The impact of blue and green lending on credit portfolios: a commercial banking perspectiveJournal articleNawazish Mirza, Muhammad Umar, Rashid Sbia and Mangafic Jasmina, Review of Accounting and Finance, Volume ahead-of-print, Issue ahead-of-print, 2024

Purpose The blue and green firms are notable contributors to sustainable development. Similar to other businesses in circular economies, blue and green firms also face financing constraints. This paper aims to assess whether blue and green lending help in optimizing the interest rate spreads and the likelihood of default. Design/methodology/approach This analysis is based on an unbalanced panel of banks from 20 eurozone countries for eleven years between 2012 and 2022. The key indicators of banking include interest rate spread and a market-based probability of default. The paper assesses how these indicators are influenced by exposure to green and blue firms after controlling for several exogenous factors. Findings The results show a positive relationship between green and blue lending and spread, while there is a negative link with the probability of default. This confirms that the blue and green exposure positively supports the credit portfolio both in terms of profitability and risk management. Originality/value The banking system is among the key contributors to corporate finance and to enable continuous access to sustainable finance, the banking firms must be incentivized. While many studies analyze the impact of green lending, to the best of the authors’ knowledge, this study is among the very few that extend this analysis to blue economy firms.

Does it matter where and how governments spend?Journal articleErnil Sabaj, Rashid Sbia and Haytem Troug, Economics Letters, Volume 228, pp. 111158, 2023

This paper studies government spending multipliers in a panel of OECD countries. While recent literature has highlighted the differences in government consumption and investment effects, we extend this approach sectorally and report findings that suggest strong heterogeneities across sectors for government spending and output. Differences in price stickiness and sectors’ position in the production network are the main drivers of these heterogeneities.

Transitory and permanent shocks in the global market for crude oilJournal articleNooman Rebei and Rashid Sbia, Journal of Applied Econometrics, Volume 36, Issue 7, pp. 1047-1064, 2021

This paper documents the determinants of real oil price in the global market based on an empirical model embedding transitory and permanent shocks. We find evidence of significant differences in the propagation mechanisms of transitory versus permanent disturbances, pointing to the importance of disentangling their distinct effects. Permanent supply shocks are found to be very influential in driving oil price fluctuations.

Remittances and inflation in OPEC countries:Evidence from bias-corrected least-squares dummy variable (CLSDV) estimatorJournal articleRashid Sbia and Helmi Hamdi, Economics Bulletin, Volume 40, Issue 3, pp. 2471-2483, 2020

The aim of this paper is to investigate the impact of remittances outflows on inflation for a panel of 14 OPEC countries during the period 1980-2018. Using bias-corrected least-squares dummy variable (CLSDV) estimator, empirical results reveal that remittance outflows have no effect on inflation rate. However, trade openness and current account deficits have a positive impact on inflation. Further, oil price appears to not have any effect on inflation in OPEC countries.

Empirical evidence on the long and short run determinants of health expenditure in the Arab worldJournal articleKarim Barkat, Rashid Sbia and Youcef Maouchi, The Quarterly Review of Economics and Finance, Volume 73, Issue C, pp. 78-87, 2019

This paper empirically examines the determinants of health care spending for 18 Arab world countries for the period 1995–2015 by using recently developed panel cointegration techniques. We conducted the same estimations for 3 sub-samples, namely high-income, upper-middle- and lower-middle-income countries to reduce the heterogeneity among them. Our empirical findings demonstrate that health care expenditure and its determinants are non-stationary, and revealed the existence of a long run relationship among variables. Furthermore, the estimation results suggest that income is not the only driver of health expenditure in the Arab world countries in the long run. Other variables such as medical progress and ageing population are also playing an important role in the increase of health care expenditure with major policy implications for the region in the long run. Furthermore, the results support that health care expenditure is a necessity good for the three income groups. Finally, the Pairwise Dumitrescu-Hurlin panel causality test shows evidence of a bidirectional causal relationship between health care expenditures and income for the full sample, as well as for the groups income.

Investigating the twin-deficit phenomenon among oil-exporting countries: Does oil really matter?Journal articleOlusegun Ayodele Akanbi and Rashid Sbia, Empirical Economics, Volume 55, Issue 3, pp. 1045-1064, 2018

This study empirically investigates the existence of twin deficits—the impact of fiscal policy on the current account—among selected major oil-exporting countries. Given the huge effects of the oil proceeds on these economies, the study separates the effects of oil on the fiscal balance from its effect on the current account balance. The investigation took a further step by grouping these countries—based on their fiscal policy actions over the period of years under review—into pro-cyclical and counter-cyclical fiscal countries. In line with the existing literature, the impact of fiscal balance on the current account balance takes into consideration the contemporaneous effects brought about by exchange rate fluctuations, the growth in GDP, rate of openness and the growth in money supply. The models are estimated based on a panel of 31 oil-exporting countries over the period 1984–2013, using the two-stage least squares estimation techniques. The results from all countries estimations reveal the existence of twin-deficit in the total economy. In the non-oil economy, on the other hand, the evidence of twin-deficit disappears. This evidence is also reported in the counter-cyclical fiscal countries. Results from pro-cyclical fiscal countries indicated the total opposite, revealing the existence of twin-deficit in the non-oil economy, while this evidence does not occur in the total economy. The indisputable conclusion is that oil dominance continues to blur the existence of twin deficits among the oil-exporting countries.

Trade-growth nexus and the rolling window analysis in United Arab EmiratesJournal articleSyed Ali Raza, Rashid Sbia, Muhammad Shahbaz and Sahel Al Rousan, Journal of Asia Business Studies, Volume 12, Issue 4, pp. 469-488, 2018

The study examines the relationship between trade and economic growth using data of UAE economy for the period of 1974-2011.
The bounds testing is applied for testing the cointegration relationship between the variables. The rolling window approach has been used to analyze the stability of long run coefficients.

The empirical analysis shows the presence of cointegration between trade and economic growth. Furthermore, exports have positive but imports have negative effect on economic growth. The rolling window approach confirms the stability of long-run estimates.

Practical implications:
This paper provides new insights for policy makers to use trade as economic tool for sustainable economic development.

This paper makes a unique contribution to the literature with reference to UAE, being a pioneering attempt to investigate the relationship between trade and economic growth by using long time series data and applying more rigorous techniques like time varying rolling window analysis.

A dynamic network analysis of the world oil market: Analysis of OPEC and non-OPEC membersJournal articleSahel Al Rousan, Rashid Sbia and Bedri Kamil Onur Tas, Energy Economics, Volume 75, Issue C, pp. 28-41, 2018

We characterize the dynamic network structure of major oil producing countries. We examine the oil production coordination of 13 Organization of the Petroleum Exporting Countries (OPEC) and 17 non-OPEC members. We construct the dynamic network structure using the network connectedness measure of Diebold and Yilmaz (2009). We investigate the structural changes in connectedness of OPEC and non-OPEC members. Additionally, we study how the influence of OPEC members, non-OPEC countries and major oil producers evolve. We find that the network structure of major oil-producing countries changes significantly over time. Specifically, the impact of changes in oil-production of all OPEC members on global oil production declines, whereas the impact of non-OPEC on global oil production increases. OPEC's “increase” decisions have a significant and positive impact on OPEC and non-OPEC coordination. However, “cut” decisions do not affect coordination. We find that OPEC countries and developing countries have significantly higher levels of connectedness. Additionally, countries with high oil production levels have significantly more influence. The empirical results provide intuition about the recent developments in global oil production.

Testing for wavelet based time-frequency relationship between oil prices and US economic activityJournal articleSyed Ali Raza, Muhammad Shahbaz, Rafi Amir-ud-Din, Rashid Sbia and Nida Shah, Energy, Volume 154, Issue C, pp. 571-580, 2018

This study investigates the empirical association of oil prices with economic activity in developed open economy namely: The United States by using the wavelet transform framework. This methodology enables the decomposition of time-series at different time-frequencies. In this study, we have used maximal overlap discrete wavelet transform, wavelet covariance, wavelet correlation, continuous wavelet power spectrum, wavelet coherence spectrum and wavelet based Granger causality approaches to analyze the relationship between oil prices and economic activity. The present study uses month frequency data for the period of 1979M1-2013M7. The results indicate that oil prices have positive impact on economic activity and the feedback effect exists between oil prices and economic activity.

Finance and Growth Nexus: What Role for Institutions in Developed and Developing Countries?Journal articleHelmi Hamdi, Hakimi Abdelaziz and Rashid Sbia, Journal of Economic Development, Volume 42, Issue 4, pp. 1-22, 2017

The main purpose of this paper is to investigate the relationship between financial sector development and economic growth taking into consideration the role of institutions quality. Our sample is on a group of 143 countries observed during the period of 2006-2013. The sample is dived into 100 developing and 43 developed countries. Using structural GMM the paper shows that financial sector plays a crucial role in economic development and growth for the whole sample as well as for developed and developing countries. However, the results show that unlike developing countries, developed countries enjoyed the presence of proper institutions in their countries which in turn have contributed further to the development of their financial sector.