low-income economies, while high-income countries display a distinct trend of less susceptibility to uncertainty-induced suboptimal investment choices. The study’s implications extend to policymakers and industry stakeholders, urging a closer examination of firms’ risk management strategies, particularly considering the strategic potential of overinvestment as a buffer against uncertainty’s adverse effects. This holds particular significance in the dynamic economic landscape of the Asia-Pacific countries, where the study contributes to a deeper understanding of the interplay between uncertainty and inefficiency of investment decisions across diverse economic settings.
KETIDAKPASTIAN EKONOMI TERHADAP STABILITAS BANK DI INDONESIA Berto, Andre; Handoko, Liza
Media Riset Bisnis Ekonomi Sains dan Terapan Vol 4, No 2 (2025): Media Riset Bisnis Ekonomi Sains dan Terapan
Publisher : Taksasila Edukasi Insani

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.71312/mrbest.v4i2.642

Abstract

The research measures the economic uncertainty variable using World Uncertainty Index (WUI) and uses three proxies of bank risk (bank default risk, bank leverage risk, and bank portfolio risk) to assess its becoming effect on the stability of Indonesia banks. In an analysis based on panel data and a combination of fixed and random effects models, the study aims to reflect how world economic uncertainty influences bank stability in Indonesia. The results however indicate that economic uncertainty shows no influence towards all bank risk aspects, which consists of default risk, leverage risk, and portfolio risk, based on the 5 percent significance level.  This result implies that Indonesian banks are generally quite resistant from the direct impact of economic uncertainty relating to credit default risk, leverage risk, and portfolio risk. This research paper also takes into consideration the structural characteristics of banks that would be important predictors of this bank stability risk in these dimensions, namely, loan share, income diversification, liquidity and commission-based income.Keywords : Bank Stability, Economic Uncertainty, Financial Resilience, World Uncertainty Index (WUI)