Vision: The Journal of Business Perspective

The present study intends to investigate the impact of financial sector development on GDP growth in the four middle-income countries of South Asia over the period of 1990–2016. Using pooled mean group (PMG) estimation, this study tries to examine whether in these developing countries, GDP growth has been influenced by size of market capitalization and size of market turnover in the long run which are used as proxy for stock market development. Similarly, domestic credit to private sector is used as proxy for banking sector development while assessing its long-run impact on GDP growth. Furthermore, by incorporating a dummy variable for the global financial crisis (2007–2008), this study investigates whether these economies are vulnerable to external shocks or not. The outcomes of this study find that relatively, the impact of banking sector on GDP growth has remained low in the region. Nevertheless, the development in both sectors has positively influenced economic growth in the long run. The outcomes of this study suggest that both, i.e. stock market and banking sector, are vital determinants of long-run economic growth in the South Asian countries. Therefore, to achieve the sustainable growth, policymakers need to adopt the global approach which can be ensured by improving the quality and scope of financial services in these countries.

Financial inclusion is one of the essential barometers for all-encompassing growth in any country. Past studies have linked financial inclusion as an economic instrument for inclusive growth. It is therefore imperative to know the determinants of financial inclusion. But to the best of knowledge, studies on the measurement of financial inclusion in a holistic manner are scarce and inconclusive. Adding on, there is still a considerable debate about how socio-economic development impacts financial inclusion. Understanding the link between financial inclusion and socio-economic development at the aggregated level will assist policymakers to devise and employ programmes that will expand financial inclusion, leading to reduction of income equality and poverty. The present article makes a modest attempt to measure financial inclusion in a composite manner through Wroclaw Taxonomic Approach. The paper also seeks to find out if the already apparent major socio-economic predictors of financial inclusion as revealed in the extant literatures are relevant in a panel data framework. The paper finds that the State of Goa tops the list while the State of Nagaland occupies the last position. The econometric analysis utilizing a panel data structure of 28 states of India over four years found that income, infrastructure and employment opportunities are perhaps the most important determinants of financial inclusion. Furthermore, the computed indices can be utilized to track and measure financial inclusion over a period of time and at the micro level. The policymakers should also take into account these facts to improve the financial inclusiveness of any region.

Although studies encompassing the different aspect of microfinance like sustainability of microfinance institutions (MFIs), role of microfinance in poverty alleviation, etc., have enriched the literature from time to time, studies on competition and its impact on social performance of MFIs are scarce. There also exists lacking consensus as to how can competition influence MFIs’ social performance. The empirical evidence reveals duality of opinion. With information asymmetry, competition enhances borrowers’ indebtedness and lowers expected loan repayment and impeding loan quality. Furthermore, in order to overcome these problems, MFIs would engage in more screening that raises their operational costs. This encumbers the sustainability of MFIs. Thus, the socially oriented MFIs, in order to remain sustainable, start targeting the less poor borrowers. But the other view holds that as competition intensifies, it provokes the MFIs to remain committed with the social objective and to strive to retain the clients. The theory on impact of competition on the social performance of MFIs may be either positive or negative, which calls for further investigation. Against this backdrop, this article attempts to assess the impact of competition on social performance of MFIs in India and Bangladesh. The study is conducted over 53 MFIs from India and 20 MFIs from Bangladesh on which a complete set of data is available. The study period is confined to 9 years from 2009 to 2017. In order to establish the association between competition and MFIs’ social performance, panel data regression is used. The study takes into account the depth and breadth of outreach as the dependent variable. The study uses panel data regression to establish the association between competition and social performance of MFIs. The empirical analysis reveals that competition has no significant association with any of the measures of social performance. This implies that social performance in the sector is explained by other factors. Amongst the country-specific variables, it is clear from analyses that gross domestic product (GDP) and inflation are important determining factors of MFIs’ social performance. Country of origin (COO) of the MFIs is one of the determining factors for social performance as it is found to be significant for three out of the four models. It is also evident from the analyses that Bangladeshi MFIs have a greater impact on MFIs’ social performance in terms of outreach in comparison to Indian MFIs. While for percentage of female borrowers (PFB), Indian MFIs account for greater depth of outreach in comparison to Bangladesh.

A highly engaged workforce is being looked at as the means for attaining a sustainable competitive advantage in the dynamic business world. Research has shown that both the academicians and practitioners tout employee engagement to improve organizational and financial performance. However, numerous overlapping yet inconsistent definitions have created a conceptual chaos. Delineation between the academic and industrial view on employee engagement creates difficulty in operationalization of the construct.

This paper explores the construct of employee engagement by conducting structured interviews of HR heads of 15 best companies to work for in India. The data obtained were subjected to thematic analysis using Grounded Theory Methodology by Charmaz (2006). The emergent themes around the notion of employee engagement led to the development of a theoretical framework comprising three dimensions (Alignment, Affectiveness and Action-orientation) of employee engagement. Various drivers of employee engagement and the challenges in engaging employees were exemplified with narratives from practitioners in the Indian context.

An attempt has been made to bridge the gap between the academic and industrial view by exploring variables of the construct after taking inputs from the HR practitioners. It attempts to bring a conceptual clarity on construct which may help the organizations to develop effective engagement strategies and interventions for fostering higher engagement levels among employees.

Inclusive financial system is a key to sustainable development and growth of a nation wherein all segments of the society have timely access to financial services at an affordable cost. It facilitates safe custody of savings, availability of loan for multiple purposes, diversification of risk through investment in different avenue, coverage of risk through various insurance products, etc., which make the life of people easier and comfortable. Therefore, inclusive finance leads to prosperity and economic growth by eliminating or minimizing poverty, unequal distribution of income and dominance of indigenous bankers. Financial inclusion is not a single dimension that can be achieved directly; rather, it is a process which completes after different dimensions such as access to and usage of financial services and banking penetration are accomplished. The present study considers three main dimensions of financial inclusion: usage, penetration and accessibility. The purpose is to observe how financial inclusion is linked with economic growth in India. Spread over 2005 to 2017, the study uses Bayesian vector auto-regression model to explore the linkage of economic growth with financial inclusion and its different dimensions (accessibility, penetration, and usage). The findings show a considerable relationship between economic growth and the usage dimension of financial inclusion in India. As far as financial inclusion index is concerned, it does not explain economic growth significantly. This study is based on recent data extracted from IMF and World Bank databases. The study is useful for policymakers and banks to frame appropriate policies to achieve complete financial inclusion that would lead to a robust growth of an economy.

This article investigates the effect of voluntary corporate disclosures on the firm value from the market value perspective. Financial reporting includes disclosures as prescribed by regulators, but few companies go beyond mandatory requirements and provide additional information voluntarily. This study empirically tests the extent of such voluntary disclosures using Corporate Voluntary Disclosure Index containing 81 items of both financial and non-financial information and panel data regression to test the hypotheses. The sample for this study is the non-financial companies in the BSE 100 Index and the period is five financial years from 2010–2011 to 2014–2015. This study finds a positive association between voluntary disclosures and firm value as measured by Tobin’s Q. Especially the market gives a higher valuation for companies disclosing optional information on social and environmental, corporate governance and financial information. This finding has a significant implication for emerging economies like India and it supports various disclosure theories such as agency, stakeholders and positive accounting theories.

Intellectual capital (IC) has gained recognition in enhancing the firms’ value and gain competitive advantage in the developed world. Thus, it is imperative for all stakeholders to have an understanding of its impact on firms’ profitability. The present study aims to analyse the impact of intellectual capital on firms’ profitability of Indian pharmaceutical companies listed in National Stock Exchange (NSE-500) for the time period of 10 years (i.e. 2009–2018). The paper has used modified version of Pulic’s Value Added Intellectual Coefficient, i.e., M-VAIC as a proxy to measure intellectual capital and firms’ profitability as represented by ROA, ROE and EBITDA. In line to analyse the effectiveness, a balanced panel data regression technique has been used. The results of the paper indicate a significant relationship between intellectual capital and firms’ profitability. Also, it is found that human capital, relational capital and physical capital have a significant role in increasing the profitability of the firm. The analysis would help the administration and management of pharmaceutical companies in the composition and organization of intellectual capital, stakeholders in the decisions related to investment and financial specialist for enhancing intellectual capital efficiency and value creation for the firm. Human capital is found to be having a positively significant impact on firms’ profitability; their inclusion and management are suggested for the companies.

The present study was to examine whether the performance of options trading strategies can be improved if volatility forecasting incorporating investors’ sentiment was incorporated in the decision-making process at the Indian options market. The study adopted the multiple-factor model to build the Indian volatility forecasting model. The benchmark forecasting model (BMF) includes absolute daily returns (|RA|), daily high–low range (HLR) and daily realized volatility (RV). The proxies of investors’ sentiment considered in the study were India volatility index (IVIX), advance decline ratio (ADR), put-call open interest (PCOI) and their changes. The results of the causality and regression test indicate that investors’ sentiment and their changes should be included in the forecasting model. Mean absolute percentage error (MAPE) indicates that 15-day holding period shows the minimum error. Straddle strategies were simulated 15 days ahead before the options maturity date base on the direction of the forecast for different volatility forecasting models. The simulation result shows that the options trading performance might be improved if volatility forecasting incorporating investor sentiment, particularly IVIX, was incorporated in the decision-making process at the Indian options market. From the behavioural finance point of view, the study bridges the gap between options trading, volatility forecasting and information content of investors’ sentiment at the Indian financial market.

O. P. Chawala, Evolution of Banking System in India since 1900, 2019, New Delhi: SAGE Publications India Private Limited, 294 pp., ₹1,095. ISBN: 978-93-532-8467-1.

Monica C. Worline and Jane E. Dutton, Awakening Compassion at Work, Berrtt-Koehler Publishers, 242 pp., US$17.23. ISBN-13:978-1626564459.