Journal of Economics and Business Letters

FDI inflows and domestic interest rate nexus in Nigeria: A new look at the mundell-flemming hypothesis

Wed, 29 Oct 2025 00:00:00 +0700

The relevance of FDI to an economy has led to an avalanche of studies investigating its link with other macroeconomic variables. One such variable that has been discussed extensively in the literature is the domestic interest rate. The link between FDI inflows and interest has been emphasized by the Mundell-Flemming framework, and in recent times, some scholars have contended that FDI inflows exert a downward influence on domestic interest rates. This study seeks to provide empirical evidence for the latter claim by examining the impact of FDI inflows on interest rates in Nigeria. The study used an annual series ranging from 1981-2022 to and under the ARDL framework. The findings reveal that in both the short and long runs, FDI inflows have a negative and significant impact on the real interest rate. This outcome has implications for the implementation of monetary policy in Nigeria. Although a fall in the interest rate is necessary, it could adversely impact the inflation-targeting objective of the monetary authorities. Therefore, the choice of allowing much inflow of FDI into the country should be weighed against the inflationary impact they portend.

The role of MSMEs (Micro, Small and Medium Enterprises) in improving the national economy

Imam Mahfud — Wed, 29 Oct 2025 00:00:00 +0700

In the era of globalization, development relies heavily on the economic sector as a benchmark for governmental success. Society's contribution to national development, particularly in the economic realm, is embodied by Micro, Small, and Medium Enterprises (MSMEs). MSMEs occupy a crucial and strategic position within the national economy. MSMEs have continued to grow year after year since the economic crisis. This also proves that MSMEs can survive amidst economic turmoil. Thus, MSMEs are considered to play a strategic role in reducing unemployment and poverty. Given the contributions and roles of MSMEs, the government must continue supporting MSMEs through reinforcement so that their role as pillars in building the nation’s economy can function optimally. This study aims to understand the contribution of MSMEs to the economy. In addition, this study identifies the challenges and obstacles faced by MSMEs in the national economy. Library research was used, utilizing articles published in international and national journals related to the role of MSMEs in improving the national economy. The results of this study show that MSMEs contribute significantly to the national economy, although their implementation faces challenges. However, the government is striving to provide a range of stimuli to address these issues, so that MSMEs can continue to grow and become empowered.

The impact of global geopolitical risk on Afghanistan's economic condition: Evidence from wavelet quantile regression

Abdul Ahmad Pooya — Wed, 29 Oct 2025 00:00:00 +0700

This study explores the dynamic effects of global geopolitical risk (GPR) on Afghanistan's macroeconomic performance using data from 1990 to 2024. The results of Wavelet Quantile Regression (WQR) show that GPR shocks have immediate and negative impacts on GDP, the Exchange Rate (EXP), imports (IMP), exports (EXP), and inflation (INF) across all quantiles in the short, medium, and long terms. Notably, the response of GDP per capita to GPR is strong in the short term but diminents over time. Additionally, IMP and EXP are negatively affected by GPR dynamics owing to border closures, sanctions, and disruptions to trade routes in both the short and long terms. The most significant vulnerabilities are revealed in EXP and INF, where persistent depreciation and unstable prices harm household welfare in low-income, import-dependent economies. These findings provide new insights into one of the most fragile nations within the global system and demonstrate the role of the WQR in breaking down multi-scale dynamics often overlooked by linear models. This study underscores the urgent need for Afghanistan to develop adaptation policies that can mitigate short-term shocks, build external buffers, and enable structural reforms, ultimately making the country less vulnerable to long-term geopolitical shocks.

The role of the government internal control system (SPIP) in budget optimization in local governments in Indonesia

Imran Ahmad, Andi Chairil Furqan — Thu, 30 Oct 2025 00:00:00 +0700

This study analyzes the role of SPIP, the internal control of Indonesia, within the broader framework of Public Financial Management (PFM) and how it influences the appropriation of health budgets to achieve Sustainable Development Goal 3 (SDG 3). In contrast to previous studies, which have predominantly focused on the coverage of health budgets, SPIP emerges, theoretically, as a moderating variable intervening between the relationship between expenditure on health and health results. Using JKN coverage, Indonesia's National Health Insurance program and chief tool for pursuing universal coverage for health, for tracking the realization of SDG 3, a dataset of 538 municipalities for a period of five years, from 2018 until 2022 (2,690 observations), the study conducts Moderated Regression Analysis using Generalized Least Squares, considering heteroscedasticity, as well as autocorrelation, for estimation. While the results confirm that a greater appropriation of the health budget promotes the success of JKN, whose impact is significantly boosted by SPIP due to the enhancement of transparency, accountability, and due utilization of the budget, evidence exists that points towards a strong internal control, when complemented with effective management of the budget, facilitating a catalyst towards SDG 3 realization. Furthermore, it provides impetus towards another motivation for policymakers to increase sustainability, along with greater inclusivity, for health developmental efforts, strengthen strategies for health budgeting, and realize SPIP implementation strategies.

Climate change, resource degradation, and economic sustainability: A study of key commodity sectors in Southern Sumatra

Thu, 30 Oct 2025 00:00:00 +0700

Climate change is one of the biggest challenges facing the world today. This phenomenon has significantly impacted the degradation of natural resources, posing a serious threat to the agricultural and fisheries sectors, especially in developing countries. Climate change affects the structure of land and water and directly impacts the potential sectors in a region. The primary objective of this study is to quantitatively analyze the impact of climate change on resource degradation across the leading commodity sectors, namely agriculture, plantations, and fisheries in the Southern Sumatra region. This research adopts a mixed-methods approach, integrating multiple regression analysis using regional data from 2015 to 2022 with a Sharing Group Discussion (SGD) component to ensure contextual validation and deeper insights. The findings indicate that six meteorological factors (wind speed, rainfall, solar radiation, air temperature, air pressure, and humidity) significantly influenced degradation within these three crucial sectors. Ultimately, this study offers a forecasting overview of the climate impacts on specific commodity sectors, providing a crucial basis for stakeholders to formulate anticipatory policies, plan appropriate technological adaptation, and implement more effective resource management strategies to address the challenges of climate change.

Short-termism in social organizations

Jafar El Armali — Thu, 30 Oct 2025 00:00:00 +0700

Social organizations, defined as social entrepreneurship and nonprofit organizations, aim to meet societal objectives and play an important role in achieving sustainable development goals (SDGs). However, social organizations may fall into short-termism, defined as favoring short-term goals over long-term objectives. This undermines social organizations’ ability to meet their long-term objectives and, in turn, negatively affects efforts to meet sustainable development goals. This note presents the channels that contribute to short-termism in social organizations. Three channels are presented and discussed herein. First, if investors and donors are short-term oriented, social organizations may focus on meeting short-term goals over long-term objectives to satisfy the demands of investors and donors and attract their funding. Second, if the management of a social organization is short-term oriented, it will be inclined to prioritize short-term goals over long-term objectives. Third, scaling up operations may result in neglecting the long-term objectives of social organizations. Understanding the roles of these channels is important for providing a better understanding of short-termism in social organizations.

Revisiting finance-led growth: Evidence from disaggregated bank credit in Indonesia (period 2009–2023)

Syamsul Huda, Anik Yuliati, Dendy Setyawan — Fri, 31 Oct 2025 00:00:00 +0700

Indonesia’s economic performance has long been intertwined with the flow of bank credit; however, the rapid expansion of lending has not always moved in harmony with growth. The varied outcomes of working capital, investment, and consumer loans raise concerns about whether credit actually promotes sustainable development or, when misdirected, risks producing an imbalance. This study aims to clarify these dynamics by analyzing the distinct effects of disaggregated bank loans on Indonesia's economic expansion from 2009 to 2023. Taking a quantitative approach, it uses multiple linear regression to examine the individual and collective influence of each loan category, using secondary data from Bank Indonesia and the Central Statistics Agency. The study found that working capital loans have a favorable and significant impact, emphasizing their importance in supporting daily output and short- to medium-term growth. Investment loans typically have a negative impact because of inefficiencies, delays, and intrinsic structural flaws that obstruct their primary purpose of increasing capacity. While consumer loans help boost household demand, their impact on macroeconomic growth is small, highlighting their limitations as long-term growth drivers. Nonetheless, the interaction of these three loan categories is critical in shaping economic results, as models show that they account for a considerable part of the growth fluctuation. This duality emphasizes the potential of finance as both an enabler and a constraint, implying that effective oversight of investment credit, consistent working capital flows, and careful management of consumer credit are critical strategies for promoting inclusive and resilient economic growth in Indonesia.

Gender diversity and chief executive officer tenure on earnings management

Ida Harahap — Fri, 31 Oct 2025 00:00:00 +0700

This study proves research that proves that differences between men and women can impact decisions. Several researchers have stated that men are risk-takers, whereas women are associated with natural risks and do not want to take risks that increase company performance. Agency problems increase as CEO approach retirement. In the last year of their tenure, CEO take advantage of their personal information to improve company performance to get higher compensation in the last year or after leaving work (retirement). The results of the regression analysis support the hypothesis that the representation of female CEOs negatively influences earnings management. These results indicate that the representation of female CEOs strengthens the quality of the earnings information presented in a company's financial statements. The regression analysis of the study supports the second hypothesis, which states that CEO tenure has a negative effect on earnings management. This shows that CEOs with long tenures are less aggressive in reporting earnings than those with short tenures.