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Volume 11 Issue 5 (2020) ISSN 2228-9860 eISSN 1906-9642

http://TuEngr.com DEVELOPMENT OF TECHNOLOGY FOR PRODUCTION OF PROTEIN-VITAMIN GRANULATE PAKISTAN'S PRIMARY EDUCATIONAL REFORMS AND CHALLENGES AN EVALUATION AND PREDICTION CUSTOMER LOYALTY BASED ON DECISION TREE AND ARTIFICIAL NEURAL NETWORK: CASE OF OFOGH KOOROSH STORES IN TEHRAN BIOLOGICALLY ACTIVE FEED ADDITIVE DEVELOPMENT BASED ON KERATIN AND COLLAGEN-CONTAINING RAW MATERIALS FROM POULTRY WASTE THE REVIVAL OF TRADITIONAL PASSIVE COOLING TECHNIQUES FOR SCHOOL BUILDINGS THROUGH WINDCATCHERS DISAGGREGATED ACCRUALS AND PREDICTION OF FUTURE CASH FLOWS: AN EFFECT OF GLOBAL FINANCIAL CRISIS 2008-09 ELASTICITY MEASUREMENT OF FOOD DEMAND IN PAKISTAN: CROSS-PRICE AND OWN PRICE ELASTICITY ANALYSIS USE OF WHITE LUPINE IN THE DIETS OF MEAT CHICKENS OF BASELINE AND BROILER CHICKENS OF SELECTION OF SGC "SMENA"

IMPACTS OF INTEREST RATE ON HOUSING PRICES: EVIDENCE FROM HO CHI MINH CITY, VIETNAM EFFECTS OF KNOWLEDGE-BASED, INTELLECTUAL CAPITAL AND INNOVATION METHODS ON HUMAN RESOURCE MANAGEMENT: CASE STUDY OF MINISTRY OF EDUCATION, TEHRAN DISTRICT 7 COMPARISON OF PUBLIC, PRIVATE SCHOOLS, AND DEENI MADARIS SECONDARY STUDENTS REGARDING CONFIDENCE AS SOCIAL ADJUSTMENT IN THE SOCIETY IMPACTS OF QWL (PROMOTION & WORK ENVIRONMENT) ON DOCTORS' PERFORMANCE IN PUBLIC SECTOR HOSPITALS OF PAKISTAN WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF FISHERIES ENTERPRISES BY APPLYING GMM CONTAGION AND INTERDEPENDENCE AMONG GOLD, OIL, FOREX, AND ASIAN EMERGING EQUITY MARKETS URBAN SOLID WASTE DEVELOPMENT: A REVIEW OF NIGERIA'S WASTE MANAGEMENT POLICY IMPACTS OF LEVERAGE ON SYSTEMATIC RISK BASED ON CAPITAL ASSET PRICING MODEL: A COMPARISON OF HIGH AND LOW CAPITAL INTENSIVE FIRMS A REVIEW OF AN ALTERNATIVE STUDIO PEDAGOGY FOR ALTERNATIVE SPACES: CASE STUDIES FROM A STUDENT'S DESIGN COMPETITION ROLES OF REMUNERATION ON CONSUMER RESPONSES TOWARDS SOCIAL MEDIA ADVERTISING: A PAKISTANI PERSPECTIVE CROSS-BORDER MERGERS & ACQUISITIONS AND SHAREHOLDERS' VALUE: NEW INSIGHTS FROM UK ACQUIRING FIRMS LEARNING FROM COGNITIVE PROCESS OF VISIONARY MALAYSIAN ARCHITECT ON GENERATING CREATIVE, NOVEL ARCHITECTURAL DESIGN IDEAS

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

International Editorial Board

Editor-in-Chief Ahmad Sanusi Hassan, PhD Professor Universiti Sains Malaysia, MALAYSIA

Executive Editor Boonsap Witchayangkoon, PhD Associate Professor Thammasat University, THAILAND

Editorial Board:

Assoc. Prof. Dr. Mohamed Gadi (University of Nottingham, UNITED KINGDOM) Professor Dr.Hitoshi YAMADA (Yokohama National University, JAPAN) Professor Dr. Chuen-Sheng Cheng (Yuan Ze University, TAIWAN ) Professor Dr.Mikio SATOMURA (Shizuoka University, JAPAN) Professor Dr.Chuen-Sheng Cheng (Yuan Ze University, TAIWAN) Emeritus Professor Dr.Mike Jenks (Oxford Brookes University, UNITED KINGDOM ) Professor Dr.I Nyoman Pujawan (Sepuluh Nopember Institute of Technology, INDONESIA) Professor Dr.Toshio YOSHII (EHIME University, JAPAN) Professor Dr.Neven Duić (University of Zagreb, CROATIA) Professor Dr.Dewan Muhammad Nuruzzaman (University Malaysia Pahang MALAYSIA) Professor Dr.Masato SAITOH (Saitama University, JAPAN)

Scientific and Technical Committee & Editorial Review Board on Engineering, Technologies and Applied Sciences:

Associate Prof. Dr. Paulo Cesar Lima Segantine (University of São Paulo, BRASIL) Associate Prof. Dr. Kurt B. Wurm (New Mexico State University, USA ) Associate Prof. Dr. Truong V.B.Giang (Vietnam National University, Hanoi, VIETNAM) Associate Prof. Dr. Fatemeh Khozaei (Islamic Azad University Kerman Branch, IRAN) Assistant Prof.Dr. Zoe D. Ziaka (International Hellenic University, GREECE) Associate Prof.Dr. Junji SHIKATA (Yokohama National University, JAPAN) Assistant Prof.Dr. Akeel Noori Abdul Hameed (University of Sharjah, UAE) Assistant Prof.Dr. Rohit Srivastava (Indian Institute of Technology Bombay, INDIA) Assistant Prof. Dr.Muhammad Yar Khan (COMSATS University, Pakistan) Assistant Prof. Dr. David Kuria (Kimathi University College of Technology, KENYA ) Dr. Mazran bin Ismail (Universiti Sains Malaysia, MALAYSIA ) Dr. Salahaddin Yasin Baper (Salahaddin University - Hawler, IRAQ ) Dr. Foong Swee Yeok (Universiti Sains Malaysia, MALAYSIA) Dr.Azusa FUKUSHIMA (Kobe Gakuin University, JAPAN) Dr.Yasser Arab (Ittihad Private University, SYRIA) Dr.Arslan Khalid (Shandong University, CHINA)

:: International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

Volume 11 Issue 5 (2020) http://TuEngr.com

ISSN 2228-9860 eISSN 1906-9642

FEATURE PEER-REVIEWED ARTICLES

IMPACTS OF INTEREST RATE ON HOUSING PRICES: EVIDENCE FROM HO CHI MINH CITY, VIETNAM

11A05A

EFFECTS OF KNOWLEDGE-BASED, INTELLECTUAL CAPITAL AND INNOVATION METHODS ON HUMAN RESOURCE MANAGEMENT: CASE STUDY OF MINISTRY OF EDUCATION, TEHRAN DISTRICT 7

11A05B

COMPARISON OF PUBLIC, PRIVATE SCHOOLS, AND DEENI MADARIS SECONDARY STUDENTS REGARDING CONFIDENCE AS SOCIAL ADJUSTMENT IN THE SOCIETY

11A05C

IMPACTS OF QWL (PROMOTION & WORK ENVIRONMENT) ON DOCTORS' PERFORMANCE IN PUBLIC SECTOR HOSPITALS OF PAKISTAN

11A05D

WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF FISHERIES ENTERPRISES BY APPLYING GMM

11A05E

CONTAGION AND INTERDEPENDENCE AMONG GOLD, OIL, FOREX, AND ASIAN EMERGING EQUITY MARKETS

11A05F

URBAN SOLID WASTE DEVELOPMENT: A REVIEW OF NIGERIA'S WASTE MANAGEMENT POLICY

11A05G

IMPACTS OF LEVERAGE ON SYSTEMATIC RISK BASED ON CAPITAL ASSET PRICING MODEL: A COMPARISON OF HIGH AND LOW CAPITAL INTENSIVE FIRMS

11A05H

A REVIEW OF AN ALTERNATIVE STUDIO PEDAGOGY FOR ALTERNATIVE SPACES: CASE STUDIES FROM A STUDENT'S DESIGN COMPETITION

11A05I

ROLES OF REMUNERATION ON CONSUMER RESPONSES TOWARDS SOCIAL MEDIA ADVERTISING: A PAKISTANI PERSPECTIVE

11A05J

CROSS-BORDER MERGERS & ACQUISITIONS AND SHAREHOLDERS' VALUE: NEW INSIGHTS FROM UK ACQUIRING FIRMS

11A05K

LEARNING FROM COGNITIVE PROCESS OF VISIONARY MALAYSIAN ARCHITECT ON GENERATING CREATIVE, NOVEL ARCHITECTURAL DESIGN IDEAS

11A05L

DEVELOPMENT OF TECHNOLOGY FOR PRODUCTION OF PROTEINVITAMIN GRANULATE

11A05M

PAKISTAN'S PRIMARY EDUCATIONAL REFORMS AND CHALLENGES

11A05N

AN EVALUATION AND PREDICTION CUSTOMER LOYALTY BASED ON DECISION TREE AND ARTIFICIAL NEURAL NETWORK: CASE OF OFOGH KOOROSH STORES IN TEHRAN

11A05O

BIOLOGICALLY ACTIVE FEED ADDITIVE DEVELOPMENT BASED ON KERATIN AND COLLAGEN-CONTAINING RAW MATERIALS FROM POULTRY WASTE

11A05P

THE REVIVAL OF TRADITIONAL PASSIVE COOLING TECHNIQUES FOR SCHOOL BUILDINGS THROUGH WINDCATCHERS

11A05Q

DISAGGREGATED ACCRUALS AND PREDICTION OF FUTURE CASH FLOWS: AN EFFECT OF GLOBAL FINANCIAL CRISIS 2008-09

11A05R

ELASTICITY MEASUREMENT OF FOOD DEMAND IN PAKISTAN: CROSSPRICE AND OWN PRICE ELASTICITY ANALYSIS

11A05S

USE OF WHITE LUPINE IN THE DIETS OF MEAT CHICKENS OF BASELINE AND BROILER CHICKENS OF SELECTION OF SGC "SMENA"

11A05T

Contacts: Professor Dr.Ahmad Sanusi Hassan (Editor-in-Chief), School of Housing, Building and Planning, UNIVERSITI SAINS MALAYSIA, 11800 Minden, Penang, MALAYSIA. Tel: +60-4-653-2835 Fax: +60-4-657 6523, Sanusi@usm.my, Editor@TuEngr.com Associate Professor Dr.Boonsap Witchayangkoon (Executive Editor), Thammasat School of Engineering, THAMMASAT UNIVERSITY, Klong-Luang, Pathumtani, 12120, THAILAND. Tel: +66-2-5643005 Ext 3101. Fax: +66-2-5643022 DrBoonsap@gmail.com, Editor@TuEngr.com Managing Office TUENGR Group, 88/244 Moo 3, Moo Baan Saransiri, Klong#2, KlongLuang, Pathumtani, 12120, THAILAND. Tel/WhatsApp: +66-995535450. P l P id i MALAYSIA/THAILAND Side image is the colorful models of Corona COVID19 virus.

DEVELOPMENT OF TECHNOLOGY FOR PRODUCTION OF PROTEINVITAMIN GRANULATE

11A05M

PAKISTAN'S PRIMARY EDUCATIONAL REFORMS AND CHALLENGES

11A05N

AN EVALUATION AND PREDICTION CUSTOMER LOYALTY BASED ON DECISION TREE AND ARTIFICIAL NEURAL NETWORK: CASE OF OFOGH KOOROSH STORES IN TEHRAN

11A05O

BIOLOGICALLY ACTIVE FEED ADDITIVE DEVELOPMENT BASED ON KERATIN AND COLLAGEN-CONTAINING RAW MATERIALS FROM POULTRY WASTE

11A05P

THE REVIVAL OF TRADITIONAL PASSIVE COOLING TECHNIQUES FOR SCHOOL BUILDINGS THROUGH WINDCATCHERS

11A05Q

DISAGGREGATED ACCRUALS AND PREDICTION OF FUTURE CASH FLOWS: AN EFFECT OF GLOBAL FINANCIAL CRISIS 2008-09

11A05R

ELASTICITY MEASUREMENT OF FOOD DEMAND IN PAKISTAN: CROSSPRICE AND OWN PRICE ELASTICITY ANALYSIS

11A05S

USE OF WHITE LUPINE IN THE DIETS OF MEAT CHICKENS OF BASELINE AND BROILER CHICKENS OF SELECTION OF SGC "SMENA"

11A05T

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05A

IMPACTS OF INTEREST RATE ON HOUSING PRICES: EVIDENCE FROM HO CHI MINH CITY, VIETNAM Toan Ngoc Bui 1* 1

Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), VIETNAM. ARTICLEINFO

Article history: Received 30 July 2019 Received in revised form 26 November 2019 Accepted 06 December 2019 Available online 19 December 2019

Keywords:

House price index; Housing market; Lending interest rate; Real estate in Vietnam; ARDL.

A B S T RA C T

The paper investigates the impact of interest rate on housing prices in Ho Chi Minh city from 2009:Q1 to 2018:Q4. The author employs the Autoregressive Distributed Lag (ARDL) approach to estimate the research model. The results indicate that housing prices are significantly influenced by the interest rate in the short run and long run. Specifically, the interest rate exerts a positive impact on housing prices in the short run. However, this influence turns into negative in the long run. The study greatly succeeds in finding the impact of interest rate on housing prices in the short run and long run. Further, the results provide first empirical evidence on the correlation between interest rates and housing prices in Ho Chi Minh city as well as Vietnam, thereby being meaningful for Ho Chi Minh city as well as other provinces in Vietnam. Disciplinary: Management Sciences (Banking, Real Estate Study). ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

As the biggest economic centre of Vietnam, Ho Chi Minh city attracts more and more interprovincial migrants. This has put more pressure on the city with the rise in infrastructure and housing demands. However, it is not always easy to purchase a house here due to the unpredictable fluctuations in housing prices. Also, considerable fluctuations in interest rate (even with high increase) make it difficult to get loans from banks (Figure 1). More than that, these fluctuations are the main root of changes in residential property prices (Tse et al., 2014). Thus, to analyze the impact of interest rate on housing prices is essential to Ho Chi Minh city. These results provide a reliable basis for the authorities in stabilizing interest rates and boosting a sustainable housing market. In addition, this facilitates residents in need to buy a house. Nevertheless, despite its necessity, only a few existing studies have examined the influence of interest rate on housing prices in Ho Chi Minh city. Most of them have been conducted in developed countries, not developing ones like Vietnam. This is a big research gap to be filled.

*Corresponding author (Toan Ngoc Bui). Email: buingoctoan@iuh.edu.vn ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05A http://TUENGR.COM/V11/11A05A.pdf DOI: 10.14456/ITJEMAST.2020.81

20 18

105

16 14

100

10 8

6 4

Lending interest rate (%)

Housing prices (points)

110

Housing prices

Lending interest rate

Figure 1: Lending interest rate and housing prices in Ho Chi Minh City. Furthermore, there exist different views on this topic. Indeed, some scholars state that interest rate exerts a negative impact on housing prices (for example, Adams & Fuss, 2010; Xu & Chen, 2012; Kengne et al., 2013; Kivedal, 2013; Engsted & Pedersen, 2014; Zhu et al., 2017). Meanwhile, it is believed that a mild rise in interest rate will enhance the housing market, which in turn raises the property prices. In other words, the interest rate is positively correlated to housing prices (for example, Wadud et al., 2012; Tse et al., 2014; Zhang et al., 2016; Gaspareniene et al., 2017; Tupenaite et al., 2017). This paper investigates the impacts of interest rate on housing prices in Ho Chi Minh City.

2. LITERATURE REVIEW An interest rate is an essential tool of monetary policy. Accordingly, to control the interest rate should be one of its targets. Also, the procedure to complete a mechanism of interest rate control always ensures a monetary policy target which is economic stability. Moreover, interest rate greatly contributes to stabilizing the housing market (Tse et al., 2014; Bui, 2019b) which represents a market for properties being purchased, sold and rented, thereby forming prices. Therefore, the housing market is frequently indicated by the house price index, a statistically weighted average price of each region at a specific time (Vries et al., 2009). The impact of interest rate on housing prices has been researched in different economies and regions. In summary, the existing literature could be divided into two following mainstreams: The negative impact of interest rate on housing prices: A significant rise in the interest rate causes a decrease in the housing market. Also, it becomes more difficult for citizens to get a mortgage, which in turn negatively affects the housing prices. The negative effect of interest rate on housing prices has been revealed in many empirical studies. For instance, by analyzing data of 15 countries, Adams and Fuss (2010) reported that a 1% increase in interest rate will decrease housing demands, thereby giving a 0.3% fall to housing prices in the long run. Xu and Chen (2012) found the negative causality between the interest rate and housing prices in 70 Chinaâ€™s large and medium cities. In the same vein, Kengne et al. (2013) also stressed that the interest rate exerts a negative influence on housing prices in South Africa. At that time, Kivedal (2013) stated that a rise in interest rate can reduce bubbles in the U.S real estate market, which is the negative effect of interest rate on house price alternatively. Further, Engsted and Pedersen (2014) concluded that interest rate is negatively

Toan Ngoc Bui

related to house prices in 18 OECD countries. In addition, it was deduced that a low-interest rate can lead to the bubble phenomenon in the property market. More recently, Zhu et al. (2017) examined data of 11 European countries and confirmed the negative effect of interest rate on housing prices. The positive impact of interest rate on housing prices: Lending is one of the main activities of commercial banks, especially those in developing countries. Hence, a mild rise in interest rate (lending interest rate particularly) helps banks increase their income, thereby having sufficient financial resources to improve their services and abilities of credit supply for the housing market. This eventually stimulates a better performance of the housing market. Alternatively, the interest rate is positively related to housing prices. This positive impact has been revealed in some empirical studies. For example, Wadud et al. (2012) found the positive effect of interest rate on housing prices in Australia, which reaches a high value in the short term and afterward gradually decreases. In another research, Tse et al. (2014) stated that interest rate is positively correlated to housing prices in England. Sharing the same view, Zhang et al. (2016) also stressed that interest rate exerts a positive influence on housing prices in China’s metropolises, and the impact gradually decreases from bigger cities to smaller cities. Recently, Gaspareniene et al. (2017) highlighted that 49.23% of the variation in interest rate could be explained by fluctuations in housing prices in Lithuania, significantly with positive impact. Also, Tupenaite et al. (2017) concluded on this positive causality in Litva. Therefore, housing prices may be significantly affected by interest rates. However, a majority of empirical studies have analyzed developed countries, not developing countries. Moreover, the level of this influence still attracts different views. Thus, to find empirical evidence on the causality between the interest rate and housing prices in developing economies is essential.

3. DATA AND METHODOLOGY 3.1 DATA

The author collects quarterly data from 2009:Q1 to 2018:Q4. In specific, data on interest rates are obtained from the International Monetary Fund (IMF) while those on housing prices of Ho Chi Minh city are collected from sources of Savills Vietnam. As a characteristic of Vietnam, Savills Vietnam is the only source that has released quarterly data on Ho Chi Minh city’s housing prices since the first quarter of 2009. As a result, the author can only collect quarterly data in this period.

3.2 METHODOLOGY

This study employs the Autoregressive Distributed Lag (ARDL) approach to analyze the impact of interest rate on housing prices in Ho Chi Minh city. Following earlier studies, the lending interest rate is utilized for the analysis because of its direct influence on housing prices. The model is estimated by employing the ARDL approach in order to reveal the impact of interest rate on housing prices in the short term and long term. Moreover, this approach is suitable for the model with short data series (Pahlavani et al., 2005; Bui, 2019a; Bui, 2019b), which is a characteristic of Vietnam’s data. To examine the impact of interest rate on housing prices in Ho Chi Minh city, the research model is proposed with the following models. Table 1 gives details of the variables. Long-term impact:

HPIt  0  1LIRt  vt *Corresponding author (Toan Ngoc Bui). Email: buingoctoan@iuh.edu.vn ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05A http://TUENGR.COM/V11/11A05A.pdf DOI: 10.14456/ITJEMAST.2020.81

(1).

Short-term impact: k

j 1

j 0

(2).

HPI t   0   1HPI t  j   2 LIRt  j   ECM t 1   t

Where: Dependent variable: House price index (HPI). Independent variable: Lending interest rate (LIR). Error correction mode: ECM. The symbol ε is the model error term. Variable name House price index

Code HPI

Lending interest rate

LIR

Table 1: Summary of variables.

Source How to measure Savills Vietnam The logarithm of the house price index in Ho Chi Minh City The lending rate is the bank rate that usually meets the shortIMF and medium-term financing needs of the private sector.

4. EMPIRICAL RESULTS 4.1 DESCRIPTIVE STATISTICS

In fact, the house price index in Ho Chi Minh city fluctuates constantly (Figure 1). Table 2, house price index in Ho Chi Minh city reached the top in the third quarter of 2009 (105 points) and the bottom in the last counterpart of 2013 (88.7 points). Meanwhile, the lending interest rate reached the highest value in the second quarter of 2011 (18.02%) and the lowest value in the third counterpart of 2015 (6.96%). Lending interest rate and house price index have gradually been stabilized recently. Table 2: Descriptive statistics of all variables. Variable House price index in Ho Chi Minh city (points) Lending interest rate (%)

Mean 93.928 10.094

Min 88.700 6.960

Max 105 18.020

4.2 DICKEY-FULLER TEST The Augmented Dickey-Fuller test (1979) is adopted to examine the stationarity of the data series. Table 3 gives the Dickey-Fuller test result. Table 3: Dickey-Fuller test. At Level At ∆ I(0) I(1) House price index (HPI) 0.575 0.000*** Lending interest rate (LIR) 0.878 0.010*** Note: *** indicates significance at the 1% level. Variable

Table 3 shows that the data series of a house price index (HPI) and lending interest rate (LIR) become stationary after the first difference I(1) at the 1% level of significance.

4.3 ARDL BOUND TESTING COINTEGRATION

The lag of variables is calculated based on the Bayesian Information Criterion (BIC). Next, the ARDL bound test developed by Pesaran et al. (2001) is also used to test cointegration among the data series. Table 4: ARDL bound testing cointegration. F = 17.200 F

I(0) 4.163

Toan Ngoc Bui

10%

I(1) 5.018

5% 1% I(0) I(1) I(0) I(1) 5.205 6.182 7.699 8.935 Note: *** indicates significance at the 1% level.

p-value I(0) I(1) 0.000*** 0.000***

Table 4 indicates that F values at 17.200, which is above the upper bound I(1) and significant at the 1% level. It can be deduced that there exists cointegration among the data series at the 1% level of significance. In other words, the ARDL approach performs well in testing the causality between the interest rate and housing prices in the long run and short run.

4.4 RESULTS OF THE COEFFICIENT ESTIMATION

It can be seen from Table 5 that the model is significant at the 1% level (Prob>F = 0.000). Rsquared is 57.31%, which means that 57.31% of fluctuations in property prices in Ho Chi Minh City could be explained by lending interest rates. The results show that there is no autocorrelation (Prob>chi2 = 0.836) and heteroskedasticity (Prob>chi2 = 0.456) issues in the model. Also, Ramsey reset test reveals that none of any important variables are not omitted (Prob>F = 0.707). The normality test concludes that the model has a standard distribution (Prob>chi2 = 0.421). Consequently, the results are valid. Table 5: ARDL The long-run and short-run results. Variable LIR

Coef. Long-run results -0.009 Short-run results -0.003 0.006 0.005 -0.167 0.771

Prob.

0.064*

LIR 0.216 LIR(-1) 0.019** LIR(-2) 0.021** ECM(-1) 0.002*** Constant 0.001*** R-squared 57.31% Significance level Prob > F = 0.000*** Autocorrelation test Prob > chi2 = 0.836 Heteroskedasticity test Prob > chi2 = 0.456 Normality test Prob>chi2 = 0.421 Ramsey Reset test Prob > F = 0.707 Note: *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively. CUSUM

CUSUM squared

Figure 2: Stability tests. Next, the stability is tested by using a cumulative sum of recursive residuals (CUSUM) and the cumulative sum of squares of recursive residuals (CUSUM squared). Figure 2 indicates that both CUSUM and CUSUM squared are within the standard bound at the 5% level of significance. It can thus be concluded that the model has its stability. From Table 5, it can be deduced that the house price index is significantly influenced by the lending interest rate in the long term and short term. Particularly, the lending interest rate exerts negative impact (β = -0.009) on house price index in the long run at the 10% level of significance. However, in the short run, the influence of the house price index on the lending interest rate is positive *Corresponding author (Toan Ngoc Bui). Email: buingoctoan@iuh.edu.vn ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05A http://TUENGR.COM/V11/11A05A.pdf DOI: 10.14456/ITJEMAST.2020.81

and significant at the 5% level. This impact is obviously expressed by the lag of one quarter ( = 0.006) and two quarters (= 0.005). Thus, in the short run, an increase in interest rate can stimulate the operation of the housing market, which in turn gives rise to housing prices. In other words, the interest rate is positively related to housing prices in the short term, which is consistent with what Wadud et al. (2012) reported. Nevertheless, in the long run, an excessive increase in interest rate can reduce the investment into the real estate market as well as make it hard for citizens to get a mortgage, leading to a fall in housing prices. The negative correlation between the interest rate and housing prices has been found in previous studies of Adams and Fuss (2010), Xu and Chen (2012), Kengne et al. (2013), Kivedal (2013), Engsted and Pedersen (2014), Zhu et al. (2017). Despite being consistent with earlier studies, an unprecedented finding of this study is revealing the impact of interest rate on housing prices in the long term and short term. More than that, this paper provides first empirical evidence on this impact in Ho Chi Minh city as well as Vietnam. Therefore, this result is meaningful to Ho Chi Minh city’s authorities as well as other provinces’.

5. CONCLUSION

With the objective of analyzing the impact of interest rate on housing prices from 2009:Q1 to 2018:Q4, the study reveals that interest rate significantly influences housing prices in the long term and short term. Specifically, in the short run, interest rate exerts a positive impact on property prices, which is clearly expressed at the lag of one quarter and two quarters. Meanwhile, this impact turns out to be negative in the long run. The paper greatly succeeds in finding the correlation between the interest rate and housing prices in the short run and long run, which is an unprecedented finding. Further, the study provides first empirical evidence on the causality between the interest rate and property prices in Ho Chi Minh city as well as Vietnam. Based on this result, the authorities in Ho Chi Minh city, as well as those in other regions, can have a reliable foundation to stabilize interest rate in the combination with the sustainable development of the housing market. The stability of the interest rate will facilitate the house purchase of citizens, especially limiting bubbles in the market. Despite gaining its objective, the paper still has its limitations when some variables which may be correlated to interest rate and housing prices such as economic growth, inflation, financial crisis have not been investigated. More specifically, due to the fact that Ho Chi Minh city’s housing market is still nascent, data adopted are quite short and cannot be collected monthly.

6. DATA AND MATERIAL AVAILABILITY

Information regarding this study is available by contacting the corresponding author.

7. REFERENCES

Adams, Z., & Fuss, R. (2010). Macroeconomic determinants of international housing markets. Journal of Housing Economics, 19, 38-50. Bui, T.N. (2019a). Inflation and stock index: Evidence from Vietnam. Journal of Management Information and Decision Sciences, 22(4), 408-414. Bui, T.N. (2019b). The Role of Financial Development in the Vietnam Economy. WSEAS Transactions on Business and Economics, 16, 471-476. Dickey, D., & Fuller, W. (1979). Distribution of the Estimators for Autoregressive Time Series with Unit Root. Journal of the American Statistical Association, 74, 427-432.

Toan Ngoc Bui

Engsted, T., & Pedersen, T. (2014). Housing market volatility in the OECD area: Evidence from VAR based return decompositions. Journal of Macroeconomics, 42, 91-103. Gaspareniene, L., Remeikiene, R., & Skuka, A. (2017). Assessment Of The Impact Of Macroeconomic Factors On Housing Price Level: Lithuanian Case. Intellectual Economics, 10, 122-127. Kengne, B., Balcilar, M., Gupta, R., Reid, M., & Aye, G. (2013). Is the relationship between monetary policy and house prices asymmetric across bull and bear markets in South Africa? Evidence from a Markov-switching vector autoregressive model. Economic Modelling, 32, 161-171. Kivedal, B. (2013). Testing for rational bubbles in the US housing market. Journal of Macroeconomics, 38, 369-381. Pahlavani, M., Wilson, E., & Worthington, A. (2005). Trade-GDP Nexus in Iran: An Application of the Autoregressive Distributed Lag (ARDL) Model. American Journal of Applied Sciences, 2(7), 1158-1165. Pesaran, M., H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of the level relationship. Journal of Applied Econometrics, 16(3), 289-326. Tse, C., Rodgers, T., & Niklewski, J. (2014). The 2007 financial crisis and the UK residential housing market: Did the relationship between interest rates and house prices change?. Economic Modelling, 37, 518-530. Tupenaite, L., Kanapeckiene, L., & Naimaviciene, J. (2017). Determinants of Housing Market Fluctuations: Case Study of Lithuania. Procedia Engineering, 172, 1169-1175. Vries, P., Haan, J., Wal, E., & Mariën, G. (2009). A house price index based on the SPAR method. Journal of Housing Economics, 18, 214-223. Wadud, M., Bashar, O., & Ahmed, H. (2012). Monetary policy and the housing market in Australia. Journal of Policy Modeling, 34, 849-863. Xu, X., & Chen, T. (2012). The effect of monetary policy on real estate price growth in China. PacificBasin Finance Journal, 20, 62-77. Zhang, H., Li, L., Hui, E., & Li, V. (2016). Comparisons of the relations between housing prices and the macroeconomy in China’s first-, second- and third-tier cities. Habitat International, 57, 24-42. Zhu, B., Betzinger, M., & Sebastian, S. (2017). Housing Market Stability, Mortgage Market Structure, and Monetary Policy: Evidence from the Euro Area. Journal of Housing Economics, 37, 1-21. Toan Ngoc Bui is a Lecturer at the Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), Vietnam. He holds a Master of Finance and Banking from Ho Chi Minh City Open University, Vietnam. Currently, he is pursuing a PhD at the University of Finance – Marketing (UFM), Vietnam. His researches are in the fields of financial development, real estate market and applied econometrics.

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PAPER ID: 11A05B

EFFECTS OF KNOWLEDGE-BASED, INTELLECTUAL CAPITAL AND INNOVATION METHODS ON HUMAN RESOURCE MANAGEMENT: CASE STUDY OF MINISTRY OF EDUCATION, TEHRAN DISTRICT 7 1

Seyed Ali Shahtaheri , Kaveh Teymournejad 1

Management Department, Central Tehran Branch, Islamic Azad University, Tehran, IRAN.

ARTICLEINFO

Article history: Received 14 June 2019 Received in revised form 01 November 2019 Accepted 22 November 2019 Available online 19 December 2019

Keywords:

Knowledge-based human resource management; Relational asset; Human capital; Structural capital; Innovative performance.

A B S T RA C T

Innovation function in organizations is; primarily; considered to be a human issue in which individuals cultivate opinions to develop and implement them with respect to knowledge and individuals′ relationships in the organization. An innovative function can influence human resource management (HRM) and existing knowledge in organizations′ innovation; the study's purpose is to investigate the effect of knowledge-based; intellectual capital and innovation methods of HRM in Ministry of Education; Tehran District 7. The study′s methodology is description-survey. The method of data collection is field type, and the method of data collection has been a standard questionnaire; the statistical population includes 60 staff of the Ministry of Education in Tehran District-7. Valid and measurable questionnaires have been collected and then they have been analyzed by structural equations SmartPls2; then obtained results show that immediate factors are effective between HRM and innovative function in this study. Disciplinary: Management Sciences (HRM). ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

Human resource management (HRM) has considered innovation to be a vital factor for organizations to create permanent competitive value in today′s complex and variable environment. When organizations are more innovative in response to variable environments and developing new allowable capabilities, they become more successful; innovative measures are heavily dependent on knowledge, specialty, and employees′ commitment as the process′s input, in order to form innovation, organizations may influence assets to develop organizational specialty and form new ideas. Indeed, knowledge is the complex result of conscious measures related to duties (Maman, 2016) Organizations, in addition to organizational and statutory criteria, need a set of factors which support them in this way and make cooperation and unity possible toward a collective and public strategy (Norouzi et al 2015).

*Corresponding author (Kaveh Teymournejad). Email: kav.teimoornejad@iauctb.ac.ir ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05B http://TUENGR.COM/V11/11A05B.pdf DOI: 10.14456/ITJEMAST.2020.82

2. THEORETICAL PRINCIPLES In many organizations, activities have faced many factors including market opportunities, cost reduction, and competition to improve performance (Navarro et al, 2010) to show satisfactory performance in tough occasions encountering by markets. Thus, a perspective based on resources in the organizations can be caused by their unique resources, integrated resources and/ or the ability to respond to the environment. Accordingly, there is a distinct difference regarding different organizations’ performances is due to the fact that successful organizations have strategic resources (physical, human and organizational) that their competitors lack these resources (Sinaei et al., 2011). On the other hand, human resources are the core of organizations’ activities, these are humans who work in organizations and the organization does not work automatically (Sheykh-alEslami, 2012). One of the symptoms of organizations’ improper statute is the lack of a functioning system in different aspects of the organization including satisfying staff needs, suppliers. On the other hand, lack of an organization evaluation and monitoring system means inability to communicate with inner and outer environment of the organization which are followed by indolence and finally breakdown of organizations (Rezaian et al 2011). Innovation is a vital factor in the organizations to create permanent competitive advantage and value in our changing and complex world. While each activity needs genius and talent, it also needs the knowledge, attention and hardworking of all staff. Innovation term is a wide concept to use related knowledge or information to create or introduce new and useful things. Therefore, innovation can be described as any new idea of an organization and/or industry and/or a nation and/or world (Hosseini 1998). Innovative organizations need a flexible environment to support innovations. Flexibility increases the power of adapting and believing which makes the openness to innovation easier (JafarPour, 2013). A majority of government organizations are looking forward to establishing internalized knowledge management to take advantage of their knowledge and maintain a competitive advantage in national and international. Fast changes in today′s world, organizations have faced different challenges. Pioneer organizations have exploited management means and modern technologies to accomplish organization′s purposes (Ramezani & Soleymani, 2015). Science development and fast changes in today′s world have posed many challenges to organizations. Continuous changes in knowledge have imposed an imbalanced condition on organizations. The most important role which can be dedicated to knowledge management is that we can consider it to be a change methodology. Knowledge management can be the most important factor for a change in the organization because it attracts new knowledge into the organization and manages it (Hosseini and Fard, 2012). It is hard to implement knowledge sharing in organizations and it needs support (Reychav and Weisberg, 2010). Intellectual capital is a non-competitive capital that is contrary to physical capital that can be used for a single purpose at a particular time. Intellectual capital can be used for multi-purposes simultaneously (Zanjirani and Allahi, 2014). Employees create intellectual capital through competency and intellectual agility. In fact, this capital creates an opportunity for the organization using creativity and personal cooperation to acquire trade value (Dastgir et al, 2014). Intellectual capital includes three elements like human capital, structured capital and communicative capital (Khoo et al 2015). Human capital and communicative capital and structured capital cannot change into private property, they shall be shared among staff, customers and suppliers, and these

Seyed Ali Shahtaheri, Kaveh Teymournejad

properties growth needs close attention and monitoring among individuals and organizations (Dastgir et al, 2014). With respect to discussed issues and the importance of subject in Tehran district 7 Ministry of Education, first of all, human is needed to grow and develop more in innovative areas of organizations, knowledge depends on developing and implementing HRM and main innovative factors in district 7, Ministry of Education. Innovative production can be considered to be an important concern which has certain shortages. There is limited data regarding human capital, structured capital for innovative performance and there is a question which says to what extent HRM can be effective in the field of successful and ideal innovative performance? Kianto et al. (2018) obtained findings on 180 Spanish companies have been tested, that intellectual capital is a positive mediator between HRM and innovative performance. The main study question is: does the investigation of knowledge-based HRM impact intellectual capital and innovation in Tehrandistrict 7 ministry of education? Wikhamn (2019) investigated the way of permanent HRM and its impact on customer satisfaction and customers in Swedish hotels. Respondent hotels are divided into four groups based on their participation in two methods of permanent HRM. Findings showed that the relationship between innovation and customer satisfaction depends on permanent human resource methods. However, innovative acts and methods of permanent human resource impact positively on customer satisfaction. Their interaction shows that an individual can replace customer satisfaction with the other factor. This study shows that methods of permanent HRM increases a hotel′s capability to be more innovative and have more customers. Many studies’ findings showed that structured capital impacts significantly the range of knowledge-based companies′ authority and policies regarding entrance to the market. Human capital plays a critical role in organizational learning and training. Communicative capital helps these companies to act successfully in the field of networking with customers, suppliers of research centers, development and financial sources. Also, many studies explore these relationships in the statistic sample showing that culture improves innovation and also it contains the company′s performance. It can also be a barrier toward innovation, it depends on values and beliefs in which culture cultivates them. This fact clearly shows that adhocracy culture is the best factor and variable to predict innovation and performance. We can conclude that innovation balances the relationship between organizational culture and performance.

3. CONCEPTUAL MODEL The study conceptual model is given within the framework of Figure 1. Based on the issues which have been discussed in the introduction and the importance of study subject, these three hypotheses are made for carrying out this study: H1: H1 Knowledge-based HRM with a mediatory role of human capital impacts the innovative performance of Tehran- District 7 Ministry of Education, Iran. H2: Knowledge-based HRM with a mediatory role of structural capital impacts the innovative performance of Tehran- District 7 Ministry of Education, Iran. H3: Human capital with a mediatory role of structural capital impacts the innovative performance of Tehran- District 7 Ministry of Education, Iran. *Corresponding author (Kaveh Teymournejad). Email: kav.teimoornejad@iauctb.ac.ir ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05B http://TUENGR.COM/V11/11A05B.pdf DOI: 10.14456/ITJEMAST.2020.82

Figure 1: The study model (after Kianto et al. (2017)).

4. METHOD This study is in the applied form with regard to the study purpose, and it is a descriptivesurvey with regard to the study method. In the study, the review also covers Latin and Persian articles, books, and the Internet. A questionnaire has been designed and used to collect data. The study population contains the staff of the District 7 Ministry of Education.

4.1 QUESTIONNAIRE VALIDITY

In order to measure the validity of the questionnaire, content reliability has been used. A questionnaire has been handed out among specialists and experts which has asked about the usefulness and uselessness of questions with respect to the variables and purpose of each variable. The completed questionnaires were collected and the validity of content has been given to 12 marketing experts, the content validity has been calculated for the index of identification based on 12 auditors. According to 12 auditors in Table 1, the accepted content validity ratio (CVR) equals 0.56. The numerical calculations results were 0.66 to 1 for each question which illustrated the questionsâ€˛ validity. Table 1: the content validity of the questionnaire Question Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9

Calculated value 0.66 0.67 0.84 1 1 0.66 0.84 0.84 1

Question Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18

4.2 RELIABILITY OF QUESTIONNAIRE

Calculated value 0.84 1 0.66 1 1 0.84 0.84 1 1

Question Q19 Q20 Q21 Q22 Q23 Q24 Q25

Calculated value 1 1 1 1 0.84 1 0.67

First of all, a primary sample is provided which contains 30 questionnaires before the test, and then SPSS 22 software calculates the reliability with the Cronbachâ€™s alpha method using obtained data. Using SPSS22 software, the alpha amounts have been estimated to be more than 0.827 which shows the questionnaire validity and proper intellectual impression of respondents regarding the content of related variables. Results show that the amount of alpha enjoys the advantage of having the required reliability.

Seyed Ali Shahtaheri, Kaveh Teymournejad

No 1 2 3 4

Table 2: coefficient of Cronbach’s alpha

Variable HRM Human capital Structural capital Innovative performance

Questions 1-13 14-16 17-20 21-25

Alpha amount 0.886 0.869 0.827 0.853

5. FINDINGS In this study, inferential discussions and statistic descriptions have been used to analyze data and test hypotheses. Descriptive statistics contain frequency tables and means, and at inferential level, structured equations have been used including estimation of path coefficient, significance coefficients, and Soyel test. SPSS22 and PLS2 software have been used to analyze data. Respondents′ educational backgrounds: 8.3 percent diploma, 16.7 percent technician, 41.7 percent bachelor, 23.3 percent master’s level, 10.0 percent PhD. Respondents′ ages: 3.3 percent between 25 to 30 years old, 40.0 percent between 31 to 35 years old, 28.3 percent between 36 to 40 years old, 15.0 percent between 41 to 45 years old, 13.3 percent between 46 to 50 years old. The reliability of the index is calculated by measuring factor loads through calculating the amount of indices′ correlation in each structure, and its amount equals and/ or more than 0.7. It proves the fact that reliability is acceptable for the measurement model. Table 3: validity of variables Variables

Cronbach alpha

HRM

0.904 0.765 0.784 0.802

Human capital Structured capital Innovative performance

Mixed reliability CR˃ 0.7 0.916 0.864 0.860 0.864

Shared reliability communality˃ 0.5 0.548 0.680 0.607 0.560

In the present study, indices show that all the questions have factor load of more than 0.7. These results confirm next stages of study. The second validity has been divergent for measurement confirmation and validity which is a complementary criteria. In PLS modeling, two criteria including Fornel Lacker and width loading tests have been used. In the present study, Farnel Laker test is used to investigate known level. On the other hand, each structure has a higher correlation in comparison to other structures. Fornel and Laker results have been presented, the results related to Fornel have been presented in table 4, as you can see, each structure′s load has a higher load in comparison to other structures (factor loads are higher on the main diameter). Therefore, the model′s divergence is confirmed. Table 4: divergent validity of measurement model Main variables HRM Human capital Structured capital Innovative performance

1 0.740 0.651 0.572 0.626

0.825 0.591 0.704

0.779 0.682

0.748

The obtained results of Table 4 show that there is enough divergent validity among study′s *Corresponding author (Kaveh Teymournejad). Email: kav.teimoornejad@iauctb.ac.ir ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05B http://TUENGR.COM/V11/11A05B.pdf DOI: 10.14456/ITJEMAST.2020.82

variables. With respect to numbers written on main diameter, the number of figures on each column was less than main diameter. This confirms the level of divergent validity in the study model.

5.1 INVESTIGATING THE STUDY′S INNER MODEL

After testing outer model and confirming its validity and reliability (study′s measurement model), inner model or structural model of study is evaluated. Study hypotheses can be dealt by using inner models. Statistic criterion including t, coefficient of determination, and path coefficient are used to evaluate the model. The tested conceptual model has been presented in a standard way or PLS algorithm, and paths′ coefficients (figure 1) and significance coefficients (Figure 2) have been presented.

Figure 2: A structural model for determining path coefficients.

Figure 3: Structural model for significance coefficients. In Table 5, the rate of R2 impact and structural quality of model which shows the impact of external variables on internal variables, the final amount can be strong in R2 due to this model′s structural state, and independent variables could predict the dependent variable to be strong and it

Seyed Ali Shahtaheri, Kaveh Teymournejad

has been on average for independent variables. Table 5: The amount of internal and external variables′ impacts Variable HRM Human capital Structural capital Innovative performance The general model fitting

0.424 0.287 0.350 0.377 0.987 0.251 0.593

As we considered the obtained results, R2 and Q2 show that independent variables were able to predict independent variables on average or above and the general fitting is strong. The outputs of PLS prove the study′s hypotheses which have been shown in table (6). As you can see, study′s hypotheses have been investigated with respect to the statistic amount of 1. Table 6: results of the studied hypotheses.

Hypotheses H1 H2 H3

Test statistic 5.76 2.76 3.18

Std. Error 0.021 0.103 0.104

p-value <0.001 0.005 0.001

Hypothesis Results confirmed confirmed confirmed

6. CONCLUSION In the study, we have dealt with investigating the effect of knowledge-based human resource management methods, on innovative and intellectual capital and a number of results have been reached which are dealt with based on hypothesis: First hypothesis: knowledge-based HRM is effective with mediatory role of human capital on innovative performance of District 7 Ministry of Education in Tehran. Regarding structural model and mediatory effect of human capital, statistic hypothesis H0 has been confirmed and H1 has been rejected between knowledge-based HRM and innovative performance of Ministry of Education because its P-value (<0.001) is less than 0.05. In this study, as knowledge-based HRM affects innovative performance. Based on the effect of all main and side hypotheses, we can conclude that the effectiveness of the mediatory factor related to the social capital on HRM and innovative performance is acceptable, obtained results are consistent with study′s findings of Ino & et al in 2017. Second hypothesis: knowledge-based HRM with mediatory role of structural capital impacts innovative performance of Ministry of Education in Tehran district-7. With respect to the structural model and mediatory role of structural capital, H0 is confirmed and H1 is rejected because P-value equals 0.005 and this amount is less than 0.05. As knowledge-based HRM impacts structural capital and also impacts innovative performance. Generally, there is an impact between HRM and innovative performance, with respect to the effect of all main and side hypotheses, we can conclude that the effect of mediatory role of structural capital and innovative performance is acceptable, obtained results are consistent with study′s findings of Ino et al. in 2017. Third hypothesis: human capital is effective with the mediatory role of structural capital on innovative performance in the Ministry of Education- Tehran district-7. Regarding structural model and mediatory role of structural capital, it is effective between *Corresponding author (Kaveh Teymournejad). Email: kav.teimoornejad@iauctb.ac.ir ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05B http://TUENGR.COM/V11/11A05B.pdf DOI: 10.14456/ITJEMAST.2020.82

human capital and innovative performance because its P-value equals 0.001 and it is less than 0.05, statistic hypothesis H0 is confirmed and H1 is rejected. In this study, there is an impact between human capital and structural capital, and there is also an impact between structural and innovative performance. In general, there is an impact between human resources and innovative performance. With respect to the impact between main and side hypotheses, we can conclude that the impact of the mediatory factor of structural capital between human capital and innovative performance is acceptable. Obtained results are consistent with findings of Ino et al. (2017).

6. DATA AND MATERIAL AVAILABILITY

Information regarding this study is available by contacting the corresponding author.

7. REFERENCES

Dastgir, Mohsen; Arab Salehi, Mahdi; Amin Jafari, Razieh; Akhlaghi, Hasanali. (2014). the effect of intellectual capital on company′s financial performance, financial and accounting researches, 6(21), 1-36. Falahi Maman, M.F. (2016). Investigating the effect of strategic procedures of human resources on innovative performance, management and entrepreneurship studies, second review, 3, 212-224. Hosseini, S.M.; Fard, D.H. (2012). The effect of organizational citizenship behavior on knowledge sharing: study of mediatory role of organizational culture; Iran management science periodical, 7(28), 109-130. Jafarpour, M. (2013). The role of gaining knowledge in innovation and flexibility in Gilan broadcast; Master thesis. Rasht Islamic Azad University. Hosseini, K.H. (1998). innovation in organizations: concept, types and processes, research and science magazine of economy and management. 42, 48. Kianto, A., Sáenz, J. & Aramburu, N. (2017). Knowledge-based HRM practices, intellectual capital and innovation, Journal of Business Research. 81 (Supplement C), 11-20. Kianto, A. Vanhala, M. Heilmann, P. (2018). The impact of knowledge management on job satisfaction, Journal of Knowledge Management. 20, 621-636. Khoo, M.M., Torabi, M.M., Loo, K.M. (2015). Investigating the effect of intellectual capital components on different aspects of financial function, state accounting, 1(2), 83-92. Zanjirani, M.D., Elahi, N.Z. (2014). Investigating the effect of intellectual capital on relative efficiency of production cooperatives, case study in Boushehr province, property and funding management, 2(4), 51-74. Navarro, A. Losada, F. Ruzo, E.Diez, J. (2010) Implications of perceived competitive advantages, adaptation of marketing tactics and export commitment on export performance, Journal of World Business, 45(1), 49–58. Navarro, J.G.C, Acosta, P.S., Wensley, A. K. P., (2015) Structured knowledge processes and firm performance: The role of organizational agility, Journal of Business Research. Norouzi, H., Kameli, A., Beigi, R., Mahzabi, M. (2015). investigating the effect of organizational atmosphere on staff organizational performance through social capital (case study: municipality staff of five districts in Rasht city); social capital management, 1, 137- 154. Ramezani, G., Soleymani, J. (2015). identifying indices of knowledge management and its implementation (case study: Koredestan university), knowledge based studies, 2(5), 1-24. Reychav, I., and J. Weisberg. 2010. Bridging intention and behavior of knowledge sharing. Journal of Knowledge Management. 14(2), 285-300.

Seyed Ali Shahtaheri, Kaveh Teymournejad

Rezaian, A., Karimi, A.H., Azar, A., Dehghanian, H. (2011). Designing a conceptual model of consistent performance in national media (National news channel): communicative researches. 65, 115-142. Sheykh-al-Eslami, M. (2012). the role of human resource management in forming competitive advantage, work and society periodical. 147. Sinaei, H., Haji pour, B., Taheri, K. (2011). investigating the relation between intellectual capital and companyâ€˛s performance; transformation management research; review 3(5). Wikhamn, W. (2019). Innovation, sustainable HRM and customer satisfaction. International Journal of Hospitality Management. 76, 102-110.

Seyed Ali Shahtaheri holds a-Master of Educational Human Resource, Central Tehran Branch, Islamic Azad University, Tehran Iran. He is interested in HRM Management. Ali.shahtaheri96 @ gmail.com.

Dr.Kaveh Teymournejad is an Assistant Professor of Management Department, Central Tehran Branch, Islamic Azad University, Tehran Iran. He is interested in Public Administration, Comparative and Development Management, Human Resource Management, Change Management.

*Corresponding author (Kaveh Teymournejad). Email: kav.teimoornejad@iauctb.ac.ir ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05B http://TUENGR.COM/V11/11A05B.pdf DOI: 10.14456/ITJEMAST.2020.82

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PAPER ID: 11A05C

COMPARISON OF PUBLIC, PRIVATE SCHOOLS, AND DEENI MADARIS SECONDARY STUDENTS REGARDING CONFIDENCE AS SOCIAL ADJUSTMENT IN THE SOCIETY 1*

Mati Ullaha , Allah Noor Khan 1

Institute of Education & Research, Gomal University, Dera Ismail Khan, PAKISTAN.

ARTICLEINFO

Article history: Received 06 April 2019 Received in revised form 19 June 2019 Accepted 28 June 2019 Available online 19 December 2019

Keywords:

Students’ confidence; Social adjustment; Public School; Academic success; Secondary education; Self-confidence.

A B S T RA C T

Adjustment is the interaction between a person and his environment. It is the ability to bring a desirable change in society. Similarly, confidence is the belief about yourself, your abilities and experiences. This is a cross-sectional study wherein all the public, private secondary schools and Deeni Madaris of the southern region of Khyber Pakhtunkhwa, Pakistan was the population of the study. The main purpose of the study was to compare public, private schools and Deeni Madaris students about confidence as a social adjustment in society, using questionnaires as a study tool. The respondents included principals, teachers, students, and parents were a sample of study by applying L.R.Gay Sample Size rule of thumb. The simple random, disproportionate, stratified and convenient sampling was used for a sample collection from respondents. Data were statistically analyzed through frequency and one way ANOVA which provides significant information for the stakeholders and policymakers. The study finds that students from all the institutions whether public, private and Deeni Madaris are confident about their social adjustment in society. Disciplinary: Education Sciences (Secondary Education), Psychology. ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

Confidence is the belief regarding yourself and your abilities for which wisdom, holistic intelligence with experience, enthusiasm and determination are highly mandatory to achieve desired objectives while living in society (Pepi et al., 2006). Confidence is the tool through which trust with the inner strength of someone is fully ensured and the purpose ought to achieve in the society becomes true (Kleitman & Stankov, 2007). Confidence is the key to unlock the potentials of person and confidence is a feeling of trust in one's qualities, judgment, and capabilities (Eccles & Wigfield, 2002). An individual may pass through different levels of confidence such as low confidence (to govern your behavior based on what other people think; optimal confidence (your belief about your doings to be right even others criticize you for that). In this type of confidence decisions are made *Corresponding author (Mati Ullah). Email: educationistmrn@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05C http://TUENGR.COM/V11/11A05C.pdf DOI: 10.14456/ITJEMAST.2020.83

with absolute trust and clarity without any sort of others' approval); Overconfidence (Egotism and stubbornness or in simple words superiority complex) (Lane et al., 2004). The confidence power can be properly developed by adopting the sequence likewise the goal, setting, analysis, creation, action, and evaluation (Greenberg, 2008). When someone identifies the negative thoughts and turns it into positivity, then his confidence level is automatically enhanced and maintenance of positive support networking, complete elimination of negativity from mind, identification of own talent by taking pride in own self, gracefully acceptance of compliments with smiling in the society are all the key factors that enhance the confidence of someone (Bridgeman & Shipman, 1978). Those people who are highly confident are happier, men of strength and capabilities, free of self-doubt, fear, stress, social anxiety and depression (Covassin & Pero, 2004). Confident students act with full vigor and motivation; they enjoy interacting with others and they are successful members of society (Farooq et al., 2011). Confidence is the knowledge someone may do something well by applying skills that are quite essential in almost all aspects of life (Sander & Sanders, 2002). Confident Parents, their children to feel good and satisfactory about yourselves and analyze yourself by focusing more on where you behind are, so that your confidence power may be polished and developed (Aggarwal & Mishra, 2005). Confident students mostly show better academic grades because they believe themselves (Sandra & Ruppert, 2006). They are theoretically and practically genius from all aspects of life and they show better performance in every field where they indulge or where they get in (Al-Hebaish, 2012).

2. LITERATURE REVIEW It is highly mandatory for parents to train and nourish children to have full belief on own abilities, talents, and experiences to enhance own confidential power. The students can ensure their beliefs on themselves in two ways like understanding themselves and overestimating themselves, and a realistic assessment of their abilities is the key to acquire confidence (Ochoa & Sander, 2012). Confident students never make wrong decisions and they are honest and positive thinkers of the society; their feelings, self-esteem, skills, abilities, and experiences are developed (Ziegler & Heller, 2000; Martins et al., 2002). Confident students communicate with others quite effectively, they always speak concisely and with clarity (Purwar, 2002; Koรง & Polat, 2006). Confident students always prefer to live with smile and satisfaction in society; they always monitor their progress; they do the right things; they are long term planner; they always follow their abilities, skills, and beliefs; they always do what they are afraid to do (Martin, 2004). They commit themselves to their success; their focus is always on the basics; they first set their goals and then confidently achieve it; unhappy, melancholic and confused the students always show poor academic grades due to the stress and lack of the confidence and lack of confidence negatively influences the social relations, career, achievements, and moods of students (Van-Laar, 2000). The confidence comes from practice and knowledge; a student with more knowledge and practice becomes more confident due to which he/she can easily face new challenges in society due to which they successfully avail different opportunities (Crocker & Luhtanen, 2003). Confidence is the combination of ability, strong feelings of self-esteem as well as self-belief, personal judgment, and power; confident students always feel competency from their inside and outside and they always use their talent and experiences for the achievement of their goal with patience which helps them in

Mati Ullaha, Allah Noor Khan

increasing their confidence on themselves (Ross & Broh, 2000). Confident students utilize their energies and determinations in the best way resulting in better and quality work; confident students have positive controlled behaviors and emotions; they always motivate others to do the right things boldly without any fear; they are highly mature and professional minded due to which they show better performance in the society as well as in academics (Legum & Hoare, 2004). Confident students always accept themselves as they are and they start their day with a smile; they believe in trial and error; they always think positively. They are not anxious, they are highly optimistic; they maintain their self-esteem and their personalities are quite social in society (Freih & Owayed,2005). Confident students spend most of the time with confident people and the majority of students are better sportsmen as they follow a competitive approach in life (Levy et al., 2010). Confidence does not come when you have all answers but it comes when you are ready to face all questions but show better performance in academics because of talent and confidence to do and show performances (Huang et al., 2001). This study examines and compares the confidence of public, private & Madaris secondary students as the social adjustment.

3. RESEARCH METHODOLOGY This study applied a statistical tool to analyze and compare students’ confidence as obtained from questionnaire respondents. All principals, teachers, students, and parents of public, private secondary schools and Deeni Madaris of Southern divisions (Kohat, Bannu, and D.I.Khan) consisting six districts (Kohat, Karak, Bannu, Lakki Marwat, D.I.Khan, and Tank) Khyber Pakhtunkhwa, Pakistan were the studied populations, see Table 1. This study collects the primary data from the total 1500 respondents were taken as samples as per L.R.Gay sample size rule of thumb. Districts were selected through the judgmental sampling technique from each category as in Table 1. Table 1: Target population and sample of this study.

43909 82784

34215

752

300 500

2702 89794 174178 90

300 500

Parents

4428

Students

232

Teachers

65935

Students

Principals

300 500

Parents

Teachers

Deeni Madaris

Principals

Sample Total

5511 77227 148995

Private Schools

Parents

322

Students

Population Total

Teachers

Study statistics

Principals

Public Schools

80930 90

The questionnaire is a six-point Likert scale having options Strongly Agree, Agree, Slightly Agree, Slightly Disagree, Disagree and Strongly Disagree carrying values 6, 5, 4, 3, 2 and 1 respectively.

4. RESULT The split-half reliability was used to analyze and assess the internal consistency of the research instrument thereby using Cronbach’s alpha to determine the internal consistency among the different measures of the study. The Cronbach’s alpha result is reliable and acceptable, see Table 2. *Corresponding author (Mati Ullah). Email: educationistmrn@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05C http://TUENGR.COM/V11/11A05C.pdf DOI: 10.14456/ITJEMAST.2020.83

Table 2: Reliability statistic.

Cronbach’s alpha 0.886

N of Items 16

The data were statistically analyzed through frequency and one-way ANOVA by using SPSS. The frequency table provides the variation in responses of the respondents about the confidence as the social adjustment of the students in the societies from different dimensions like the public schools, private schools, and Deeni Madaris. Table 3: Confidence in Students (Frequency).

Total

4 4 1 13 16 15 9 9 10 36 31 38 186

1 3 3 7 7 15 2 2 4 10 8 39 101

20 20 20 90 90 90 90 90 90 300 300 300 1500

Total

2 2 3 9 8 20 5 7 8 16 11 29 120

Sub Total

3 2 2 15 12 14 16 14 19 35 40 34 206

Slightly Disagree

8 6 7 36 31 18 35 40 29 156 175 121 662

Strongly disagreed

Students

2 3 4 10 16 8 23 18 20 47 35 39 225

Disagree

Parents

Slightly Agree

Teachers

Public School Private School Deeni Madaris Public School Private School Deeni Madaris Public School Private School Deeni Madaris Public School Private School Deeni Madaris

Agree

Institutions/ Schools

Respondents Principals

Strongly Agree

Our Students are Confident.

Statement

Responses of Respondents

60 270 270 900 1500

Table 3, the overall, 887 respondents provide agree and strongly agree on responses, while 221 gives disagree and strongly disagree responses about the statement regarding “confidence in students”. Table 2 is self-explanatory and a decision can be made in a variation of the responses wherein the majority of the respondents have shown their agreement with the statement that their students are confident and able to adjust socially in the society. Table 4: Confidence in Students (ANOVA).

Variables Principals Between Groups Within Groups Total Teachers Between Groups Within Groups Total Parents Between Groups Within Groups Total Students Between Groups Within Groups Total

Sum of Squares 33.652 877.092 910.744 8.455 821.195 829.650 93.587 659.157 752.744 67.790 817.194 884.983

df 5 1494 1499 5 1494 1499 5 1494 1499 5 1494 1499

Mean Square 6.730 .587

F 11.464

Sig. <0.001

1.691 .550

3.076

0.009

18.717 .441

42.424

<0.001

13.558 .547

24.787

0.027

Table 4 reveals that the mean value of parents is maximum i.e. 18.717 with the significant value (.000) and after that the mean value of students i.e., 13.558 with the significant value (.027), then principals 6.730 with the significant value (<0.001) and at last teachers i.e. 1.691 with

Mati Ullaha, Allah Noor Khan

significant value (0.009). So it is clear from the findings that the perceptions of parents regarding their children studied in public, private schools and Deeni Madaris having significant influence in the society. Overall results elaborate that the p-value is less than 0.05 for all four groups under study which means that there is a significant group mean the difference in responses of the respondents about the statement related to the social adjustment of the students in society. So it is interpreted that these results are generalizable.

5. CONCLUSION

This study highlighted and further explored the significant issue of the students' confidence from different perspectives like the principals, teachers, parents, and students hailing from the public, private and Deeni Madaris. The application of the frequency tabulation and ANOVA provide significant information in deciding and reaching the conclusion. Likewise, the majority of the respondents have shown their agreement that the students from all the institutions whether public, private and Deeni Madaris are confident about their social adjustment in the society which is also validated over the group mean differences by using the application of variance. This confirmed that there is a significant group means different concerning the confidence of the students which further helps them to adjust socially in society. The main reason behind this is the motivation and inspiration of the principals, teachers and parents towards the students in nurturing their confidence and to adjust to the society to become a social individual in the community. These motivation and encouragement inspire the students to focused upon their main objectives of achieving their academic and social status in the institution as well as in society.

6. DATA AND MATERIAL AVAILABILITY

Information regarding this study is available by contacting the corresponding author.

6. REFERENCES

Aggarwal, A., & Mishra, A.K. (2005). Impact of Parent Child Relationship on Self-Confidence. Indian Journal Psycho-Education, 36, 146-152. Al-Hebaish, S. M. (2012). Correlation between General Self-Confidence and Academic Achievement in the Oral Presentation Course. Theory and Practice in Language Studies, 2(1), 60-65. Alves-Martins, M., Peixoto, F., Gouveia-Pereira, M., Amaral, V., & Pedro, I. (2002). Self-Esteem and Academic Achievement among Adolescents. Educational Psychology, 22(1), 51-62. Bridgeman, B., & Shipman, V.C. (1978). Preschool Measures of Self-Esteem and Achievement Motivation as Predictors of Third-Grade Achievement. Journal of Educational Psychology, 70(1), 17-28. Covassin, T., Pero, S. (2004). Relationship between Self-Confidence, Mood State, and Anxiety among Collegiate Tennis Players. Journal of Sport Behavior, 27(3), 230- 242. Crocker, J., & Luhtanen, R.K. (2003). Level of Self-Esteem and Contingencies of Self-Worth: Unique Effects on Academic Social, And Financial Problems in College Students. Personality and Social Psychology Bulletin, 29(6), 701-712. Eccles, J. S. & Wigfield, A. (2002). Self-Concept, Domain Values, and Self-Esteem: Relations and Changes at Early Adolescence. Journal of Personality, 57 (2), 283-310. Farooq, M. S., Chaudhary, H. A., Shafiq, M. & Berhanu, G. (2011). Factors Effecting Students Quality of Academic Performance: A Case of Secondary School Level. Journal of Quality and Technology Management, 2 (7), 1-14. *Corresponding author (Mati Ullah). Email: educationistmrn@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05C http://TUENGR.COM/V11/11A05C.pdf DOI: 10.14456/ITJEMAST.2020.83

Freih, Owayed, E. (2005). Academic Achievement and Its Relationship with Anxiety, Self-Esteem, Optimism, and Pessimism in Kuwaiti Students. Social Behavior and Personality, 33(1), 95-103. Greenberg J (2008). Understanding the Vital Human Quest for Self-Esteem. Perspectives on Psychological Science, 3, 48-55. Huang, Penelope, M., Brainard., & Suzanne, G. (2001). Identifying Determinants of Academic SelfConfidence among Science, Math, Engineering, and Technology Students. Journal of Women and Minorities in Science and Engineering, 7(4), 315-37. Kleitman, S., & Stankov, L. (2007). Self-Confidence and Metacognitive Processes. Learning and Individual Differences, 17, 161-173. Koç, M., & Polat, Ü. (2006). Üniversite ö÷rencilerinin ruh sa÷lÕ÷Õ. ønsan Bilimleri Dergisi, 3(2), 122. Lane, J., Lane, A.M, Kyprianu, A. (2004). Self-Efficacy, Self-Esteem and Their Impact on Academic Performance. Social Behavior & Personality, 32(3), 247-256. Legum, H.L., & Hoare, C.H. (2004). Impact of a Career Intervention on At-Risk Middle School Students’ Career Maturity Levels, Academic Achievement, and Self-Esteem. Professional School Counseling, 8(2), 148-155. Levy, A. R., Nicholls, A. R., Polman, C. J. (2010). Pre-Competitive Confidence, Coping, and Subjective Performance in Sport. Scandinavian Journal of Medicine and Science in Sport, 21, 721-729. Martin, G.N. (2004). Estimates of Emotional and Psychometric Intelligence: Evidence for GenderBased Stereotypes. Sri Nagar Journal of Social Psychology, 144 (2), 149-162. Ochoa, A. R. A, & Sander, P. (2012). Contrasting Academic Behavioral Confidence in Mexican and European Psychology Students. Journal of Research in Educational Psychology, 10(2), 813-838. Pepi, A., Faria, L., & Alesi, M. (2006). Personal Conceptions of Intelligence, Self-Esteem, and school Achievement in Italian and Portuguese Students. Adolescence, 41(164), 615-631. Purwar, M. (2002). Self-Confidence, Intelligence, and Level of Aspiration among Urban and Rural Scheduled Cast Boys and Girls. Journal of Psycho-Cultural Dimensions, 18(2), 111-114. Ross, C.E. & Broh, B.A. (2000). The Roles of Self-Esteem and the Sense of Personal Control in the Academic Achievement Process. Sociology of Education, 73(4), 270-284. Sander, P. & Sanders, L. (2002). Understanding Academic Confidence. The British Psychological Society, 1(12), 29-4. Sandra, S., & Ruppert, C. (2006). Factor Affecting Students’ Quality of Academic Performance: Journal of Quality and Technology Management, 24 (2), 1-4. Van-Laar, C. (2000). The Paradox of Low Academic Achievement but High Self-Esteem in African American Students: An Attribution Account. Educational Psychology Review, 12(1), 33- 61 Ziegler, A., & Heller, K. A. (2000). Conditions for Self-Confidence among Boys and Girls Achieving Highly in Chemistry. Journal of Secondary Gifted Education, 11(3), 144-51. Mati Ullah is a PhD Scholar at Institute of Education & Research, Gomal University, Dera Ismail Khan, Khyber Pakhtunkhwa, Pakistan. He is interested in Teaching and Learning.

Dr. Allah Noor Khan is an Assistant Professor at the Institute of Education & Research, Gomal University, Dera Ismail Khan, Khyber Pakhtunkhwa, Pakistan. He got his PhD Degree from Institute of Education & Research, Gomal University. His research is Email: noormarwat2@yahoo.com

Mati Ullaha, Allah Noor Khan

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05D

IMPACTS OF QWL (PROMOTION & WORK ENVIRONMENT) ON DOCTORS’ PERFORMANCE IN PUBLIC SECTOR HOSPITALS OF PAKISTAN Masood Akhtar 1, Qamar Afaq Qureshi 1 1

Department of Public Administration, Gomal University, D.I. Khan, PAKISTAN.

ARTICLEINFO

Article history: Received 22 July 2019 Received in revised form 29 November 2019 Accepted 12 December 2019 Available online 23 December 2019

Keywords:

Quality of Work Life (QWL); Individual Work Performance; Doctors’ work performance; Hospitals’ performance.

A B S T RA C T

This study investigated the relationship between promotion, work environment and performance. The survey approach was used. Crosssectional data were collected and used in the analysis. The descriptive and inferential statistics such as mean, standard deviation, correlation, regression, exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and Cronbach’s alpha were used. SPSS®25 and AMOS-SEM18 were used for statistical analysis. The findings revealed that all the scales were reliable, valid and all the variables are significantly and positively related to each other. It is concluded that promotion is the most significant and dominant variable in the model for improving the performance of employees. This research is helpful in bringing valuable information to the government of Pakistan by considering this concept/variable as a tool for enhancing the doctors’ performance in the above-mentioned context. Disciplinary: Management Sciences, Healthcare Management. ©2020 INT TRANS J ENG MANAG SCI TECH.

1 INTRODUCTION

For modern organizations to be successful, they need to be more flexible so that they are equipped to develop their workers and enjoy their commitment. A workforce that is well equipped and highly committed is more likely to be very effective which is very important for every organization. The Quality Work Life (QWL) is related to organizational conditions and practices that aim at promoting the employee’s mental and physical health, safety and satisfaction (Almalki et al., 2012). A high QWL is essential for organizations to continue to attract and retain high performing employees. The importance of healthcare institutions in any country, particularly developing countries like Pakistan cannot be overestimated. The health care system exerts a direct influence on productive capacities of country. Sustainable development in healthcare sector is not possible without the contribution of high performing doctors who serve hospitals (Hsu & Kernohan, 2006). *Corresponding author (Masood Akhtar). Email: soodi4u@live.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05D http://TUENGR.COM/V11/11A05D.pdf DOI: 10.14456/ITJEMAST.2020.84

It is, therefore, necessary to conduct studies that are intended to inform and assist decisionmakers in hospitals in identifying the key workplace issues that would help in developing the strategies to address and improve the performance of doctors in public sector hospitals. Researchers observed that a high quality of work life (QWL) is essential for organizations to achieve high performance (Azril et al., 2010; Deb, 2006). The way doctors who work in hospitals perceive their work environment influences their level of performance. Although improving the QWL is important to the well-being and development of employees, it has not attracted adequate attention in developing like Pakistan. This study presents addressed these concepts by providing new and valuable information thereby conducting the field study on the quality of the work life and individual (doctors) work performance of the hospitals in Pakistani (Khyber Pakhtunkhwa) context by generalizing the findings.

2 LITERATURE REVIEW 2.1 QWL

Generally, QWL has been defined as opinions and impressions regarding employees' organizations working conditions. The majority of the literature on the nature of QWL of work life shows that the concept is latent, multidimensional in nature, and need-based. Sirgy et al. (2001) conceptualize QWL as need-based categorizing QWL into higher-order needs and the lower order needs (Schaubrock & Ganster, 1991). Lower order needs are comprised of the health/safety needs, and economic /family needs (Tabachnick & Fidell, 2002). The higher-order needs are comprised of the social needs, esteem needs and self-actualization needs, knowledge needs, and aesthetic needs. 2.1.1 PROMOTION Some employees like equality at the work, some like benefits provided by their job, or others satisfied with the degree to which they have the power to take the initiatives at their workplace during the job. In this research, we will study the effect or influence of promotion upon doctors’ work Performance. Promotion is worker recognition efforts and his commitment to work (Borman & Motowidlo, 1993). Getting higher and higher promotion is the ultimate desire of each person working in any sort of organization. Promotion is a Shifting of an employee for a job of higher significance and higher compensation. The movement of an employee upward in the hierarchy of the organization, typically that leads to enhancement of responsibility and the rank and an improved compensation package is a promotion (Koopmans et al., 2011). 2.1.2 WORK ENVIRONMENT QWL is a process by which the organizations’ personnel and stakeholders learn how to work better together to simultaneously improve staff quality of life and individual work performance and thus improving organizational productivity. An attractive and supportive work environment is critical to the employees’ task performance (Almalki et al., 2012). The work environment can be grouped into three distinct forms. These are the physical work environment (an environment that deals with the physical or tangibles at the setting where the job is performed), psychological work environment (a set of characteristics of work environment that affect how the worker feels (Hamid, 2012). The psychological work environment provides a good description of the mental activities that a worker undertakes during working hours or at the post) and social work environment (deals

Masood Akhtar, Qamar Afaq Qureshi

with relations at job settings. It includes communication styles, the relationship between superiors and subordinates. It includes the relationship among coworkers, the readiness of others to assist and teamwork (Awan, 2014).

2.2 INDIVIDUAL WORK PERFORMANCE

Individual work performance is an issue that has not only grasped companies all over the world but also fueled a great deal of research in fields of management, occupational health, and work and organizational psychology. Numerous studies on individual work performance have been conducted (Viswesvaran & Ones, 2000). Still, diverse approaches to studying individual work performance circulate in recent literature. Whereas the field of management has primarily occupied itself with how one can make an employee as productive as possible, the field of occupational health has focused on how to prevent productivity loss due to a certain disease or health impairment (Vandewalle, 1995). Work and organizational psychologists, on the other hand, have an interest in the influence of determinants like work engagement, satisfaction, and personality, on individual work performance.

2.3 QWL AND INDIVIDUAL WORK PERFORMANCE

The conclusion that can be drawn from the literature on the link between the EWL and the work performance is that QWL has a positive association with work performance. Rossmiller (1992) found that QWL positively influenced the respect accorded to teachers, teacher participation in decisions affecting work, professional collaboration and interaction, use of skills and knowledge and the teaching-learning environment. Madlock (2008) argued that interpersonal communication (respecting others, working together, believing others and sharing information) does have a positive impact on the employees'satisfaction and work performance. A study by Azril et al. (2010) also found that nine aspects of work life studied have significant and positive relationships with work performance where the highest relationship occurred between individual and family life with work performance. It is thus hypothesized that H1: Doctors Perceived (QWL) is positively related to their work performance.

3 RESEARCH METHOD Researcher collected the data by using the survey as it is a most feasible, common and easy way to collect large amounts of data from big populations in less time and cost. All the district public sector hospitals from Khyber Pakhtunkhwa were included in the population. In hospitals, only doctors were the target population. A nonprobability convenience sampling technique was used for sampling. All the instruments were adopted from previous research and then modified some items, statements to ensure clarity of items for the respondents. Now, instruments are adapted. At initial stage, pilot testing was conducted to ensure reliability and validity of the scales. Initially, 30 respondents were contacted after getting ethical permission from the management of hospitals. Questionnaires along with a cover letter explaining the aim of the study were distributed in respondents. In addition, respondents were ensured that their names and data would be kept confidential. The researcher distributed 300 questionnaires out of 300, 235 were received back in which 11 were incomplete so those questionnaires were discarded from analysis and 224 were used in analysis yielding a response rate of 74.6%. *Corresponding author (Masood Akhtar). Email: soodi4u@live.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05D http://TUENGR.COM/V11/11A05D.pdf DOI: 10.14456/ITJEMAST.2020.84

4 ANALYSIS RESULT Co-linearity happens when all the independent variables are highly correlated with each other. This effects beta values and researcher inferences about sample and population got affected. So first researchers have checked multicollinearity, this can be checked by the VIF variance inflation factor and it should be less than 10 and Tolerance T value it should be higher than 0.10. All the values of VIF and T were in the specified range. When data is collected by using the same survey, same scale and same time its validity is questionable. For this purpose, the researchers suggested to checked common method bias (CMB) by using Harman Single-factor analysis. It was run and found that the first factor was explaining variance less than 50% it means that CMB is not a major issue in this study. From the analysis, results revealed that there are 224 respondents participated in the study. From the analysis, it is revealed that there were 164 (73.2%), male respondents, while 60 (26.8%) were females participated in this study. Further analysis of results also revealed that majority of the respondents belongs to age group of 20-30 years i.e. 84 (37.5%) followed by age group of 51-60 years i.e. 77 (34.4%), likewise 49 respondents belong to the age group of 31-40 years i.e. (21.9%) and minimum number of respondents belongs to age group of 41-50 years (6.3%). Similarly, the majority of respondents were holding MPhil degrees i.e. 161 (71.9%) followed by 42 (18.8%) were holding master degrees and only 21 doctors were having doctoral degrees (9.4%). In the analysis, it was identified that the majority of the respondents were assistant professors i.e. 72 (32.1%) while followed by associate professors 59 (26.3%) and lecturers were 45 (20.1%) number of professors were identified as 48 (21.4%). 152 (67.9%) respondents had the experience of 1-10 years, followed by the respondents having experience of 20 years i.e. 52 (23.2%) and only 20 respondents were having experience of 20-30 years i.e. 8.9%. there were 131 local respondents and 93 nonlocal respondents. Same data for married and single respondents, see Table 1 and Figure 1.

Table 1: Demographic Information

Variables

Gender

Age

Education

Designation

Experience

Domicile

Marital Status

Masood Akhtar, Qamar Afaq Qureshi

Characteristics Male Female 20-30 31-40 41-50 51-60 Master MPhil PhD Lecturer Assistant Professor Associate Professor Professor 1-10 1-20 21-30 Local Non Local Married Single

N 164 60 84 49 14 77 42 161 21 45 72 59 48 152 52 20 131 93 131 93

Percentage 73.2 26.8 37.5 21.9 6.3 34.4 18.8 71.9 9.4 20.1 32.1 26.3 21.4 67.9 23.2 8.9 58.5 41.4 58.5 41.4

Variables

Promotion

Work Environment

Performance

Items Item 1 Item 2 Item 3 Item 4 Item 5 Item 1 Item 2 Item 3 Item 4 Item 5 Item 1 Item 2 Item 3 Item 4 Item 5 Item 6 Item 7 Item 8 Item 9 Item 10

Table 2: Reliability and Validity

Mean 3.22 3.36 3.08 3.51 3.28 3.53 3.67 3.50 3.48 3.27 3.54 3.51 3.36 3.47 3.55 3.22 3.36 3.08 3.51 3.51

SD 1.47 1.16 1.08 1.17 1.24 1.15 1.11 1.05 0.97 1.02 1.11 1.16 1.18 1.05 1.09 1.47 1.16 1.08 1.17 1.10

ITC 0.713 0.657 0.610 0.448 0.354 0.628 0.664 0.650 0.621 0.134 0.362 0.214 0.193 0.335 0.343 0.577 0.553 0.522 0.508 0.366

Alpha

KMO

Variance

0.775

0.733

54.0%

0.760

0.782

74.5%

0.736

0.720

58.3%

EFA 0.882 0.831 0.782 0.605 0.505 0.847 0.824 0.820 0.783 0.959 0.439 0.654 0.458 0.430 0.458 0.802 0.759 0.718 0.630 0.525

AVE

0.540

0.850

0.720

0.928

0.363

0.844

It was necessary to report reliable and valid instruments. For this purpose mean and standard deviation criteria was set. Those items having S.D<0.3 were decided to exclude from the analysis. Table-2 shows item summaries of promotion variable it is noted that highest mean is recorded for item4 i.e. Mp4= 3.51, SDp4= 1.17, followed by item 2 Mp2= 3.36, SDp2= 1.16, while lowest mean score was identified for item 3, Mp3= 3.08, SDp3= 1.08. The same criteria were set for the work environment. Highest mean was identified for item 2 Mwe2= 3.67, SDwe2= 1.11, followed by item1 Mwe1=3.53, SDwe1= 1.15, lowest means core for work environment was recorded for item 5 Mwe5=3.27, SDwe5= 1.02. For individual performance variables same criteria were set. Highest mean for item 5 MPer5=3.55, SDper5=1.09, while lowest mean was recorded for item 8, MPer8= 3.08, SDper8= 1.08, from the above analysis it was concluded that all items for promotion, work environment and performance met set criteria. All items were retained for further analysis. Further reliability analysis was run to check inter item correlations through Item Total Correlation (ITC) and Cronbach’s alpha. Cronbach’s alpha is accepted at 0.7, while 0.8 is considered good and 0.9 is considered as excellent. While for ITC criteria is 0.3-0.4 as per the existing literature. For promotion, all items have ITC values higher than 0.3 and the overall alpha value is 0.775, for work environment all items met criteria except for item 5 but it was not excluded as overall alpha is higher than 0.7 i.e. 0.760. for performance two items, items 2 and 3 have ITC less than 0.3 so these variables can be excluded to increase alpha value but still alpha for performance is 0.736 still acceptable. Instruments and scales for Quality of work life (promotion & work environment) and performance are found reliable. Kaiser Mayer Olkin (KMO) is used to check the sampling adequacy. It was found KMO = 0.733 for promotion, KMO= 0.782 for the work environment, and for performance KMO= 0.720. It is recommended that KMO values should be greater than 0.50, in this study KMO for all variables is higher than 0.5, oblique rotation and the Promax method was sued for rotation and criteria for factor loadings were set at 0.40. it is noted that Table-2 all the factor loadings for all items of promotion and work environment and performance are higher than 0.4. Average variance extracted (AVE) for promotion is =0.540, and Construct Reliability (CR) *Corresponding author (Masood Akhtar). Email: soodi4u@live.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05D http://TUENGR.COM/V11/11A05D.pdf DOI: 10.14456/ITJEMAST.2020.84

=0.850. for work environment AVE=0.720 and CR=0.928, for performance=0.363, CR=0.844 though AVE for performance is less than 0.40 but CR is higher than 0.7 so ITC is acceptable no issue of validity. All the items and variables and their scales are found reliable and valid (Hillsdale et al., 1993).

Figure 1: Measurement Model Confirmatory Factor Analysis (P: Promotion; WE: Work Environment; PERF/PR: Performance). AMOS-SEM 18 was used for confirmatory factor analysis (CFA). Criteria for factor loadings for set at 0,50. But criteria for other goodness of fit such as goodness of fit index (GFI), Bollen's Incremental Fit Index (IFI), Comparative fit index (CFI), Tucker-Lewis Index (TLI), Normed Fit Index (NFI); Relative Fit Index (RFI), are set >0.90, and for Root Mean Square Error of Approximation (RMSEA) <0.08 for chi-square less than 3. Figure 3 shows that all the items of promotion, work environment, and performance have factor loadings greater than 0.5 but two items were deleted from promotion because of low factor loadings, one item was excluded from work environment and eight items were deleted from the performance. RMSEA= 0.06 <0.08, GFI=0.955>0.90, IFI=0.970>0.090, CFI=0.970>0.90, TLI=0.953, NFI=0.944, RFI=0.912 all are greater than 0.90. Chi-square/df =2.072. Therefore, the above model is found fit for the present research and context in highlighting the issue and measure. These indicate the model fitness in the entire procedure.

4.1 CORRELATION ANALYSIS As this data was normally distributed, so Pearson correlation as used. Correlation 0.1 to 0.4 is considered weak, 0.5-0.6 is the moderate and 0.7 and 0.9 is considered high. Pearson correlation is used to check the relationship amid promotion, work environment and performance. Table 3: Pearson Correlation Matrix. Promotion Work Environment Performance Promotion 1 Work Environment .664** 1 Performance .858** .625** 1 **. Correlation is significant at the 0.01 level (2-tailed).

It was found that the relationship between promotion and work environment is r = 0.664, p<0.01, it means that flexible promotion policies increase the environment at the workplace and there is a friendly and supportive environment developed by doctors and colleagues in the hospitals. While the relationship between promotion and performance is r = 0.858, p<0.01 it means that when

Masood Akhtar, Qamar Afaq Qureshi

doctors got flexible promotion opportunities then their performance will increase. Similarly, the relationship between work environment and performance is r = 0.625, p<0.01. it means that when there is a friendly work environment, the performance of doctors will be enhanced and they become productive members of the organizations.

4.2 REGRESSION ANALYSIS

There are three types of regression, multiple regressions, stepwise and hierarchical multiple regressions. In this study, multiple regressions are used. Before regressions analysis data must fulfill certain assumptions, including a minimum observation number 15-20; data must be normally distributed; there must be no multicollinearity and no heteroscedasticity problems. Table 4: Regression Analysis D.V

I.V

Adj R2

Performance

Constant Promotion WE

0.861

0.742

0.739

317.350

0.793 0.098

12.33 17.341 2.140

Collinearity T VIF

<0.001 <0.001 0.559 0.003 0.55

1.79 1.79

Figure 2: Heteroscadasticity. Our data fulfills all assumptions so the researcher may proceed for regressions analysis. In this study promotion and work environment are predictors and performance is the criterion. Table-4 shows regression analysis results. It was found that promotion and work environment shows variance upon performance i.e. R2=0.742, which means 74.2% variance is explained by promotion and work environment. The goodness of fit index or model fitness is checked by F Statistics F = 317.350, p<0.01. Further analysis of results revealed that for performance, promotion shows βp= 0.793, p<0.01, it means that one unit change in promotion policies could bring a 79.3% change in performance of employees this means that performance could be enhanced by offering flexible promotion policies and opportunities in the healthcare organizations. For performance work environment shows βwe= 0.098, p<0.05. This means that a 9.8% variance is explained by the work environment upon the performance of employees. t statistics are also found significant and it is also identified that there is no issue of colinearity in Table-4. As T statistics are higher than 0.1 and VIF values are less than 10. There is no issue of heteroscedasticity in Figure 3.

5 DISCUSSION

Aim of this study is to find the relationship between promotion, work environment and performance. For this purpose data was collected from healthcare organizations’ professionals *Corresponding author (Masood Akhtar). Email: soodi4u@live.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05D http://TUENGR.COM/V11/11A05D.pdf DOI: 10.14456/ITJEMAST.2020.84

working in all over KP state. 224 respondents participated in this study. Most respondents were male and having Mphil degrees. Descriptive statistics and inferential statistics using SPSS®25 and AMOS-SEM18 were used for the analysis of results. Mean standard deviation was used, criteria for S.D were set at 0.30, all the items met the criteria and reliability of scales were checked by Cronbach's alpha and ITC values. Criteria for ITC were 0.40, while for Cronbach’s alpha is 0.70 (Field, 2013). All the items show ITC values higher than 0.40 except few items, these items were deleted from further analysis in CFA. The reliability of all the variables is found satisfactory i.e. above 0.70 and results of exploratory factor analysis (EFA) are also found valid. The average variance extracted and construct reliability are also computed from factor loadings of EFA for promotion, work environment and performance all the values met the standard criteria except AVE for performance but its CR is reliable so there is no issue. CFA is run to further refine the scales. Two items from promotion, one item from the work environment and eight items from performance were deleted because of low factor loadings i.e. 0.50, all the index show satisfactory values i.e. GFI, CFI, IFI, RFI, RMSEA. Further analysis revealed that there is a moderated correlation found between promotion and work environment, while high correlation as found between promotion and performance likewise moderated correlation as found between work environment and performance (Huang, 2005). These results are in line with the result of Almalki et al. (2012) reporting the positive and significant relationship between these predictors and criteria. Further, these results got support from the results of Azril et al., (2010) and Huang (2005) about the positive relationship between these variables.

6 CONCLUSION

This study finds that promotion and work environment are important factors to bring change in the performance of employees, among promotion and work environment. Promotion is found as the most dominant variable from beta value. So, the organizations in Pakistan should provide doctors flexible promotion opportunities so that they get benefits from their efforts and struggle.

6. DATA AND MATERIAL AVAILABILITY

Information regarding this study is available by contacting the corresponding author.

7 REFERENCES Almalki, M. J., FitzGerald, G., & Clark, M. (2012). Quality of work life among primary healthcare nurses in the Jazan region, Saudi Arabia: A cross sectional study. Human Resources for Health. Awan, K. Z., Qureshi, W., Akram, M., Shahzad, K. (2014). Mediation role of organizational commitment in the relationships of organizational politics and job involvement and employee performance. Int. J. Acad. Res. Economics and Management Science. 3(6), 1–21. Azril, M. S., Jegak, U., Asiah, M., Azman, A. N., Bahaman, A. S., Jamilah, O., Thomas, K. (2010). Can quality of work life affect work performance among government agriculture extension officers. A case from Malaysia. Journal of Social Sciences, 6(1), 64–73. Borman, W. C., & Motowidlo, S. J. (1993). Expanding the criterion domain to include elements of contextual performance. In N. E. Schmitt, and W. C. Borman (Eds), Personnel Selection in Organizations (pp. 71 – 98). Deb, T. (2006). Human Resource Development, (7th ed.). New York: Prentice-Hall. Ferris, K. 1981. Organizational commitment and performance in professional accounting firms. Accounting Organizations and Soc., 6(4): 317– 325.

Masood Akhtar, Qamar Afaq Qureshi

Hamid, Z., Zolfa, H., Karimi. A. Z. (2012). Determining and prioritizing the criteria and scales of Quality of Work Life (QWF) by AHP Method. European Journal of Social Science, 27(3), 346359. Hillsdale, N J., Campbell, J. P., McCloy, R. A., Oppler, S. H., Sager, C. E. (1993). A theory of performance. In N.E. Schmitt & W.C. Borman (Eds), Personnel Selection in Organizations (pp. 35– 70). Hsu, M., Kernohan, G. (2006). Dimensions of hospital nurses‟ quality of working life. J. Adv. Nursing, 54(1): 120- 131. Huang, C. (2005). The effect of quality of work life on organizational commitment. Human resource management. In Asgari, M. H. and Dwadashi, M. A. (2011) determining the relationship between Quality of Work Life (QWL) and Organizational Commitment of Melli Bank Staff in West Domain of Mazandaran in 2009-2010. Australian J. Basic and Appl. Sci., 5(8): 682–687. Koopmans, L., Bernaards, C. M., Hildebrandt, V. H., Wilmar, B., Schaufeli, B. W., Henrica, C.W.H., Beek, A.J. (2011). Conceptual frameworks of individual work performance: A systematic review. J. Occupational and Environ. Med., 53(8): 856–866. Madlock, P. E. (2008). The link between leadership style, communicator competence and employee satisfaction. Journal of Business Communication, 45, 61–78. Nunally, J. C., & Bernstein, I. H. (1994). Psychometric Theory. New York: McGraw-Hill. Rossmiller, R. A. (1992). The secondary school principal teachers‟ Quality of Life. Educational Management and Administration, 20, 132–146. Sirgy, M. J., Efraty, D., Siegel, P., Lee, D. J. (2001). A new measure of quality of work life (QWL) based on need satisfaction and spill over theory. Social In-disciplinary Research, 55: 241–302. Tabachnick, B.G., Fidell, L.S. (2002). Using multivariate statistics (4th Ed.). New York: Harper Collins. Taher, A.M. 2013. Variations of quality of work life of academic professionals in Bangladesh. European Journal of Training and Development, 37(6): 580–595. Tavakoli, Z., Montazeri, A., Sarshid, A.A., Hassim, I.N. (2019). Role of Occupational Stressors Among Iranian Doctors at Hospitals in Tehran Province, Iran. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 10(15), 10A15I: 1-7. Vandewalle, D., Dyne, L., Kostova, T. (1995). Psychological ownership: an empirical examination of its consequences. Group and Organization Management, 20(2): 210–226. Viswesvaran, C., & Ones, D. S. (2000). Perspectives on models of job performance. Int. J. Selection and Assessment, 8: 216–226. Masood Akhtar is a PhD scholar at Institute of Political and Administrative Studies, Department of Public Administration, Gomal University, Dera Ismail Khan. He got an M. Phil degree from Gomal University. His research area of interest is QWL in Public Sector Hospitals of Khyber Pakhtunkhwa.

Dr. Qamar Afaq Qureshi is an Assistant Professor at Institute of Political and Administrative Studies (Public Administration Department), Gomal University, Dera Ismail Khan, Khyber Pakhtunkhwa, Pakistan. He got his Ph.D. Degree from Department of Management Sciences, Hazara University, Hazara. His research is focused on HRM and E-Health. ( qamarafaq1 @ gmail.com ).

Trademarks Disclaimer: All product names including trademarksTM or registered® trademarks mentioned in this article are the property of their respective owners, using for identification and educational purposes only. The use of them does not imply any endorsement or affiliation

*Corresponding author (Masood Akhtar). Email: soodi4u@live.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05D http://TUENGR.COM/V11/11A05D.pdf DOI: 10.14456/ITJEMAST.2020.84

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05E

WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF FISHERIES ENTERPRISES BY APPLYING GMM Thu-Trang Thi Doan 1

Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), VIETNAM.

ARTICLEINFO

Article history: Received 02 July 2019 Received in revised form 29 December 2019 Accepted 16 December 2019 Available online 23 December 2019

Keywords:

Cash conversion cycle; Generalized Method of Moment (GMM); Profitability of fisheries enterprises; Supply chain finance; Enterprise size; Working capital management; Vietnam.

A B S T RA C T

This article uses the Generalized Method of Moment (GMM) to analyze the impacts of working capital management on the profitability of fisheries enterprises in Vietnam. Not only that, the author also considers the role of the supply chain finance in this impact, which is new to this study compared to the previous studies. The study data is collected from 20 fishery enterprises listed on Vietnam's stock market, for the period of 2010-2018. The study results show that the profitability (ROA) of the enterprises is negatively affected by accounts receivable period (AR), inventory period (INV), accounts payable period (AP) and cash conversion cycle (CCC). In addition, this study has found significant impacts of enterprise size (SIZE), leverage (LEV), economic growth (GDP) and inflation (INF) on profitability (ROA) of the enterprise. The study results are a reliable basis to help managers at the fisheries enterprises to better understand the impact of working capital management and especially the supply chain finance on the profitability of the enterprise. Disciplinary: Financial Sciences. ©2020 INT TRANS J ENG MANAG SCI TECH.

1 INTRODUCTION

The trend of international integration will create a significant thrust for seafood export activities in Vietnam. However, this thrust also brings significant challenges to the management of fisheries enterprises. In order to overcome these challenges, the fisheries enterprises must adjust their competitiveness and management ability in conformity with the new trend. In particular, the working capital management and especially completion of the supply chain finance is an issue that the fisheries enterprises are very interested in. The working capital management is the management of short-term financial resources of the enterprise. Furthermore, the working capital management helps maintain an optimal balance between the components of working capital, including receivables, inventories, payables and cash conversion cycle (Kandpal, 2015). In particular, the cash conversion cycle reflects the effectiveness of the supply chain finance (Zhang et al., 2019), i.e. the financial linkage among the enterprises in the supply chain (Wuttke et al., 2013). Therefore, when *Corresponding author (Thu-Trang Thi Doan). Email: doanthithutrang@iuh.edu.vn ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.85

the cash conversion cycle decreases, the supply chain finance will operate more efficiently, the enterprises in the supply chain finance will take advantage of short-term credit capital at low cost, thereby, it will improve the profitability of enterprises (Bui, 2020). Not only that but managing the components of working capital is also a daily activity of enterprises and significantly affects the liquidity of enterprises (Deloof, 2003). Therefore, the impact of working capital management on the profitability has been found in many empirical studies, such as Mathuva (2010), Gill et al. (2010), Afeef (2011), Mumtaz et al. (2011), Napompech (2012), Arunkumar and Radharamanan (2013), Gul et al. (2013), Azeez et al. (2016), Bagh et al. (2016), Iqbal and Wang (2018). However, there has been virtually no empirical study detailing the role of the supply chain finance in this impact, which is a big gap in the previous studies. Therefore, with this article, the author will overcome the limitations in the previous studies by examining the role of supply chain finance when analyzing the impact of working capital management on the profitability of the enterprise. Moreover, the data is collected from the fisheries sector in Vietnam, which is facing many high growth opportunities but is also facing difficulties in working capital management as well as improving the supply chain finance. Therefore, this study result will have important implications for managers in fisheries enterprises.

2 LITERATURE REVIEW Working capital is the difference between current assets and short-term liabilities. In a broad sense, the working capital is the value of all current assets, which are tied to the business cycle of the enterprise. In each business cycle, these current assets are transformed into all forms, namely: existing from cash to inventories, receivables and return to the original form of cash. As a result, working capital management (Figure 1) is usually represented through four indicators: accounts receivable period (AR), inventory period (INV), accounts payable period (AP), and cash conversion cycle (CCC). The studies on the impact of working capital management on profitability of the enterprise have been done by many authors in many different economies and regions, a summary of the contents of some previous studies is mentioned in Table 1. Inventory purchased

Inventory sold

Inventory period (INV) Accounts payable period (AP) Cash paid

Cash received

Accounts receivable period (AR)

Cash conversion cycle (CCC)

Time

Figure 1: Working capital management at the enterprise. In the previous studies, the corporateâ€™s profitability was often measured by the after-tax profitto-assets (ROA). For the working capital management, it is usually measured through four indicators: accounts receivable period (AR), inventory period (INV), accounts payable period (AP), and cash conversion cycle (CCC). In particular, the cash conversion cycle (CCC) also reflects the effectiveness of supply chain finance (Zhang et al., 2019). Zhang et al. (2019) and Bui (2020) have

Thu-Trang Thi Doan

Table 1: Summary of previous studies.

Author

Data

Gill et al. (2010)

Study period: 2005-2007. Study data: 88 companies listed on the New York Stock Exchange.

Mathuva (2010)

Study period: 1993-2008. Study data: 30 companies listed on the Nairobi stock exchange (NSE).

Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Enterprise size, leverage, economic growth.

Afeef (2011)

Study period: 2003-2008. Study data: 40 small and medium enterprises listed on the Karachi Stock Exchange (KSE).

Profitability is positively affected by AP, INV and enterprise size. And also, AR, CCC and leverage negatively impact profitability.

Independent variables: Components of working capital (AR, INV, AP and CCC).

INV and AR negatively impact profitability.

Mumtaz et al. (2011)

Study period: 2005-2010. Study data: 22 chemical companies listed on the Karachi Stock Exchange (KSE).

Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Enterprise size, leverage ratio.

Sharma and Kumar (2011)

Study period: 2000-2008. Study data: 263 companies listed on the Bombay Stock Exchange (BSE).

Napompech (2012)

Study period: 2007-2009 Study data: 255 companies listed on the Thailand Stock Exchange.

Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Enterprise size, leverage ratio. Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Leverage ratio.

INV, AR and leverage negatively impact profitability. In addition, profitability is also positively affected by enterprise size.

Arunkumar and Radharamanan (2013)

Study period: 2005-2010. Study data: 1198 manufacturing companies in India.

Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Enterprise size.

Gul et al. (2013)

Study period: 2006-2012. Study data: SMEs in Pakistan.

Independent variables: Components of working capital (AR, INV, AP and CCC). Control variables: Enterprise size, leverage ratio.

Azeez et al. (2016)

Study period: 2003-2014. Study data: 5 groups listed in Nigeria.

Bagh et al. (2016)

Iqbal and Wang (2018)

Study period: 2005-2014. Study data: 50 nonfinancial companies listed on the Pakistani stock market. Study period: 2008-2014. Study data: 60 companies listed on the Karachi Stock Exchange (KSE).

Variables Independent variables: Components of working capital (AR, INV, AP, and CCC). Control variables: Enterprise size, leverage ratio.

Results Profitability is negatively affected by AR and positively affected by CCC.

Profitability is positively affected by AR, and negatively affected by enterprise size. Profitability is negatively affected by AR, INV and CCC. Profitability is negatively affected by AR, INV, AP and CCC. In addition, profitability is also positively affected by enterprise size. Profitability is positively impacted by AP and enterprise size. And also, AR, INV, CCC and leverage negatively impact profitability. AR has a negative impact on profitability. And also, profitability is positively affected by AP. AR has a positive impact on profitability. Also, profitability is negatively affected by AP, INV and CCC. AR, INV negatively profitability

and CCC impact on

found significant impacts of supply chain finance on corporate profitability. However, almost no *Corresponding author (Thu-Trang Thi Doan). Email: doanthithutrang@iuh.edu.vn ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.85

studies have examined the role of supply chain finance when analyzing the impact of working capital management on corporate profitability. In addition, the previous studies show that corporate profitability is significantly affected by control variables such as the enterprise size, leverage ratio, and economic growth. Based on this basis, the author will set up a study model in the next section.

3 DATA AND METHODOLOGY 3.1 DATA

The study data is collected from the financial statements of 20 fisheries enterprises listed on Vietnam's stock market, for the period of 2010-2018. The study has only looked at companies listed before 2010 and still listed at the end of 2018. In addition, the author uses the economic growth (GDP) and inflation (INF) data of the World Bank.

3.2 METHODOLOGY

Based on the results of previous studies, the author uses the after-tax profit to assets (ROA) as the dependent variables in the study model. For the independent variables representing working capital management, the author uses the accounts receivable period (AR), inventory period (INV), accounts payable period (AP) and cash conversion cycle (CCC). In addition, the author uses enterprise size variables (SIZE), leverage ratio (LEV), economic growth (GDP) and inflation (INF) as control variables in the study model. The variables such as enterprise size (SIZE), leverage ratio (LEV) and economic growth (GDP) have been used in many previous studies. In this article, the author adds the control variable such as inflation (INF) to the study model. Because Vietnam has just experienced an economic crisis, inflation is a macroeconomic factor that is expected by the author to have a significant impact on the activities of fisheries enterprises. Thus, the expected study models are Model 1: ROAit = β0 + β1 ARit + β2 SIZEit + β3 LEVit + β4 GDPt + β5 INFt + εit

(1),

Model 2: ROAit = β0 + β1 INVit+ β2 SIZEit + β3 LEVit + β4 GDPt + β5 INFt + εit

(2),

Model 3: ROAit = β0 + β1 APit + β2 SIZEit + β3 LEVit + β4 GDPt + β5 INFt + εit

(3),

Model 4: ROAit = β0 + β1 CCCit + β2 SIZEit + β3 LEVit + β4 GDPt + β5 INFt + εit

(4).

Table 2: Summary of variables in the study model.

Variable

ROA

Profitability

1 2 3 4

AR INV AP CCC

Accounts receivable period Inventory period Accounts payable period Cash conversion cycle

1 2 3 4

SIZE LEV GDP INF

Enterprise size Leverage ratio Economic growth ratio Inflation ratio

Thu-Trang Thi Doan

Method of calculation Dependent variable After-tax profit/total assets Independent variables (Average receivables/net revenues)*365 (Average inventories/Cost of goods sold)*365 (Average payables to sellers/ Cost of goods sold)*365 CCC = INV + AR - AP Control variables The logarithm of total assets Total liabilities/total capital sources Annual growth of the total gross domestic product Annual growth in the consumer price index

For the purpose of analyzing the impact of working capital management on profitability, the author will conduct estimates of the study models according to the Generalized Method of Moment (GMM). The GMM has great advantages when it is very suitable for tabular data and can overcome the regression hypotheses that are violated and control the potential endogenous (Doytch & Uctum, 2011).

4 RESULT AND DISCUSSION The correlation coefficients between variables in the study model are described in Table 3 as follows:

ROA AR INV AP CCC SIZE LEV GDP INF

ROA 1.000 -0.304 -0.095 -0.530 -0.086 0.296 -0.525 0.004 0.183

Table 3: Correlation analysis.

INV

CCC

SIZE

LEV

GDP

INF

1.000 0.344 0.294 0.778 -0.443 0.625 0.055 -0.174

1.000 0.407 0.788 -0.279 0.082 0.115 -0.238

1.000 0.145 -0.268 0.439 0.191 -0.252

1.000 -0.389 0.310 0.053 -0.195

1.000 -0.220 -0.027 0.073

1.000 0.091 -0.217

1.000 -0.238

1.000

Table 3 shows that the independent variables such as AR, INV, AP and CCC are negatively correlated with ROA. For control variables, the LEV variable is negatively correlated with the ROA. Meanwhile, the remaining control variables are positively correlated with ROA. Next is to test on multicollinearity, heteroscedasticity and autocorrelation in study models. Table 4: Results of tests on multicollinearity, heteroscedasticity and autocorrelation (Model 1) Variable VIF AR 1.96 SIZE 1.25 LEV 1.69 GDP 1.06 INF 1.11 Mean VIF = 1.41

Heteroscedasticity test

Autocorrelation test

chi2 (20) = 17500.14 Prob>chi2 = 0.000***

F(1, 19) = 0.145 Prob > F = 0.708

Note: *** indicates significance at the 1% level.

Table 5: Results of tests on multicollinearity, heteroscedasticity and autocorrelation (Model 2) Variable VIF INV 1.15 SIZE 1.14 LEV 1.10 GDP 1.07 INF 1.16 Mean VIF = 1.12

Heteroscedasticity test

Autocorrelation test

chibar2(01) = 3.12 Prob > chibar2 = 0.038**

F(1, 19) = 1.034 Prob > F = 0.321

Note: ** indicates significance at the 5% level.

Table 6. Results of tests on multicollinearity, heteroscedasticity and autocorrelation (Model 3) Variable VIF AP 1.36 SIZE 1.09 LEV 1.28 GDP 1.08 INF 1.13 Mean VIF = 1.19

Heteroscedasticity test

Autocorrelation test

chibar2(01) = 0.06 Prob > chibar2 = 0.406

F(1, 19) = 0.365 Prob > F = 0.552

*Corresponding author (Thu-Trang Thi Doan). Email: doanthithutrang@iuh.edu.vn ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.85

Table 7: Results of tests on multicollinearity, heteroscedasticity and autocorrelation (Model 4) Variable VIF CCC 1.28 SIZE 1.20 LEV 1.16 GDP 1.06 INF 1.13 Mean VIF = 1.16

Heteroscedasticity test

Autocorrelation test

chibar2(01) = 4.40 Prob > chibar2 = 0.018**

F(1, 19) = 0.851 Prob > F = 0.367

Note: ** indicates significance at the 5% level.

Thus, in all four study models, the multicollinearity is considered to be not serious (mean VIF <10), and there is no autocorrelation between errors. However, Model 1, Model 2 and Model 4 have heteroscedasticity. Therefore, the author will estimate the study models according to GMM to overcome the heteroscedasticity and control the potential endogenous. Table 8: Regression result. ROA Constant AR INV AP CCC SIZE LEV GDP INF

Model 1 -0.11475*** -0.00002***

Model 2 -0.06134*** -0.00009***

Model 3 -0.10680***

Model 4 -0.10247***

-0.00021***

-0.00003*** 0.00690 0.00302 0.00462 0.00617*** *** *** *** -0.01596 -0.01504 -0.01150 -0.01298*** *** *** *** 0.52860 0.76778 1.04369 0.51889*** *** ** *** 0.10578 0.02745 0.02754 0.09153*** Wald chi2(4) = Wald chi2(4) = Wald chi2(4) = Wald chi2(4) = 4362.67 4301.95 2094.26 855.12 Significance level Prob > chi2 = Prob > chi2 = Prob > chi2 = Prob > chi2 = 0.000*** 0.000*** 0.000*** 0.000*** Arellano-Bond test for z = 1.34 z = 1.50 z = 1.54 z = 1.37 AR(2) in first differences Pr > z = 0.179 Pr > z = 0.134 Pr > z = 0.124 Pr > z = 0.171 chi2(17) = 15.27 chi2(17) = 13.84 chi2(17) = 16.77 chi2(17) = 13.31 Sargan test Prob > chi2 = Prob > chi2 = Prob > chi2 = Prob > chi2 = 0.576 0.679 0.470 0.716 Note: ** and *** indicate significance at the 5% and 1% level, respectively. ***

***

Table 8 shows that the estimated results in all four study models are statistically significant at the 1% level. Moreover, the Sargan test shows that the instrument variables used in the study models are appropriate. Therefore, the estimated results of four GMM study models are appropriate and usable. The study results show that the components of working capital (AR, INV, AP and CCC) have a negative impact on profitability (ROA) with a 1% significance level. In addition, profitability (ROA) is also positively affected by the control variables such as enterprise size (SIZE), economic growth (GDP) and inflation (INF) with a 1% significance level. Not only that, the study has also found the negative impact of the control variable such as leverage ratio (LEV) on profitability (ROA) with a 1% significance level. - Impact of the accounts receivable period on profitability: The accounts receivable period (AR) has a negative impact (-0.00002) on profitability (ROA). This means that the sooner the company gets the amounts, the more profitable it will be. This result is consistent with the theory and previous studies that a tight credit policy will increase corporateâ€™s profitability, as long as the policy does not damage negatively revenues (Gill et al., 2010; Afeef, 2011; Mumtaz et al., 2011; Napompech, 2012; Arunkumar, 2013; Gul et al., 2013; Azeez et al., 2016; Iqbal & Wang, 2018).

Thu-Trang Thi Doan

- Impact of inventory period on profitability: Inventory period (INV) has a negative impact (0.00009) on profitability (ROA). This result is also found in most previous studies, for example Afeef (2011), Mumtaz et al. (2011), Napompech (2012), Arunkumar and Radharamanan (2013), Gul et al. (2013), Bagh et al. (2016), Iqbal and Wang (2018). This shows that the shorter the inventory period is, the more profitability will increase because the shorter the inventory period will lead to reduced costs and increased profits. However, the managers in enterprises should also balance the inventories at an adequate level. It means not "too much" but also not "too little". Because, when the inventory period is too short, it will lead to the risk of insufficient inventory, this will seriously affect the production and business activities of the enterprise. Moreover, the insufficient inventories can lead to the risk that fisheries enterprises will lose the customers, these customers will tend to look to other enterprises to provide an adequate and stable amount of products according to their needs. Therefore, the enterprises in the fisheries sector need to develop effective sales policies to shorten the inventory period rather than reduce the number of inventories. - Impact of the accounts payable period on profitability: The accounts payable period (AP) has a negative impact (-0,00021) on profitability (ROA). This result is also found in the studies of Mathuva (2010), Arunkumar and Radharamanan (2013), Bagh et al. (2016). Accordingly, when extending the payment term for sellers, the enterprises will take advantage of temporary capital to invest. This will contribute significantly to increase the profitability of the enterprise. However, extending the payment term too long can also reduce the reputation of the enterprise, this is also an issue that fisheries enterprises need to be concerned about. - Impact of cash conversion cycle on profitability: The cash conversion cycle (CCC) has a negative impact (-0.0003) on profitability (ROA). This result is also found in the studies of Mathuva (2010), Napompech (2012), Arunkumar and Radharamanan (2013), Gul et al. (2013), Bagh et al. (2016), Iqbal and Wang (2018). Therefore, fisheries enterprises should shorten the cash conversion cycle to improve profitability. However, fisheries enterprises also need to ensure a reasonable budget to ensure continuous and effective production and business. Moreover, the study results show that supply chain finance plays an important role in the impact of working capital management on the profitability of fishery enterprises. Indeed, as the cash conversion cycle declines, the supply chain finance will become more efficient, it means that the enterprises in the supply chain finance will take advantage of short-term credit at a low cost, thus the profitability will be improved. This is consistent with Zhang et al. (2019) and Bui (2020).

5 CONCLUSION This article analyzes the impact of working capital management on the profitability of 20 fisheries enterprises listed on Vietnam's stock market, for the period of 2010-2018. The author has applied the GMM to ensure the reliable results of estimating the study model. The study results show that profitability (ROA) is negatively affected by the accounts receivable period (AR), inventory period (INV), accounts payable period (AP), and cash conversion cycle (CCC). And also, the results of this study also show that supply chain finance plays an important role in improving the profitability of enterprises. In addition, the author has found a significant impact of control variables such as enterprise size (SIZE), leverage ratio (LEV), economic growth (GDP) and *Corresponding author (Thu-Trang Thi Doan). Email: doanthithutrang@iuh.edu.vn ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.85

inflation (INF) on profitability ( ROA). Therefore, managers at fisheries enterprises need to pay more attention to working capital management, especially the role of the supply chain finance in order to improve profitability effectively and sustainably. This result is empirical evidence for the fishery sector in Vietnam. Therefore, this study result is extremely important for enterprises in the fisheries sector.

6 AVAILABILITY OF DATA AND MATERIAL Data can be made available by contacting the corresponding authors

7 REFERENCES Afeef, M. (2011). Analyzing the Impact of Working Capital Management on the Profitability of SME’s in Pakistan. Journal of Business and Social Science, 2(22), 173–183. Arunkumar, O. N., & Radharamanan, T. (2013). Working Capital Management and Profitability: An Empirical Analysis of Indian Manufacturing Firms. International Journal of Management, 4(1), 121–129. Azeez, O. T., Abubakar, M. A., & Olamide, F. T. (2016). Analysis of the effects of working capital management on profitability of listed Nigerian conglomerate companies. FWU Journal of School Sciences, 10(1), 10–20. Bagh, T., Nazir, M. I., Khan, M. A., Muhammad Atif Khan, M. A., & Razzaq, S. (2016). The Impact of Working Capital Management on Firms Financial Performance: Evidence from Pakistan. International Journal of Economics and Financial Issues, 6(3), 1097–1105. Bui, T.N. (2020). Supply chain finance, financial development and profitability of real estate firms in Vietnam. Uncertain Supply Cain Management, 8(1), 37–42. Deloof, M. (2003). Does Working Capital Management Affects Profitability of Belgian Firms?. Journal of Business Finance & Accounting, 30(3&4), 573–587. Doytch, N., & Uctum, M. (2011). Does the worldwide shift of FDI from manufacturing to services accelerate economic growth? A GMM estimation study. Journal of International Money and Finance, 30(3), 410–427. Gill, A., Biger, N., & Mathur, N. (2010). The Relationship Between Working Capital Management and Profitability: Evidence from The United States. Business and Economics Journal, 10, 1–9. Gul, S., Khan, M. B., Rehman, S. U., Khan, M. T., Khan, M., & Khan, W. (2013). Working Capital Management and Performance of SME Sector. European Journal of Business and Management, 5(1), 60–68. Iqbal, A., & Wang, Z. (2018). Effect of Working Capital Management on Profitability. KEMCS, 5, 5359. Kandpal, V. (2015). An analysis of working capital management in select construction companies. Journal of Commerce & Management Thought, 6(1), 7–31. Mathuva, D. M. (2010). The influence of working capital management components on corporate profitability: A survey on Kenyan listed firms. Research Journal of Business, 4(1), 1–11. Mumtaz, A., Rehan, M., Rizwan, M., Murtaza, F., Jahanger, A., & Khan, H. A. (2011). Impact of Working Capital Management on firms’ performance: Evidence from Chemical sector listed firms in KSE-100 index. Journal of Business and Management, 93–100. Napompech, K. (2012). Effects of Working Capital Management on the Profitability of Thai Listed Firms. International Journal of Trade, Economics and Finance, 3(3), 227–232.

Thu-Trang Thi Doan

Sharma, A., & Kumar, S. (2011). Effect of Working Capital Management on Firm Profitability: Empirical Evidence from India. Global Business Review, 12(1) 159–173. Wuttke, D.A., Blome, C., Foerstl, K., & Henke, M. (2013). Managing the innovation adoption of supply chain finance – empirical evidence from six European case studies. Journal of Business Logistic, 34(2), 148–166. Zhang, T., Zhang, C.Y., & Pei, Q. (2019). Misconception of Providing Supply Chain Finance: Its Stabilising Role. International Journal of Production Economics, 213, 175–184. . Thu-Trang Thi Doan is a lecturer at Faculty of Finance and Banking, Industrial University of Ho Chi Minh City, Vietnam. She holds a Master of Finance and Banking from University of Finance – Marketing (UFM), Vietnam. Her researches are in the fields of finance and banking, real estate market and applied econometrics.

*Corresponding author (Thu-Trang Thi Doan). Email: doanthithutrang@iuh.edu.vn ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.85

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05F

CONTAGION AND INTERDEPENDENCE AMONG GOLD, OIL, FOREX, AND ASIAN EMERGING EQUITY MARKETS 1

Nazakat Hussain , Imran Riaz Malik 1

Department of Business Administration, Iqra University, Islamabad, PAKISTAN.

ARTICLEINFO

A B S T RA C T

The terms contagion and interdependence strike the mainstream literature, specifically in times of crisis in financial markets. This study put an effort to examine the contagion and interdependence among Asian Emerging Equity Markets (AEEMs) (e.g., China, Taiwan, Pakistan, Malaysia, Thailand, South Korea, Philippines, India, and Indonesia), and the developed market of the US, Gold, WTI, and UDI Keywords: during the Global Financial Crisis (GFC). This study adds to the AEEMs; Commodity; DCC GARCH Model; literature on portfolio diversification by testing the dynamic correlation among AEEMs, gold prices, oil prices, and forex markets during Global Financial Crisis; Market turmoil; tranquil and turmoil situations. The multivariate GARCH-DCC model is applied to data series. To measure interdependence and contagion, Forex market; Subprime crisis; Equity the data is divided into tranquil and turmoil time period. Hence, in this study for GFC, the data is divided into tranquil (03-01-2005 to 16-07risk. 2007) and turmoil (17-07-2007 to 31-08-2009) time period. The results show that except for China, Philippines, Taiwan, gold and forex markets, most of the AEEMs and oil markets were influenced by the contagion effect during the U.S. subprime crisis. The study indicates that in order to reduce the risk of equity portfolio at the time of crises, investors can add gold and forex in their portfolios.

Article history: Received 04 July 2019 Received in revised form 14 November 2019 Accepted 16 December 2019 Available online 23 December 2019

1 INTRODUCTION

Financial markets all over the globe are increasingly becoming integrated due to globalization, financial capital flows, development of information and communication technology and trade openness. The correlation among the security returns across the countries has increased leading to a reduction in the benefit of international diversification. Few earlier studies have revealed that due to stock market contagion and rise in cross-market links the benefits of diversification across the globe, both at national and international levels, are declining, especially in situations of crises. These linkages are found to lead towards a positive correlation among the different assets (Bekaert et al., 2005; Markwat et al., 2009). *Corresponding author (I.R. Malik) Email: Imran.malik@iqraisb.edu.pk ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.86

At the time of abnormal market condition cross-market linkages increases. This increase in correlation among the markets is known as contagion. A number of authors have come up with different definitions for the term â€˜contagionâ€™. Extracting from the previous studies, we, in this paper, will be using the definition given by (Forbes and Rigobon, 2002), according to whom, Contagion refers to â€œa significant and temporary increase in cross countries linkages after a shock". The financial crises that occur in one country may spread to another country through different channels. These channels are divided into two classes, one is fundamentals-based contagion and the other is pure contagion. Fundamentals-based contagion, presented by Calvo and Reinhart (1996), emphasis the country-to-country diffusion of shock. This diffusion of shocks between the countries is the outcome of real and financial linkages in the crisis period as well as in a normal period. Whereas, Eichengreen et al. (1996) define pure contagion as diffusion of shocks from one market to another market beyond any idiosyncratic turbulence and fundamental linkages. The consequence of the contagion effect is the increase in correlation among equity markets. Increase in the correlation among equity markets increases the fear of market sentiment about potential disastrous financial events, thus alerting investors about situations where they should become more conscious and should instinctively look for stock alternative (e.g. commodities) which would hold better value even in disastrous time (Hood & Malik, 2013). It is also necessary for the investors to have knowledge of association among the commodity markets and equity markets in order to get the maximum benefit from investment opportunities. Commodity markets are very liquid and investors use commodity markets for the purpose of investment (Vivian & Wohar, 2012). By incorporating commodities in the portfolio, investors may reduce risk and enhance portfolio performance. Hence, it is important to carefully inspect the connection between commodity and equity markets for making a wise decision and sustaining the wealth of investors in the scenario of a highly volatile market. It is observed that many studies have been conducted to investigate the effects of contagion and interdependence at time of crises, but their focus has mainly been on equity markets (Hamao, Masulis, and Ng, 1990; Edward and Susmel, 2001; Morana and Belratti, 2008; Narayan et al., 2014; Burzala, 2016). Unlike previous studies, our paper is aimed at finding out the contagion and interdependence effects among Asian emerging equity markets, commodity (Gold & oil) markets and the Forex market during Global Financial Crises. This study will add value to the existing body of knowledge by investigating the dynamic correlation between forex, commodity and equity markets remain static or fluctuate during both tranquil and turbulent situations and try to find out which commodity can be a safe haven during turmoil situation. Moreover, with the perspective of investors, this study shall provide distinct strategies for portfolio diversification during both tranquil and turmoil period. As this study examines dynamic correlation of different classes of assets both during crises as well as normal time, it shall assist investors (e,g. mutual funds, insurance companies, pension funds, and brokerage firms) in choosing the combination of assets which shall be more durable and hold value in the scenario of contagion.

2 LITERATURE REVIEW During the last two decades, the recurring nature of crises, its speedy transferring across borders without justifying for fundamentals has caught the attention of many researchers. Such as

Nazakat Hussain, Imran Riaz Malik

global financial crises, Eurozone crises, these crises disseminate like a contagious disease, which affected the neighboring as well as distant markets. These scenarios became the main subject of many theoretical and empirical types of research. After the crash of the stock market in 1987 the interest in studying contagion increased. King and Wadhwani, (1990) examined the correlation round the crash by considering the major stock markets. It was observed that crisis leads to a rise in dynamic correlation. Hamao et al. (1990) investigated the correlation between markets during the US stock market 1987crisis. Moreover, the evidence of contagion was also presented by Lee and Kim (1993). The investigation of cross-market correlations is important with regards to portfolio selection across countries. Some researchers explored the presence of contagion in the currency market at the time of crises by considering the correlation coefficients across countries. Eichengreen (1996) explored the currency crises contagion effect in France, Germany and Holland nations by applying a bivariate probit model. They found that if an abnormal situation occurred in a country, the possibility of opportunistic attacks on other countries would rise. Nagayasu (2001) analyzed the presence of contagion effect in the currency crises of Thailand by applying Vector Auto-Regression (VAR). Results denoted the existence of the contagion effect. Additionally, the contagion effect in financial markets has been explored by a number of studies. To study the dynamics in stock markets during crisis time, Balla and Torous, (2002) applied the stochastic correlation technique on the stock indices of different markets. They found that over the period of time the structure of correlation is dynamic. The proof of higher correlation among the stock return of the US and OECD member countries are also presented by Longin and Slonik (1995). Edward and Susmel (2001) also explored that at the time of crises many markets of Latin America were correlated significantly which verifies that contagion exists in the crisis time period. Further proof of contagion in Asian markets is presented by Narayan et al. (2014) by using EGARCH (DCC) for 2001-2012. The study found that there exists a correlation between Asian and US equity markets. The study further inferred that the reasons for stock market integration are price differentials, exchange rate risk, global financial crisis, bilateral trade relations, and domestic market characteristics. Wang, (2014) established a study to find out whether financial crises strengthen the relationships among US and East Asian stock markets. The consequences of the study suggested that before the financial crisis, East Asian markets tended to respond to global shocks. However, the financial crisis seemed to strengthen linkages among Asian equity markets while the US market impact was weak during the crisis period. It can be inferred from the cited literature that contagion exists at the time of crises. The higher correlation of the equity markets with developed markets indicates that the contagion effect transfers from one country to another country which affects its equity market during the crisis time period. But no study covered the contagion between AEMs and gold, oil and forex markets at the time of GFC. This study will find out the presence of contagion among the gold, oil, forex and Asian Emerging Equity Markets (AEMs) during the Global Financial Crisis.

3 METHOD 3.1 DATA DESCRIPTION

This paper attempts to examine the contagion and interdependence among Gold, Oil, Forex

*Corresponding author (I.R. Malik) Email: Imran.malik@iqraisb.edu.pk ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.86

Markets and AEEMs during the GFC. To find out the contagion and interdependence among Gold, Oil, Forex Markets and AEEMs, daily data from 03-01-2005 to 31-08-2009 of stock indices, Forex, oil, and Gold is utilized which covers the incidence of Global Financial Crises. The sample includes the stock-index returns of the nine AEEMs markets and one developed market of US and of Gold, WTI and UDI (US Dollar Index). The selection of sample countries is based on the classification of MSCI (2018). The data of all the markets is taken in Dollar form, as Rigobon (2002) reported that the use of local indices or dollar indices does not alter the results. For gold, the study used the nearby contract prices of the gold futures contract. For oil spot daily crude oil prices of the WTI in dollars per barrel is used, for forex US Dollar Index is used. All the market data is obtained from Bloomberg. To measure interdependence and contagion it is required that the sample must be split into pre crises and crises period. Hence, in this study data is divided into tranquil 03-01-2005 to 16-07-2007 and turmoil 17-07-2007 to 31-08-2009 period for the crisis under investigation. The time period of tranquil and turmoil chosen for this study is the same as BriĂ¨re et al. (2012).

3.2 ECONOMETRIC TECHNIQUE

To study the correlation among the return of different assets over time, it is required to estimate the time-varying correlation. In literature number of methods is suggested to study the time-varying correlation especially in the multivariate GARCH family. These methods are burdensome in estimation and difficult to interpret. Engle, (2002) suggested a pragmatic model for studying the time-varying correlation among the different assets return over time known as the Dynamic conditional correlation (DCC) model. The Multivariate (DCC) specification model proposed by Engle (2002) is stated as follows: đ??ťđ??ťđ?‘Ąđ?‘Ą = đ??ˇđ??ˇđ?‘Ąđ?‘Ą đ??śđ??śđ?‘Ąđ?‘Ą đ??ˇđ??ˇđ?‘Ąđ?‘Ą 1

(1), 1

2 2 where đ??ˇđ??ˇđ?‘Ąđ?‘Ą = đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘ ďż˝â„Ž11đ?‘Ąđ?‘Ą â€Ś â€Ś â„Žđ?‘ đ?‘ đ?‘ đ?‘ đ?‘ đ?‘ ďż˝. The estimates of time-varying standard deviation are taken

from univariate GARCH (1, 1) models with ďż˝â„Žđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą on the ith diagonal. The Ci is a time-varying

conditional correlation matrix having size đ?‘ đ?‘ Ă— đ?‘ đ?‘ . The elements of Dt are simply created by the univariate GARCH (1, 1) process 2 đ??ťđ??ťđ?‘–đ?‘–,đ?‘Ąđ?‘Ą = đ??Žđ??Žđ?’Šđ?’Š + đ?›źđ?›źđ?‘–đ?‘– đ?œ‡đ?œ‡đ?‘–đ?‘–,đ?‘Ąđ?‘Ąâˆ’1 + đ?›˝đ?›˝đ?‘Ąđ?‘Ą â„Žđ?‘–đ?‘–,đ?‘Ąđ?‘Ąâˆ’1

(2),

where đ??Žđ??Žđ?’Šđ?’Š is the constant term, đ?›źđ?›źđ?‘–đ?‘– captures the Auto-Regressive Conditional Heteroscedasticity (ARCH) effect and đ?›˝đ?›˝đ?‘Ąđ?‘Ą measures the persistence of the volatility. The evolution of correlation in the DCC model is given as Ě‡ đ?›źđ?›źđ?‘ˆđ?‘ˆ đ?‘ˆđ?‘ˆ , + đ?›˝đ?›˝đ?‘„đ?‘„ đ?‘„đ?‘„ = (1 âˆ’ đ?›źđ?›ź âˆ’ đ?›˝đ?›˝)đ?‘„đ?‘„ + (3), đ?‘Ąđ?‘Ą

đ?‘Ąđ?‘Ąâˆ’1 đ?‘Ąđ?‘Ąâˆ’1

đ?‘Ąđ?‘Ąâˆ’1

where đ?‘„đ?‘„đ?‘Ąđ?‘Ą = ďż˝đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą ďż˝ is the đ?‘ đ?‘ Ă— đ?‘ đ?‘ time-varying covariance matrix of residuals, đ?‘„đ?‘„ = đ??¸đ??¸âŒŠđ?œ‡đ?œ‡đ?‘Ąđ?‘Ą đ?œ‡đ?œ‡đ?‘Ąđ?‘Ą âŒ‹ is the

đ?‘ đ?‘ Ă— đ?‘ đ?‘ time-invariant variance matrix of ut. The nonnegative scalar parameters đ?›źđ?›ź and đ?›˝đ?›˝ satisfy đ?›źđ?›ź + đ?›˝đ?›˝ < 1. Because Qt does not have unit elements on the diagonal, the correlation matrix Ct is obtained by scaling it as

Nazakat Hussain, Imran Riaz Malik

đ??śđ??śđ?‘Ąđ?‘Ą = (đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘(đ?‘„đ?‘„đ?‘Ąđ?‘Ą ))âˆ’2 âˆ™ (đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘đ?‘‘(đ?‘„đ?‘„đ?‘Ąđ?‘Ą ))âˆ’2

(4)

đ?‘ƒđ?‘ƒđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą = đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą / ďż˝đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą đ?‘žđ?‘žđ?‘—đ?‘—đ?‘—đ?‘—.đ?‘Ąđ?‘Ą â€˛ (i,j =1,2â€Śâ€Śâ€Śn, and đ?‘–đ?‘– â‰ đ?‘—đ?‘—)

(5)

Each Ct element has a normal form

Thus, the correlation coefficient đ?‘ƒđ?‘ƒđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą at time t is defined as đ?‘ƒđ?‘ƒđ?‘–đ?‘–đ?‘–đ?‘–,đ?‘Ąđ?‘Ą =

(1âˆ’đ?›źđ?›źâˆ’đ?›˝đ?›˝)đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘– +đ?›źđ?›ź đ?œ‡đ?œ‡đ?‘–đ?‘–đ?‘–đ?‘–âˆ’1 đ?œ‡đ?œ‡đ?‘—đ?‘—đ?‘—đ?‘—âˆ’1 +đ?›˝đ?›˝đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘–đ?‘–đ?‘–âˆ’1

2 2 ďż˝(1âˆ’đ?›źđ?›źâˆ’đ?›˝đ?›˝)đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘– +đ?›źđ?›źđ?œ‡đ?œ‡đ?‘–đ?‘–đ?‘–đ?‘–âˆ’1 +đ?›˝đ?›˝đ?‘žđ?‘žđ?‘–đ?‘–đ?‘–đ?‘–âˆ’1 ďż˝(1âˆ’đ?›źđ?›źâˆ’đ?›˝đ?›˝)đ?‘žđ?‘žđ?‘—đ?‘—đ?‘—đ?‘— +đ?›źđ?›źđ?œ‡đ?œ‡đ?‘—đ?‘—đ?‘—đ?‘—âˆ’1 +đ?›˝đ?›˝đ?‘žđ?‘žđ?‘—đ?‘—đ?‘—đ?‘—âˆ’1

â€Ś

(6)

In this study, correlation coefficients are of significant importance because these coefficients produce key evidence on the pattern of correlation among gold, oil, forex and equity markets series over time. Since the volatility is accustomed by the process, the DCC does not have any bias from volatility. Unlike the volatility-adjusted cross-market correlations used in Forbes and Rigobon (2002), DCC-GARCH constantly adjusts the correlation for the time-varying volatility. Hence, DCC offers a superior measure for dynamic correlation. This notion is also supported by a number of studies. This study employs the one-tail t-test to observe the presence of the contagion effect. This test finds the mean of DCC correlation in crises and normal time period, moreover, this test clarifies that either mean of DCC correlations is higher at the turmoil time as compared to tranquil time. The study defines the null and alternative hypothesis as đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?âˆ’đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?

H0=đ?œ‡đ?œ‡đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? â‰¤ đ?œ‡đ?œ‡đ?‘?đ?‘?

(7)

đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?âˆ’đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?

H1= đ?œ‡đ?œ‡đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? > đ?œ‡đ?œ‡đ?‘?đ?‘?

đ?œ‡đ?œ‡đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? denotes the means of dynamic conditional correlation at the time of crises and

đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?âˆ’đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?

đ?œ‡đ?œ‡đ?‘?đ?‘?

denotes the means of dynamic conditional correlation in pre-crises time. The value of t

statistics is compared with critical value. If the value of t statistics is higher than the critical value, H0 is rejected and H1 is accepted which supports the proof for the existence of contagion.

4 RESULT AND DISCUSSION 4.1 DESCRIPTIVE STATISTICS

Table 1 represents the descriptive statistics of stock-index returns of the nine Asian emerging markets China, Taiwan, Pakistan, Malaysia, Philippine, Thailand, India, South Korea, Indonesia, one developed market US and of Gold, oil and forex markets. Table 1 only contains the summary of the whole sample whereas Tables 2 and 3 contain the summary statistics of US pre crises time and crises time. Table 1 depicts the average positive daily return of all the markets except UDI. The highest average daily return is of *Corresponding author (I.R. Malik) Email: Imran.malik@iqraisb.edu.pk ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.86

Variables Mean Median Maximum Minimum SD. Skewness Kurtosis Jarque-Bera Probability

BSE 0.000 0.000 0.146 -0.124 0.012 -0.721 15.326 358 <0.001

SP500 8.97E 0.000 0.105 -0.082 0.009 -0.061 16.135 401 <0.001

Table 1: Descriptive Statistics (Full Sample)

GOLD 0.000 0.000 0.068 -0.095 0.009 -0.321 12.105 193 <0.001

JCI 0.000 0.000 0.076 -0.109 0.011 -0.787 14.009 287 <0.001

KOSPI 0.000 0.000 0.112 -0.128 0.013 -0.667 13.255 248 <0.001

KSCI 0.000 0.000 0.045 -0.099 0.006 -1.120 20.119 693 <0.001

PSEI 0.000 0.000 0.161 -0.130 0.010 0.423 27.226 136 <0.001

PSX 0.000 0.000 0.085 -0.077 0.011 -0.282 9.389 957 <0.001

SET50 0.000 0.000 0.105 -0.160 0.011 -0.828 18.257 548 <0.001

SSE 0.000 0.000 0.093 -0.092 0.012 -0.152 11.052 151 <0.001

TWSE 1.08E 0.000 0.065 -0.069 0.011 -0.215 8.276 652 <0.001

UDI -3.91E 0.000 0.017 -0.022 0.002 -0.006 10.518 131 <0.001

WTI 0.000 0.000 0.164 -0.170 0.020 -0.284 11.313 161 <0.001

Table 1 describes the summary statistics of the whole sample. Summary statistics include means of all the markets, results depict the average daily positive return of all the markets except UDI. Higher values of Kurtosis and Jarque-Bera test show that data is not normally distributed. Conditional heteroscedasticity is represented by ARCH values, which show the presence of heteroscedasticity in the data. * denotes the rejection of null hypothesis at 5% significant level.

Variables Mean Median Maximum Minimum SD Skewness Kurtosis Jarque-Bera Probability

Table 2: Descriptive Statistics (US Pre-crisis Data)

BSE S&P500 GOLD 0.000 0.000 0.000 0.000 0.000 0.000 0.062 0.020 0.040 -0.071 -0.033 -0.062 0.011 0.005 0.009 -0.876 -0.311 -0.599 10.230 6.625 8.880 2130 520 1386 <0.001 <0.001 <0.001

JCI 0.000 0.000 0.053 -0.065 0.009 -0.801 10.290 2145 <0.001

KOSPI 0.000 0.000 0.034 -0.035 0.008 -0.324 5.296 219 <0.001

KSCI 0.000 0.000 0.026 -0.047 0.005 -1.050 14.837 5565 <0.001

PSEI 0.000 0.000 0.047 -0.082 0.010 -0.645 9.622 1752 <0.001

PSX 0.000 0.000 0.058 -0.060 0.013 -0.504 6.064 400 <0.001

SET50 0.000 0.000 0.105 -0.160 0.010 -3.186 83.865 2533 <0.001

SSE 0.001 0.000 0.079 -0.092 0.013 -0.702 10.923 2493 <0.001

TWSE 0.000 0.000 0.029 -0.043 0.007 -0.639 7.696 912 <0.001

UDI -0.000 0.000 0.008 -0.009 0.002 0.078 5.273 199 <0.001

WTI 0.000 0.000 0.084 -0.123 0.016 -0.199 8.030 980 <0.001

Table .2 describes the summary statistics in US pre-crisis time. Summary statistics include means of all the markets, results depict the average daily positive return of all the markets except UDI. Values of Kurtosis and Jarque-Bera test show that data is not normally distributed.

Variables Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis Jarque-Bera Probability

BSE 0.000 0.000 0.146 -0.111 0.020 -0.057 9.598 1399 <0.001

S&P500 -0.000 0.000 0.105 -0.082 0.016 0.141 10.755 1934 <0.001

Table 3: Descriptive Statistics (US crisis Data).

GOLD 0.000 0.000 0.068 -0.079 0.013 -0.099 7.955 790 <0.001

JCI 0.000 0.000 0.076 -0.109 0.017 -0.575 10.095 1659 <0.001

KOSPI -0.000 0.000 0.112 -0.111 0.017 -0.544 10.804 1994 <0.001

KSCI -0.000 0.000 0.042 -0.099 0.009 -1.381 18.413 7877 <0.001

PSEI -0.000 0.000 0.093 -0.130 0.015 -0.844 14.451 4304 <0.001

PSX -0.000 0.000 0.082 -0.051 0.014 -0.142 6.902 491 <0.001

SET50 -0.000 0.000 0.075 -0.110 0.015 -0.840 11.965 2673 <0.001

SSE -0.000 0.000 0.090 -0.080 0.020 -0.166 6.118 315 <0.001

TWSE -0.000 0.000 0.065 -0.067 0.016 -0.229 5.709 242 <0.001

UDI 0.000 0.000 0.016 -0.023 0.003 -0.427 9.409 1342 <0.001

WTI -0.000 0.000 0.164 -0.128 0.029 0.137 8.252 888 <0.001

S&P500 (8.97E-05) is followed by the Taiwan stock exchange weighted index (1.08E-05). Table 2 shows the descriptive statistics before US crises and Table 3 for the US crisis time. In precrisis time the average return of all the markets is positive except UDI but in crisis times Table 3 shows that the average return of all the markets is negative except India, Indonesia, Gold, and UDI. Same as the pre-crisis period, all the markets show the high value of Kurtosis in crisis time which leads towards the rejection of the null hypothesis that series are normally distributed. Tables 2 and 3 represent that the values of standard deviation for all the markets are higher in crisis time as compared to pre crises time which provides the evidence of higher risk at the time of crisis. Hypothesis test results are presented in Table 4. The results show that the dynamic correlations are higher in crisis time as compared to the pre-crisis time for the markets of Thailand, India, South

Nazakat Hussain, Imran Riaz Malik

Korea, Pakistan, Malaysia, Indonesia, and WTI, which leads towards rejection of the null hypothesis and signifies the presence of contagion effect in these markets. Table 4: Dynamic conditional correlation coefficient and contagion effect test Condition Pre-crises DCC US_ China Crises DCC US_ China Pre-crises DCC US_Philipine Crises DCC US _Philippine Pre-crises DCC US_Taiwan Crises DCC US_Taiwan Pre-crises DCC US_Thailand Crises DCC US_ Thailand Pre-crises DCC US_ India Crises DCC US_ India Pre-crises DCC US_SouthKorea Crises DCC US_ South Korea Pre-crises DCC US_Pakistan Crises DCC US_ Pakistan Pre-crises DCC US_Malaysia Crises DCC US_ Malaysia Pre-crises DCC US_Indonesia Crises DCC US_ Indonesia Pre-crises DCC US_GOLD Crises DCC US_ GOLD Pre-crises DCC US_WTI Crises DCC US_ WTI Pre-crises DCC US_UDI Crises DCC US_ UDI

Mean 0.019 -0.014 0.039 -0.012 0.062 0.025 0 0.083 0.023 0.088 0.058 0.094 0.021 0.067 -0.014 0.31 0.006 0.095 0.081 -0.027 -0.024 0.013 0.049 0

Variance 0.003 0.003 0 0.001 0 0.006 0.002 0.012 0.002 0.002 0.001 0.005 0.001 0.003 0.003 0.012 0.002 0.004 0.002 0.01 0.001 0.039 0.003 0.052

t-statistics H0=đ?œ‡đ?œ‡đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? â‰¤ đ?œ‡đ?œ‡đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?âˆ’đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? đ?‘?đ?‘? đ?‘?đ?‘? 3.617

-16.284 -12.908 28.99* 17.198* 11.410* 10.499* 44.520* 27.579* -3.204 9.519* -7.776

Note: This table presents the dynamic correlation in the turmoil and tranquil time of the US crisis. The time period for pre-crisis is from 03-01-2005 to 16-07-2007 and for crisis time is from 17-07-2007 to 31-08-2009. Rejection of null hypothesis against the onesided alternative that at the time of crisis the dynamic correlation increases is tested at a 5% significant level denoted by *.

However, results revealed that the dynamic correlations are lower in crisis time as compared to the pre-crisis time for the markets of China, the Philippine, Taiwan, Gold, and UDI, which signifies that we cannot reject the null hypothesis for these markets. The results of this study support the presence of contagion effect in AEEMs. As t-test confirms the higher correlation at the time of crises. The results are in line with the definition of contagion which was given by Forbes and Rigobon, (2002). Consistent with the above-cited studies and with the studies of (Bae et al., 2003: Kallberg et al., (2005), this study confirms the presence of contagion effect in Emerging Asian equity markets except for China, Taiwan and Philippine. The results of this study provide no evidence of contagion for the markets of China, the Philippine and Taiwan. These results for the equity market of China are consistent with Wen, Wei and Huang et al., (2012) who found the low level of DCC between China and the US at the time of crises. However, these results are not consistent with the study of Wang, (2014) and Narayan et al., (2014) with respect to the China equity market. Moreover, with respect to Taiwan, the study reports different results as compared to the study of Celik, (2012) who reports the presence of contagion effect in the market of Taiwan. The reason for the difference in results is that Celike, (2012) provides evidence of contagion effect for foreign exchange markets of Taiwan whereas this study focused on the equity market. This study also reports no contagion effect on the market of the Philippine. This result is not in line with the study of (Chiang, Jeon & Li, 2007), who found the presence of a contagion effect in the equity market of *Corresponding author (I.R. Malik) Email: Imran.malik@iqraisb.edu.pk ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.86

the Philippine. The difference in result is due to the difference of crises under this study and source of contagion country. Finally, this study is different from the above-mentioned studies because this study investigated the contagion effect not only in equity markets but also in commodity and forex markets. Results provide evidence for the presence of contagion effect in the oil market but no contagion effect for the market of Gold and UDI.

5 CONCLUSION This study attempts to find out that either there exists contagion or independence across emerging Asian equity markets and markets of gold, oil, and forex. According to the definition of forbs and Rigobon, (2002) contagion is the significant increase in the correlation of the markets at the time of crises. This study used the one-tail t-test to check either the means of correlation are higher in crisis time as compared to pre-crisis time. Results revealed that the contagion effect exists at the time of US crises for most Asian emerging markets except China, Taiwan, and the Philippine. It shows that most of the Asian emerging markets seem to be influenced by the contagion effect during the U.S subprime crisis. Moreover, results inferred that the contagion effect exists for the market of WTI. One of the major findings is that the Gold and USD market is not affected by the contagion effect of the GFC. It is observed from the analysis that at the time of crises the dynamic conditional correlation of equity markets got significance increase. This significant increase in correlation is not a good sign for portfolio investors. Because a higher correlation between the securities reduces the benefits of diversification. To reduce the risk of investment at the time of crises there must be a low or negative correlation among the securities. The study suggests that investors should incorporate Gold and USD in their portfolio in order to reduce the risk of higher correlation among the equity markets at the time of crises.

6 AVAILABILITY OF DATA AND MATERIAL Data can be made available by contacting the corresponding author.

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Nazakat Hussain, Imran Riaz Malik

Bouaziz, M. C., Selmi, N., & Boujelbene, Y. (2012). Contagion effect of the subprime financial crisis: Evidence of DCC multivariate GARCH models. European Journal of Economics, Finance and Administrative Sciences, 44, 66-76. Brière, M., Chapelle, A., & Szafarz, A. (2012). No contagion, only globalization and flight to quality. Journal of International Money and Finance, 31(6), 1729-1744. Burzala, M. M. (2016). Contagion effects in selected European capital markets during the financial crisis of 2007–2009. Research in International Business and Finance, 37, 556-571. Calvo, G. A., Leiderman, L., & Reinhart, C. M. (1996). Inflows of Capital to Developing Countries in the 1990s. Journal of economic perspectives, 10(2), 123-139. Calvo, G. A., Reinhart, C. M., & Vegh, C. A. (1995). Targeting the real exchange rate: theory and evidence. Journal of development economics, 47(1), 97-133. Celık, S. (2012). The more contagion effect on emerging markets: The evidence of DCC-GARCH model. Economic Modelling, 29(5), 1946-1959. Chiang, T.C., Jeon, B.N., Li, H., 2007. Dynamic correlation analysis of financial contagion: evidence from Asian markets. Journal of International Money and Finance 1026–1228. Cho, J. H., & Parhizgari, A. M. (2008). East Asian financial contagion under DCC-GARCH. International Journal of Banking and Finance, 6(1), 17-30. Choi, K., & Hammoudeh, S. (2010). Volatility behavior of oil, industrial commodity and stock markets in a regime-switching environment. Energy Policy, 38(8), 4388-4399. Collins, D., & Biekpe, N. (2002). Should Emerging Market Contagion Be a Fear for African Stock Markets? School of Management Studies, University of Cape Town. Edwards, S., & Susmel, R. (2001). Volatility dependence and contagion in emerging equity markets. Journal of Development Economics, 66(2), 505-532. Eichengreen, B., Rose, A. K., & Wyplosz, C. (1996). Is there a safe passage to EMU? Evidence on capital controls and a proposal. In The Microstructure of Foreign Exchange Markets (pp. 303332). University of Chicago Press. Eichengreen, B., Rose, A. K., & Wyplosz, C. (1996). Contagious currency crises (No. w5681). National bureau of economic research. Engle, R. (2002). Dynamic conditional correlation: A simple class of multivariate generalized autoregressive conditional heteroskedasticity models. Journal of Business &Economic Statistics, 20(3), 339-350. Forbes, K., & Rigobon, R. (2000). Contagion in Latin America: Definitions, measurement, and policy implications (No. w7885). National Bureau of Economic Research. Gallegati, M. (2012). A wavelet-based approach to test for financial market contagion. Computational Statistics & Data Analysis, 56(11), 3491-3497. Hamao, Y., Masulis, R. W., & Ng, V. (1990). Correlations in price changes and volatility across international stock markets. The review of financial studies, 3(2), 281-307. Hood, M., & Malik, F. (2013). Is gold the best hedge and a safe haven under changing stock market volatility?. Review of Financial Economics, 22(2), 47-52. Hwang, E., Min, H. G., Kim, B. H., & Kim, H. (2013). Determinants of stock market comovements among US and emerging economies during the US financial crisis. Economic Modelling, 35, 338-348.

*Corresponding author (I.R. Malik) Email: Imran.malik@iqraisb.edu.pk ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05E http://TUENGR.COM/V11/11A05E.pdf DOI: 10.14456/ITJEMAST.2020.86

King, M. A., & Wadhwani, S. (1990). Transmission of volatility between stock markets. The Review of Financial Studies, 3(1), 5-33. Kuper G, Lestano. (2007). Dynamic Conditional Correlation Analysis of Financial Market Interdependence: An Application to Thailand and Indonesia. Journal of Asian Economics. 18: 670-684. Lahrech, A., & Sylwester, K. (2011). US and Latin American stock market linkages. Journal of International Money and Finance, 30(7), 1341-1357. Lee, H. Y., Wu, H. C., & Wang, Y. J. (2007). Contagion effect in financial markets after the South-East Asia Tsunami. Research in International Business and Finance, 21(2), 281-296. Lee, S. B., & Kim, K. J. (1993). Does the October 1987 crash strengthen the co‐movements among national stock markets?. Review of Financial Economics, 3(1), 89-102. Lien, D., & Yang, L. (2009). Intraday return and volatility spill-over across international copper futures markets. International Journal of Managerial Finance, 5(1), 135-149. Lin, W. L., Engle, R. F., & Ito, T. (1994). Do bulls and bears move across borders? International transmission of stock returns and volatility. Review of Financial Studies, 7(3), 507-538. Loh, L. (2013). Co-movement of Asia-Pacific with European and US stock market returns: A crosstime-frequency analysis. Research in International Business and Finance, 29, 1-13. Longin, F., & Solnik, B. (2001). Extreme correlation of international equity markets. The journal of finance, 56(2), 649-676. Longin, F., & Solnik, B. (1995). Is the correlation in international equity returns constant: 1960–1990?. Journal of international money and finance, 14(1), 3-26. Morana, C., & Beltratti, A. (2008). Comovements in international stock markets. Journal of International Financial Markets, Institutions and Money, 18(1), 31-45. Markowitz, H. (1952). Portfolio selection. The journal of finance, 7(1), 77-91. Markwat, T., Kole, E., & Van Dijk, D. (2009). Contagion as a domino effect in global stock markets. Journal of Banking & Finance, 33(11), 1996-2012. Nagayasu, J. (2001). Currency crisis and contagion: evidence from exchange rates and sectoral stock indices of the Philippines and Thailand. Journal of Asian Economics, 12(4), 529-546. Naoui, K., Khemiri, S., & Liouane, N. (2010). Crises and financial contagion: the subprime crisis. Journal of Business Studies Quarterly, 2(1), 15. Narayan, S., Sriananthakumar, S., & Islam, S. Z. (2014). Stock market integration of emerging economies: Patterns and causes. Economic Modelling, 39, 19-31.

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Syriopoulos, T., & Roumpis, E. (2009). Dynamic correlations and volatility effects in the Balkan equity markets. Journal of International Financial Markets, Institutions and Money, 19(4), 565-587. Vivian, A., & Wohar, M. E. (2012). Commodity volatility breaks. Journal of International Financial Markets, Institutions and Money, 22(2), 395-422. Wang, L. (2014). Who moves East Asian stock markets? The role of the 2007–2009 global financial crisis. Journal of International Financial Markets, Institutions and Money, 28, 182-2

Nazakat Hussain, Imran Riaz Malik

Yiu, M. S., Alex Ho, W. Y., & Choi, D. F. (2010). Dynamic correlation analysis of financial contagion in Asian markets in global financial turmoil. Applied Financial Economics, 20(4). Nazakat Hussain is a PhD Scholar, Department of Business Administration, Iqra University, Islamabad, Pakistan. He is interested in Financial Crisis and Analysis.

Dr.Imran Riaz Malik is an Associate Professor of Finance/Director of Research, Department of Business Administration, Iqra University, Islamabad Pakistan. He is interested in Financial Econometrics, Financial Risk Management.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05G

URBAN SOLID WASTE DEVELOPMENT: A REVIEW OF NIGERIA’S WASTE MANAGEMENT POLICY Maidodo Adam Maiyaki 1 2

, Azizan Marzuki , Abdullahi Alhassan Ahmed

School of Housing, Building, and Planning, Universiti Sains Malaysia 11800 Penang, MALAYSIA. Department of Estate Management and Valuation, Federal Polytechnic Nasarawa, NIGERIA.

ARTICLEINFO

Article history: Received 14 June 2019 Received in revised form 01 November 2019 Accepted 22 November 2019 Available online 19 December 2019

Keywords:

Waste management development; Solid Waste Management Practices; Nigeria’s waste management policy; Urban solid waste management (USWM).

A B S T RA C T

Solid waste management concerns with the administration of the generation, storage, collection, transfer, transport, processing, and disposal of solid waste in correspondent with the best principle of public health, economic engineering conservation, aesthetics and other environmental considerations which are responsive to public attitudes. The continually rising worldwide concern on ecological wellbeing requires that wastes be appropriately administered and discarded harmoniously and satisfactorily. This would minimize, and where possible dispense its potential damage to people, plants, animals and natural resources. Urban solid waste management development in Nigeria can be traced the back to late 1980s. With the rise in population, urbanization, and industrialization alongside globalization, the challenge of urban solid waste management (USWM) has escalated with its attendant human and environmental problems that need to be attended to. Thus, the purpose of this paper is to review government policy related to waste management, development, and practices in developing countries particularly, Nigeria cities from 1988 to date. Finally, this paper is a conceptual paper achieved through the review method. Disciplinary: Environmental Management (Solid Waste Management). ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

Nigeria has 36 States and a Federal Capital Territory which is situated in the Western part of Africa. Census Bureau of the United States (2017) averred that premised on insertion of World Population Prospects information estimated Population of Nigeria is 186,988,000 with a GDP of US$ 235.9billion. With the increase in population due to urbanization and industrialization alongside globalization, the challenges of urban solid waste management (USWM) have expanded. Studies have shown that the birthplace of the problem incorporates inadequate and outdated waste management policies with the deficient regulatory system. Okot-Okumu (2012) traced the primary *Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

source of poor urban solid waste management practices to insufficient and lax policy. This is clearly evident in government failure; absence of private sector’s passion to invest in USWM service conveyance (framework); uncoordinated institutional capacities; low political will, low capacity to discharges duties, poor data for planning, negative attitude of waste generators among others. Adequate and updated waste management policy with a strong regulatory system is a sole success factor in any reform management. A good policy in any reform institution may give a 50% chance of success. Amasuomo & Ojukonsin (2015) stated that suitable policy is an institutional instrument for the execution of waste management procedure whosoever in charge, hence, it is pivotal to effective USWM. The aim of this paper is to review Nigerian government waste management policy vis-a-vis USWM practices to determine both success and failure factors.

2. WASTE MANAGEMENT DEVELOPMENTS IN NIGERIA The solid waste issue drew the attention of human civilization even before water and air pollution issues. Due to the advancement in the development of items, technologies, and services, the quality and quantity of waste kept on changing throughout the years. Hence, the waste qualities depend on individuals' income, culture and location as well as economy general public experiences and circumstances like a hazard to which the general public might be subjected to (Chen et al., 2011). The historical development of developing nations is not starkly similar to that of developed nations. The method of waste disposal or sanitation and its associated human and environmental problems in Nigeria like any other African nation today are remindful of the 19th century of Europe and perceived as the 20th century of Asian and, it appears everyone needs to win 'as much conceivable’ (Chandrappa & Brown, 2012). Thus, presently Nigeria like any other Africa are living in the past of the 19th century of Europe and the 20th century of Asian in terms of urban solid waste management and its attendant human and environmental problems. Walling et al. (2004) averred that the total size of the solid waste issue in Nigeria is difficult to grasp. Perhaps, due to the absence appropriate system for regulation and poor planning, the volume of waste that piles up in a few hours is beyond what waste collectors could responsibly transport in a day. Based on these narratives, Nigerian waste “dumps” are situated along the major road at the edge of urban areas and there are no public waste containers. As a result, waste regularly spreads into the street, blocking traffic, gutters and so on. Hence, a reasonable amount of waste remains uncollected; when waste piles up, households and businesses gather it in the middle of main roads and burn it (Warren, personal experience). Consequently, these lead to inadequate waste management with far-reaching ramifications to both public and environmental health (Zainu & Songip, 2017). From the background information described above, Nigeria is a country that epitomizes protracted solid waste management issues going by the trend of its population growth. That it is the most populated black nation in the world, with enormous wealth from crude petroleum. However, the country has been facing numerous environmental and socio-economic problems such as urban waste management and poverty, with the population more than 190 million, known as the giant of Africa (Ezeh, 2017). In the same vein, the National Population Commission (NPC) and the National Bureau of Statistics (NBS), in 2017 have put the figure of Nigeria’s population at 193,392,517. Likewise, for more than half a century now, Nigeria has had the third biggest urban growth rate on the planet at 5.51% every year (UNWUP 1999). It is evaluated that almost 10% of the population

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

lives under the national poverty line (World Bank 1996). Since the acquisition of independence from Great Britain in 1960, Nigeria's administration has been controlled by a progression of military dictators. The race in 1999 of Olusegun Obasanjo was the start of the 1st true democracy in Nigeria (Economist 2002). But, the nation is still known to be exceedingly corrupt which thwart the influence of the federal government over environmental control. The National Environment Protection Agency (FEPA) was set up in 1988 to manage the increasing concern of waste management in Nigeria (Onibokun and Kumuyi 2003). Vision 2010 was FEPA try to address environmental problems in the country that would lead to sustainable development. Concerning solid waste management, the report says the objective is to "accomplish at least 80% successful managing of the volume of urban solid waste produced at all levels and guarantee environmentally stable management" (Vision 2010, 2003). Approaches to accomplish this objective incorporates education/awareness programs, community involvement in dealing with the integrative management of USW, reinforcing existing laws and guaranteeing adherence, and promoting a residence and private sector cooperation. Even though this sounds positive, but to some degree no commitment towards that, because the realism of poverty and government infidelity has barred viable operation of these plans. There is little to consider the government or the general population in charge of the regulations made by FEPA and Vision 2010 (Bankole 2004). This paper argued that there is a lot much more to consider the government is the custodian of the regulation and there is nothing to consider since the general public can only respond to the regulations not responsible for the formulation and Vision 2010 now we are in 2019 yet nothing to show on waste management appropriation in Nigeria. The general public can only respond to regulations (i.e., policies) that are responsible (i.e., policies that are strong, appropriate, fully implemented and enforced) not the opposite. Consequently, no organization would be ready to assume liability for the regulation of waste management. For instance, in Ibadan, in the western region of Nigeria, jurisdiction over waste management has changed hands many times since the late 1980s (Onibokun & Kumuyi 2003). Even though local authorities are planned to fund solid waste disposal, not as much as one-fourth of the cash was realized in 1994 (Onibokun & Kumuyi 2003). Since state resources are to some extent scarce, privately-owned companies would often be engaged in waste disposal. But, these companies cannot be more efficient than the state, in Ibadan in 1991, there were twenty-three enlisted private waste collectors. However, just ten were functional (Onibokun 1999). This as a result of the fact that privately-owned companies have limitations regarding law enforcement. Lagos, south of Ibadan, exhibits another impediment to efficient waste management. The city has about twelve and eighteen million individuals, the 6th biggest city on the planet. A 20-25% of Lagos' financial plan is allotted to waste management. Not only that but even with appropriate waste gathering trucks, effective management and collection of solid waste were thwarted. This was due to the absence of good streets and planned roads which made it difficult for the trucks to move through to gather the huge accumulated waste generated daily. In the five other mega-cities of the world, more than forty trips are made every day from the city to the disposal site. In Lagos, just two trips are conceivable every day (UNESCO 2003). This is so because development control which is the urban planning tool used to regulate the development of any physical development in town or cities being the custodian of space were not recognized in the policy guidelines. *Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

To illustrate this, Agunwamba (1998) stated that, at the center of the problems of solid waste management are the lack of appropriate and strong policy. In other words, Government policies on the environment are piecemeal where they exist and are not fully implemented which were identified as key challenges militating against effective waste management in Nigeria. It is against this background that this study is set out to review Nigeria's government policy related to waste management to provide a clear part for all agencies, different levels of government, and the general public including NGOs and group affiliations.

2.1 URBAN SOLID WASTE MANAGEMENT PRACTICES IN NIGERIA

Nigeria covers 924,000 km2 and is located in the western part of the African continent with a population of more than 190 million, with a growth rate of 2.6% (Ezeh, 2017). Nigeria is comprised of 36 states and the Federal Capital Territory (FCT) which are all in all constituted 774 Local Government Areas. Urban waste management ideally, should be the collective process of sorting, storage, collection, transportation, processing, resource recovering, recycling and disposal of waste to rid human and the environment from it hazards (Cointreau, 2007; SchĂźbeler et al., 1996). However, USWM in Nigeria is portrayed by ineffective gathering techniques, lack of ability to meet the scope of the gathering framework and indiscriminate dumping of solid waste.

Figure 1: A pile of solid waste along Lafia road (the capital city of Nasarawa state) Contrarily, the amount of solid waste produced in urban centers in industrialized nations is higher than in low-income countries; still, municipal solid waste management service deliverance was met due to enabling policies. While, in most low-income nations, Nigeria is not the exception, the reverse is the case (Agunwamba, 1998). Hence, the typical solid waste disposal practice in Nigeria is an open dump. While some use streams as routes to transport their solid waste out of their sight, some specifically dump their solid waste by the street sides. In some segments of Nigeria, by and large, a dump is covered; some imprudently blaze it (Igoni, 2007). According to Babayemi & Dauda (2009), and Nkwachukwu et al. (2010) that in Nigeria, waste is often dumped by roadsides, accessible open pits, rivers, and gutters. The habit of indiscriminate dumping of urban waste is increasingly increasing in most cities of Nigeria (Figure 1). Uniquely, only a few Nigerians have thought of it as a shoddy method. Throughout the years, solid waste collection and disposal in

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

Nigeria has been a greater issue of concern. In the same manner in Nigeria, the processes involved in the management of waste are storage, collection, transportation, and disposal at dumpsites (any available open space). Urban solid waste is being disposed of using several methods. However, methods used, are landfill, incineration, composting and anaerobic digestion and recycling (Abila & Kantola, 2017). In Nigeria, the existing practice of urban or municipal waste management is open dumping in any available open space, while the incineration technique is rarely put to practice. Incineration is the cheapest urban waste disposal option which is from time to time used in Nigeria clinics where medicinal waste is burnt at a nominal scale (Ogwueleka, 2009). The cheapest and easiest technique for waste disposal is landfill. The subsequent environmental effect of landfills is colossal yet could be alleviated given sanitary precautionary measures are embraced, and waste lessening is upheld. Landfills were in charge of 49% of England's methane outflows in 2007 (Burnley et al., 2011). Additionally, recycling which is an environmentally free inched disposal method has no place in policy guidelines in Nigeria. Consequently, the issue of the formal recycling sector in Nigeria will not arise. Waste is recycled casually by scavengers who purchase un-utilize valuables from individuals and furthermore go to lawful and unlawful dumpsites looking for materials that can be re-utilized and recycled. The circumstance reported above, if left unchecked may lead to environmental degradation and all forms of human health implication. Thus, this necessitates a review of existing Nigeria waste management policy to curtail the abnormality in waste management practices which is the main purpose of this paper.

3. NIGERIAN GOVERNMENT WASTE MANAGEMENT POLICY Effective waste management is a condition for environmental sustainability depending on policy guidelines. It expresses Nigeria's sense of duty regarding sustainable development with regards to the efficient management of the environment (Ikpeze, 2014). Therefore, waste is the birthplace of environmental issues, and as would be seen underneath, the regulatory system for environmental protection here has gotten attention in Nigeria based on the number agencies involved (Ikpeze, 2014). However, what remains oblique is, can the regulatory system in Nigeria attend to the challenges postured by the increasing rate of waste generation? There are numerous laws and agencies regulating waste management in Nigeria. These comprise The National Environmental Standards Regulatory and Enforcement Agency (NESREA); Federal Ministry of Environment; States' Ministries of Environment; Ministry of Water Resources; Lagos State Waste Management Authority (LSWMA) and different states waste management experts; States' Environmental Protection Agencies, for example, the Lagos State Environmental Protection Agency (LASEPA); and States' Waste Disposal Boards, for example, the Lagos State Waste disposal board (LSWDB). Bako (2014a) stated that Laws/Regulations on Environmental management in Nigeria is glued on the 1989 National Policy on the Environment as edited in 1998, and likewise a set of laws, regulations, and guidelines to guarantee the preservation of natural resources and the quality assurance of the environmental and human wellbeing. The objective of the Nigeria Government Policy on waste management is to accomplish sustainable development in Nigeria as follows: to secure for all Nigerians a quality of environment sufficient for their wellbeing and prosperity; re*Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

establish, keep up and upgrade the ecosystems and ecological procedures key for the role of the biosphere to save biological diversity and the standard of ideal sustainable yield in the utilization of these natural resources and ecosystems; sharpen public awareness and raise comprehension of crucial linkages amongst environment and development in environmental improvement efforts. Likewise, to collaborate in compliance with other countries, international organizations/agencies to accomplish the ideal utilization of trans-boundary natural resources and successful counteractive action of trans-boundary environmental pollution (Bako, 2014a). The Federal Environmental Protection Agency (FEPA) Act is the major legal framework on waste management in Nigeria. With the change to democratic governance in 1999, FEPA transformed into the Federal Ministry of Environment in June 1999. As a ministry is to a greater extent, policy-making organ, the Federal Government built up in November 2006 the National Environmental Standards and Regulations Enforcement Agency (NESREA) with powers the same with the old FEPA for effective enforcement of environmental regulations in Nigeria (Babayemi, 2017). All FEPA's laws have been abrogated with the NESREA act signed into laws by the President of Nigeria in July 2007. The federal laws are the minimum standards in the states. Constitution 33 permits the state to set up stricter standards than the Federal, furthermore enforce stiffer sanctions on violators (Bako, 2014a). Nigeria has different Ministries, Agencies and Departments (MDAs) engaged directly or indirectly with waste issues. These incorporate the Federal Ministry of Environment, State Environmental Protection Agency, State Ministry of Environment, different Local Government and Area Councils and NESREA. The local government authorities are given the obligation of municipal solid waste management by law, however, because of inefficiency, the mediation in waste management exercises by different State environmental protection board/agency became a child of necessity (Table 1). The National Environmental Protection (NEP) (Pollution Abatement in Industries and Facilities Generating Wastes) Regulations S.I.9 of 1991 enforces limitations on the emission of toxic substances and stipulates requirements for monitoring of pollution; it likewise makes it obligatory for existing industries and facilities to perform the environmental audit. The NEP (Waste Management) Regulations S.I.15 of 1991 regulates the collection, treatment, and disposal of solid and hazardous wastes from the municipal and industrial sources. The National Guidelines and Standards for Environmental Pollution Control in Nigeria 1991 offer an essential instrument for monitoring and controlling industrial and urban pollution in Nigeria (Bako, 2014b). In Table 1, different environmental institutions in Nigeria such as Federal Ministry of Environment (FME), National Environmental Standards and Regulations Enforcement Agency (NESREA), State Environment Protection Agencies (SEPAs), State Ministry of Environments (SMEs), State Ministry of Health (SMH), State Waste Management Authorities/Boards (SWMA/B), Local Government Environmental Health Officers (LGEHO), Community Based Organizations (CBO) and Non-Governmental Organizations (NGOs). The FME is designated to manage and implement environmental laws in Nigeria. The importance of such laws/regulations is for it to abide by and for the ministries, agencies, and departments to develop, organize, execute policies and programs on effective waste management information.

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

Table 1: Nigeria Laws/Regulations Related to Solid Waste Management (Source: UNIDO (2012)). Law/regulations/international conventions The Constitution of the Federal Republic of Nigeria 1999, S. 20.

Content Ensuring general environmental sustainability

The Regulations apply to issues in environmental animation and all categories of solid wastes covering every stage of the National Environmental (sanitation and existing solid waste management chain. It is the most wastes control) regulations, S.1. 28. comprehensive regulation on solid waste so far in the country The National Environmental Protection and development of the environment, biodiversity Standards and Regulatory conservation and sustainable development of Nigeria‘s Enforcement Agency natural resources in general and environmental technology (Establishment) (NESREA Act) No 25. including coordination and liaison with, relevant stakeholders within and outside Nigeria‘s on matters of enforcement of environmental standards and regulations. The Environmental Impact It provides for the need for an environmental impact Assessment Act assessment of all projects that may affect the environment. NEP: Management of Solid and The regulations specifically provide for the management of Hazardous Waste Regulations S.1 Solid and Hazardous Waste and adopt a multi-pronged 15. approach that involves the Agency, private operators, industrial and other public agencies. Hazardous waste (Criminal Provisions) Prohibits the carrying, depositing and dumping of harmful Decree No 42. waste on any land, territorial waters and related matters. It prohibits activities relating to harmful waste and lists such activities. International Conventions and treaties. i. Basel Convention on the Transboundary Movement of Hazardous Wastes and their Disposal. ii. Bamako Convention on the Ban of the Import into Africa and the Control of Transboundary Movement and Management of Hazardous Wastes within Africa.

Entry into force 2009

2007

1992 1991

1988

1991 1991

3.1 TOP SITUATION ANALYSIS OF NIGERIA WASTE MANAGEMENT POLICIES

In terms of Nigeria waste management policies narrations in Table 1 indicate that there are no clarification of relationship and responsibilities among NESREA, SEPAs Ministries and LGA councils concerning policy development enforcement and implementation; hence there is confusion and overlap in their activities. According to Bako (2014b) apart from these obvious hindrances, one of the most important factors this paper identified as a factor affecting waste management is the ambiguity in the Nigerian environment law on the authority (i.e. state government or local council) vested with the responsibility of collecting and disposing of wastes in the states. Unlike, Malaysia, solid wastes are by and large classified into three main classifications, and every class is under the obligation of particular government divisions: a. Municipal solid waste – under the Ministry of Housing and Local Government (MHLG) b. schedule/ hazardous waste – under the Department of Environment (DOE) c. Clinical waste – under the Ministry of Health (MOH) Municipal solid waste management in Malaysia is under the obligation of the local authority. The local authority is relied upon to give direct or indirect (through contract) fair and satisfactory public sanitary services to all urban and semi-urban communities inside of its jurisdiction. Nevertheless, local authorities are confronted with a lot of issues concerning the collection and transportation of wastes. By and large, half of the local authority's working budget plan is spent on

*Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

MSWM and of this more than half is spent on the collection of waste. Hence, the government has set up another solid waste management structure. Under the Ministry of Housing and Local Government, Malaysia has set up the National Solid Waste Management Department as the regulatory body and the Solid Waste and Public Cleansing Management Corporation to carry out the operations. The corporation would assume control over the part of overseeing solid waste from local authorities and watch over the concessionaires. In any case, local authorities would keep on monitoring cleanliness in regions under their watch. From the circumstances reported above, to have effective waste management and sustainable development in terms of waste collection and disposal effort in Nigeria, the enforcement mechanism should preferably be left with only one organization where many agencies must be involved, their role must be clear-cut and well spelled out. The enforcement of environmental laws in Nigeria generally has been problematic. The management and regulation of the environmental Laws have been overwhelmed by a host of problems and has met with very limited success. These problems that hinder the enforcement of sanctions on violators of the environment are political, social and economic. It is, therefore, clear that any effort towards a sustainable legal framework for successful enforcement, avoidance of overlap of environmental laws must come to terms with these issues, as a positive step towards the protection of the environment through effective waste management (Uchendu, 2016). Mbah and Nzeadibe (2017) lamented that at the core of the problems of solid waste management is the absence of adequate policy and enabling legislation. Government policies related to waste management are piecemeal where they exist and are poorly implemented. The policy of waste management must be thorough and incorporate plans for waste minimization amid every phase of a product life cycle from the utilization of raw materials, production procedure, to final disposal of the wastes. However, the financial cost of products decides client decisions as opposed to their environmental friendliness. There is no rising public sensation to the relationship linking products and environment and said sometime recently, the manufacturing sector is not stimulated viably to lessen waste. Concerns mostly are for the profit at the detriment of environmental protection. Thus products are not intended for minimized environmental effects. Conversely, significance set on the various policies set out which supposes to serve as a base for the governmentâ€™s vision and strategic plan for the prevention and management of wastes, and the policies intended to be applied for achieving them has been a neglected domain. Hence, it aims to provide a framework within which individuals and organizations can make a contribution through more efficient use of resources, better-informed choices, and decisions about how to manage and dispose of waste once the products have reached the end of their useful life are undermined. Possibly, because of limited studies on policy related to USWM in Nigeria which is apparently evident in the present deficit and weakness of Nigerian government policy on several important areas of waste management. To demonstrate this, no policy exists for sorting at waste generation points, recycling, reuse, recovery, composting or sanitary landfilling, scavenging and no specific agency responsible for enforcement of laws/regulations, which makes the current waste management process not to be effective (Gurdian & McDonald, 2011). Table 1 also indicated that there is no decisive strategy or national policy plans on the management of waste. There is also the issue of policy reversal with different administration where it exists and also non-implementation of the national guidelines on solid waste management and

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

possibly, no awareness of the guidelines in some states; where there are plans, there is no clear delineation of roles and responsibility between local government and states and other stakeholders. Consequently, this led to a fragmentary institutional framework with attendant institutional hindrances to effective solid waste management. It is also quite evident from narrations in Table 3.1 that waste management is an uncoordinated sector in most of Nigeria cities. Perhaps, due to poor policy formulation and implementation. The constraint to policy formulation and implementation in the cities includes the constitutional lapses in ensuring duties and the clear path between the state and local government agencies. This review found that inadequacy and poor implementation of policy-related waste management may be attributed to lack of understanding of the underlying political economy of waste work; nonchalant attitude towards the informal economy on the part of elected officials who see no mileage to benefit from supporting the waste management sector; and before now, a limitation of study highlighting the significance of political economy of waste work in the Nigeria.

3.2 NEED FOR SOLID WASTE MANAGEMENT POLICY IN NIGERIA

Waste generation and its likely effects on both human, environmental health, and the urban landscape have become recurring dismal in Nigeria today (Olukanni, 2014). All stakeholders concern with the safety and the beautification of our environment need to realize the negative consequences of nucleated solid wastes found in residential neighborhoods and many places in cities. These solid wastes have become recurring features in our urban environment. It is no longer news that Nigerian cities are inundated with the challenges of uncleaned solid wastes (Osinibi, 2014). Consequently, urban residents are often confronted with the hazardous impact of nucleated solid wastes found in their environment. Hence, there is a need for solid waste management policy to clearly spelt out the following in the policy guidelines: the overriding rules and regulations; strategic goals/objectives; blue print specifying what actions and measures shall be taken to accomplish the waste management policy; and by who; a set of management methods to be considered to enable cost-effective management of a particular waste as specified by waste management policies (special emphasis on the role of the private sector and community; for their full participation); facts on how various measures and actions perceived in waste management plan shall be executed and by whom; amount of waste generated; a comprehensive solid waste management framework; integrated; cost effective; sustainable; and satisfactory to the community, with an accentuation on environmental preservation and technological option which are bearable and guarantee general wellbeing; execute solid waste management in light of the waste management progression that necessitate waste reduction through 3R, in-between treatment and final disposal; negative effects of the waste generated on human and environmental health; the composition of harmful substances in products and materials; persons whose activities generate waste; a clear call for adequate funding of the various strategies has been made to all stakeholders; sanctions and enforcement mechanisms strengthening and decentralising for effectiveness, while rewards for best practices to be institutionalised as identified by various studies such as (Akpabio, 2012; Ladan, 2012; Ngwuluka et al., 2009; Offiong, 2011; Olusakin, 2006), etc. just to mention a few. Given these points, the waste management policies and regulations were propagated to guide and mitigate the continuous dumping of waste to rivers, pathways, water channels and illegal dumpsites (Abila & Kantola, 2013). Collaborating the study of *Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

Zainu and Songip (2017) in a study â€œPolicies, Challenges, and Strategies for Municipal Waste Management in Malaysiaâ€? stating that, generally, substantive progress has been made in Malaysia regarding developing MWM infrastructures. However, the desired goal of a clean and green nation has yet to be attained due to docile and weak policy which provides a favored condition for the following number of issues: Attainment of a waste recycling program as a long haul strategy for urban waste management is deterred (Economic Planning Unit, 2010). This becomes a matter of concern in view of the fact that the appropriate disposal sites are winding up threatened and the vast majority of the current ones are almost coming towards the terminal point of its utility. To demonstrate this, as indicated by (Nadzri, 2013) that the wastes produced are dumped at 165 dump sites in Malaysia, which provide for up to 95% of Malaysian waste, of these, only 8 are sterile landfills while the rest are open dumps. Moreover, around 80% of these dumps have practically attained full limits and will be closed down in a few years. Shutting a landfill is environmentally tasking which entails obtaining different parcels of land, which would, in the end, turn out to be rare later on. The current recycling rate of 5% is misleading since recycling exercises are as yet unregulated along these lines no legitimate information has been gathered (Nadzri, 2013). Meaning, municipal waste recycling in Malaysia is still at the crossroad. Attempt to less waste through waste recycling should be well strategized in a policy guideline. This does not mean going for more capitalintensive and classy frameworks since they are not only the most powerful and productive. The recycling system ought to be legitimately strategized including all the partners (waste generators) such as the government, districts, families, non- governmental organizations, manufacturers, scavengers and so on. No Decision Support System (DSS) has been developed for the waste management system. This may hinder access to important information from being used for future planning (Nadzri, 2013). In other words, coveted waste management service deliverance in any given nation relies upon dependable information about quantities and qualities (Badgie et al., 2012). And the authors added that this would shed light on the amount of material that can be obtained and aid the decisionmakers to come up with better decisions later on. A lot of researches has been embraced in the past on waste composition, yet they were challenges utilizing appropriate sampling procedures and lacks coordination due to the absence of DSS. This is a factor that could be a threat to a decent method for city waste management in any nation. Consequently, municipal waste analysis and information for major cities in Malaysia have not been critically analyzed and documented (Badgie et al., 2012). Public awareness on waste management issues stays deficient; in spite of the amount of money the local authority spent half of their operational budget (40% - 80%) on municipal waste management related issues. Hence, the need for basic skills and expertise in waste management must not be undermined if the coveted objective must be accomplished. The important partners must obtain and expertise to deal with the different municipalities of waste management well and skilfully as stated in the eleventh Malaysia Plan to speed up human capital improvement for a developed country (Economic Planning Unit, 2015). The government has upheld recycling programs through various campaigns however little has been achieved. Perhaps, due to the lack of community participation aside lukewarm attitudes of the public in Malaysia would have reduced the cost and volume of waste to be disposed of. To demonstrate this a research was carried out by (Rathi, 2006) of which the two alternative

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

approaches to solid waste management were weighed on the balance and explored using a developed mathematical model to determine the net costs of each approach as follows: One, the net cost with community participation is Rs. 1518(US$35). Two, the net cost with private-public partnership (PPP); Rs. 1797 (US$41). Three, the net cost with only local authorities Rs. 1908(US$44). Thus, community participation in waste management is the cheapest among all. These could be briefly explained as follows: on account of community participation, the expense is borne by waste generators while on account of PPP which Malaysia government dwells on there is no component to recoup the cost from waste generators. The expense of collection and transportation of waste management is much lower with community participation than with PPP due to the fact that on account of community participation waste is separated at the source and just non-biodegradable and non-recyclable materials are transported to dumpsites. It lessens the necessity for community containers and the number of trips to transport waste. This directly or indirectly has lessened the cost and amount of waste to be disposed of. Moreover, LAs are, in most cases, incapable of absorbing the high-cost expenditure since the necessary resources to implement adequate municipal waste management systems are generally underestimated. The absence of these consequently, leads to inadequate waste management with far-reaching ramifications to both the public and the environment health (Badgie et al., 2012). That is to say that, the amount of waste generated would continue to increase without a conscious decision by consumers to reduce, reuse and recycle. Noted that Malaysia's solid waste management policies lack two imperative measures: i. motivators for waste separation and the "pay as you throw" approach. That the incorporation of these measures is fundamental if any coordinated waste management system is to be effective. ii. Low levels of legislative enforcement and administrative inefficiencies are important issues that must be avoided. This may be possible because the Malaysian Solid Waste Management Corporation is a private business that expects to operate profitably. Thus, to change the narratives there is a need for adequate and sound policy fully implemented, enforced, and ensure compliance, been a law, roadmap, or framework, blueprint, or plan, or measures or standard working practices which the main objective of this paper.

4. CONCLUSION This paper dissects the existing policy structure on urban waste management in Nigeria and elucidates the provision of strong and appropriate policies, judicial decision and government intercessions that help a rights-based comprehension of waste management and disposal in Nigeria. Likewise, recommendations have been made on positive activities and changes that could offer a catalyst to a heartier and effective waste management framework in Nigeria. Government at all levels in Nigeria ought to in this manner be aware of the need for a healthy and clean environment as a condition for sustainable development. This is because, from the much that has been expressed about enhancing the framework for waste management, it is clear from this work that the Nigerian Government policy is porous and of course, has a long way to go in the documentation of adequacy and efficiency. This is the main issue abetting poor waste disposal practices. As a matter of urgency, this necessitates a review of Nigeria's waste management policy as well as streamlines them to provide a clear part for all agencies, different levels of government, and the general public including NGOs and group affiliations involved. *Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

Subsequently, the bridging equipment and infrastructure gap is a relevant variable in the equation of effective and sustainable urban waste management need to be met. In other words, there is a need for an articulated national policy strategy that joins sufficiently streamlined regulation, monetary arrangements, community participation, presentation and sustenance of new technological and scientific techniques and awareness in the region. The answer to solid waste issues in Nigeria would remain illusory until the point where every single related issue has been dissected exhaustively and brought to the fore. The recommendation for effective urban waste management is given a). Providing enabling regulation for the effective execution of a waste program, to incorporate a complete sanction on open dumping. This sanction, conversely, is possible only and only if sufficient waste cans, collection facilities, and appropriate dumpsites are first worked out. b). Formulation of integrated policies on waste minimization, recycle, reusing, and disposal. One of the basic parts is the system for sufficient planning of waste collection, transportation, and disposal facilities.

5. DATA AND MATERIAL AVAILABILITY Information regarding this study is available by contacting the corresponding author.

6. ACKNOWLEDGEMENT The special thanks go to the first authorâ€™s institution for financial support through TEDFUND.

7. REFERENCES Abila, B., & Kantola, J. (2013). Municipal solid waste management problems in Nigeria: evolving knowledge management solution. Paper presented at the Proceedings of World Academy of Science, Engineering and Technology. Abila, B., & Kantola, J. (2017). Proposed solutions in municipal solid-waste management. International Journal of Environment and Waste Management, 19(4), 297-317. Agunwamba, J. (1998). Solid waste management in Nigeria: Problems and issues. Environmental Management, 22(6), 849-856. Akpabio, E. M. (2012). Water supply and sanitation services sector in Nigeria: The policy trend and practice constraints. Retrieved from Amasuomo, E., & Ojukonsin, T. (2015). Exploring the Potential of Organic Waste as a Source of Methane Gas for Electricity Generation in Nigeria. Journal of Management and Sustainability, 5(3), 99. Babayemi, J., & Dauda, K. (2009). Evaluation of solid waste generation, categories and disposal options in developing countries: a case study of Nigeria. Journal of Applied Sciences and Environmental Management, 13(3). Bako, A. G. (2014a). Municipal Solid Waste Re-Use And Recycling For Wealth Creation And Sustainable Environment In Zaria, Kaduna State, Nigeria. Department Of Geography, Faculty Of Science, Ahmadu Bello University, Zaria. Bako, A. G. (2014b). Municipal Solid Waste Re-Use And Recycling For Wealth Creation And Sustainable Environment In Zaria, Kaduna State, Nigeria. Department Of Geography, Faculty Of Science, Ahmadu Bello University, Zaria

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Burnley, S., Phillips, R., Coleman, T., & Rampling, T. (2011). Energy implications of the thermal recovery of biodegradable municipal waste materials in the United Kingdom. Waste management, 31(9), 1949-1959. Chandrappa, R., & Brown, J. (2012). Solid waste management: Principles and practice: Springer Science & Business Media. Chen, A., Dietrich, K. N., Huo, X., & Ho, S.-m. (2011). Developmental neurotoxicants in e-waste: an emerging health concern. Environmental Health Perspectives, 119(4), 431. Cointreau, S. (2007). The growing complexities and challenges of solid waste management in developing countries. World Bank. Ezeh, O. K. (2017). Trends and population-attributable risk estimates for predictors of early neonatal mortality in Nigeria, 2003–2013: a cross-sectional analysis. BMJ open, 7(5), e013350. Ikpeze, N. (2014). Safe disposal of municipal wastes in Nigeria: perspectives on a rights based approach. Journal of Sustainable Development Law and Policy (The), 3(1), 72-86. Ladan, M. T. (2012). Review of NESREA act 2007 and regulations 2009-2011: a new Dawn in environmental compliance and enforcement in Nigeria. Law Env't & Dev. J., 8, 116. Mbah, P. O., & Nzeadibe, T. C. (2017). Inclusive municipal solid waste management policy in Nigeria: engaging the informal economy in post-2015 development agenda. Local Environment, 22(2), 203-224. Ngwuluka, N., Ochekpe, N., Odumosu, P., & John, S. A. (2009). Waste management in healthcare establishments within Jos Metropolis, Nigeria. African Journal of Environmental Science and Technology, 3(12). Nkwachukwu, O. I., Chidi, N. I., & Charles, K. O. (2010). Issues of Roadside Disposal Habit of MunicipalSolid Waste, Environmental Impacts andImplementation of Sound Management Practicesin Developing Country" Nigeria". International Journal of Environmental Science and Development, 1(5), 409. Offiong, O. J. (2011). The dilemma of implementing effective environmental policies in Nigeria. JORIND (9), 1. Ogwueleka, T. (2009). Municipal solid waste characteristics and management in Nigeria. Journal of Environmental Health Science & Engineering, 6(3), 173-180. Okot-Okumu, J. (2012). Solid Waste Management in African Cities-East Africa: INTECH Open Access Publisher. Olukanni, D. O., Azuh, D. E., George, T. O., Ajayi, M. P., & Emenike, P. C. (2014). The Relevance Of Policy And Practice On Sanitation Effort In Developing Nations: The Experience Of A SemiUrban City In South-West Nigeria. Olusakin, A. M. (2006). Peace in the Niger Delta: Economic development and the politics of dependence on oil. International Journal on World Peace, 3-34. Osinibi, O. M. (2014). Evaluating the impact of poor waste disposal management on environmental sustainability and human rights in Nigeria. Interdisciplinary Environmental Review 19, 15(2-3), 147-159. Rathi, S. (2006). Alternative approaches for better municipal solid waste management in Mumbai, India. Waste management, 26(10), 1192-1200. Schübeler, P., Christen, J., & Wehrle, K. (1996). Conceptual framework for municipal solid waste management in low-income countries (Vol. 9): SKAT (Swiss Center for Development Cooperation) St. Gallen. *Corresponding author (M.A.Maiyaki). Email: adammaidodo@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID: 11A05G http://TUENGR.COM/V11/11A05G.pdf DOI: 10.14456/ITJEMAST.2020.87

Uchendu, O. H. (2016). Household Waste Disposal Laws in the Federal Republic of Nigeria. Walling, E., Walston, A., Warren, E., Warshay, B., Wilhelm, E., & Wolf, S. (2004). Municipal solid waste management in developing countries, Nigeria, a case study. Group, 9, 1. Zainu, Z. A., & Songip, A. R. (2017). Policies, challenges and strategies for Municipal waste management in Malaysia. Journal of Science, and Innovation Policy, 3(1). Dr. Maidodo Adam Maiyaki is a Master's Degree Holder from the Department of Urban and Regional Planning, Federal Polytechnic Nasarawa. He received a National Diploma and Higher National Diploma in Urban and Regional Planning from Federal Polytechnic Nasarawa. He continued his PGD and M.sc in Environmental Resource management in Nasarawa State University Keffi, Nigeria. He got a Ph.D. (Doctor of Philosophy) in Urban Planning and Management from Universiti Sains Malaysia. He is interested in Urban Planning, Urban Design, Sustainable Human Settlement, Urban Economy and Housing. Prof. Dr. Azizan Marzuki joined USM after completing his Ph.D. from Flinders University, Australia. Prior, he worked with the Federal Town and Country Planning Department. His research interest covers a wider area such as Tourism Planning, Urban and Regional Planning and Public Participation in the Decision Making Process.

ESV Dr. Abdullahi Alhassan Ahmed is at the Department of Estate Management and Valuation, Federal Polytechnic Nasarawa. He got a PhD (Environmental Science), a Master of Philosophy MPhil in Geography (Environmental Resource Management), a Master of Science (Land Resource Admin).

M.A.Maiyaki, A.Marzuki, A.A.Ahmed

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05H

IMPACTS OF LEVERAGE ON SYSTEMATIC RISK BASED ON CAPITAL ASSET PRICING MODEL: A COMPARISON OF HIGH AND LOW CAPITAL INTENSIVE FIRMS 1

Mubeen Abdur Rehman , Muhammad Kashif Khurshid 1 2 Muhammad Ans Hafeez , Muhammad Kashif

, Muhammad Iltaf ,

Department of Management Science, National University of Modern Languages (NUML) Islamabad, PAKISTAN. 2 Govt. Degree College Khurrianwala Faisalabad, PAKISTAN. ARTICLEINFO

Article history: Received 24 June 2019 Received in revised form 08 November 2019 Accepted 26 November 2019 Available online 23 December 2019

Keywords:

Systematic risk (beta); Degree of operating leverage (DOL); Degree of financial leverage (DFL); Degree of combined leverage (DCL); Firm size; Tobin’s Q.

A B S T RA C T

This study examines the relationship between leverage and systematic risk using high and low capital intensive firms for a period of six years (2010-2015). With the help of a simple random sampling technique, the data of 94 non-financial firms state the impact of leverage on systematic risk and it is found that degrees of operating leverage (DOL) and Degree of combined leverage (DCL) have significant while degrees of financial leverage (DFL) has an insignificant impact on systematic risk. Secondly, the core objective of this study is to differentiate the outcomes of high and low capitalintensive firms. Hence, the results concluded that in the case of high capital-intensive firms, the result of DOL and DFL is positively significant on systematic risk (beta). On the other hand, by compelling the low capital-intensive firms, the result is insignificant. The empirical results showed that capital intensity does influence leverage due to which leverage has a consistent impact on systematic risk. Disciplinary: Financial Sciences and Management. ©2020 INT TRANS J ENG MANAG SCI TECH.

1 INTRODUCTION

Risk is an integral part of every investment and more interestingly, it is harder to predict. In fact, the level of risk should be considered in any investment. The most challenging task for a financial manager is to provide funds for investment. Systematic risk has the characteristics of the whole market. However, any decision taken by a company put the risk in the value of its common, for example, change in capital structure and use of debt may be a cause to reduce the cost of capital for a company (Akbari & Mohammadi, 2013). Operating leverage (DOL) demonstrates that how and how much operating profit can fluctuate with the help of the degree of operating leverage, which depends upon the volume of sales (Alaghi,

*Corresponding author (M.Kashif Khurshid). Tel: +92-300-9650054 Email: kashif041@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05H http://TUENGR.COM/V11/11A05H.pdf DOI: 10.14456/ITJEMAST.2020.88

2011). Operating leverage has a significant impact on systematic risk (Gahlon & Gentry, 1982; Houmes et al., 2012; Ali et al., 2019). The objective of the work is to discover the impact of leverage on systematic risk by comparing high and low capital intensive firms. The systematic risk of a firm can be enhanced by the help of DOL (Gahlon, 1981). As the DOL increases the systematic risk: firms using more leverage are earning more profit margins with higher risk and those who use more level of equity with the lower partition of debt are more sustainable but with lower profit earnings (Bhatti et al., 2010). If managers of a firm use more debt than equity, they may eliminate projects as they may have outcomes with negative values. This also provides benefits and support to investment theory (Odit & Chittoo, 2008). Big companies use a lower level of variability of assets return and risk than smaller companies (Beaver, 1970). It is verified that the size of the firm has a strong relationship with sales and hence, ultimately with the firmâ€™s earning and total assets are used as proxies. Change in earnings of a firm and sales can affect stock returns (Ball & Brown, 1968; Dimitrov & Jain, 2008; Gupta et al., 2016). Hence, it is associated as well as depends upon the assets return in the portfolio investments (Gahlon & Gentry, 1982). Markets look the same and interchangeable but actually, both emerging and developed markets have some special characteristics, they are different from each other including business structure (Gupta et al., 2016). To achieve the equilibrium level, the investors want high returns (Ahmad, 2011). Financial analysts prefer to evaluate the capital intensity by looking at variation in return on assets that can be calculated by total assets over sales (Elmasr, 2007). Investments and strategies are not for communication channels & attitudes of the goals and hence, these investments are for improving return on investment (Bhatti et al., 2010).

2 LITERATURE REVIEW Houmes et al., (2012) and Jiao, (2013) found a positive significant impact of operating leverage on systematic risk. Gupta et al., (2016) indicated the inverse significant relationship between the value of the firm and operating leverage. On the other hand, the degree of financial leverage and firm value were insignificant for firms or portfolio of firms. Operating leverage has a positive significant impact on systematic and overall risk of the common stock and operating leverage is negatively associated with the variable cost of firms (Lev, 1974). Lee and Park (2014) expressed that the overall risk of stock was negatively and positively related to the variable cost and operating leverage, respectively. Mensah (1992) studied the significant impact of operating leverage on systematic risk. Gupta et al. (2016) researched the same variables in India and found insignificant. Moreover, Akbari and Mohammadi (2013) studied the relationship of systematic risk with all three types of leverage and their results showed that these three types of leverage were insignificant. Gahlon and Gentry (1982) found a positive correlation among operating & financial leverages and systematic risk and found significant results of the study. On the contrary, Huffman (1989) found a negative correlation between the financial and operating leverages but it was found that there was an optimistic significant relationship with financial leverage and systematic risk. Operating and financial leverages showed a significant impact on equity risk. DOL and DFL both have a positive impact on systematic risk (Darrat & Mukherjee, 1995). Ghosh and Jain (2000) studied that as the financial leverage increases, the risk attached to the firms also increases. Rayan (2010) studied that as financial leverage increases the value of the company decreases. Hence, leverage was negatively correlated with the value of companies.

Mubeen Abdur Rehman, Muhammad Kashif Khurshid, Muhammad Iltaf, Muhammad Ans Hafeez, Muhammad Kashif

Alaghi (2011) showed a positive significant impact of financial leverage on risk. Akhtar et al., (2012) analyzed that financial leverage has a significant impact on financial performance. Mensah (1992) studied market beta including operating and financial leverages and recommended that accounting flow can represent the real determinants of beta including operating & financial leverage and business risk. Bowman (1979) indicated that financial variables were correlated with risk and can make a very fruitful prediction for future risk. As the level of leverage increases, the firms become riskier especially at the time of low productivity (Obreja, 2008). Mandelker and Rhee (1984) examined the impact of leverage on diversifiable risk for the first time and analyzed the relationship between systematic risk and leverage. Akbari and Mohammadi, (2013) determined the relationship between leverage ratios and systematic risk based on the capital asset pricing model (CAPM). Leverage either individual or combined has a significant impact on stock return, in India, one of the growing markets of the world (Gupta et al., 2016). Bhatti et al., 2010 and Tan et al., (2015) drawn that as the level of leverage increases, the level of systematic risk also increases and vice versa. It was showed that systematic risk was more volatile with the proportionate to leverage. Guo and Whitelaw (2006) developed a model based on CAPM and identified separately the two major components of expected returns, for instance, risk & return and both of two were proved positively significant. Ramadan (2012) analyzed the systematic risk and showed that leverage is a compulsory factor for estimating the risk. The usage of equity can be a result of lower bank liquidity and hence the greater use of debt level enhances the chances of bank liquidations (Acharya & Thakor, 2016). Leverage has a relationship with firm value specifically in riskier and firms having lower growth rates. Further, it was known that debt advantages can be substituted by the management decisions by using other ways in an organization (Ahn et al., 2006). Elmasr (2007) stated that capital intensity as the process of a firm or an industry to invest the amount of money and financial assets to run a business. Ahmad et al. (2011) indicated that corporate tax has an insignificant relationship with the systematic risk and leverage disclosed a positive and significant relationship. Moreover, it was recommended that operating leverage is a wonderful tool for polices to evaluate the low leverage ratios. Gritta et al. (2010) compared and contrast with several carrier firms to understand the impact of the boom. The impact of financial or combined leverage was expressed and analyzed using some sectors of non-financial firms only. Secondly, the most essential quantity of gap is that there is no comparison found for high and low capital intensive firms simultaneously to see the impact of leverage on systematic.

3 RESEARCH METHODOLOGY Data for this study is selected from 94 non-financial firms of 14 diverse sectors listed at the Pakistan Stock Exchange (PSX). Hence, it means that almost all the different sectors are taken in the research work to generalize the results. For the selection of a sample from the population, a simple random sampling technique is applied. The unit of analysis for this research work is an â€œindividual firmâ€?. Data of every firm including high and low capital intensive firms are chosen for six years, 2010-2015. Secondary data is gathered due to reliability and availability as it is a more useful and reliable source for financial analysis. Following the conceptual framework prepared and clarifies the relation of dependent and independent variables. The aim of the research is to explore the impact of financial and operating *Corresponding author (M.Kashif Khurshid). Tel: +92-300-9650054 Email: kashif041@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05H http://TUENGR.COM/V11/11A05H.pdf DOI: 10.14456/ITJEMAST.2020.88

leverage on systematic risk. Interestingly, there are two control variables including firm size and Tobin’s Q. Generally, systematic risk (beta) is measured by a very common method, for instance, with the help of the capital assets pricing model and this model presented trading off between systematic risk and return. As the beta is used to analyze the returns of the market and stock in such a condition when the beta is equal to 1. Hence, the difference in stock return with respect to the market is 1:1. But in such situations, the systematic risk is not ignored and the beta of market risk is taken as a whole (Ramadan, 2012).

3.1 CONCEPTUAL FRAMEWORK

Figure 1 shows all the studied variables. Independent Variables

Dependent Variable

Degree of Operating Leverage (DOL)

Systematic Risk (Beta)

Degree of Financial Leverage (DFL) Degree of Combined Leverage (DCL) Figure 1: Conceptual Framework.

3.2 HYPOTHESES OF THE STUDY

There are three major hypotheses, using statistical techniques. H1: There exists a significant relationship between DOL and systematic risk (β). H1A: There exists a significant relationship between DOL and systematic risk (β) for high capitalintensive firms. H1B: There exists a significant relationship between DOL and systematic risk (β) for low capital intensive firms. H2: There exists a significant relationship between DFL and systematic risk (β). H2A: There exists a significant relationship between DFL and systematic risk (β) for high capitalintensive firms. H2B: There exists a significant relationship between DFL and systematic risk (β) for low capitalintensive firms. H3: There exists a significant relationship between DCL and systematic risk (β). H3A: There exists a significant relationship between DCL and systematic risk (β) for high capitalintensive firms. H3B: There exists a significant relationship between DCL and systematic risk (β) for low capital Intensive firms.

3.3 ESTIMATION MODELS

For the model estimation purpose, three different models are drawn and estimated with the help of considered variables. Following is the overall model of the work

Mubeen Abdur Rehman, Muhammad Kashif Khurshid, Muhammad Iltaf, Muhammad Ans Hafeez, Muhammad Kashif

(1). (đ?›ƒ) đ??˘đ?? = đ?›ƒđ??Ž + đ?›ƒđ?&#x;? đ??ƒđ??Žđ??‹đ??˘đ?? + đ?›ƒđ?&#x;? đ??ƒđ??…đ??‹đ??˘đ?? + đ?›ƒđ?&#x;‘ đ??ƒđ??‚đ??‹đ??˘đ?? + đ?›ƒđ?&#x;’ đ??’đ??˘đ??łđ??žđ??˘đ?? + đ?›ƒđ?&#x;“ đ??“đ??¨đ??›đ??˘đ??§â€˛ đ??Ź đ???đ??˘đ?? + đ?›†đ??˘đ?? The primary purpose of this research is to see the impact of leverage on systematic risk as proved by (Ahmad et al., 2011). All these variables are taken for a specific time period and for a particular firm to realize the control of independent variables. This is a general model, as it includes all the five hundred and sixty-four number of observations for ninety-four different cross-sections. (đ?›ƒ) đ??˘đ?? = đ?›ƒđ??Ž + đ?›ƒđ?&#x;? đ??ƒđ??Žđ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‡,đ??ƒ) + đ?›ƒđ?&#x;? đ??ƒđ??…đ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‡,đ??ƒ) + đ?›ƒđ?&#x;‘ đ??ƒđ??‚đ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‡,đ??ƒ) + đ?›ƒđ?&#x;’ đ??’đ??˘đ??łđ??žđ??˘đ?? + đ?›ƒđ?&#x;“ đ??“đ??¨đ??›đ??˘đ??§â€˛ đ??Ź đ???đ??˘đ?? + đ?›†đ??˘đ?? (2), where, CID = 1, if high capital intensive firms are taken, otherwise â€œ0â€?. In model No. 02, all the independent variables are taken for high capital-intensive firms using capital intensity as a dummy variable. The purpose of the model is to evaluate the results for such firms that are more capital-intensive and to segregate the capital intensity; the median value of capital intensity is taken. Firms, which have values greater than median value considered as more capital intensive firms. The dummy variable helps to see the preferred outcomes. So, this work also uses capital intensity as a dummy variable and in this model, such firms are taken which are highly capital intensive. Hence, firms having low capital intensity are ignored. (đ?›ƒ) đ??˘đ?? = đ?›ƒđ??Ž + đ?›ƒđ?&#x;? đ??ƒđ??Žđ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‹,đ??ƒ) + đ?›ƒđ?&#x;? đ??ƒđ??…đ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‹,đ??ƒ) + đ?›ƒđ?&#x;‘ đ??ƒđ??‚đ??‹đ??˘đ?? Ă— đ??‚đ??ˆđ??˘đ?? (đ??‹,đ??ƒ) + đ?›ƒđ?&#x;’ đ??’đ??˘đ??łđ??žđ??˘đ?? + đ?›ƒđ?&#x;“ đ??“đ??¨đ??›đ??˘đ??§â€˛ đ??Ź đ???đ??˘đ?? + đ?›†đ??˘đ?? (3), where, CID = 1, if low capital intensive firms are taken, otherwise â€œ0â€?. In this model, such firms are taken whose capital intensity is lesser than the median value of capital intensity. This is the third and the last model of the study that completes the work of non-financial firms used in the study. The symbols đ?›ƒđ??Ž , đ?›ƒđ?&#x;? , đ?›ƒđ?&#x;? , đ?›ƒđ?&#x;‘ , đ?›ƒđ?&#x;’ , đ?›ƒđ?&#x;“ are regression coefficients of each respective model. The symbol đ?›† indicates the regression model error.

4 DATA ANALYSIS AND RESULTS DISCUSSION The detailed interpretations of the financial data are discussed below.

4.1 DESCRIPTIVE STATISTICS

Table 1 shows the descriptive statistics for all the variables. Table 1: Descriptive Statistics (N = 564).s Variable Beta DOL DFL DCL Size TQ

Min -0.97 -221.11 -96.44 -412.63 8.77 0.13

Max 6.66 187.02 191.41 356.31 20.13 96.37

Range 7.64 408.13 287.85 768.94 11.35 96.24

Mean 0.28 6.34 1.98 5.29 16.22 6.76

Median 0.07 1.02 0.96 0.80 16.24 3.52

SD 0.82 97.73 15.44 199.04 1.78 10.56

The above table shows that beta (systematic risk) has -0.98 and 6.67 values for minimum and maximum respectively. It has a mean of 0.28, which is lowest in the tables. The median value of beta is 0.08 while the standard deviation is 0.83 for 564 No. of observations. Minimum and maximum values of degrees of operating leverage are different than financial leverage (DFL) and the values are -221.11 and 187.03, respectively. The mean and median values of operating leverage (DOL) for observations are 6.35 and 1.02 while the standard deviation is 97.74. Financial leverage (DFL) has minimum and maximum values which are -96.44 and 191.42, respectively. Mean and Median values of financial leverage are 1.99 and 0.97 while the standard deviation of financial *Corresponding author (M.Kashif Khurshid). Tel: +92-300-9650054 Email: kashif041@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05H http://TUENGR.COM/V11/11A05H.pdf DOI: 10.14456/ITJEMAST.2020.88

leverage (DFL) is 15.44, which is also lower than other types of leverage. Mandelker and Rhee (1984) showed average financial leverage (DFL) of 0.98 for the years and industries in their research. García‐Feijóo and Jorgensen (2010) found a mean of financial leverage (DFL) estimated of 1.23. The minimum and maximum values of combined leverage (DCL) are -412.63 and 356.31, respectively. So, the value range is maximum among all types of leverage, which are 768.94. Mean and Median values of combined leverage are 5.30 and 0.80, while the standard deviation is 199. Similarly, minimum and maximum values for firm size (ln TA) are 8.77 and 20.13 while the range is 11.36. The mean and median values of firm size are greater than the rest of the variables. The standard deviation is 1.78 which shows that all the values are closer to mean.

4.2 CORRELATION MATRIX

Table 2 describes the correlation relationship of variables with each other including all the independent and dependent variables.

Variables Beta DOL DFL DCL Size TQ

Table 2: Correlation Matrix. Beta 1 0.29 0.06 0.25 -0.19 0.27

DOL

DFL

DCL

Size

1 0.01 0.34 0.18 0.01

1 0.05 -0.00 -0.01

1 -0.02 0.01

1 0.08

Beta is highly correlated with DOL and its value is 0.29 in a positive direction and it has the weakest correlation is equal to 0.06 with DFL. DFL has a positive correlation with the beta, DOL, and DCL while it has a negative relationship with firm size and Tobin Q. Financial leverage (DFL) is highly correlated with systematic risk and its value is 0.06 in a positive direction while its lowest correlation is with firm size having a value of -0.01. Combined leverage (DCL) has a positive correlation with systematic risk, DOL, DFL, and Tobin Q while the firm size is negatively correlated with the degree of combined leverage. Combined leverage (DCL) has the strongest positive correlation with operating leverage (DOL) which is 0.34 while it has the weakest correlation with the size that is -0.02. Size is positively correlated with DOL and Tobin Q. Tobin Q is positively correlated with systematic risk, DOL, DCL, and size. There are two hypotheses H0 and HA as described below. If the null hypothesis is accepted, then this research work can use a common effect model and vice versa. Ho: Constant of variables is common and the Pooled Ordinary Least Square technique is suitable. HA: Constant of variables is not common and the Pooled Ordinary Least Square technique is not suitable. In the results there includes 93 dummy variables and the constants of these dummy variables are insignificant. Only a few constants are not common but the rest of them are common in nature. So, the alternative hypothesis is rejected and the null hypothesis is accepted. Hence, the pooled ordinary least square data regression model is suitable for the research. DOL, DCL and Tobin Q are significant while DFL and firm size are insignificant (Houmes et al., 2012) and p-value (F) is 0.05, which is significant. R-square value is 0.30 and the adjusted R-square is 0.26. Table 3 specifies the P-value (F) that states the overall significance of the model and the value is 8.17, which is highly significant. R-square describes all the independent variables that are 30 %

Mubeen Abdur Rehman, Muhammad Kashif Khurshid, Muhammad Iltaf, Muhammad Ans Hafeez, Muhammad Kashif

defining the systematic risk. DOL is positively significant (<0.001) with systematic risk (Houmes et al., 2012; Lee & Park, 2014). DFL is insignificant as it has 0.70 and 0.39 values for p-value and tratio, respectively (Darrat & Mukherjee, 1995; Mensah, 1992). Ahmad et al., (2011) and Ramadan, (2012) found a positive significant relationship between the degree of combined leverage and systematic risk it is, therefore, systematic risk is also positively significant with combined leverage. The outcomes verify that if the DCL increases then the value of systematic risk can also increase. Ramadan (2012); Yoon and Jang, (2005) found a significant relationship between the size of the firm and systematic risk. To elaborate on this study, the results of firm size and systematic risk are also significant but in the inverse track. It clarifies that the increase in the size of a firm causes to decrease the degree of systematic risk. Table 3: Pooled ordinary least square (General Model) Variables Coefficient Const 123.30 DOL 0.13 DFL 0.17 DCL 0.09 Size -6.59 TQ 3.11 R-squared Adjusted R-squared

SE 62.08 0.02 0.43 0.04 3.79 0.63 0.30 0.28

t-ratio p-value 1.99 0.05 5.49 <0.001 0.39 0.69 2.53 0.01 -1.74 0.08 4.94 <0.001 F(6, 556) P-value(F)

** *** ** * *** 12.11 8.17

Table 4: Pooled Ordinary Least Square (For High Capital Intensive Firms) Variables Constant DOL_HCI DFL_HCI DCL_HCI Size TQ R-squared Adjusted R-squared

Coefficient 56.94 0.18 0.08 0.14 -5.54 2.19

Std. Error 22.16 0.03 0.60 0.02 2.42 0.43 0.30 0.26

t-ratio 2.57 5.72 0.13 5.70 -2.29 5.07 F (6, 556) P-value (F)

p-value 0.01 <0.001 0.90 <0.00 0.02 <0.001 12.57 0.00

** *** *** ** ***

Table 4 displays that leverage is taken for high capital intensive firms only and the median value is used as a tool to segregate the high and low leverage firms. The R-square value is 30 %, which indicates that all independent variables are defining the systematic risk of up to 30 %. Operating leverage (DOL) is positively significant with beta while financial leverage (DFL) is insignificant with beta. On the other hand, combined leverage (DCL) is significant with beta. It means that for high capital-intensive firms, the change in DCL can change the systematic risk in the parallel course. Elmasr (2007) stated that companies that have high capital intensity can enjoy more return as compared to low capital intensive firms. Yoon and Jang (2005) analyzed that high levered restaurant firms are a more profitable and ultimately higher level of risk is involved with such firms. It is found that capital intensity has a significant impact on systematic (Stickney & McGee, 1982). It is, therefore, the impact of such firms, which are highly capital intensive is significant on systematic risk as compared to the low capital-intensive firms. In Table 5, all three types of leverages including DOL, DFL, and DCL are taken for those

*Corresponding author (M.Kashif Khurshid). Tel: +92-300-9650054 Email: kashif041@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05H http://TUENGR.COM/V11/11A05H.pdf DOI: 10.14456/ITJEMAST.2020.88

firms, which have low capital intensity. Opposite to Table 4, all the three types of leverages (DOL, DFL, and DCL) are insignificant with beta. On the contrary, firm size is significant with beta. Firm size and systematic risk have a negative relationship, which means that the increase in size can decrease the systematic risk and vice versa. For low capital intensive firms, Tobin Q is also significant. Table 5: Pooled ordinary least square (For Low Capital Intensive Firms) Variable Const DOL_LCI DFL_LCI DCL_LCI Size TQ R-squared Adjusted R-squared

Coefficient 89.88 0.13 0.18 0.10 -6.52 3.16 0.10 0.08

Std. Error 29.71 0.18 0.68 0.27 2.38 0.65

t-ratio 3.03 0.73 0.28 0.37 -2.75 4.89 F(6, 556) P-value (F)

p-value 0.001 0.47 0.78 0.71 0.01 <0.001 6.70 0.00

***

*** ***

5 CONCLUSION In this study, three different hypotheses were generated to calculate the study variables. Systematic risk (beta) is chosen as a dependent while 05 variables as independent are analyzed. Regression analysis showed that the overall significance level of the study. It means the overall study is consistent with the previous work and theoretical models. Firstly, the degree of operating leverage is positively significant with systematic risk (beta). DOL was significant with the beta, which was proved by the work of (Houmes et al., 2012; Lee & Park, 2014; Lev, 1974). All these studies proved that the degree of operating leverage shows a positive impact on systematic risk. On the contrary, the degree of financial leverage is insignificant with the dependent variable. In this case, the null hypothesis is accepted that the degree of financial leverage doesnâ€™t have any effect on systematic risk. Darrat and Mukherjee (1995) also studied such variables with the same relationship and found that the degree of financial leverage was insignificant. In Pakistani firms, DFL is irrelevant to the systematic risk as proved in section 4. Ramadan (2012) studied the relationship of combined leverage with systematic risk and his outcomes were significant. To carry on with such variables, this work proved the previous work. Non-financial firms of Pakistan Stock Exchange showed that in Pakistan systematic risk is affected by combined leverage in a positive direction. Yoon and Jang (2005) found that size is negatively significant with systematic risk. Parallel to their work, in Pakistan, the results are the same as in the United Kingdom. It is found that size is significant with beta. As the size of the firm increases, the level of risk decreases and on the other hand if the size of the firm is small or decrease, the percentage of risk increases. In the end, TQ was positively significant with systematic risk. High Capital Intensive Firms In high capital-intensive firms, leverage is positively significant with systematic risk. Outcomes of DOL stated that the degree of operating leverage is highly significant with systematic risk. It showed that as the value of DOL increases, the value of beta also increases. On the other hand, DFL is insignificant with systematic risk. It showed that in the context of Pakistan, DFL has no impact on systematic risk for high capital-intensive firms. Likewise, DFL was also insignificant

Mubeen Abdur Rehman, Muhammad Kashif Khurshid, Muhammad Iltaf, Muhammad Ans Hafeez, Muhammad Kashif

in model-1 that was used for all types of firms including high and low capital intensity and for firms having high capital intensity, DCL is significant at a 1% level. The change in DCL can pass the change in systematic risk in the same direction. Likewise, the decrease in operating or combined leverage can bring the change in systematic risk, again in the same direction. Low Capital Intensive Firms Opposite to high capital concentrated firms, in low capital concentrated firms, the results showed the impact of degrees of leverage is insignificant on the dependent variable (systematic risk). Model-3 showed that all three types of leverage including DOL, DFL, and DCL are insignificant. Hence, low capital-intensive firms are not related to systematic risk. The results of model-3 are contradictory in nature. It means that capital intensity has an impact on systematic risk. In the case of low capital intensity, the insignificant results showed that the low capital-intensive firms have a lower effect on systematic risk, opposite to the high capital-intensive firms.

6 AVAILABILITY OF DATA AND MATERIAL Data can be made available by contacting the principal and corresponding author.

7 REFERENCES Acharya, V. V, & Thakor, A. V. (2016). The dark side of liquidity creation: Leverage and systemic risk. Journal of Financial Intermediation, 28, 4–21. Ahmad, F., Ali, M., Arshad, M. U., & Shah, S. Z. A. (2011). Corporate tax rate as a determinant of systematic risk: Evidence from Pakistani cement sector. African Journal of Business Management, 5(33), 12762–12767. Ahn, S., Denis, D. J., & Denis, D. K. (2006). Leverage and investment in diversified firms. Journal of Financial Economics, 79(2), 317–337. Akbari, P., & Mohammadi, E. (2013). A study of the effects of leverages ratio on systematic risk based on the capital asset pricing model among accepted companies in Tehran stock market. J. Educ. Manage. Stud, 3(4), 271–277. Akhtar, S., Javed, B., Maryam, A., & Sadia, H. (2012). Relationship between financial leverage and financial performance: Evidence from fuel & energy sector of Pakistan. European Journal of Business and Management, 4(11), 7–17. Alaghi, K. (2011). Financial leverage and systematic risk. African Journal of Business Management, 5(15), 6648–6650. Ali, F., Fareed, Z., Khan, T.M., Hamid, R. (2019). Impacts of Leverage on Investment: A Brief View of Pakistani Listed Firms. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 10(17), 10A17G: 1-8. Ball, R., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 159–178. Beaver, W., Kettler, P., & Scholes, M. (1970). The association between market determined and accounting determined risk measures. The Accounting Review, 45(4), 654–682. Bhatti, A. M., Majeed, K., Rehman, I., & Khan, W. A. (2010). Affect of leverage on risk and stock returns: evidence from Pakistani companies. International Research Journal of Finance and Economics, 58, 32–49. *Corresponding author (M.Kashif Khurshid). Tel: +92-300-9650054 Email: kashif041@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05H http://TUENGR.COM/V11/11A05H.pdf DOI: 10.14456/ITJEMAST.2020.88

Bowman, R. G. (1979). The theoretical relationship between systematic risk and financial (accounting) variables. The Journal of Finance, 34(3), 617–630. Darrat, A. F., & Mukherjee, T. K. (1995). Inter‐industry differences and the impact of operating and financial leverages on equity risk. Review of Financial Economics, 4(2), 141–155. Dimitrov, V., & Jain, P. C. (2008). The value-relevance of changes in financial leverage beyond growth in assets and GAAP earnings. Journal of Accounting, Auditing & Finance, 23(2), 191–222. Elmasr, H. (2007). Capital intensity and stock returns. Journal of Investment Strategy, 2(1), 61. Gahlon, J. M. (1981). Operating leverage as a determinant of systematic risk. Journal of Business Research, 9(3), 297–308. Gahlon, J. M., & Gentry, J. A. (1982). On the relationship between systematic risk and the degrees of operating and financial leverage. Financial Management, 15–23. García‐Feijóo, L., & Jorgensen, R. D. (2010). Can operating leverage be the cause of the value premium? Financial Management, 39(3), 1127–1154. Ghosh, A., & Jain, P. C. (2000). Financial leverage changes associated with corporate mergers. Journal of Corporate Finance, 6(4), 377–402. Gritta, R. D., Adams, B., & Adrangi, B. (2010). Operating, Financial and Total Leverage and the Effects on US Carrier Returns, 1990-2003. Journal of Transportation Research Forum. 45. Guo, H., & Whitelaw, R. F. (2006). Uncovering the risk-return relation in the stock market. The Journal of Finance, 61(3), 1433–1463. Gupta, P. K., Kumar, S., & Verma, P. (2016). Value relevance of the degree of leverages. International Journal of Business and Emerging Markets, 8(2), 166–182. Houmes, R. E., MacArthur, J. B., & Stranahan, H. (2012). The operating leverage impact on systematic risk within a context of choice: an analysis of the US trucking industry. Managerial Finance, 38(12), 1184–1202. Huffman, S. P. (1989). The impact of the degrees of operating and financial leverage on the systematic risk of common stocks: another look. Quarterly Journal of Business and Economics, 83–100. Jiao, D. (2013). Demand volatility, operating leverage and systematic risk in hospitality industry. Universiteit van Tilburg. Lee, S., & Park, S.-B. (2014). A study on the association between operating leverage and risk: The case of the airline industry. International Journal of Economics and Finance, 6(3), 120–125. Lev, B. (1974). On the association between operating leverage and risk. Journal of Financial and Quantitative Analysis, 9(4), 627–641. Mandelker, G. N., & Rhee, S. G. (1984). The impact of the degrees of operating and financial leverage on systematic risk of common stock. Journal of Financial and Quantitative Analysis, 19(1), 45– 57. Mensah, Y. M. (1992). Adjusted accounting beta, operating leverage and financial leverage as determinants of market beta: a synthesis and empirical evaluation. Review of Quantitative Finance and Accounting, 2(2), 187–203. Obreja, I. (2008). Financial leverage and the cross-section of stock returns. In VI Encontro Brasileiro de Finanças. Odit, M. P., & Chittoo, H. B. (2008). Does financial leverage influence investment decisions? The case of Mauritian firms. Journal of Business Case Studies (JBCS), 4(9), 49–60. Ramadan, Z. S. (2012). Does leverage always mean risk? Evidence from ASE. International Journal of Economics and Finance, 4(12), 150–158.

Mubeen Abdur Rehman, Muhammad Kashif Khurshid, Muhammad Iltaf, Muhammad Ans Hafeez, Muhammad Kashif

Rayan, K. (2010). Financial leverage and firm value. University of Pretoria. Stickney, C. P., & McGee, V. E. (1982). Effective corporate tax rates the effect of size, capital intensity, leverage, and other factors. Journal of Accounting and Public Policy, 1(2), 125–152. Tan, N., Chua, J., & Salamanca, P. (2015). Study of the overall impact of financial leverage and other determinants of systematic risk. In Proceedings of the Research Congress, Philippines (Vol. 3, pp. 1–7). Yoon, E., & Jang, S. (2005). The effect of financial leverage on profitability and risk of restaurant firms. Journal of Hospitality Financial Management, 13(1), 35–47. Mubeen Abdur Rehman works as a Business Finance Partner, Finance Department at Haleeb Foods Limited since January 2018. He has completed his MS Business Administration from National University of Modern Languages, Islamabad. He is interested Financial Leverage, Risks.

Muhammad Kashif Khurshid is a Lecturer at Department of Management Science, National University of Modern Languages. He did his MS in Business Administration (Finance) from Mohammad Ali Jinnah University. Currently, he is pursuing a Ph.D. from GC University Faisalabad. He research are Corporate Governance and Corporate Finance.

Muhammad Iltaf is working as a Lieutenant in Pakistan Navy. He has completed his MS in Business Administration from National University of Modern Languages, Islamabad. He is interested in Financial Management.

Muhammad Ans Hafeez is working as an Office Coordinator in the Education Department. He completed his MS in Business Administration from National University of Modern Languages, Islamabad.

Muhammad Kashif is a Lecturer in Commerce at Govt Post Graduate College Sahiwal. He got his MS degree in Finance from National University of Modern Languages Faisalabad Campus. He focuses on Capital Market Imperfections with relative to Investment and Cash Flow.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05I

A REVIEW OF AN ALTERNATIVE STUDIO PEDAGOGY FOR ALTERNATIVE SPACES: CASE STUDIES FROM A STUDENT’S DESIGN COMPETITION Mohammad Saquib

1,2*

Department of Architecture, Faculty of Architecture & Ekistics, Jamia Millia Islamia University, New Delhi, INDIA.

ARTICLEINFO

Article history: Received 16 August 2019 Received in revised form 22 November 2019 Accepted 12 December 2019 Available online 23 December 2019

Keywords:

Design competition; Public Interest Design; Learning outcomes; User satisfaction; Design studio pedagogy; Live projects.

A B S T RA C T

The design studio remains an essential mode of learning for students to develop their basic design sensibilities. However, it often lacks discussions on real issues and challenges and rarely attempts at creating real-time changes in our built environment making design pedagogy only partly real. Design competitions provide an alternative to the conventional design studio environment and often seek design responses to real issues of our society. Design competitions facilitate informal learning among students where they enhance their design skills in a self-motivated and collaborative environment. One such experiment was witnessed in India in a National Design Competition (ANDC) that sought to redesign and build abandoned public spaces. The study aimed to evaluate the success of such projects in a real-time environment and their effectiveness in enhancing learning outcomes among students. Six projects designed and built by students from various schools in the Delhi-NCR region were studied and their learning outcomes were evaluated. Quantitative and qualitative data obtained was used to perform triangulation in a mixed-methods approach. Results obtained revealed a positive impact of the projects in their environments. Projects that engaged the community in their process of design created a more positive impact in their immediate environments. Other factors reporting success were collaboration and students’ motivation. Disciplinary: Architectural Sciences, Architectural Education. ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

The design studio enables students to develop their basic design sensibilities. However, design problems attempted in a design studio are often oversimplified and unrealistic (Rodriguez 2018). They are often evaluated as per the goals set by the design faculties, and not from the point of view of its intended users or its usage (Salama 2015). A range of design studio pedagogies exists that attempt to align the design studio goals with the student’s learning outcomes in a realistic manner, though *Corresponding author (Mohammad Saquib). Email: arsaquib@gmail.com ©2020 International Transaction Journal of

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

they remain an unconventional and alternative mode of design studio education. The paper is a description of a case study undertaken to evaluate entries of a competition project hosted in 2017-18 by the National Association of Students of Architecture (NASA 2017) for the undergraduate students of schools of Architecture in India. The nature of this design competition is seen as an inquiry into an alternative mode of the design studio, which attempts to move beyond the boundaries of a conventional design studio education and seek realistic learning outcomes.

2. PROJECT DESCRIPTION

The Annual NASA Design Competition 2017-18 hosted by the National Association of Students of Architecture in India floated a competition on “Reimagining alternative urban spaces” in which they were supposed to ‘redesign and build abandoned public space’. The design brief sought to question schools of Architecture if they can “create a positive social impact on derelict urban spaces by redesigning alternative spaces to have a larger social impact, and to rebuild and improve them with small interventions”. The objectives outlined for the project were to identify an abandoned public space in the city, evolve a design for "Alternative spaces" that transforms the abandoned public space, engage in hands-on construction and transform the place, and to document the process and the way it is used (NASA 2017). The competition was an opportunity to study the success of the projects conducted by evaluating the project outcomes, perception of the users, and learning outcomes among students.

3. LITERATURE REVIEW 3.1 REVIEW OF DESIGN COMPETITIONS

Student Design Competitions provide an innovative platform for new dimensions of thinking and possibilities in design. They act as an out of curriculum studio where learning often occurs informally. Design competitions help students in learning on their own terms, through active and collaborative engagement, and a self-motivated environment. Many researchers visualize design competitions as a useful tool for design education as well as a profession. According to Rönn (2014), “architectural competition is seen by the profession as an old, effective, and reliable instrument for establishing dialogues among jury members representing professional experts, clients, and even end-users, during the selection and assessment of architectural design proposals.”

The significance of design competitions in shaping our built environment has often been highlighted. Bonenberg (2019) stresses the significance of architectural design competitions in building spatial systems and improving the built environment. Banerjee and Loukaitou-Sideris (1990) view design competition as a form of the design method. Council of Architecture, India (CoA 2005) notes that design competitions “attract great public interest, and have led to the discovery of a new talent and new ideas, that could only be found by throwing an architectural project wide open to competition” Design competitions have played an important role in shaping the informal design pedagogy among students, although little is written about the use of architectural competitions in education as compared to architectural practice (Bibbings et al., 2018; Buddhawanna, 2013). Khare and Khare (2013) explore student design competitions as a pedagogical tool to meet educational objectives in academic curricula. Some also view design competitions as a break in style that is only loosely

Mohammad Saquib

coupled to the curriculum, an effective way of motivating students and providing them with feedback (Verhoeff 1997), and as a tool for the growth of architectural creative activities (Bonenberg 2019). Banerjee and Loukaitou-Sideris (1990) emphasize on making competitions more responsive to user needs. According to Bonenberg (2019), competitions “aim to ensure a high quality of the built environment with the public interest in mind”.

3.2 DESIGN COMPETITION AS AN ALTERNATIVE STUDIO PEDAGOGY

A range of alternative design studio pedagogies exists which attempt to create design learning environments in real circumstances and often in collaboration with people concerned, e.g. Design-Build, Live project, Community Design and Public Interest Design (PID). The projects studied may be categorized as ‘Design and build’ type of live projects as described by Sara (2006), where students work on small projects …“from preparing a brief to design and then construction… with a focus on the relationship between drawing and making, brief development, hands-on material understanding, project management, communication, and working with client/user”. Live Projects comprise six factors reported by Anderson, Godiksen, and Harriss (2016); namely “negotiation of a brief, timescale, budget and product between an external organization and an educational institution”. Public interest design (PID) is another approach to an alternative design studio practice that places a priority on engaging people in the design process and advocates for an issue-based approach to problem-solving (Abendroth and Bell 2016). It includes evaluation as a necessary component in order to measure the success of the project. Since the intent was to evaluate the design projects and measure their success (or failures), and factors contributing to it, it may be assumed that in the study conducted, live projects performed in the design brief were evaluated with a ‘Public Interest Design’ based approach to measure their outcomes.

4. RESEARCH DESIGN FRAMEWORK

Out of more than 400 entries received from various schools of architecture in India, six projects completed by the students from schools of architecture in Delhi and its adjoining National Capital Regions (NCR) were selected for an independent study by the author. There were no restrictions on the number of entries from a school. However, for research purposes, the number of entries from a particular school was restricted to one only. The study aimed to measure the success of the completed projects & their learning outcomes. The objectives for the course were to measure success in terms of user’s perception and improvement in learning outcomes among students. The research questions formulated were: RQ1. Are alternative design studio projects effective at producing positively received projects? RQ2. Are alternative design studio projects effective at enabling students to acquire positive learning outcomes? The methodology involved performing case studies of the selected projects and collecting data to record user and student’s perception. A mixed-methods approach was undertaken to evaluate the success of the projects.

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

5. CASE STUDIES OF COMPETITION DESIGN PROJECTS

Case studies of the projects were performed to observe site conditions, issues addressed, community engagement, and stakeholder involvement. The documents developed by the students for the competition entries were also reviewed to understand the design process followed during the design development, build activities undertaken, construction methods used, choice of materials, project costs, funding modes, quality of the outcome, and evaluation of the success of the project. Data were collected through observation, mapping of activities within the site, discussion with focus groups, and community surveys through the feedback form. Descriptions of the six projects studied are reported in Tables 1 to 6. Project C1 and C4 were also among the entries shortlisted in the competition. Table 1: Project C1: Aarambh (Beginning), New Delhi (Rehani 2017; NASA India 2017).

Category Project brief

Design interventions Materials used Community Engagement Outcomes Visuals

Description A neglected park in an EWS settlement turned into a garbage-dumping zone. The project aimed to transform the site into a safe, hygienic, and usable park for the community, especially for kids. Interventions dealt with the cleaning of the site, provision of seating for elders, and swings for kids. Best out of waste materials (BOOW) and recycled materials were used to make design solutions more environmentally friendly, sustainable, and to reduce the project cost. Seating was built with materials such as bottles, pipes, cans, steel drums and sheets. Swings for kids were made by using materials like tyres, ropes, wooden planks, etc. Students worked on suggestions given by locals. Children and people of the neighborhood slums, generally shopkeepers took part in activities with great interest. The municipal corporation (MCD), and an NGO provided the necessary assistance for completing the project. The park was developed in collaboration with the community. A sense of ownership was visible among the users as the site was maintained well by them along with the NGO, and they felt connected with the project.

Table 2: Project C2: Revitalization of a Park in a Central Market, New Delhi (Joshi 2017).

Category Project brief

Design interventions Materials Community Engagement Outcomes Visuals

Description A park surrounded by shops in a central market was not maintained and had no public infrastructure with a low footfall. The project aimed to develop the space to make it user-friendly, lively, and clean. The intervention dealt with providing seating and eating spaces for visitors and shopkeepers and shaded seating areas for senior citizens under an existing banyan tree. Waste and sustainable materials were used. There was initial support from the MCD but the project received no active participation from the community as the students built the project themselves. People used the project initially but due to high footfall, the interventions could not sustain for long, as it demanded daily upkeep and the shopkeepers were not able to own responsibility.

Mohammad Saquib

Table 3: Project C3: Revitalization of a Park in Ghaziabad, Delhi-NCR.

Category Project brief

Design interventions Materials used

Community Engagement Outcomes Visuals

Description The project aimed to revitalize a park in a shopping area, which turned into a dumping yard, making the space unhygienic and unsafe for visitors. Interventions consisted of reconstructing the broken boundary walls of the park by fixing grills for safety and providing design interventions within it. Shelters for seating area were constructed off the site and installed later on site Roofs were built with bamboo and canvas. Seating was created by using tree guards filled with stones and cemented at the top. Metal scrap and concrete blocks were also used. Oilcans and a mannequin structure were painted and crafted with waste materials for aesthetics. Students received financial support from the market association and the municipal corporation for reconstructing the broken boundary wall of the park. The engagement of the community and the authority helped the students in creating a space, which was utilized effectively instead of being a dump yard. Users, especially nearby vendors were happy as they felt they had a cleaner and hygienic environment.

Table 4: Project C4: Revitalization of a Park in Gurgaon, Delhi-NCR (NASA India 2017). Category Project brief

Design interventions Materials -used Community Engagement Outcomes Visuals (Tripathy 2017)

Description A central hub in the market was a neglected space, which turned into a dumping ground. The project aimed to transform the space into a socially interactive one through experimentation with materials and techniques. Students experimented with materials to design seating arrangements and the adjoining landscape. The temporary light installation was another initiative to make the area safe at night The students collected waste and cost-effective materials from nearby construction sites and their colleges in order to minimize the budget. Seating was made with bricks, used tyres, white cement, mosaic and glass bottles. The project received active participation from locals as well as stakeholders. Students cleaned the site with the helpers. Nearby residents and shopkeepers extended moral support and provided supervision, while few also provided material and financial support. Space was actively used in the market, and the residents and stakeholders were happy. A permanent light installation was still needed as females felt the area was unsafe.

*Corresponding author (Mohammad Saquib). Email: arsaquib@gmail.com ÂŠ2020 International Transaction Journal of

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

Category Project brief Design interventions Materials Community Engagement Outcomes Visuals

Table 5: Project C5: Revitalization of a Park in New Delhi.

Description Students attempted to revive an abandoned park space, sandwiched between two economically diverse community groups who did not mix with each other. The project aimed to create a park for the children, which may stimulate interaction among groups. Students cleaned and removed garbage from the site. They designed and installed the swings with the help of skilled laborers for children's recreation. Bricks, cycle rim, used tyres, MS sections, discarded water bottles, and ropes were used. Communities were reluctant to engage in the project although they felt positive towards the change. Few people provided utility items and labor while still few gave financial support. The project was only partially successful as, despite the interventions, few children only from the economically weaker community used to come to the park while others chose to stay away.

Table 6: Project C6: Sadhya: Revitalization of Hospital outdoors in Murthal, Delhi-NCR

Category Project brief

Design interventions Materials used Community Engagement Outcomes

Visuals (Dahiya 2017)

Description A dirty and unhygienic outdoor in the civil hospital with stagnant water was a breeding ground for insects. The project aimed to revive the open space and make it lively and usable for the people. The attempt was to design for healing through nature and provide a space that acts as an outdoor extension of the hospital interiors but is soothing to its users. Huts made of the bamboo framework were designed with the provision of seating inside them. Swings were also designed for children through waste materials. The brickwork was used to create seating, while bamboo frames were used to create huts. Paints and used tyres were also utilized. The hospital support staff and local masons helped in cleaning the site and build activities. An NGO involved in feeding the wards of the patients in the hospital agreed to take care of the work. A shop owner on-site and users helped in providing insight into the issues on site. Both hospital authorities and users appreciated the project. An immediate increase in footfall transformed an obsolete space into a vibrant one. The project provided an important node for people to sit and interact but it ultimately degraded due to negligence, lack of ownership and civic sense.

Most interventions attempted by students dealt with issues of unhygienic conditions and lack of civic sense. Consequently, design interventions often dealt with the cleaning of spaces, raising community awareness and ownership, and promoting civic sense. Projects that stressed on community involvement were more successful in their outcome, as they were maintained by the

Mohammad Saquib

community groups. In projects where the community did not own the project, the interventions decayed with time.

6. DATA ANALYSIS & RESULTS

Live projects differ due to their complex and holistic nature incorporating teamwork, external collaborators, context-dependence, and varying learning outcomes (Morrow 2007; Harriss 2015; Salama 2015). Morrow (2007) argues that projects may even shift in emphasis as they develop, which makes their assessment difficult.

Hence, Morrow (2014) suggests that live Projects must be assessed differently to design studio projects as it may lead to different types of learners being valued in different ways at different times in the curriculum. However, given its holistic and complex nature, there is a lack of well-defined methods of assessment for live projects. Anderson (2017) argues that ordering live projects by singular categories such as outcome or motive fails to acknowledge their complexity. Hence, emphasis on the process is more relevant, rather than on product in case of live projects. Moore (2016) suggests that for evaluating a project, the intentions of the design team (students in this case) should be known. He further proposes the use of multiple sources of data and performing triangulation for analysis, by combining both qualitative and quantitative methods to ensure validity and encompass differing views of reality. In his critique on live projects, Brown (2012) describes three participating stakeholders in the live project: the student, the educator, and the client. Based on the arguments discussed, and building on a grounded theory approach, studies were performed through surveys, case studies (including open and closed questionnaires, observation) and literature review (Sara 2004). It intended to record and evaluate the perception of both participating stakeholders, i.e. the student and the client/ user which is detailed out in the continuing sections.

6.1 REVIEW OF CASE STUDIES For comparing and analyzing the projects, six factors reported by Anderson (2017) as common to all live projects were considered. Each factor with its own spectrum was used for a quantitative interpretation of information. Unused spectrums were filtered out for analysis. A description of three factors, namely brief (level of institutional support), timescale, and educational organization (group size, student level and curricular/extra-curricular), which shared common spectrums in all projects is being provided in Table 7.

# 1 2 3

Table 7: Description of common spectrums of studied projects

Factors Brief Timescale Educational Organization

Group size Student level Type of Activity

Common Spectrums To be developed by Students 3 months 1-10 Undergraduate Extra-curricular

All six projects were documented on three remaining factors, i.e. budget (funding source), product (permanence of outcome), and external collaborator (client) which are described in Table 8. In addition, a study of the primary motivation behind every project, identified from four categories of *Corresponding author (Mohammad Saquib). Email: arsaquib@gmail.com ÂŠ2020 International Transaction Journal of

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

motivation (Technical, Social, Design, Professional) reported by Dodd et al. was also conducted (Dodd, Harrisson, and Charlesworth 2012). Table 8: Comparative description of the spectrums of studied projects. #

Factors

Spectrums

Budget: Funding source

Product

External collaborator

Motivation

Self-funded Sponsorship Client funded Temporary Semi-Permanent Permanent Self-initiated Collaboration Commission Technical Social Design

Project # C3 C4

All projects were self-funded by the students themselves, while two projects also managed to raise funds from the community. Four projects were temporary or semi-permanent in character, but two projects which were permanent were also the ones shortlisted in the competition. The projects also reflect that a process-oriented approach was undertaken and that the stress was not on obtaining a final finished product, but on making it work by evolving a process. Three projects were self-initiated while three others collaborated with external organizations such as NGOs. Most projects displayed a socially motivated approach in their design revealing the social perspective to design, though it was not mentioned in the design competition brief. This shows how a real-time design engagement in itself results in client/community engagement, and students envision their design solutions from people’s perspective rather than their own or educator’s perspective.

6.2 EVALUATION OF STUDENT’S INTENTIONS

Student’s perception was recorded through response obtained from a qualitative questionnaire based on the “SEED evaluator” (SEED Network 2015) which emphasizes on designer’s narration to arrive at learning outcomes achieved. The SEED evaluator takes a PID approach to evaluate projects and “provides a common standard to guide, measure, evaluate and certify the social, economic and environmental impact of design projects. It promotes the critical evaluation of design that strives for positive impact apart from other benefits” (SEED Network 2015).

The content of the evaluator referred was ‘Part C’, meant to obtain feedback from the designer (student) and reflect on project results during/ after its completion. Three open-ended questions with multiple sub-questions embedded within them were summarized in order to simplify them for evaluating student’s learning outcomes. The questions summarized were “Is the project considered a success?”...”What are the positive and negative impacts of the project?”...and “What did you learn from the PID project and its process?”

Mohammad Saquib

Table 9: Coding of responses seeking positive and negative impacts of the project (Q2).

Coding of Responses by marking segments of data Stakeholders using the area tired customers can take rest but not maintaining it aesthetic force Stakeholders happily using the area hospital users maintaining it. using the space Space utilized in a proper manner awareness among the people keeping the space clean

Children space to play Patients family members space they can relax nature

Open-ended responses were obtained from student groups for every project, and content analysis was carried out. Transcripts of open-ended responses for each question were segmented to form meaningful analytical units. Codes were obtained by marking segments of data with descriptive words, or category names, and were categorized into a small number of groups of like answers (Gibbs 2008). Table 9 shows the coding of responses for the second question seeking positive and negative impacts. The process helped in identifying anchor codes that related to the themes enquired (Table 10). Themes Positive impacts

Table 10: Identification of anchor codes and themes (Q2). Anchor codes Impact in terms of people: Use Happiness Awareness

Impact in terms of space: Space utilization Keeping space clean Type of usage of space Others

Negative impacts

A higher level of motivation: Community collaboration Lack of community involvement

Codes (categorized) Stakeholders using the area Stakeholders happily using the area tired customers can take rest hospital users awareness among the people Children Patients family members Space utilized in a proper manner using the space keeping the space clean space to play space they can relax aesthetic force nature maintaining it. but not maintaining it

In response to the first question stating, “Is the project considered a success?” all groups considered their projects a success, which was attributed to the happiness of people in two cases, while the provision of funds and transformation of space in one case each. One entry recorded a higher level of motivation, where they sought to extend their work under a banner, where more people can follow. A single negative response talked about a completed project not maintained, reflecting a lack of community involvement. An analysis of the number of occurrences of codes revealed that there were eight occurrences of positive terms defining the success of the project, such as “happy”, “success”, “yes”, “transforming intangible negativity”; and a single occurrence of a negative term “not maintained”. In response to the second question stating, “What are the positive and negative impacts of the project?” all projects reported a positive impact. While most projects mentioned *Corresponding author (Mohammad Saquib). Email: arsaquib@gmail.com ©2020 International Transaction Journal of

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

impact in terms of people, relating to their use of design, happiness, and enhanced awareness; other important criteria mentioned were a positive use of space. Single instances of extremities reported were in terms of community collaboration or lack of collaboration in maintaining the project after completion, reflecting again that projects were majorly understood in terms of people’s satisfaction. In response to the third question, stating “What did you learn from the PID project and its process?” most responses again related learning to design for people through engagement. Other learnings reported were collaboration, goal setting, and space consideration.

6.3 EVALUATION OF PEOPLE’S PERCEPTION

An evidence-based approach was undertaken to evaluate people’s perceptions. A feedback form was used to evaluate the projects in the post-occupancy evaluation phase (POE) by obtaining feedback from the users of the community on their perception towards the built project on various design parameters. The feedback form was a single page questionnaire developed by the author (Saquib 2019) having seven items on a five-point Likert scale (Leung 2001; Harpe 2015). Responses to the statements were obtained as “Strongly disagree, Disagree, Can’t say, Agree and Strongly agree” (Bertram 2006). Responses obtained under the “strongly agree” and “agree” categories were considered positive and in agreement with the respective statement, while under the “strongly disagree” and “disagree” categories were considered negative, and those under “can’t say” category were considered neutral. Table 11: Item-wise analysis (n=239) on a five-point Likert scale.

# 1 2 3 4 5 6 7

Frequency and percentage Standard Deviation SD/D N A/SA SD/D N A/SA Have you ever felt the need for 228 19 42 167 0.13 0.12 0.22 developing this area (8%) (18%) (70%) The developed space now seems 237 3 20 214 0.03 0.1 0.11 attractive than what it was earlier (1%) (8%) (90%) I am happy with the built design 237 24 23 190 0.17 0.07 0.22 (10%) (10%) (79%) Space is used by more people than 237 28 40 169 0.12 0.08 0.22 earlier (12%) (17%) (71%) The project is durable and will survive 235 67 58 110 0.22 0.14 0.14 for a long period of time (28%) (24%) (46%) It is secure and safe for use at all time of 239 40 45 154 0.14 0.1 0.22 day (17%) (19%) (64%) It fulfils the purpose for which it was 238 21 40 177 0.12 0.12 0.15 developed (9%) (17%) (74%) Legend: ‘SD’-Strongly disagree, ‘D’- Disagree, ‘N’-Neutral, ‘A’- Agree, ‘SA’-Strongly agree. Item

A sample size of 40 responses per project was targeted for study, and 239 respondents were surveyed for six projects. Descriptive analysis conducted to obtain means, standard deviations, and percentages showed a positive impact of the projects among users. A mean of responses with respect to the items (Table 11) suggests that 71% of responses were positive. For every item indicating agreement in column ‘A/SA’ the standard deviations recorded a variance of CV < 1 (0.18) which is low and represents a concentrated data, suggesting little difference of opinion among respondents. A description of responses with respect to the items reveals that 70% (n=167) respondents felt the need of developing their area, while 90% (n= 214) respondents agreed that the developed space seemed more attractive than before the intervention. Seventy-nine percent (n=190) respondents said that they were happy with the built design, whereas 71% (n=169) respondents agreed that more people use it

Mohammad Saquib

now. Only forty-six percent (n=110) respondents agreed that the structure is durable and will survive for a long period, while 64% (n=154) respondents agreed that it is strong and safe for use, indicating a lesser degree of agreement. Seventy-four percent (n=177) respondents reported that it fulfills the purpose for which it was developed. An analysis of mean with respect to projects (Figure 1) reported that 71% of responses were positive, which suggests that the competition design projects were received well by the community. Out of six projects studied, three projects recorded more than 78% positive responses. The highest level of agreement recorded was for “Project C3” with 260 responses (93%) in agreement with the statements. The least level of agreement recorded was for “Project C5” with 127 positive responses (45%), which also relates to the lower level of satisfaction among students.

Project: C1

229

Project #

Project: C2

217

Project: C3

260

Project: C4

193

Project: C5

127

Project: C6

155

Total 10%

20%

1181 0%

30%

40%

268

50%

60%

70%

80%

202 90%

100%

Percentage of agreement Agree/ Strongly Agree

Neutral

Disagree/ Strongly Disagree

Figure 1: Project-wise analysis of responses on a five-point Likert scale. A mixed-methods approach was undertaken and analysis of quantitative and qualitative data was performed through triangulation (Table 12). The analysis attempted to compare outcomes of the studied projects, evaluation of intentions of the design team (students) and their motivations behind the project, and evaluation of the user’s perception. The findings suggest that most projects were effective in terms of project success as well as learning outcomes. An analysis of the user’s feedback and the project outcomes reveal that except Project C5, all reported successful results on identified parameters. While projects which were permanent in character were the only entries shortlisted in the competition, in reality, projects that aimed for a social perspective to design, whether temporary or permanent, reported successful project outcomes. A summary of content analysis of student’s feedback reveals that irrespective of the project outcomes, the process adopted by students ensured self-motivation and collaboration amongst them, as responses were largely recorded in the affirmative. Student groups perceived the projects as successful and having a positive impact. Learning was also primarily motivated in terms of designing through engagement with people despite the design competition brief not specifying it in its scope, which also relates to the findings by Anderson (2017), where ‘people’ were the prime source of motivation. *Corresponding author (Mohammad Saquib). Email: arsaquib@gmail.com ©2020 International Transaction Journal of

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05I http://TUENGR.COM/V11/11A05I.pdf DOI: 10.14456/ITJEMAST.2020.89

Project Intentions of the Design # team C1 To transform the site into a safe, hygienic, and usable park the community and kids. C2 To design a park in a busy market and make it user-friendly, lively, and clean. C3 To revitalize an unused park in a shopping area

To transform an unused space in a market into an interactive one by experimenting with materials and techniques. To revive an abandoned space between two economically diverse groups for children. To revive the dirty outdoors of a hospital and make it lively and usable for the people.

Table 12: Triangulation of data.

Evaluation of Student’s perception Stakeholders were happy and were maintaining it.

The project was completed but not maintained by shopkeepers The project is a success considering the positive response of the people and their happy faces Yes, the project is considered a success as the local people are happy and appreciated work We worked hard to design and create elements but few children used the space The project is indeed a success. The positive impacts include the use of space.

User’s Motivation response rate 82%

78%

93%

67%

45%

58%

Project outcomes

Park was developed well in collaboration with the Social community, and a sense of ownership was visible Interventions could not sustain due to high footfall, Social and shopkeepers not owning responsibility. Space was utilized effectively, and nearby vendors were happy. Social Engagement of the community and the authority helped the students. Space was used positively Technical and stakeholders were happy. Females felt unsafe Design during the night due to low light levels. Only partially successful, as few children from the Technical economically weaker community used the park. Both hospital authorities and users appreciated the project, Social but it ultimately degraded due to negligence, and lack of civic sense.

In response to the first research question, the study revealed that design projects were received positively, as they ensured student’s as well as people’s satisfaction, in terms of design intervention. Findings for the second research question suggest that the design projects were effective at enabling students to acquire positive learning since most students chose to adapt a social perspective to design, which reportedly results in enhanced learning outcomes. It also reflects a higher level of motivation among students, where they were self-motivated enough, and collaborated to ensure project completion and success. The above findings suggest that the alternative studio projects initiated by the competition brief were successful in terms of project outcome, and user’s and student’s perception.

7. CONCLUSION Design competitions facilitate informal learning among students where they enhance their design skills in a self-motivated and collaborative environment, as witnessed in India’s National Design Competition (ANDC) that sought to redesign and build abandoned public spaces. The study ascertains the success of projects in enhancing learning outcomes among students. Six projects designed and built by students from various schools in the Delhi-NCR region were studied and their learning outcomes were evaluated. Quantitative and qualitative data obtained was used to perform triangulation in a mixed-methods approach. This study revealed a positive impact of the projects in their environments. Projects that engaged the community in their process of design created a more positive impact in their immediate environments. Other factors reporting success were collaboration and students’ motivation.

Mohammad Saquib

8. DATA AND MATERIAL AVAILABILITY

Information can be made available by contacting the corresponding author.

9. ACKNOWLEDGEMENT

The author acknowledges the fieldwork undertaken by third-semester postgraduate students of Architecture Pedagogy (2017-18) in the Faculty of Architecture & Ekistics, for the case study of competition design projects and their documentation.

10. REFERENCES

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Joshi, A. 2017. “A.M.A.C.E.030, Behtari Initiative - Merging Community with Comfort.” 2017. https://www.youtube.com/watch?v=cusg_iB5NNI. Khare, R., and A.Khare. 2013. “Design Competition as a Pedagogical Tool to Teach Concepts of Universal Design in India.” Proceedings of the Human Factors and Ergonomics Society, October: 511–15. Leung, Wai-ching. 2001. “How to Design a Questionnaire.” BMJ 9: 187–89. Moore, S.A. 2016. “Post-Occupancy : Implementation and Evaluation.” In Public Interest Design Practice Guidebook, edited by Lisa M. Abendroth and Bryan Bell, 81–92. Routledge. Morrow, R. 2007. “Creative Transformations: The extent and potential of a pedagogical event.” In Design Studio Pedagogy: Horizons for the Future, edited by Ashraf M Salama and Nicholas Wilkinson, 269– 84. Gateshead, UK: The Urban International Press. Morrow, R. 2014. “Foreword: Live Project Love: Building a Framework for Live Projects.” In Architecture Live Projects: Pedagogy into Practice, edited by Harriet Harriss and Lynnette Widder, xviii–xxiii. Routledge. https://www.routledge.com/Architecture-Live-Projects-Pedagogy-into-Practice/Harriss-. NASA. 2017. “Reflection-Reimagining Alternative Urban Spaces.” Annual NASA Design Competition 2017-18. https://doi.org/http://youtu.be/uW43VJ8-xlg. NASA

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Rehani, K 2017. “A.M.A.C.E. 263, AARAMBH.” 2017. https://www.youtube.com/watch?v=P5-7sN_gOhU. Rodriguez, C.M. 2018. “A Method for Experiential Learning and Significant Learning in Architectural Education via Live Projects.” Arts and Humanities in Higher Education. 17(3): 279–304. Rönn, M. 2014. “Architectural Quality in Competitions. A Dialogue Based Assessment of Design Proposals.” FORMakademisk 4(1): 100–115. https://doi.org/10.7577/formakademisk.130. Salama, A.M. 2015. Spatial Design Education: New Directions for Pedagogy in Architecture and Beyond. Spatial Design Education: New Directions for Pedagogy in Architecture and Beyond. Ashgate Publishing Limited. Saquib, M. 2019. “Designing , Conducting and Evaluating the Effectiveness of an Integrated Public Interest Design Studio.” International Journal of Architecture, Engineering and Construction 8(3): 32–40. Sara, R. 2004. “Between Studio and Street: The Role of the Live Project in Architectural Education.” University of Sheffield. http://etheses.whiterose.ac.uk/21784/1/412728_Vol1.pdf. Sara, R. 2006. “Live Project Good Practice : A Guide for the Implementation of Live Projects.” CEBE Briefing Guide Series, no. 8: 1–7. SEED

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Mohammad Saquib is an Associate Professor at the Department of Architecture, Faculty of Architecture & Ekistics, Jamia Millia Islamia University, New Delhi, India. He is interested in Architecture Education & Learning Sciences.

The paper is based on author’s ongoing Ph.D. work at Department of Architecture, Deenbandhu Chottu Ram University of Science and Technology, Murthal, Sonipat, Haryana (India) under the supervision of Prof. Dr. Chitrarekha Kabre.

Mohammad Saquib

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05J

ROLES OF REMUNERATION ON CONSUMER RESPONSES TOWARDS SOCIAL MEDIA ADVERTISING: A PAKISTANI PERSPECTIVE 1*

Qazi Mohammed Ahmed , Osman Sadiq Paracha , Aneel Salman 1

Department of Management Sciences, COMSATS University Islamabad (CUI), PAKISTAN.

ARTICLEINFO

A B S T RA C T

The study explores the association between remuneration motivation and the underlying behavioral intentions to purchase and participate in electronic word of mouth (eWOM), through social media advertising (SMA). The study proposes that this relationship is mediated by perceived social media advertising value (PSMAV) and consumers’ attitudes towards social media advertising (CATSMA). The survey Keywords: draws evidence from a set of 673 usable responses comprising of young Remuneration and active social media users, belonging from recognized universities of Motivation; the twin cities (Islamabad & Rawalpindi) of Pakistan. A Consumers’ attitudes; component-based structural equation modeling technique has been Purchase intentions; utilized through SmartPLS 3. The findings reveal that remuneration Behavioral Intention; exerts a significant impact on PSMAV and CATSMA but shows an Electronic word of mouth; Young segment insignificant association with behavioral intentions. Both PSMAV and CATSMA fully mediate the relationship between remuneration and consumers; Perceived behavioral outcomes. The paper extends advertising literature on social social media media within an under-researched context of Pakistan’s fashion industry. advertising value It also assists the advertisers in backing their social media campaigns (PSMAV). with financial rewards for enhancing advertising value and generating positive consumer attitudes.

Article history: Received 19 July 2019 Received in revised form 05 December 2019 Accepted 16 December 2019 Available online 23 December 2019

1. INTRODUCTION The consumers of today have extended their communication platforms through a dynamic Web 2.0 based technology, known as social media. Also referred to as the fifth “P” of marketing (Tuten & Solomon, 2017). Social media serves as a hybrid element of any company’s promotional mix (Mangold & Faulds, 2009). Now, the product perceptions and attitudes have been inclined towards this multi-dimensional advertising platform, where consumers are able to interact and engage with greater empowerment and control (Algharabat et al., 2018; Shareef et al., 2019). Both, the *Corresponding author (Q.M.Ahmed). Tel: +92-3215258988. Email: ahmedqazi@hotmail.com ©2020 International Transaction

Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05J http://TUENGR.COM/V11/11A05J.pdf DOI: 10.14456/ITJEMAST.2020.90

practitioners and research scholars are now focusing on this emerging phenomenon, in terms of attaining a better understanding of consumer behavior (Casaló & Romero, 2019; Ismail, 2017). Although a growing body of literature has been working on social media but still, a significant amount of scholarly work needs to inculcated towards it. Social media behavior is still passing through an embryonic process with its marketing nature under exponential evolution (Duffett, 2017; Hamouda, 2018; Harb et al., 2019). Further, due to a lack of explicit theoretical support (Knoll, 2016; Mao & Zhang, 2017). Most examinations are leading to inconclusive outcomes. Further, many studies have focused on developed societies (Odoom et al., 2017) which cannot easily be contextualized to under-developed nations (Marakarkandy et al., 2017). This study aims to address the aforementioned gaps by deepening the understanding of consumer responses toward social media advertising (SMA). The main objective is to examine an emerging social media motivation, known as remuneration (Muntinga et al., 2011; Muralidharan & Men, 2015) and evaluate its impact on the perceived social media advertising value (PSMAV), consumers’ attitudes towards social media advertising (CATSMA) and behavioral intentions. Besides these linkages, the mediating roles of PSMAV & CATSMA between remuneration and behavioral intentions are also examined, which have previously remained unaddressed. The study also advances marketing literature in an under-researched context of Pakistan (Raziq et al., 2018), where studies pertaining to consumer attitudes and intentions remain scant. To be more specific, the current research work focuses on the fashion advertising industry of Pakistan. The country has been categorized as a “Fast-track Asian economy”, which has rapidly adopted the latest technology, with advertising expenditures increasing at an average growth rate of nine percent (Zenith, 2018). The top three Pakistani industries on the world’s most popular social networking platform i.e. Facebook; consists of fashion, e-commerce and fast-moving consumer goods (FMCG). With an online fan base crossing eighty-seven million, fashion has turned out to be a way of life for Pakistani netizens (Socialbakers, 2018). With brands getting global, social media is now considered as an inexpensive way of promoting a company’s products (Roult et al., 2016); with greater reach and rapid response. Hence, the study considers the fashion industry of Pakistan for analyzing the role of remuneration on a consumers’ social media behavior.

2. LITERATURE REVIEW & HYPOTHESES DEVELOPMENT 2.1 REMUNERATION MOTIVATION & PERCEIVED SOCIAL MEDIA ADVERTISING VALUE (PSMAV) Within the context of media usage, motivations are recognized as drivers that influence an individual’s selection and utilization of media content (Rubin, 2002). Prior studies (Goldsmith & Horowitz, 2006; Rodgers et al., 2005) have shown that consumer motivations exert an impact on advertising effectiveness, consumers’ attitudes and behavioral responses. Remuneration is regarded as an emerging social media motivation (Muralidharan & Men, 2015), demanding empirical investigation (Muntinga et al., 2011). It does not only strengthens consumers’ engagement behaviors but also induces them towards futuristic rewards. These rewards represent economic incentives; comprising of money, contests, and sweepstakes (Muralidharan & Men, 2015; Wang & Fesenmaier, 2003).

Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

The value of advertising refers to the extent to which, an individual considers promotional content to be effective, in terms of its proposed utility (Ducoffe, 1995). He stated that information, entertainment and irritation are the key predictors of PSMAV. Later, Brackett and Carr (2001) added credibility as the fourth predictor of advertising value. The current work extends the advertising literature and examines remuneration as the key antecedent of PSMAV. Earlier, Muntinga et al. (2011) explored remuneration through instant messaging (IM) interviews, for examining consumers’ online brand-related activities (COBRAs). Kim and Han (2014) later found a statistically significant relationship between incentives and the perceived value of smartphone advertising. Based on the arguments, the study hypothesizes a positive relationship between remuneration and PSMAV, within the context of fashion advertising on social media. So, the first hypothesis is proposed as follows: H1(a): There exists a significant positive relationship between remuneration motivation and consumers’ perceived social media advertising value (PSMAV).

2.2 REMUNERATION MOTIVATION & CONSUMERS’ ATTITUDES TOWARDS SOCIAL MEDIA ADVERTISING (CATSMA) An individual’s attitude is a mere representation of his evaluative criteria (Fishbein & Ajzen, 1975) and his motivation towards an ad is a basic predictor of his attitude towards advertising (Chi, 2011; Rodgers & Sheldon, 1999). Historically, Pollay and Mittal (1993) found that the variable of “good for the economy”, positively influenced the attitudes towards advertising; for both collegians and older householders. In terms of online advertising, Wolin et al. (2002) showed a contrasting result, with the variable “good for the economy”, depicting no association with consumer attitudes towards web advertising. However, in a cross-cultural study by Wang and Sun (2010), the same variable turned out to be the most significant predictor of attitudes towards online advertising. Furthermore, remuneration was also termed as “incentive offering” (Suk, 2007) and it exerted a positive impact on consumers’ attitudes towards advertising on social networks (Luna-Nevarez & Torres, 2015). Thus, this research investigates the association of remuneration with CATSMA, in a fashion advertising context on social media. Hence, the next hypothesis is proposed as H1(b): There exists a significant positive relationship between remuneration motivation and consumers’ attitudes towards social media advertising (CATSMA).

2.3 REMUNERATION MOTIVATION & BEHAVIORAL INTENTIONS The role of incentives and financial rewards has played an instrumental role in accelerating a company’s brand image, generating higher ad clicks and strengthening positive perceptions to reap desirable behavioral responses (Luna-Nevarez & Torres, 2015; Robinson et al., 2007). Remuneration has also been considered as an individualistic motivation, that carries an intrinsic tendency to trigger eWOM engagement behaviors for attaining economic benefits; in the form of coupons and free samples (Muralidharan & Men, 2015). Earlier, Kim and Han (2014) found a statistically supportive relationship of an individual’s incentive seeking behavior with advertising value and flow experience, in the context of smartphone advertising. Extending their work, the present study within the context of SMA; not only tests the relationship of remuneration with PSMAV but also with behavioral intentions. This extension in marketing literature highlights the unaddressed relationship of remuneration motivation and consumer’s behavioral intentions of purchasing and engaging in *Corresponding author (Q.M.Ahmed). Tel: +92-3215258988. Email: ahmedqazi@hotmail.com ©2020 International Transaction

eWOM. Thus, the hypothesis is postulated, H1(c): There exists a significant positive relationship between remuneration motivation and behavioral intentions.

2.4 PERCEIVED SOCIAL MEDIA ADVERTISING VALUE (PSMAV) & BEHAVIORAL INTENTION As attitudes represent an individual’s evaluation of the world he sees around himself, a behavioral intention reflects his inner willingness to perform a specific behavior (Fishbein & Ajzen, 1975). Specifically, an individual’s behavioral intentions on social networks represent his purchase intentions and electronic word of mouth (eWOM) intentions (Luna-Nevarez & Torres, 2015). Ducoffe (1995), who pioneered the concept of advertising value, stated that any type of advertising that enhances its effectiveness ultimately leads towards favorable consumer perceptions and behavioral intentions. Choi et al. (2008) and Zeng et al. (2009) identified that the value of advertising had a statistically significant relationship with behavioral intentions, in the context of mobile advertising in Asian economies. Building on to it, Dao et al. (2014) observed a significant relationship between PSMAV and behavioral intentions, while examining social media behavior in South Asian transitional economies. Based on the scholarly evidence and considering Pakistan as a transitional economy (UNDP, 2018), the second hypothesis is posited H2: There exists a significant positive relationship between perceived social media advertising value (PSMAV) and behavioral intentions.

2.5 CONSUMERS’ ATTITUDES TOWARDS (CATSMA) & BEHAVIORAL INTENTIONS

SOCIAL

MEDIA

ADVERTISING

Generally, consumers’ attitude towards an ad and attitude towards a brand is a reflection of their potential behavioral intentions (MacKenzie et al., 1986; Raziq et al., 2018). As attitudes turn out to be favorable, greater advertising recalls and better buying interests are formulated (Bauer & Greyser, 1968; Mehta & Purvis, 2006). Nelson et al. (2004) view that positive attitudes towards video advertisements lead to higher purchase intentions. With respect to social networks, Luna-Nevarez and Torres (2015) also point out a statistically significant relationship between attitudes towards social networking advertising and their underlying intentions to engage in eWOM. Similarly, the scholarly work of Zhang and Mao (2016) also shows that desirable motivations generate positive ad click behaviors to purchase and engage in eWOM. Specifically, in an SMA context, the studies of Hamouda (2018) and Johnston et al. (2018) also propagate a significant relationship between CATSMA and consumers’ underlying behavioral responses. Hence, the third hypothesis is given as H3: There exists a significant positive relationship between consumers’ attitudes towards social media advertising (CATSMA) and behavioral intentions.

2.6 MEDIATING ROLES OF PERCEIVED SOCIAL MEDIA ADVERTISING VALUE (PSMAV) & CONSUMERS’ ATTITUDES TOWARDS SOCIAL MEDIA ADVERTISING (CATSMA) From a media perspective, value has been recognized as a consequence of an individual’s belief and motivational factors (Rayburn & Palmgreen, 1984). In terms of mobile advertising, Liu et al.

Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

(2012) investigated the role of consumer perceptions on advertising value but did not evaluate its mediating effect between its predictors and resulting attitudes. While examining smartphone advertising behavior, again the mediating effect of advertising value between incentives and purchase intentions remained ignored (Kim & Han, 2014). Similarly, in an SMA context; Dao et al. (2014) utilized the construct of advertising value for analyzing its basic antecedents and its ultimate effect on purchase intentions, but again did not examine its mediating nature. The present study extends the aforementioned works and explores the unaddressed mediating effect of PSMAV, between remuneration motivation and behavioral intentions. Therefore, the fourth hypothesis is posited as H4: Perceived social media advertising value (PSMAV) mediates the relationship between remuneration motivation and behavioral intentions. Consumer attitudes towards advertisements have been referred to as vital mediators of advertising effectiveness (MacKenzie et al., 1986). With respect to online advertising, both Drèze and Zufryden (1998) and Wang and Sun (2010) found attitudes, as effective mediators between beliefs and behavioral responses. In a study on SMA, Muk et al. (2014) propagated that the mediating effect of attitudes needs to be validated under various cross-cultural settings. Following it, Jung et al. (2016) seconded the mediating effect of attitudes between social media characteristics and behavioral intentions on Facebook; in a South Korean context. Similar findings were also reported by Johnston et al. (2018) while examining social media behavior in Taiwan and Vietnam. So, this work proposes its fifth hypothesis, within the social media context of Pakistan, as H5: Consumers’ attitudes towards social media advertising (CATSMA) mediates the relationship between remuneration motivation and behavioral intentions. Based on the hypothesis development, the study presents its conceptual model accompanied by four control variables (See Figure 1). This helps in controlling the demographic characteristics of the selected sample (Dao et al., 2014; Haridakis & Hanson, 2009). Perceived Social Media Advertising Value (PSMAV) Behavioral Intentions

Remuneration Consumers’ Attitudes Towards Social Media Advertising (CATSMA)

Gender Occupation Education Age

Figure 1: Conceptual Model.

3. METHODOLOGY 3.1 COLLECTION OF DATA & SAMPLING METHOD A structured questionnaire was emailed to the major universities, belonging to the twin cities of Islamabad and Rawalpindi. The selected varsities comprised of Comsats University, Air University, *Corresponding author (Q.M.Ahmed). Tel: +92-3215258988. Email: ahmedqazi@hotmail.com ©2020 International Transaction

Riphah International University, and Arid Agriculture University. Making use of Google Docs, 720 questionnaires were floated, out which 673 usable responses were generated for data analysis. University students are considered as ideal subjects for research on consumer behavior (Peterson & Merunka, 2014); specifically social media (Hamouda, 2018; Shareef et al., 2019). Pakistani collegiate and university students consider social media as a way of life and actively utilize networking platforms for online fashion shopping (Socialbakers, 2018). Moreover, convenience sampling has been deemed more appropriate for data collection. Being a non-probability sampling technique, the under-graduate and post-graduate students have been selected on ease of accessibility and geographical proximity. Not only has this method been widely applied and accepted for studies pertaining to advertising (Pollay & Mittal, 1993; Wang & Sun, 2010) but also SMA (Permatasari & Laydi, 2018; Sanne & Wiese, 2018).

3.2 MEASURES & TOOLS FOR ANALYSIS A seven-point Likert Scale, with wider discrimination opportunities (Cooper & Schindler, 2014), was utilized for structuring the questionnaire; ranging from “Strongly Disagree” to “Strongly Agree”. The measures of each construct representing the research model were adopted from previous literature. A three-item scale for remuneration was adopted from the work of Luna-Nevarez and Torres (2015) and Wang and Fesenmaier (2003). The three-item scale for PSMAV was attained from the study of Dao et al. (2014), while the six-item scale for CATSMA was adopted from Taylor et al. (2011). Lastly, the behavioral intention scale comprised of six items, originating from the studies of Dao et al. (2014) and Luna-Nevarez and Torres (2015). For demographic analysis, SPSS v.23.0 was applied. For analyzing measurement and structural models, variance-based structured equation modeling was used through SmartPLS 3. The partial least squares(PLS) approach is one of the most emerging and dynamic techniques for conducting quantitative research (Hair et al., 2016; Sarstedt & Cheah, 2019). For authenticating convergent validity, composite reliability and discriminant validity; Confirmatory Factor Analysis (CFA) was applied. For testing the proposed hypotheses, the bootstrapping method (500 resamples) was undertaken (Henseler et al., 2009).

4. RESULTS & DISCUSSION 4.1 DEMOGRAPHIC DISTRIBUTION Table 1 shows the sample characteristics of the respondents; based on gender, age, occupation, and education. Out of 673 usable responses, males represented 61.2% while females represented 38.8% of the sampling frame. In terms of age, 60 % are the younger age bracket of 19-25. These millennials consider technology as a part of their daily lives (Bolton et al., 2013) and actively use social media (Hamouda, 2018). The older segment crossing the age of 46, only constituted 2% of the sampling frame. With respect to occupation, only 5.3% did not belong to any specific category. The majority belonged to the full-time student segment, with 48.3% of the total representation; while 36.1% of the students were also employed in various jobs. Only 10.3% of the university students had also started their entrepreneurial ventures. Finally, the educational profile reflected 45.5% of undergraduate students while 54.5% were post-graduate students.

Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

Attribute Gender

Age

Occupation Education

Table 1: Descriptive Statistics. Category Male Female 19-25 26 –32 33– 39 40-46 46 and above N/A Student Salaried Person Self-employed Undergraduate Postgraduate

Frequency 412 261 404 205 34 15 15 36 325 243 69 306 367

Percentage 61.2 38.8 60.0 30.5 5.1 2.2 2.0 5.3 48.3 36.1 10.3 45.5 54.5

4.2 MEASUREMENT MODEL

The measurement model (see Table 2) authenticates the convergent and discriminant validity of the scales measuring the latent constructs (Gefen & Straub, 2005). It represents the factor loadings (see Figure 2), the Cronbach’s alphas, composite reliability (CR) and average variance extracted (AVE). The factor loadings, Cronbach’s alpha, and CR are ideally above 0.7and the AVE crosses the standard of 0.5. This reflects good convergent validity (Hair et al., 2018). For discriminant validity, the values of the AVE square root were also greater than the constructs’ correlation coefficients (see Table 3). This depicted that they were completely unrelated (Fornell & Larcker, 1981). The study’s endogenous variable (behavioral intentions) had an R Square of 0.576, showing effective predictability of the research model (Sekaran & Bougie, 2013).

Figure 2: Measurement Model. Table 2: Convergent Validity. Constructs 1 2 3 4

Behavioral Intentions CATSMA PSMAV Remuneration

Cronbach’s Alpha 0.912 0.892 0.902 0.779

Composite Reliability 0.932 0.917 0.939 0.869

AVE 0.696 0.649 0.837 0.689

1 2 3 4

Constructs Behavioral Intention CATSMA PSMAV Remuneration

Table 3: Discriminant Validity Behavioral Intention 0.834 0.690 0.635 0.418

CATSMA

PSMAV

Remuneration

0.806 0.551 0.411

0.915 0.460

0.830

4.3 STRUCTURAL MODEL The structural model (see Figure 3) is a basic representation of the statistical significance of underlying relationships, which could be direct and indirect. Table 4 depicts the significance of the path coefficients, where the t-values need to be above 2 and p-values to be less than 0.05 (Hair et al., 2016). Seeing Table 4, remuneration exerts a significant positive impact on PSMAV and CATSMA, which confirms our hypothesis H1(a) and H1(b). The association between remuneration and behavioral intentions remain statistically insignificant, as the t-value and p-value do not record the set benchmarks. So, the hypothesis H1(c) is rejected. Further, the relationships between PSMAV & behavioral intentions and CATSMA & behavioral intentions remain statistically significant. Hence, the hypotheses H2 and H3 are accepted. While considering the control variables of the study, the only gender exerted a significant impact on behavioral intentions. This shows that demographic characteristics play an influential role in examining social media behavior. For verifying the presence of any mediation among the constructs, the specific indirect effects need to be analyzed (see Table 5). With reference to the hypothesis H4, PSMAV mediates the relationship between remuneration and behavioral intentions, as the indirect effect remains statistically significant (Hair et al., 2016). Similarly, for the hypothesis H5, CATSMA also mediates the relationship between remuneration and behavioral intentions. For validating partial or full mediations, the direct effect between remuneration and behavioral intentions also needs to be observed (Lowry & Gaskin, 2014); which has already proven to be insignificant through hypothesis H1(c). Hence, both PSMAV and CATSMA fully mediate the relationship between remuneration and behavioral intentions.

Figure 3: Structural Model.

Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

Table 4: The Direct Effects.

Hypotheses H1(a): Remuneration  PSMAV H1(b): Remuneration  CATSMA H1(c): Remuneration  Behavioral Intention H2: PSMAV  Behavioral Intention H3: CATSMA  Behavioral Intention

Path Coefficients 0.460 0.411 0.066 0.347 0.473

Table 5: The Indirect Effects

Hypotheses H4:RemunerationPSMAVBehavioral Intention H5:RemunerationCATSMABehavioral Intention

Path Coefficients 0.160 0.195

T-Stats 12.716 10.865 1.919 9.790 12.725

P-Values <0.001 <0.001 0.056 <0.001 <0.001

T-Stats 7.624 8.569

P-Values <0.001 <0.001

In terms of the study’s discussion, the significant relationship of remuneration motivation with PSMAV extends the advertising model of Ducoffe (1996) and portrays that additional factors can also enhance the value of advertising. Earlier, Kim and Han (2014) showed a statistically supportive relationship of incentives to the value of smartphone advertising. The current work attests to this association within a social media context, highlighting the need for providing economic incentives on advertising done on social networks. Similarly, the significant relationship of remuneration with CATSMA shows that this motivational construct also plays an instrumental role in enhancing consumers’ positive evaluations towards SMA. While considering the basic determinants of advertising, Pollay and Mittal (1993) found a supportive relationship of “good for the economy” with global attitudes of the consumers whereas Wolin et al. (2002) observed an insignificant relationship within the context of web advertising. The study’s supportive relationship contributes to advertising literature pertaining to social media behavior. Moreover, the unsupportive association of remuneration with behavioral intentions points towards the fact that financial rewards may not be the sole factor in effecting consumers’ responses towards SMA. There could be causal factors (PSMAV & CATSMA) that could ultimately lead to desirable behaviors. The statistically significant relationship of PSMAV with behavioral intentions depicts that as the relative utility of advertising is raised, consumer responses to purchase and engage in eWOM behavior are also accelerated. This relationship corresponds to the work of Dao et al. (2014) who observed a positive association between PSMAV and purchase intention but propagated that it should also be tested in South Asian transitional economies. Further, a significant association of CATSMA with behavioral intentions supports the work of Hamouda (2018), who was also of the view that positive SMA evaluations ultimately lead towards desirable consumer responses; in the tourism context of Tunisia. The present work authenticates this relationship within an unexplored fashion advertising perspective of Pakistan. In terms of indirect effects, the research work shows that PSMAV fully mediates the relationship between remuneration and behavioral intentions. Likewise, CATSMA also fully mediates the relationship between the predictor and the outcome variable. This clearly shows that economic incentives provided through SMA would not lead towards effective behavioral outcomes unless the relative utility of advertising is enhanced or desirable consumer attitudes are developed. Recently, Johnston et al. (2018) tested the mediating effects of advertising values and attitudes while considering the predictors of infotainment and credibility. By considering the causal effects of PSMAV and CATSMA between an untested motivation of remuneration and behavioral responses, *Corresponding author (Q.M.Ahmed). Tel: +92-3215258988. Email: ahmedqazi@hotmail.com ©2020 International Transaction

again contributes to the marketing literature on social media.

5. CONCLUSION The study aimed to explore an additional predictor of advertising value i.e. remuneration and examined its impact on PSMAV & CATSMA and ultimately on behavioral intentions. The investigation took place in an iterative perspective of social media which is still passing through an evolutionary phase (Harb et al., 2019). The full mediation effects of both PSMAV and CATSMA were also observed. As the research work portrayed that remuneration enhances advertising value, therefore advertisers need to back their promotional campaigns with financial rewards and incentives. Moreover, it also strengthened consumers’ attitudes, which can ultimately assist the fashion-oriented organizations in promoting engagement behaviors, through social media pages and brand communities. As the current work took remuneration motivation for examining social media behavior, futuristic scholarly endeavors can empirically examine additional variables to enrich the proposed conceptual model. This may include experiential learning (Raziq et al., 2018), creativity (Lee & Hong, 2016) and corporate reputation (Hamouda, 2018).

6. DATA AND MATERIAL AVAILABILITY

Information can be made available by contacting the corresponding author.

7. REFERENCES

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Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

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Zeng, F., Huang, L., & Dou, W. (2009). Social factors in user perceptions and responses to advertising in online social networking communities. Journal of Interactive Advertising, 10(1), 1-13. Zenith. (2018). Global Intelligence: Data & insights for the new age of communication. Retrieved May 23, 2019, from http://www.zenithmedia.com/wp-content/uploads/2018/Global-Intelligence-06.pdf Zhang, J., & Mao, E. (2016). From Online Motivations to Ad Clicks and to Behavioral Intentions: An Empirical Study of Consumer Response to Social Media Advertising. Psychology and Marketing, 33(3), 155-164. Qazi Mohammed Ahmed is a Ph.D. scholar in the field of Marketing at Department of Management Sciences, Comsats University Islamabad (CUI), Pakistan. He completed his Master’s degree in Marketing from Nust Business School (NBS). His research interests include Consumer Behavior, Advertising, Social Media and Integrated Marketing Communications. Dr.Osman Sadiq Paracha is an Assistant Professor at Department of Management Sciences, Comsats University Islamabad (CUI), Pakistan. He holds a Ph.D. degree in Management from Universiti Teknologi Malaysia (UTM), Malaysia. His research interests include Strategic Human Resource Management, High Performance Work Systems, Data Science, Data Analytics and Education Management.

Dr.Aneel Salman is an Assistant Professor at Department of Management Sciences, Comsats University Islamabad (CUI), Pakistan. He holds a Ph.D. degree in Economics from Rensselaer Polytechnic Institute (RPI), Troy, New York, USA. He is interested in Management and Technology.

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Qazi Mohammed Ahmed, Osman Sadiq Paracha, Aneel Salman

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05K

CROSS-BORDER MERGERS & ACQUISITIONS AND SHAREHOLDERS’ VALUE: NEW INSIGHTS FROM UK ACQUIRING FIRMS Aamir Khan 1 2

, Aneel Salman

Department of Management Sciences, COMSATS University Islamabad, PAKISTAN. Department of Economics, COMSATS University Islamabad, PAKISTAN.

ARTICLEINFO

Article history: Received 29 July 2019 Received in revised form 25 November 2019 Accepted 10 December 2019 Available online 23 December 2019.

Keywords: Mergers & Acquisitions; Political Stability; Governance Quality; Horizontal and Non-horizontal Acquisitions; Serial and First-time Acquirors; Event Study; Cumulative Abnormal Returns

A B S T RA C T

This study examines the impact of cross-border merger & acquisition deals on the stock prices of acquiring firms using event study methodology. The sample comprises of the 236 UK listed firms from 2006 to 2018. The overall findings show that cross-border M&A deals results in a positive stock price reaction. Shareholders of UK acquiring firms earn higher cumulative abnormal returns when the target firm is from a country with high political stability and governance quality. Furthermore, the shareholders of firms that acquire firms with low net debt also earn higher cumulative abnormal returns. Industry relatedness has a positive impact whereas there is no difference between first-time and serial acquirers’ performance. Disciplinary: Economic and Management Sciences. ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

In international business, cross-border mergers & acquisitions (M&As) are one of the most important events for the firms and the economy (Fuller et al., 2002). It is considered an integral business expansion tool across the borders. In recent years, firms have increasingly used cross-border M&A as a strategy for internationalization (Tao et al., 2017). In the global scenario, world markets are more closely integrated, and there is a shift from traditional business growth to growth through M&As. In the modern business environment, M&As become a powerful tool for gaining a competitive edge and achieving business expansion. It facilitates global business expansion. In the corporate world, businesses know that they must grow otherwise they will stand to fail. To remain competitive, create profits and increase shareholder's wealth, there is no way but to grow. Companies that fail to grow lose customers’ confidence, market share and ultimately, shareholders’ investment. Hence, M&A by accelerating the growth of prominent companies make it difficult for the weaker ones to survive and rewarding those with successful efforts. M&As help companies to enhance *Corresponding Author (Aamir Khan). Email: aamirhaider4343@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05K http://TUENGR.COM/V11/11A05K.pdf DOI: 10.14456/ITJEMAST.2020.91

shareholders' value, making investments attractive for investors and entrepreneurs. M&As have become a global business phenomenon, and their number is increasing significantly. The UNCTAD (2009) report shows that cross-border M&As rose significantly over the last two decades. For example, the total number of transactions in 1987 was 862, while in 2005, a total of 6134 transactions was recorded. The average annual growth over the last two decades is 31 percent in terms of numbers and 34 percent in terms of value respectively. Similarly, the cross-border M&As by UK firms witnessed a significant increase in the last decade. According to the report, the UK is one of the largest acquiring countries in the world with a net share of about 30% of the world's total M&A deals. Several studies have been conducted on examining the performance implications of cross-border M&As. Tao et al. (2017) & Li et al. (2016) find a positive stock price reaction to M&A deals announcements. Similarly, Bhagat et al. (2011) also reported a positive stock price reaction to M&A deals. According to Fuller et al. (2002), on average acquiring firms earn zero abnormal returns. In contrast, Chen & Young (2010) find a negative stock price reaction. Similarly, Uddin & Boateng (2009) also reported negative abnormal returns for UK acquiring firms. Hence, the inconsistent findings of the existing literature indicate that this phenomenon needs further and comprehensive analysis. The existing literature only focuses on acquiring firms' performance without considering the host country's political stability & governance quality. The existing body of knowledge also hasn't drawn a line between horizontal & non-horizontal acquisitions, serial vs first-time acquirers. In this study, institutional factors will be incorporated in-depth as neglected in previous studies. To address the gaps, we attempt to investigate the following research questions. a) What is the stock price reaction to cross-border M&A deals announcements by UK firms? b) To what extent the host country's political stability and governance quality affect the stock price performance following cross-border M&As. c) How stock price reacts to deal announcement by serial vs first-time acquirers. d) How the industry relatedness affects the stock price reaction to M&A deals across the borders and e) finally how the net debt of the target affects the stock prices of acquiring firms. Firms usually engage in cross-border M&As for assets-seeking, resource and technology seeking and market expansion (Deng, 2004). Even though different firms have different objectives but the ultimate goal is to increase shareholders’ wealth and to create synergy by the sum of two companies (Sudarsanam, 1995). We investigated the stock prices reaction to cross-border M&A deals considering the host countries’ institutional factors i.e., political stability and governance quality, prior acquisition experience of acquiring firms, industry relatedness and target firm net debt, while previous literature has mainly focused on internal factors such as deal size, firm size & age and the leverage, etc.

2. LITERATURE REVIEW Cross-border M&As indicate a change in a firm’s corporate strategy. Investors will react to this strategy change by either buying or selling the stock of acquiring firms according to their perception of how the firm will perform in the future, which constitutes a stock price reaction. The empirical evidence is mixed. Some studies reported positive stock price reaction while others indicate a negative or zero reaction by stock prices of acquiring firms. Tao et al. (2017) reported positive stock price reaction following cross-border M&A deals in the Chinese market. They investigated 165 cross-border M&A deals by Chinese acquirers for 2000–2012 using the standard market model. Li et

Aamir Khan, Aneel Salman

al. (2016) also reported a positive stock price reaction by acquiring a firm’s stock. This study is based on 367 cross-border M&A deals for 2000-2011. Likewise, Schwert (2000) argued that cross-border M&A deals have a significant impact on shareholders’ value of acquiring firms in the short-term. Sudarsanam & Mahate (2003) investigated a sample of the UK acquiring firms and find negative abnormal returns. Similarly, Conn et al. (2005) also investigated the stock price reaction to cross-border M&A deals in the UK context. They examined 4344 deals for 1984–1998 and reported significantly positive abnormal returns for the acquiring firms when there is cultural similarity like a common language between the acquiring and target firms. On the other hand, Gregory & McCorriston (2005) reported that the stock price reaction is insignificant in the case of the UK. Likewise, Masulis et al. (2007) performed a study on a relatively large sample of 3333 M&A deals for 1999-2003. They reported positive abnormal stock returns for those US acquiring firms where there are separate positions of the CEO and board chairman. Maris (2006) also reported higher returns for the shareholder of acquiring firms following successful M&A deal announcements. Similarly, Moeller & Schlingemann (2005) indicated positive abnormal stock returns for US acquiring firms. While Lang et al. (1991) reported negative returns. This study is based on 87 targets. Uddin & Boateng (2009) reported a negative stock price reaction for UK acquiring firms in the short-run. This study investigated the impact of deal size and other firm-specific variables on the short-run performance of acquiring firms for 1994-2003. The results reported by Uddin & Boateng (2009) are similar to those reported by Sudarsanam (1995). Pettway & Yamada (2007) reported positive abnormal returns in the case of Japan following successful M&A deals. For Canada and several European countries including Germany, France, Netherland and Portugal positive abnormal returns are reported (Eckbo & Thorburn, 2000 and Martynova & Renneboog, 2008). Goergen & Renneboog (2004) also reported positive abnormal returns for European acquiring firms. This study is based on 187 bidder firms for 1993–2000. They reported 1.2 percent significantly positive CARs for acquiring firms. Likewise, Ben-Amar & André (2006) also investigated the short-term effect of cross-border M&A deals announcements on stock prices of acquiring firms. They reported that the acquiring firm’s shareholders earned positive returns over the periods 1998 to 2000. This study examined Canadian firms. Campa & Hernando (2004) investigated the phenomenon in the case of the European market and reported that cross-borders M&A have an unfavorable effect on shareholders’ value, especially in controlled industries. In controlled industries, the existence of a strong regulatory framework creates it difficult to undertake a business activity and hence reduces the success of M&A deals. Due to many cross-border M&A deals with the UK acquiring firms in recent years, a comprehensive analysis is required to further examine the phenomenon. Gaur et al. (2013) & Zhu & Malhotra (2008) investigated the short-run impact of cross-border M&A by Indian firms. They reported positive gains for Indian acquiring firms. Floreani & Rigamonti (2001) investigated the phenomenon in the case of the insurance industry. The study is based on 56 listed acquiring firms in the insurance industry. They reported a significantly high abnormal return of 3.56 percent. Similarly, Gubbi et al. (2010) reported that the Indian acquiring firm’s shareholder earns positive abnormal returns. The investigation was carried out using a sample of 425 cross-border M&A deals for 2000– 2007. Bhagat et al. (2011) carried out a similar study on eight emerging economies for 1991-2008, using a sample of 698 firms. They reported positive returns for acquiring firms. However, another *Corresponding Author (Aamir Khan). Email: aamirhaider4343@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05K http://TUENGR.COM/V11/11A05K.pdf DOI: 10.14456/ITJEMAST.2020.91

study carried out by Aybar & Ficici (2009) reported negative abnormal returns for acquiring firms. This study is based on 433 M&A deals with 58 multinationals firms from emerging markets. They reported that stock prices react negatively to M&A deals in emerging market firms. The existing literature only focused on the direct link between cross-border M&A deals and stock prices of acquiring firms without providing a sound theoretical base to support the claims. The study performed by Ben-Amar & André (2006) is based on 238 M&A deals with 138 Canadian firms. They reported that acquiring firms’ shareholders gain 1.6 percent abnormal returns over the 3-day event window. Faccio et al. (2006) also performed a similar study. This study is based on 4429 firms both listed and unlisted targets. This study is interesting. They reported -0.38 abnormal returns for acquirers of unlisted targets while acquirers of listed targets gain 1.48 percent significant positive abnormal returns. Some studies only adopted the resource-based view or agency theory like studies performed by (Ning et al., 2014) to investigate the impact of deals announcements on the stock prices of acquiring firms. Chen & Young (2010) investigated a small sample of 39 deals by 32 Chinese acquirers for 2000–2008 and reported negative returns. In contrast, Ning et al. (2014) used a relatively large sample of 335 M&A deals for 1991–2010 on Chinese firms and reported negative cumulative abnormal returns for Chinese acquirers. Furthermore, the resource-based view and the agency theory is not able to fully capture the impact of M&A deals on the stock prices of acquiring firm. It must be combined with signaling theory that is widely used in the literature recently. Faccio et al. (2006) investigated the phenomenon in the case of 17 major European economies for 1996–2001. They reported positive abnormal returns, but the main drawback of the study is that it is conducted with providing a theoretical base. Using the resource-based theory as a theoretical base, Gubbi et al. (2010) investigated the impact of cross-border M&As on shareholders’ value. The study was conducted using data of 425 cross-border M&A deals with Indian firms for 2000–2007. They argued that firms in emerging economies like India use M&A deals across the borders as a tool to gain strategic assets to overcome the late entrance in the market and foreignness disadvantage to enhance their competitive edge. The study performed by Chen & Young (2010) is based on agency theory using a small sample of 39 cross-border M&A deals with 32 Chinese firms over the period 2000 - 20008. They found that overseas acquisitions hurt acquiring firm’s shareholders' value. The reason is the low confidence of Chinese investors in the MNE's ability to effectively manage their deals. This study is related to the investors' perception as they examined how the investors perceive the deals which ultimately create a positive or negative signal, but they didn’t talk about the importance of signaling theory in this regard. However, without signaling theory, it is difficult to interpret and analyze the study and the results. Zhou et al. (2015) found that stock prices react positively to cross-border M&As deals announcements, while others like Chen & Young (2010) found a negative relationship. Kim & Mei (2001) found that the stock market is sensitive to political risk. The political environment is associated with cross-border M&As especially in emerging economies (Kim & Mei, 2001). Hence, the varying results from prevailing literature advocate that cross-border M&As need further investigation. Here in our study, we also considered the language differences between the target and acquiring firm, which is widely neglected in previous literature. Previous studies on the performance of acquiring firms and the cross-border M&A deals only focuses on how cross-border M&A deals influence the acquiring firms and the target firms’ performance without considering the impact of political stability in the host countries. While in today's global business environment, institutional

Aamir Khan, Aneel Salman

factors cannot be neglected. The institutional factors like the host countries' political stability and quality of governance play a key role in the success or failure of M&A deals across the borders. Furthermore, the existing studies also did not consider the net debt of the target firms, however, it is an important factor. If acquiring a firm acquires a target with high net debt, it will create a negative signal. In this study, institutional factors will also be incorporated in-depth as neglected in previous studies. In addressing the institutional factors, several factors will be evaluated in the context of the UK by combining the signaling theory and Institutional-based view.

3. DATA AND METHODOLOGY The data on cross-border M&As is obtained from the Thomson one banker database. Thomson One Bankers database provides comprehensive data on M&A deals. While the stock price data is derived from Bloomberg. The study period is from January 1, 2006, to December 31, 2018. To be included in the sample, the acquiring firms should meet the following criteria. 1) The M&A deal is listed as a completed transaction. 2) The firm should be listed and have stock price data. 3) The M&A announcement date should lie between the analysis period. 4) The target companies should lie outside the UK. The final sample consists of 236 cross-border M&A deals with UK acquiring firms. Following M&A deals, stock price reaction is reflected in the acquiring firm's change in stock prices surrounding the event date (Gaur et al., 2013). Hence, the daily stock prices of acquiring firms are used to capture the change in stock prices followed by M&A deals. We use the WGI indicator compiled by Kaufmann et al., (2011) to measure the host country's political stability and governance quality. It includes; political stability & absence of violence, voice & accountability, government effectiveness, regulatory quality, the role of law and control of corruption. The first two measures are used for political stability and the last four for governance quality. The values range from -2.5 to +2.5. Higher values indicate lower political risk and good governance quality while lower values indicate higher political risk and bad governance quality. For industry relatedness, the sample is divided into two groups, one indicating cross-border M&As in the same industry i.e. horizontal acquisitions and other indicates M&As in a different sector i.e. non-horizontal acquisitions. For examining the claim that serial acquirers perform better as compared to first-time acquirers, the sample is again divided into two groups i.e., serial acquirers and first-time acquirers. We employ the event study methodology to examine the impact of M&A deals announcements on the firmâ€™s values of listed stocks in the UK. The event study methodology indicates that any change in stock prices followed by M&A deals is evinced by changes in cumulative abnormal returns (CARs) around the event date. To access the stock prices reaction to cross-border M&A deals announcements, abnormal returns are calculated on a standard market model suggested by Brown & Warner (1985), which is đ??´đ??´đ??´đ??´đ?‘–đ?‘–đ?‘–đ?‘– = đ?‘…đ?‘…đ?‘–đ?‘–đ?‘–đ?‘– âˆ’ (đ?›źđ?›źđ?›źđ?›ź + đ?›˝đ?›˝đ?›˝đ?›˝đ?‘…đ?‘…đ?‘šđ?‘šđ?‘šđ?‘š )

(1),

where đ??´đ??´đ??´đ??´đ?‘–đ?‘–đ?‘–đ?‘– is the abnormal stock returns of firms I at time t, đ?‘…đ?‘…đ?‘–đ?‘–đ?‘–đ?‘– is the actual daily stock prices on day t for firm i. đ?‘…đ?‘…đ?‘šđ?‘šđ?‘šđ?‘š is the daily return from the respective stock exchange on day t. The đ?›źđ?›źđ?›źđ?›ź and đ?›˝đ?›˝đ?›˝đ?›˝ *Corresponding Author (Aamir Khan). Email: aamirhaider4343@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05K http://TUENGR.COM/V11/11A05K.pdf DOI: 10.14456/ITJEMAST.2020.91

are OLS parameters. Measuring the stock price reaction following cross-border M&A deals surrounding the event date, the event window must be determined. The event window is defined as â€œthe number of days over which stock creates possible abnormal returnsâ€?. Several precautionary measures should be considered while creating an event window. For example, a large event window could weaken the probability of finding significant results, while a short window may not possibly capture the effect of the event. In this case, the price will react on the next date when the market opens. Therefore, following Bhabra & Huang (2013), we used a 3-days, 5-days, and 11-days event windows to investigate the effect of the deal announcement on stock prices. Following Bhabra & Huang (2013), the estimation period used in this study is 90 days before the event announcement date and ended 11 days before the announcement date. To calculate the cumulative abnormal returns, we sum up the average abnormal returns for that window, viz. đ??śđ??śđ??śđ??śđ??śđ??śđ?‘Ąđ?‘Ą = âˆ‘đ?‘›đ?‘›đ?‘Ąđ?‘Ą=0 đ??´đ??´đ??´đ??´đ?‘Ąđ?‘Ą

(2),

whereas đ??śđ??śđ??śđ??śđ??śđ??śđ?‘Ąđ?‘Ą is the cumulative abnormal return from t = day 1 up to t = day n.

The statistical significance of the CARs is tested with t-statistics to access whether fluctuations in share prices influence CARs, viz. đ?‘Ąđ?‘Ąđ??śđ??śđ??śđ??śđ??śđ??ś =

đ??śđ??śđ??śđ??śđ??śđ??ś

(3),

đ?‘†đ?‘†đ??śđ??śđ??śđ??śđ??śđ??ś /âˆšđ?‘›đ?‘›

whereas đ?‘†đ?‘†đ??śđ??śđ??śđ??śđ??śđ??ś is the standard deviation of the CARs. It will be concluded that the event has a significant impact on the stock prices if CARs significantly differs from zero.

4. RESULT AND DISCUSSION Results for a full sample of 236 cross-border M&A deals with the UK acquiring firms are presented in Table 1. Results for different time windows are reported. Cumulative abnormal returns (CARs) for a 3-day window (-1, +1) is 1.5 percent & significant at 1 percent level. CARs for event window of 5 days (-2, +2) and 11days (-5, +5) are 1.45 and 1.99 percent respectively, significant at 1 percent level. The results indicate that the stock price reaction is robust to time windows i: e for longer windows, the cumulative abnormal returns are higher. The results support the idea that on average, cross-border M&As by UK acquiring firms generate positive abnormal returns for shareholders. Table 1. Cumulative Abnormal Returns (CARs) for UK Acquiring Firms

Event Window No. Mean Std. CAR (-1, 0) 236 0.0142 0.0553 CAR (0, +1) 236 0.0125 0.0453 CAR (-1, +1) 236 0.0150 0.0583 CAR (-2, +2) 236 0.0145 0.0625 CAR (-5, +5) 236 0.0199 0.0961 *** P < 0.01. **P < 0.05. *P < 0.1

Aamir Khan, Aneel Salman

t-value 3.9558*** 4.2578*** 3.9463*** 3.5630*** 3.1790***

Positive: Negative 137:99 138:98 144:92 136:100 132:104

%age of Positive 58.05 58.47 61.02 57.62 55.93

Table 2. Commutative Abnormal Returns: High Vs. Low Political Stability

High Political Stability No. Mean t-value CAR (-1, 0) 155 0.0155 3.805*** CAR (0, +1) 155 0.0133 4.035*** CAR (-1, +1) 155 0.0156 3.642*** CAR (-2, +2) 155 0.0148 3.338*** CAR (-5, +5) 155 0.0216 3.198*** *** P < 0.01. **P < 0.05. *P < 0.1

Event Window

Low Political Stability No. Mean t-value 81 0.0057 1.304 81 0.0075 1.460 81 0.0108 1.551* 81 0.0118 1.249 81 0.0082 0.491

Mean Difference Mean Diff. t-vale 0.0098 0.037 0.0058 0.952 0.0048 0.726 0.0030 0.288 0.0134 0.060

Table 3. Commutative Abnormal Returns: High Vs. Low Governance Quality

High Governance Quality No. Mean t-value CAR (-1, 0) 169 0.0159 3.958*** CAR (0, +1) 169 0.0126 3.875*** CAR (-1, +1) 169 0.0153 3.629*** CAR (-2, +2) 169 0.0148 3.356*** CAR (-5, +5) 169 0.0205 3.068*** *** P < 0.01. **P < 0.05. *P < 0.1

Event Window

Low Governance Quality No. Mean t-value 67 0.0037 0.802 67 0.0120 1.218 67 0.0121 1.218 67 0.0123 1.193 67 0.0152 0.838

Mean Difference Mean Diff. t-vale 0.0122 2.002** 0.0006 0.095 0.0032 0.464 0.0025 0.224 0.0053 0.275

Table 2 reports the empirical results based on acquiring the target from a high or low level of politically stable countries. The findings show that CARs are positive and statistically significant for those firms who acquired targets from countries with high political stability. Shareholders earn 1.56, 1.48 and 2.16 percent around the event windows of 3 days, 5 days and 7 days respectively. All CARs are significant at 1% level. In contrast, the results are insignificant for those who acquired firms from countries that are politically unstable except for the event window of (-1, +1) which is positive and significant at 10 percent. But the effect soon disappeared for large event windows. The results show that the positive stock price reaction is robust to time windows. i.e. for longer windows, the CARs are higher. Hence the results support the argument that UK acquiring firms create higher CARs who acquire firms from politically stable countries. Results of governance quality are reported in Table 3, indicating that the stockholders of UK acquiring firms create higher cumulative abnormal returns by acquiring firms from countries with a higher level of governance quality. On average, shareholders earn 1.53, 1.48 and 2.05 percent respectively for event windows of (-1, +1), (-2, +2) and (-5, +5). All CARs are significant at a 1 percent level. Following signaling theory and institutional-based view, the results further demonstrate that political stability and good governance quality of the target firms' countries is perceived positively by shareholders and thus results in a positive stock price reaction as compared to countries with unstable political conditions and low governance quality. Table 4: Commutative Abnormal Returns: Targets with Low Vs. High Net Debt. Target with Low Debt No. Mean t-value CAR (-1, 0) 162 0.0145 3.899*** CAR (0, +1) 162 0.0155 3.542*** CAR (-1, +1) 162 0.0166 3.212*** CAR (-2, +2) 162 0.0168 3.192*** CAR (-5, +5) 162 0.0221 2.653*** *** P < 0.01. **P < 0.05. *P < 0.1

Event Window

Target with High Debt No. Mean t-value 74 0.0104 1.446 74 0.0093 1.420 74 0.0119 1.373 74 0.0122 1.547 74 0.0246 1.837

Mean Difference Mean Diff. t-value 0.0041 0.635 0.0062 0.956 0.0047 0.594 0.0046 0.526 -0.0025 -0.199

Table 4 reports the results for firms that acquired a target with high debt value vs. those who *Corresponding Author (Aamir Khan). Email: aamirhaider4343@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05K http://TUENGR.COM/V11/11A05K.pdf DOI: 10.14456/ITJEMAST.2020.91

acquired firms with low net debt. The results show that firms who acquired the target with low debt create higher cumulative abnormal returns. Shareholders of acquiring firms with a small debt of the target firms earn 1.66, 1.68 and 2.21 percent for event windows of (-1, 1), (-2, 2) and (-5, 5) respectively. All the CARs are highly significant. While on the other hand, results are insignificant for firms who acquired targets with high debt value except for the event window of (-5, +5) which is significant at a 10 percent level. Hence, the results support the claim that shareholders of those firms who acquired targets with low debt value earn positive returns. Table 5 reports CARs for horizontal vs. non-horizontal cross-border M&As. Horizontal acquisitions reflect industry relatedness while Non-horizontal acquisitions reflect diversification. Findings indicate that stockholders of UK acquiring firms obtain positive returns following cross-border M&As in the same industry. Mean CARs for horizontal acquisitions are 1.42, 1.61 and 2.46 percent respectively for event windows of CARs (-1, +1), (-2, +2) and (-5, +5). All CARs are highly significant at a 1% level. The results are robust to time window i: e the mean CARs increase with large event window. On the other hand, cumulative abnormal returns are insignificant for non-horizontal acquisitions except for small event windows. Hence, the results support the claim that shareholders of acquiring firms positively perceive the acquisitions in the same industries in the short run while non-horizontal acquisitions create uncertainty. Table 5: Commutative Abnormal Returns: Horizontal Vs. Non-Horizontal Acquisitions. Horizontal Acquisitions No. Mean t-value CAR (-1, 0) 138 0.0125 2.531** CAR (0, +1) 138 0.0127 3.182*** CAR (-1, +1) 138 0.0142 2.588*** CAR (-2, +2) 138 0.0161 3.019*** CAR (-5, +5) 138 0.0246 3.067*** *** P < 0.01. **P < 0.05. *P < 0.1

Event Window

Non-Horizontal Acquisitions No. Mean t-value 98 0.0174 1.941* 98 0.0124 1.329 98 0.0161 1.304 98 0.0162 1.630 98 0.0132 1.317

Mean Difference Mean Diff. t-vale -0.0049 -0.685 0.0003 0.051 -0.0019 -0.260 -0.0001 -0.012 0.0114 0.892

Table 6 report results based on the claim that serial acquirers create higher cumulative abnormal returns as compared to first-time acquirers. The results do not support our claim for the UK acquiring firm that serial acquirers create higher CARs. Shareholders of both serial as well as first-time acquirers both earn higher cumulative abnormal returns. In both cases, the results are highly significant. Hence, we conclude that acquisition experience has no advantage over first-time acquirers in the short run. Table 6: Commutative Abnormal Returns: Serial Vs. First-time Acquirors.

Serial Acquirors No. Mean t-value CAR (-1, 0) 151 0.0116 2.548*** CAR (0, +1) 151 0.0109 2.761*** CAR (-1, +1) 151 0.0122 2.337** CAR (-2, +2) 151 0.0101 2.153** CAR (-5, +5) 151 0.0152 1.971** *** P < 0.01. **P < 0.05. *P < 0.1

Event Window

First-time Acquirors N Mean t-value 85 0.0189 3.220*** 85 0.0154 3.684*** 85 0.0198 4.028*** 85 0.0223 2.936*** 85 0.0282 2.645***

Mean Difference Mean Diff. t-vale -0.0073 -0.982 -0.0045 -0.782 -0.0076 -1.058 -0.0122 -1.365 -0.0130 -0.988

Our findings are well aligned with studies of Bhabra & Huang (2013) & Tao et al. (2017). Boateng et al., (2008) and Wang et al., (2007) also reported similar results. Tao et al. (2017) report that cross-border M&A deals have a positive significant impact on the stock prices of Chinese

Aamir Khan, Aneel Salman

acquiring firms. They argued that investment in highly politically stable countries creates positive abnormal returns for shareholders as compared to investment in low politically stable countries. Similarly, the acquisition experience also has a positive significant impact. Bhabra & Huang (2013) reported that firms that acquire targets in the same industry generate positive abnormal returns for their shareholders. Likewise, the study performed by Wang et al. (2007) investigated the impact of 27 cross-border M&A deal by Chinese firms. They reported that cross-border M&A deals create value for Chinese acquiring firms. They argued that Chinese firms are primarily motivated to increase their market share. Instead, our results are contrary to (Uddin and Boateng, 2009). They find that the UK acquiring firms do not earn a positive abnormal return in the short-run for 1994–2003. Aybar and Ficici, (2009) also reported negative abnormal returns for shareholders of emerging markets for 1991–2004. The study was based on 433 M&A deals with 17 emerging countries. Similarly, Chen and Young, (2010) also reported negative abnormal returns for acquiring firms based on 39 cross-border M&A deals for 2000-2008 by 32 Chinese firms and showed that cross-border M&A deals resulted in negative average cumulative abnormal returns.

5. CONCLUSION Based on the signaling theory and institutional-based view, we examined how stock prices of acquiring firms react to cross-border M&A deals announcements by the UK acquiring firms. This study focuses on whether the institutional characteristics of the target firms' countries lead to generating different market reactions. An event study methodology based on 236 UK acquiring firms for 2006–2018 finds that on average stock prices respond positively to M&A deals by UK acquiring firms. Furthermore, the investigation shows that institutional factors affect stock prices. Findings show that high political stability and high governance quality is positively associated with short-run stock performance of UK acquiring firms following cross-border M&As. Besides this, we also investigated the impact of industry relatedness and acquisition experience. Results show that M&As in the same industry have a significant positive effect while acquisition experience has no significant impact in the short-run. This study also examined the effect of net-debt of the target firms on stock prices of acquiring firms. The result shows that the low-debt of the target is significantly associated with the stock prices of acquiring firms. Furthermore, we evaluated the stock price reaction to cross-border M&As based on political stability and governance quality of the target firm's countries. Thus, shareholders of acquiring firms gain higher cumulative abnormal returns that acquire firms from high politically stable countries.

6. AVAILABILITY OF DATA AND MATERIAL Relevant information can be made available by contacting the corresponding author.

7. REFERENCES Aybar, B. and Ficici, A. (2009). Cross-border acquisitions and firm value: An analysis of emerging-market multinationals. Journal of International Business Studies. 40(8), 1317-1338. Ben-Amar, W. and André, P. (2006), “Separation of ownership from control and acquiring firm *Corresponding Author (Aamir Khan). Email: aamirhaider4343@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05K http://TUENGR.COM/V11/11A05K.pdf DOI: 10.14456/ITJEMAST.2020.91

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Zhu, P. and Malhotra, S. (2008), “Announcement effect and price pressure: An empirical study of cross-border acquisitions by Indian firms”, Statistical Methodology. Aamir Khan is a PhD scholar in the Department of Management Sciences, COMSATS University Islamabad, Pakistan. He is also an Erasmus Fellow of the University of Nice Sophia Antipolis France. His research interest includes Corporate Finance, International Finance, Digital Finance, and Sustainability.

Dr.Aneel Salman is an Assistant Professor in the Department of Economics, COMSATS University Islamabad, Pakistan. He did his Ph.D. in Economics from Rensselaer Polytechnic Institute Troy, New York, USA. His areas of research expertise include Development Economics, International Trade, Institutional Governance, Corporate Social Responsibility, Public Policy, and Business Management.

Trademarks Disclaimer: All product names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification and educational purposes only. The use of them does not imply any endorsement or affiliation.

Aamir Khan, Aneel Salman

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PAPER ID: 11A05L

LEARNING FROM COGNITIVE PROCESS OF VISIONARY MALAYSIAN ARCHITECT ON GENERATING CREATIVE, NOVEL ARCHITECTURAL DESIGN IDEAS 1*

Ahmad Faiz Hassan Naziri , Salahuddin Abdul Hakeem Abas , 1 1 Ismail Samsuddin , and Mohamed Nizam Abdul Aziz Faculty of Architecture, Planning and Surveying (FSPU), Universiti Teknologi MARA Perak Branch, Seri Iskandar Campus, Perak, MALAYSIA.

ARTICLEINFO

Article history: Received 01 August 2019 Received in revised form 15 November 2019 Accepted 16 December 2019 Available online 23 December 2019

Keywords: Architectural creativity; Architectural expertise; Architectural education; Architectural design process; Architectural design thinking.

A B S T RA C T

Architecture is one of the disciplines that involve creativity within its core designing activities. Creativity occurs through a process when a person uses his/her ability (mental and physical) to generate design ideas as solutions that are novel, practical and valuable. This investigation focuses on the design process and principles of the expert and visionary Malaysian architects, which is Ar. Hijjas Kasturi and Ar. Serina Hijjas. In this investigation, the architects were interviewed on their design experiences while dealing and solving complex problems of architectural design. The initial findings indicate that these architects shared common traits of dynamic principles with other master architects throughout the world of creativity and expertise in architectural design. Such principles are considered exemplary design thinking tools that can inspire students and young architects to be more creative and innovative. Disciplinary: Architectural Sciences. ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

Architectural Education in Malaysia is still in its infancy compared to a more established institution, especially in Europe and America. Architectural education in Malaysia started in the 1960s after the establishment of the Malaysia Architectural Board (LAM). Since the formation, Malaysia’s architectural education shaped local talent that suits the government vision of ‘Nation Building’ during that time. Before that, the locals need to study abroad such as in Europe and America under the government’s initiative to create local talent because most pre-independence buildings were designed by the British. After they came back from abroad, most of them practice extensively design government buildings in creating modern Malaysia. Those who venture into academics helped set up the foundation of the local architectural education system that suits the local context and demand. Subsequently, thousands of local architects have been produced mainly to fulfill the growing demands of the construction industry parallel to the country’s rapid development. *Corresponding author (A.F.H.Naziri). Tel: +60-17-4536955 afhn90@gmail.com, ahmad702@perak.uitm.edu.my ©2020

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 Paper ID:11A05L http://TUENGR.COM/V11/11A05J.pdf DOI: 10.14456/ITJEMAST.2020.92

However, there is a jarring gap between fresh graduate students and experienced architects in terms of generating creative ideas. This is mainly due to the lack of exposure to the experienced practice architect during the study. Unlike artists from previous generations, skills and knowledge were handed down to apprentice or disciples in which the method of generating ideas and how to execute in creating their artwork. With this method, the disciples can avoid recreating mistakes that have been experienced by the master thus further speed up the learning process. Architectural education nowadays is thought through syllabus which is recognised by MQA and the board, hence the connection between students and real experienced practice architect is lost and hinder the development of the students. Graduates later need to learn from experience until they develop their own individual guiding principle or style. In tackling the issues, an interview was set with two of the most prominent architect in Malaysia, Ar. Hijjas Kasturi and his daughter, Ar. Serina Hijjas. They are the main subject of this study that will be the leading experts in identifying the common traits of generating creative design ideas. The input of the two generations of local architects can be a valuable insight on how to also incorporate the traits and experience into the local architectural education model. Students nowadays are not exposed to the architectural guiding principle and primary generator of developing creative ideas since the local architectural education model seldom incorporate the input or direct involvement of an experienced practising architect when engaging with students. The students also constantly rely much on the social media aspect in terms of finding suitable images as preferences, without knowing the credential of the images chosen. These would soon lead to students blindly follow the building without learning how ideas are generated in terms of designing the building that they replicate. The paper aims to learn from these visionary architects to identify the traits and components in what makes a visionary architect. This paper also would identify the design process and methods used by the expert architects that would become principles of incorporating the qualities into the architectural education model.

2. LITERATURE REVIEW

In determining the traits of guiding principles, several components are broken down to understand and analyse the possibilities and outcomes of having these traits in the architectural field. All these components and traits are vital for architects to build up the source of the primary generator for creative ideas, to create better solutions for the design. These attributes are selected based on the novelty and greatness associated with the architects with the traits. These architects were either received awards or recognitions on their projects or portray characters that could become an example to students and young architects. Other attributes such as passion, confidence, teamwork, and leadership; are all the important traits that any architects must acquire, where it cannot be taken lightly. But these do not portray a remarkable, outstanding architect. To further understand the meaning and the function of these attributes, several architects are linked to each component to understand the function of every trait.

2.1 COGNITIVE PROCESS

Decision making is one of the fundamental cognitive processes in the field of architecture by which a preferred option or course of action is selected from among a set of options based on certain criteria and aspects. (Wang, 2017) To model a cognitive process adequately, it is vital to understand

A.F.H.Naziri, S.A.Hakeem Abas, I.Samsuddin, and M.Nizam A.Aziz

the linkage of the mind limitation, such as attention span and memory; with the imposing of the environment, such as site information and cost of operations. This is vital to generate some solutions and then test these possible solutions. (Newell, 2008) In this matter, it would become a problematic approach if there are too many possibilities if there is no guidance or experience. (Thomson, 2013) That is why it is important to have as many experiences and explorations in order to create a better design in the architecture field. One of the great master architects who portrayed this method of cognitive thinking is the American architect, Frank Lloyd Wright. He is considered as the founder of the ‘organic architecture’. (Zbašnik-Senegačnik, 2014). The application of the term organic to architecture implies that architecture is analogous in various ways of living organisms. It has been taken to mean that, as with living organisms architecture is shaped by environmental conditions such as climatic, geographical, social and cultural. This interpretation of the organic concept leads to notions of architectural regionalism. (Zbašnik-Senegačnik, 2014) The concept derived here were developed after much consideration and through the various cognitive process, which had led him to become a renowned architect himself.

2.2 CREATIVITY

Creativity is part of fundamental elements to all academic disciplines and educational activities, not just the art itself. In the world of architecture academia, it plays a huge role in determining the potential and capacity of a student’s designing process. According to Kampylis and Berki (Runco, 2012): ‘Creative thinking is defined as the thinking that enables students to apply their imagination to generate ideas, questions and hypotheses, experimenting with alternatives and to evaluating their own and their peers’ ideas, final products and processes.’ (Gerlovina, 2011). In order for these students to have broad creative thinking, it is necessary for them to establish knowledge to help them formulate their own understanding, imagination and other aspects. ‘One cannot think creatively unless one has the knowledge with which to think creatively. Creativity represents a balance between knowledge and freeing oneself of that knowledge’ (Johnson-Laird, 1988, p.207, cited by Wolf, 2015). An example of a master architect who played with this such verb is Santiago Calatrava, a Spanish architect. He has designed multiple unique and iconic buildings, in which all of those buildings had different sources of inspiration from different aspects of life such as human figures, derivation of nature’s creativity, and experimentation of materials and their properties. This proves that to achieve this level of design thinking, one must possess creativity and well-generated thoughts. As a structural engineer himself, Santiago had embodied an explorative venture into aesthetical aspects in buildings to the maximum limits rather than the application of the structural approach, which is quite a rather contradictory to the norm of the position.

2.3 EXPERTISE

The Merriam-Webster Dictionary deﬁnes an expert as ‘having, involving, or displaying special skill or knowledge derived from training or experience.’ In the field of architecture, the study of expertise involves applying concepts and methods of practising in the industry from some areas: problem-solving, learning and ergonomic, to name just a few. The study of expertise provides a focus for basic research on many phenomena of cognition, such as memory limitation, primary generator, and reasoning biases. (Hoffman,1996) These experiences, either positive experience or the contrary, would then developed architects to become experts in the field. This would usually come through after a certain period, depend on the amount of experience earned. A renowned architect, Kenzo

Tange, a great Japanese architect, shares these traits. He was part of the think-tank that created the ideology of metabolism in Japan (Xue, 2014). The movement, which drew the attention of the international architectural community in the 1960s, with its radical and visionary urban and architectural schemes targeting a sustainable society (Lin, 2007). Kenzo Tange and his group of architects and other professions deployed several experiments and studies first before presenting the ideology. Without any experience and expertise from other backgrounds and fields, this Metabolism idea would never be envisioned nor visualised.

2.4 INSPIRATION

Architecture finds inspiration in nature. John Ruskin, a famous architect, once wrote in ‘7 lamps of architecture’, that ’forms which are not taken from natural objects must be ugly’. Analogies between man-made artifacts and living organisms have been a persistent theme in Western throughout the millennium. This can be seen during the period of the Egyptians, Greeks and Romans incorporated natural motifs, such as tree leaves, into their columns. A legendary architect that shows a great example of this trait is Antoni Gaudi. Today he is admired by both professionals and the general public, in which his masterpiece, the Sagrada Família, is one of the most visited monuments in Spain (Giulia, 2010). The Sagrada Familia is a good example of using functional forms from nature in the solving of constructional problems: in which Antoni Gaudi used columns that modelled the branching canopies to solve static problems in supporting the vault. As a Spanish Catalan, he incorporated Catalonia’s natural beauty and rich history into his buildings. The clever use of geometrical structures inspired by such curves that would produce shapes in the form of trees and flowers. It is not casual that all these inspirations in perspective do temporally coincide with the great revolutions that Science and Technology had across the Century. Therefore, in the current scenario, the prophecy of architecture lies to the young generation of architects that should be inspired by these great predecessors.

2.5 ARCHITECTURAL PRACTICE

Architectural design requires an immense amount of information for inspiration, creation, and construction of buildings. The process from the initial conception to the finished product involves substantial knowledge and involvement of multidisciplinary consultants, such as architects, engineers, and planners and others. Architecture both defines and is defined by social, cultural, political and financial constraints: this is where the discipline and the profession of architecture meet. Traditionally, an architectural practice in term of management has been perceived as the administration of contracts and offices, rather than the management of projects and practices. Like many other organizations within the construction industry, the labour market upon which architectural practices draw is regulated by The Malaysian Board of Architects (LAM, 2019) which supervises from the educational level to the operational level of the architectural practices. This is a process of standardisation of skill through the professional formation, which means that when clients purchase the intangible service, they also know to what standards and procedures the service would be supplied. Failure to meet these standards and procedures opens the professional to charges of negligence (Winch, 2006).

3. METHODOLOGY

This study is primarily based around the method of interviews with the Malaysians prominent architects, Ar. Hijjas Kasturi and his daughter, Ar. Serina Hijjas. Both of them had dedicated their

A.F.H.Naziri, S.A.Hakeem Abas, I.Samsuddin, and M.Nizam A.Aziz

lives to create and design iconic buildings in Malaysia and other countries as well. Iconic buildings associated with them are Menara Telekom, Menara Tabung Haji, and Sasana Kijang, with both architects, had received multiple awards and recognitions between them. It proves that the subject chosen is well versed in their field and become the most suitable candidates, to begin with. This interview is done qualitatively as this is an explorative study, with the results of this being collated in a document and reassessed for any valuable points to be taken. The interview seeks to find out the architect’s ability in generating ideas to solve the complex problem of architectural design as well as exploring his expertise in this field of profession. The interview was conducted in his office in Jalan Sultan Ismail, Kuala Lumpur. Sets of questions were structured beforehand, and a two-hour interview was executed. Discussion

4. FINDINGS

Based on the interview carried out, Ar. Hijjas Kasturi and Ar. Serina Hijjas has developed their own individual guiding principle, with different understanding and perspectives, even from their close blood-relation. It proves that architectural education prepares the way of thinking for these young architects independently and exclusively in which they should further develop themselves through experience by practising in architecture firms and involvement with society. The guiding principle for Ar. Hijjas Kasturi is conformed by his experience throughout many eras of the Malaysian architectural scene in the late 80s. He concludes that these young architects are pressured by the economy during the early stage of their careers. The constraints that they bear upon them leads to rigidity in design and lack of creativity. Therefore, most fresh graduates tend to follow the current architectural fashion as required by society. Architects matured mostly at age 40 when they have found their guiding principles and have the bravery to execute their ideas to the society/client without the fear of being rejected. They also believed not to follow the architectural trends which involve in façade treatment, building materials and spatial planning, instead believes in the own individual design brief requirement such as site surrounding and clients background by each project's criteria.

4.1 LEARNING PROCESS

The process of maturing in design always starts with education. However, architectural education should be emphasising at     

Creating a holistic education and embrace all kind of knowledge (or exposure) Nurturing creativity and encouraging imagination Develop the useful skill to the career such as good sketches and usable and practical knowledge Encourage students to give opinion instead of finding information (especially through Google) Emphasising on the grammar of design by having critique sessions.

(Johannes, 2001; Demirbas, 2003; Lukman, 2011) 4.1.1 COGNITIVE PROCESS It is apparent in the statement by Ar. Hijjas that designing process is a complex problem-solving process that architects or any product designer need to overcome in order to create good design products. Visionary architects show that the requirement of knowledge and ability to seek correct information and in an efficient manner is vital in tackling various design issues. With experience, architects will develop a sense of rational thinking and understanding of the environment in which *Corresponding author (A.F.H.Naziri). Tel: +60-17-4536955 afhn90@gmail.com, ahmad702@perak.uitm.edu.my ©2020

expedite the design process compare to early career. “First is knowledge of course. So among the knowledge, what is the knowledge required. Second is a skill, what skill they required. The third is an attitude, what kind of attitude is required. And another is discipline, what kind of discipline they required. These are the main themes…. The other one that they want is exposure.” (Ar. Hijjas Kasturi) “You Google the things. But, it is not enough. You can get from people doing something that is not enough that only information that all for me knowledge after that you got to go around economics no matter what you build.” (Ar. Hijjas Kasturi) “He got to know all his geometry. If he does not, if he cannot calculate, he cannot. That what I tell you the fundamental trigonometry 3, 4, and 5. If you don’t have that, you can’t form it. These are all rational. You got to know about the earth. How the earth formulates.” (Ar. Hijjas Kasturi)

4.1.2 CREATIVITY As mentioned by Johnson-Laird, in 1988, ‘Creativity represents a balance between knowledge and freeing oneself of that knowledge’. Therefore, these architects understand the fundamental of the design before incorporating the knowledge into their design process. They are equipped with terms and architectural lingo as they progress further into their career. “Architect is the creator of space. Economics is the economics of space. To make sure the best use of space the minimum, the most economical way.” (Ar. Hijjas Kasturi) ‘The language of architecture. You talk about nomenclature. Nomenclature and language of architecture are two different things…. We, every architect talks differently, are they thinking differently? No! They speak the same thing. The trend is different…because they are modern people.’ (Ar. Hijjas Kasturi) “First is the grammar of design; the fundamental grammar of design.” (Ar. Hijjas Kasturi)

4.2 EXPERIENCE THROUGH PRACTICE Common traits developed through experiences are:      

Considering the economics of planning, economic of using materials and economics of everlasting thing (maintenance method, cost, and image) Styles commonly influenced by the people (style and client) Considering the historical aspect of designing instead of raw ideas Style change through exposure along with time They developed the philosophy and aesthetic unique to the individual Designing with local context and availability in mind.

(Billet, 2013; Schwartz, 2012; Maranzano, 2005)

4.2.1 INSPIRATION Inspiration changes over time due to style, trend or local context. However, the design still considers the historical aspect instead of exploring raw ideas. They believe that as architects progress

A.F.H.Naziri, S.A.Hakeem Abas, I.Samsuddin, and M.Nizam A.Aziz

into their careers, they will develop the philosophy and aesthetic unique to the individual. “Knowledge and historical change. They are changing, the way we were working that we were merging things that the way we were merging everything on the internet.” (Ar. Serina Hijjas) “You have this that influences your work and then evolve to what I see the work is change…” (Ar. Serina Hijjas) “We always look at heroes anyway. They inspire. Whether Calatrava, whether Norman Foster, we look at it. Something in them is good. They talking about their work, not their life.” (Ar. Hijjas Kasturi)

4.2.2 EXPERTISE As they progress within their career, both Ar. Hijjas Kasturi and Ar. Serina Hijjas understands the challenges faced in the construction industry. They evolve throughout the era influenced by the trend, the client’s intention until they are strong and mature enough to influence the client on what they want to do. “There is the economics of planning. The economics of using material and the economics of everlasting things” (Ar. Hijjas Kasturi) “Every piece of work is a process. Just like the architecture process, the large piece does inspire for the next is a sense of the process.”(Ar. Serina Hijjas) “I wanted to model it like a Bauhaus. That is what I wanted. All I wanted all to be one so they can learn each other. Not only to learn each other, they have what they call it, togetherness.” (Ar. HIjjas Kasturi) 4.2.3 ARCHITECTURAL PRACTICE “Today is democratic. People tell you what to do. The people make the architect. The people there that going to buy the thing, they are the ones that do that. But, you have influence over each other. Sometimes, the architect so strong. He tells the client what to do.’ (Ar. Hijjas Kasturi) “…. you got to be exposed to the industry, you got to be exposed to the manufacturer, and you got to be exposed to the architect…. you must have exposed to books; you must have exposed to magazine…” (Ar. Hijjas Kasturi) “The architect can only bloom at least when they are the age of 40 and above. Then I can tell you, in the beginning, they are just sustaining, they just (practice) to get more and absorbing more knowledge.” (Ar. Hijjas Kasturi)

5. CONCLUSION This study can be concluded that to create or generate design ideas as solutions that are novel, practical and valuable; one must possess a great scale of creativity. This creativity can be adopted by *Corresponding author (A.F.H.Naziri). Tel: +60-17-4536955 afhn90@gmail.com, ahmad702@perak.uitm.edu.my ©2020

several methods, such as through experiences, and learning from the experts. These methods are lack in the educational system nowadays, which brings us to the main issue of having young generations of architects being lack of creativity. The literature study carried out was the quality and traits of many great architects have, including the mentioned architects. It was evident from our reading, and our interviews, that this explorative study does not solve the problem of the creativity level of the young architects, nor the educational system applied for architecture. This paper suggests that the disciplines and ways of thinking of these architects played a bigger role in finding creative solutions for the design, that lead them to become who they are now today. This study shows that these two prominent architects had their ways of thinking and solving the problems, which could have become part of the methods being applied in the education syllabus. Instead of having images and pictures as the main references, young architects must also learn to read and appreciate the qualities of spaces and study reasons behind the development of the buildings that they used as references. This study has shown that there is so much more to explore and to improve in our architectural industries. The challenge is to find a way of making a better understanding of creating excitement and unique architectural perspective, viable, teachable and, ultimately, of worth to the architectural student to follow, learn and adapt, and to do this without losing creative and innovative.

6. ACKNOWLEDGEMENT We would also like to thank Ar. Hijjas Kasturi and Ar. Serina Hijjas for their willingness in assisting the researchâ€™s interview and for their insight and many resourceful ideas.

7. DATA AND MATERIAL AVAILABILITY

Information can be made available by contacting the corresponding author.

8. REFERENCES Board of Architects Malaysia (LAM). Architect Act and Scope of Architect. Retrieved 14th January 2019. Billet, S. (2013) Learning through practice: Beyond Informal and Towards a framework for learning through practice. UNESCO-UNEVOC: Revisiting Global Trends in TVET. pp. 123-163 Demirbas O. O. (2003) Focus on Architectural Design Process through Learning Styles. Design Studios Vol 24. Gerlovina, Z. (2011) Eureka: Unravelling the Mystery behind Creativity. pp 4-18 Giulia, L. M. (2010) Art & Mathematic in Antoni Gaudiâ€™s Architecture: La Sagrada Familia. Journal of Applied Mathematics. Vol 3(1) pp 125-145 Hoffman, R. R. (1996). How Can Expertise be defined? Implication of Research from Cognitive Psychology. Exploring Expertise. pp 81-100 Johannes, R. (2001) Model for Architectural Design Education (MADE) Theory. Field of Teaching and Research. pp. 1-18 Lukman, N.I. et al (2011) Learning in Architectural Design Studio. Journal of Procedia - Social and Behavioral Sciences. pp. 30-35

A.F.H.Naziri, S.A.Hakeem Abas, I.Samsuddin, and M.Nizam A.Aziz

Lin, Z. (2007). Urban Structure for the Expanding Metropolis: Kenzo Tange’s 1960 Plan for Tokyo. Locke Science Publishing Company, Inc. pp 109-124 Maranzano, J. F. et al (2005) Architecture Reviews: Practice and Experience. Postmodern Software Design. IEEE Computer Society. pp. 34-43 Newell, B. R. (2008). Cognitive Process, Models and Metaphors in Decision Research. Journal of Judgment and Decision Making, Vol 3, No. 3. pp 195 -204. Runco, M. A. and Acar, S. (2012). Divergent Thinking as an Indicator of Creative Potential. Creativity Research Journal, 24(1) Schwartz, M. (2013) Best Practice in Experiential Learning. Learning & Teaching Office, Ryerson University. Thomson, C. (2013). Psych 207: Cognitive Processes, Winter 2013, University of Waterloo Wang, Y. (2017). The Cognitive Process of Decision Making. International Journal of Cognitive Informatics and Natural Intelligence, 1(2), pp 73-85. Winch, G. & Schneider, E. (2015). The Strategic Management of Architectural Practice. Journal of Construction Management and Economics. 11(6) pp 467-473 Wolf, R. (2015). Defining the Concept of Creativity. University of Twente, Netherlands. Master’s Degree in Psychology Thesis. pp 2-60 Xue, C. Q.L. et al (2014) Japanese Modernity Deviated: Its Importation and Legacy in the Southeast Asian Architecture since the 1970s. Journal of Habitat International. pp 227-236 Zbašnik-Senegačnik, M. (2014). Interpretations of Organic Architecture. A Scholarly Journal of Architecture and Urban Planning. pp 290-301. Ahmad Faiz Hassan Naziri is a Lecturer at Department of Architecture at UiTM Perak Branch Seri Iskandar Campus. He received his B. Sc. Architecture in the same university and continued his study in M. Archi in UiTM Shah Alam. His current interests involve historical Malay heritage and applications of structures in architecture. Salahuddin Abdul Hakeem Abas is a Lecturer at Department of Architecture at UiTM Perak Branch Seri Iskandar Campus. He received his B. Sc. in Architecture in the same university and continued his study in B. Arch in UiTM Shah Alam. He then furthers his study in M. Architecture in Universiti of East London, UK. He is now teaching architecture courses in the application of structures and photography. Dr. Ismail Samsuddin is an Associate Professor at Department of Architecture at UiTM Perak Branch Seri Iskandar Campus. He holds a Bach of Architecture and Master of Architecture from University of Nebraska, USA. He then furthers his study in PhD from Sheffield University, UK. His areas of research are Studio Education, Design Cognition and Design Peer Learning. Mohamed Nizam Abdul Aziz is a Senior Lecturer at Department of Interior Architecture at UiTM Perak Branch Seri Iskandar Campus. He holds a Bach Hons. of Interior Architecture and Master of Art Design from UiTM Shah Alam, USA. He is currently pursuing his study in PhD of Design Education at UiTM Shah Alam. His area of expertise is Design Education.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05M

DEVELOPMENT OF TECHNOLOGY FOR PRODUCTION OF PROTEIN-VITAMIN GRANULATE Sergei Dotsenko 1*, Lyudmila Kryuchkova 2 , Viktor Samuylo

Department of Building Production and Engineering Structures, Far Eastern State Agrarian University, RUSSIA 2 Department of Higher Mathematics, Far Eastern State Agrarian University, RUSSIA 3 Department of Operation and Repair of Transport-technological Machines and Complexes, Far Eastern State Agrarian University, RUSSIA 1

ARTICLEINFO

Article history: Received 06 April 2019 Received in revised form 19 November 2019 Accepted 09 December 2019 Available online 23 December 2019

Keywords:

Micro-additives; Production line; Feed technology; Mechanized feeding system; Feed binder; Vitamins; protein substances; Biological value; Compound feed.

A B S T RA C T

This article presents the results of the development of a new method for the preparation of protein and vitamin granules of high biological value. An innovative method for producing protein and vitamin granules with a high content of protein substances in an amount of at least 30%, β-carotene at a level of 240 mg/kg, vitamin E 910 mg/kg with a pellet strength of at least 95% were substantiated and proposed. The implementation of this method in the system of mechanized feeding of animals and poultry on small and medium-sized farms allows you to prepare a feed product of high biological value with a significant reduction in costs, energy, labor, and funds. Disciplinary: Animal Sciences (Animal Nutrition and Feed Technology). ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

Despite certain advances in the science and practice of mechanized feeding of animals and birds, unresolved issues related to the preparation of feed products containing a combination of protein substances and vitamins in their concentrated form and in the form of additives. Protein and Vitamin Supplements (PVS), protein-vitamin calcium supplements (BVKD) and others are homogeneous mixtures of high-protein fodder products and micro additives, crushed to the required size, used for the preparation of compound feed based on grain fodder. Improving the efficiency of production of livestock and poultry products is possible only if there are feeding diets balanced for such basic nutrients as proteins, fats, carbohydrates, minerals, and vitamins (Zhitnikova, 2008). At the same time, in the cost structure of livestock and poultry products from 50 to 60% and

*Corresponding author (Sergei Dotsenko). Tel: +7-989-99-87887. Email: lyudmila0511@mail.ru

©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.11 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05M http://TUENGR.COM/V11/11A05M.pdf DOI: 10.14456/ITJEMAST.2020.93

higher falls on the share of feed. At the same time, the harvested feed contains only 65 - 70% of the protein of its needs, so the deficit of its content is 1 unit makes up 19 - 20% (Melnikov, 1978). This leads to a shortage of livestock and poultry products, cost overruns, reduced livestock, and poultry productivity, labor productivity and inefficient use of feed, which in turn increases production costs. The so-called technology of fractionation of green plants in order to obtain protein-vitamin concentrate was not widely used. This is due to the need to process large volumes of grass and only in the summer. In addition, the equipment developed for these purposes is cumbersome, and therefore metal- and energy-intensive (Mionchinsky, 1991). The lack of technology for this purpose does not allow increasing the efficiency of agricultural production, especially on small and medium-sized farms. The aim of the study is to substantiate the innovative method of producing protein-vitamin granulate (PVF), having a significant content of nutrients with the development of a technological and structural-technological scheme (STS) for its preparation.

2. MATERIALS AND METHODS As the analysis of literary sources, as well as practice, shows today, methods are known for preparing concentrates formed into granules and briquettes in the form of an amide-concentrate additive (AKD), as well as granular concentrate. According to the first option, an extruded mixture is prepared on the basis of the grain component, urea and a binder component in the form of sodium bentonite (white clay) (Dotsenko, et al., 2018). According to the second variant, urea is dissolved in molasses, and the resulting solution is used as a binder component in the granulation of animal feed (Tutelian, 2005). The disadvantages of these methods are the presence of toxic properties in urea, as well as the relatively low biological value of the finished product due to the lack of the original components containing fat-soluble vitamins in the form of Î˛-carotene and tocopherol (vitamin E), as well as a number of other vitamins of the natural nature of their creation in synergism, providing antioxidant protection of a living organism (Stepanova, 1999). In addition, these methods are material-intensive and energy-intensive, since their implementation requires labor costs for heating the binder component - molasses. Moreover, the use of urea-molasses solution does not allow to obtain granules of the required structural strength (Ostroumov, 1998). Evaluate the effectiveness of the developed technological and technical solutions can be due to the following economic and mathematical model, which is the system of equations:

Sergei Dotsenko, Lyudmila Kryuchkova, Viktor Samuylo

= Ei = PZ

∑ (C i =1

∑ (Z i =1

= NUD

− Z E − CIC ) × Qi × t × ki → max

∑N i =1

+ EH + K i ) × Qi × t × ki → min

(1)

/ λ × Qi → min

where Ei− economic effect of granulate production; Ki− tax factor; Сpi, ZE and С IC− cost of granulate according to the existing technology, operating costs, as well as the cost of raw materials, etc. (soybean, pumpkin, carrot and water seeds); Qi− granulate production line; t− line operating time; ki− utilization rate of the line; PZ− приведенные затраты; Ен− normative efficiency coefficient (Ен = 0,15); К − capital investments; N UD− energy intensity of the granulate production process; N− power consumption; λ − degree of grinding of raw materials.

3. RESULTS AND DISCUSSIONS It is possible and advisable to increase the biological value of the finished product by creating in its structural composition a vitamin composition β-carotene + vitamin E with antioxidant activity. The reduction of labor, energy and funds costs is ensured by the exclusion of operations associated with heating molasses and spraying a urea-molasses solution to wet the feed particles while increasing the structural strength of the granules. According to the proposed method, when producing a granular concentrate, corn grits are used as a grain component, and soya-carrot paste is used as a binder component (weight parts (wp)) non-fat-free heat-treated soy flour: chopped carrots = 1 wp: 4 wp, while the granular mixture is produced by the disintegration redistribution of newly formed corn particles in a soya-carrot binder with a ratio (weight part) of corn grits: soya-carrot paste а = 1 w.p. : 2 parts by hour, with its formation and subsequent drying.

Figure 1: The technological scheme for the implementation of the proposed method. The technical result consists in the fact that this method allows you to create a granular concentrate containing a complex of safe protein-vitamin carbohydrate substances and obtained at a *Corresponding author (Sergei Dotsenko). Tel: +7-989-99-87887. Email: lyudmila0511@mail.ru

relatively lower cost of energy, labor, and funds. shows the technological scheme for the production of granular concentrate Figure 1, pre-prepared corn grits and soya-carrot paste are dosed fed from hopper-dispensers - 1 to the receiving hopper - 2 pressing devices - 3 and then to the grating-knife apparatus -4 and the pressing matrix -5 with holes. When it gets into the grate-knife apparatus - 4, the corn grits are subjected to intensive movement from the side of the knife in a soya-carrot environment. At the same time, in the same medium, cereals are destroyed into smaller particles, the surface of which is intensively enveloped with soya-carrot paste with their simultaneous saturation with moisture and binding due to the internal adhesive properties of the soya-carrot paste. Due to the redistribution of moisture between the particles of corn and soya-carrot paste, a composition is formed with an average humidity of 40%, at which there is a high internal bond between the particles. On the basis of the mixture obtained, granules are formed, which are then fed into a tray - 6 and dried in a chamber dryer - 7. The structural and technological scheme of the PVF production line is presented in Figure 2. Comparative characteristics of the quality indicators of the resulting product are presented in Table 1.

Figure 2: The structural and technological scheme of the PVF production line. Table 1: Comparative characteristics of concentrates. Components Corn grits Soya carrot composition Ready granular concentrate according to option 1-2 Compound feed Urea-molasses solution Ready granular concentrate according to option 4-5

Indicators Carbohydrates, Î˛-carotene, % mg/ru 73.0 16.0 70.0

Water, % 6-8 60-65

Protein, % 8.0 10.0

Fats, % 1.2 4.0

Vitamin E, mg/kg 320.0

Strength, % -

8-10

30.0

9.4

50.0

240.0

910.0

95-98

10-14 25

6.0-8.0 -

78.0 75.0

10-12

6.0-8.0

0.5

81.0

Obtained protein-vitamin granulate are characterized by high organoleptic characteristics, has a

Sergei Dotsenko, Lyudmila Kryuchkova, Viktor Samuylo

characteristic pronounced color, taste, and aroma corresponding to the raw materials used (Figure 3).

Figure 3: General view of protein-vitamin granulate. Granules of cylindrical shape with a matte surface with a diameter of 2 mm. The length of the granules varies from 0.8 to 1.0 cm. Humidity is not more than 14%. Crumbling no more than 5%.

4. CONCLUSION

An innovative method for producing PVF with a high content of protein substances stuffed in an amount of at least 30%, Î˛ - carotene - at a level of 240 mg/kg, vitamin E - 910 mg/kg with a pellet strength of at least 95% was substantiated and proposed. The implementation of this method in the system of mechanized feeding of animals and poultry on small and medium-sized farms allows you to prepare a feed product of high biological value with a significant reduction in costs, energy, labor, and funds. The annual economic effect is 1757744.5 rubles/year.

5. AVAILABILITY OF DATA AND MATERIAL

Data can be made available by contacting the corresponding author.

6. REFERENCES

Dotsenko, S.M., et al. RF patent No. 2665075 Method for the preparation of granular concentrate. Published in B.I. No 25 on 28.08.2018. Lipatov, N.N., Sazhinov, G.Yu., Bashkirov, O.I. (2001). Formalized analysis of the amino and fatty acid balance of raw materials, promising for the design of baby food with a given food adequacy. Storage and processing of agricultural raw materials. 8, 11-14. Melnikov, S.V. (1978). Mechanization and automation of livestock farms. L. Kolos, Leningrad branch. 560. Mionchinsky, P.N. Kozharova, L.S. (1991). Feed production. M.: Agropromizdat, 288 p. Ostroumov, L.K. (1998). Combined dairy protein products using plant materials. Storage and processing of agricultural raw materials. 38, 28 - 30. Reznik, E.I. (1986). Small farms - modern fodder preparation equipment. Tractors and agricultural machines. 8, 16.

*Corresponding author (Sergei Dotsenko). Tel: +7-989-99-87887. Email: lyudmila0511@mail.ru

ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.11 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05M http://TUENGR.COM/V11/11A05M.pdf DOI: 10.14456/ITJEMAST.2020.93

Stepanova, L.I. (1999). Handbook of a dairy production technologist. Technology and recipes. SPb. GIOGD, 190. Tutelian, V.A. (2005). Health is in your hands. Food industry. 4, 6-8. Zhitnikova, V.S. (2008). Functional emulsion products. Food industry. 2, 48. Professor Dr.Sergei Dotsenko is Professor, Far Eastern State Agrarian University. He holds a Doctor of Technical Sciences. His research includes Production Line, Feed Technology, Binder, Vitamins, Protein Substances, Biological Value. Lyudmila Kryuchkova, is an Associate Professor, Department of Higher Mathematics, Far Eastern State Agrarian University. She is a Candidate of Technical Sciences. Her research involves Applications of Math. Professor Dr. Viktor Samuylo is Professor, Department of Operation and Repair of Transport-Technological Machines and Complexes, Far Eastern State Agrarian University. He holds a Doctor of Technical Sciences His research encompasses Production Line, Feed Technology, Binder, Vitamins, Protein Substances, Biological Value.

Sergei Dotsenko, Lyudmila Kryuchkova, Viktor Samuylo

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05N

PAKISTAN’S PRIMARY EDUCATIONAL REFORMS AND CHALLENGES Tariq Mehmood Bhuttah 1

, Hakim Ullah , Saima Javed , Chen Xiaoduan

School of Education, Shaanxi Normal University, No. 199, South Chang’an Road, Xi’an, 710062, CHINA.

ARTICLEINFO

Article history: Received 30 July 2019 Received in revised form 26 November 2019 Accepted 06 December 2019 Available online 26 December 2019

Keywords:

Education status; Educational aid; Reform challenges; Basic education; Education Reforms; Poor education; Teacher training; Educational failure.

A B S T RA C T

The educational system of Pakistan has been suffering long-term problems in the form of access, quality, and equal opportunity on the primary level. The unregulated, underfunded education system of Pakistan needs a complete overhaul. The purpose of this exploratory review based study is to discuss the existing failures, obstacles, and challenges of Pakistan’s educational system on the primary level and propose suggestions to reform it based on the current educational statistical and policies post-independence. Further, it also tried to determine the role and hurdle between foreign aid and a functional primary education system of Pakistan. This study concluded with the significant issues and challenges such as a shortage in terms of facilities and services to accommodate the growing need on the primary education level. Lower participation rates of children are mainly because of the ever-increasing poverty. Further, distance from Schools and parents’ ignorance and security issues are leading towards high opportunity cost of education, child labor. There is a strong need to focus on primary education with well-defined goals by Sustainable Development Goals (SDG). These goals can be achieved by addressing all the aspects of primary education simultaneously, such as governance, financing, access, equality, teachers training, curriculum, ICT, and facilities with clean water, electricity, sanitation, etc. Disciplinary: Education Sciences (Primary Education). ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION

U.S. policies in neighboring Afghanistan have driven Al Qaeda and the Taliban into Pakistan's tribal areas. The government of Pakistan turned a blind eye on the reconsolidation and recruitment of the Taliban in the Federally Administered Tribal Area (FATA). A collection of documents declassified and released in 2007 clearly illustrates that the government of Pakistan directly funded armed and advised the Taliban. Now Islamabad has acknowledged the domestic complications created by the Taliban movement in Pakistan and is struggling to disengage with the Taliban and combat the advances in Pakistan. Pakistan’s Prime Minister, Yousaf Raza Gilani, said the army in

*Corresponding author (Tariq Mehmood Bhuttah) Email: tariqmehmoodbhuttah@outlook.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05N http://TUENGR.COM/V11/11A05N.pdf DOI: 10.14456/ITJEMAST.2020.94

the Swat Valley was fighting for "the survival of the country.” Outside the Swat Valley, Taliban extremists have targeted institutions, religious leaders, police forces and civilians alike, threatening the daily existence of the average Pakistani. Pakistan’s struggle for survival is at a point where extremists are moving into regions in search of recruits. They’ve moved into communities by embedding different versions of Islam, resulting in these communities accepting them rather than opposing them. Beyond the spread of extreme Islamist ideals, a potential threat from within Pakistan stems from its vulnerable nuclear weapons arsenal. Although a majority of Pakistanis consider themselves Muslims, they follow a moderate translation, not Islam being promoted by the minority extremists. Without intervention, the weak, or more specifically, the uneducated, are becoming nothing more than fodder for manipulative individuals involved in terror organizations and pose a threat to the security of society. Ignorant, desperate youth have become an easy target for terror organizations that offer them money and training, particularly when they have no means to provide for themselves or contribute to the needs of their families. Illiteracy deprives people of knowledge and power and reduces people’s ability to understand how political and social issues genuinely affect their lives. The vulnerability, therefore, extends from the uneducated individual to society as a whole, making rural Pakistan an area of particular concern for U.S. security. Terrorist attacks have become a daily staple in global news headlines. Terrorists are continuously inflicting pain and suffering on the lives of innocent people all over the world indiscriminately. Countering this trend is in the security interest of all nations. Inadequate opportunities in the education system of Pakistan have been originating the extremist ideologies, which bring terrorism and sectarian tensions in the country but also hindering economic growth. According to the 9/11 Commission Report, “Pakistan’s endemic poverty, widespread corruption, the ineffective government has been creating opportunities for extremists. Poor education in rural Pakistan is a particular matter of concern. Terrorism is patenting, specifically in the rural regions of the state. The current education situation of Pakistan is seen as one of the most significant barriers that are hindering this country from accomplishing its goals at full potential. Higher education level significantly yields productivity and, thus, higher development (SPDC, 2003). Inclusive and equitable quality education spurs not only the labor force but also the governance, and then the mechanisms of all the institutions and thus the whole investment climate. The universal access to primary education also helps the entire society to get benefit from macroeconomic growth (Stern, 2001). Better education creates income opportunities, alleviates poverty, and raises the productivity of society through increasing potential entrepreneurial opportunities. It also trains citizens with necessary functional life skills and prepares them for taking responsibility and contributing to the community. In short, education is unquestionably center for the development of a nation; (World Bank) Moreover; Education gives a voice to the underprivileged; fosters equity and social cohesion. It not only positively affects economic growth but also promotes good health. Thus, the development of educational reform brings economic prosperity. In the current era of technology, a lower level of education can restrain a country from economic development. A society cannot continue progress with mere survival achievement in education. Those with skills, money, or power quickly eliminate individuals barely surviving. As a human, we have the obligation and opportunity to change the environments in which the poor and

T.M. Bhuttah, H.Ullah, S.Javed, Chen Xiaoduan

weak are exploited and to effect unfortunately accepted patterns of social behavior to allow the weak to thrive; the answer is education. Unfortunately, according to the Global Competitiveness Index (GCI), Pakistan ranks on 129th for Health and Primary Education among 137 countries (World Economic Forum 2017-2018). It shows that in Pakistan, the education sector has not received enough attention, as it should be in spite of all the government exertions to build concrete foundations for education through necessary measures, including increased allocation of resources for education (Javed et al., 2020). Pakistan is included in those twelve countries of the world that spends less than 3 % of its GDP on education consistently. The weak education system has been causing a large population of unskilled youth. Reform in the primary education system is an initial step towards creating employment opportunities and deterring the influence of terrorism as well. In the Sustainable Development Goals (SDG) Agenda 2030, SDG-4 is about quality education and lifelong learning along with the several monitoring frameworks for the SDG-4 at national as well as international levels. The monitoring framework provides detailed information about the educational conditions and improvement to the policymakers as Pakistan could not accomplish the Education for All (EFA) agenda by 2015, so it will also be an integral part of SDGs vision of 2030. For this purpose, several significant initiatives have been taken in the form of structural reform. The structural reforms in education not only helped in the attainment of universal primary education and adult literacy and providing professional training for teachers and improving the overall quality of education. Primary education is a base of all education stages and, thus, human development. Education reform at the fundamental level is key to the successful reform of the education system. The review of the educational reforms helps to distinguish between quality education and corruption. Rioters have been destroying schools and threatening the existing educational institution, making the challenge even higher and the need for reform urgent. Pakistan’s educational system is broken, and the security of Pakistan, the United States, and even the global community depend upon its repair. The objective of the paper is to propose reforms based on the review of current educational figures at the primary level and analyze the policies by mainly focusing on primary education. In connection with the objective of this study, we will try to find the answer through analyzing the exiting educational situation in Pakistan, reforms and policy initiatives since 1947 and finally highlighting the main obstacles to the development of efficient primary universal education systems.

2. RESEARCH PROCEDURE The aim of this exploratory review based study is to assess the current primary educational challenges and issues based on the recent statistics and policies obtained from the national and international educational reports about Pakistan. The study reviews the last ten years’ primary educational statistics and policy documents by mainly focusing on the initiatives related to primary education. The literature search was conducted from 2007 onwards to assess the educational performance of the central system in one decade through some special educational indicators. This search was performed across two electronic databases, Google Scholar and Web of Science, in different broad areas, “Educational reforms in Pakistan” and “Educational policy” and *Corresponding author (Tariq Mehmood Bhuttah) Email: tariqmehmoodbhuttah@outlook.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05N http://TUENGR.COM/V11/11A05N.pdf DOI: 10.14456/ITJEMAST.2020.94

â€œUniversal primary education in Pakistan.â€? After collecting the primary level educational indicators data for the last ten years, this study analyzed the policy documents by providing a summary. This research is based on the national educational records 2017-18. The figures for the year 2015-16 will be considered recent statistics because of the non-availability of the PSLM survey in 2017. This study evaluates the performance of the primary education sector of Pakistan based on the 2007-2017 data, obtained from the national and international educational statistics such as World ban, UNESCO, UN, CIEC, National Educational statistics 2017, Economic Survey of Pakistan 2017 and Social development review Annual review 2015-16. This study also reviews the reforms based on international and national reports. This study discusses the structure of the existing primary education, the recent educational statistics at the primary level, the emphasis on primary education through policy analysis, the foreign aid in the form of educational support, the educational concerns in the primary education system, and the proposed reforms respectively.

3. THE STRUCTURE OF THE EDUCATION SYSTEM IN PAKISTAN The educational structure in Pakistan is widely categorized into six-level as Pre-Primary, Primary, Middle, Secondary (SSC), Higher Secondary or Intermediate (HSSC), that leads to further University programs (Undergraduate and Graduate and Post Graduate). Primary level education is primarily divided into Deni Madrasa and the modern education system, where the modern education system is further classified as English medium and Urdu medium. Mainly, English is a medium of instruction in both private and public schools, but the Urdu medium is only used in public schools as Urdu is the official language of Pakistan. Deni Madrasa has only Urdu medium and further subdivided into regular and fundamentalist. Based on the medium of instruction and public/private school, students pursue their education based on their higher secondary educational background from Colleges, Universities, Technical Institutions, or Deni Madrasa (National Educational Policy, 2017). This study solely concentrates on the primary level described in the following figure (Husain, 2005). Pubic schools English Medium Private schools

Modern School System Urdu Medium

Primary level

Public schools

Regular Madarsah System

Urdu Medium Fundamentalist

Figure 1: Primary education structure in Pakistan

T.M. Bhuttah, H.Ullah, S.Javed, Chen Xiaoduan

4. THE CURRENT EDUCATION STATUS OF PAKISTAN AT PRIMARY LEVEL The educational status of a country can be observed through several significant variables. The most commonly evaluated indicators include literacy rates for both males and females in different parts of the country, dropout rates at all levels of education, primary enrollment by several years spent in school by gender, pupil-teacher ratio, and government expenditures on education as a percentage of the GDP. Pakistan is behind in the race of education development. Regardless of the enrolment rates, the total budget of education is stagnant at 2.2 percent of GDP for a very long time. The country also could not meet the target set by the Millennium Development Goal (MDG) of 100 percent primary completion rate. According to the latest education statistics of Pakistan, currently out of total have 150,129 primary schools, 131,376 (88%) schools are public schools, 18,753 (12%) are private schools. According to this report, these primary schools have 19.351 million students, 11.895 million (61%) enrolled in public, while 7.456 million (39%) enrolled in private institutions, Table 1. Further, at the primary level, 10.722 million (55%) students are boys, and 8.628 million (45%) are girls. A total of 453,614 teachers are teaching at the primary level; in the public sector, there are 339,235 (75%) teachers in service, whereas 114,379 (25%) is teaching in the private sector (Pakistan Education Statistics 2016-17). The international and national reports and surveys are indicating the progress of primary education in the last ten years through educational indicators. These statistics were obtained from the National educational statistics, CIEC, UNESCO, WORLD Bank, etc.

77.99% 77.7% 70.02% 72.1% 72.03%

29.11% 28.33% 26.94 25.57% 28.5 28.94% 30.18% 27.26% 26.39%

Gender Parity Index (GPI)

74.96% 76.71% 74.84% 80.14% 77.04% 78% 82% 81% 82% 84%

PupilTeacher Ratio (PTR)

70.89 71.6% 73% 74.4% 71.4% 71.05% 69.81% 72.73% 73.6% 77.77%

Expenditure on Education as % of GDP

81.09% 87.25% 83.24%

Out of School Children (OOSC)

Effective Transition Rate (ETR) Primary to Middle

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Adjusted Net Enrolment Ratio (ANER)

Years

Gross Enrolment Ratio (GER)

Table 1: 2017 Pakistanâ€™s educational status at the primary level. Trained teachers

1.76% 1.82% 1.75% 1.77% 1.96% 2.14% 2.1% 2.2% 2.2% 2.38%

39.95% 40.66% 39.68% 40.45% 39.83% 41.35% 42.54% 46.52% 46.34% 47.63%

0.833% 0.843% 0.854% 0.852% 0.858% 0.87% 0.868% 0.852% 0.855% 0.853%

84.03% 85.06% 85.18% 84.22% 82.8% 83.9% 84.89% 84.01% 82.46% 75.35%

Source: National Educational Statistics (2017).

5. THE POLICY ANALYSIS POST INDEPENDENT AT PRIMARY LEVEL At the time of independence in 1947, the priority for the leadership of the new Pakistani state was the creation of a new nation. The lack of infrastructure was not the only issue, as the five different provinces (Sindh, Baluchistan, Punjab, NWFP, and East Bengal) had to establish common ground despite varying cultural heritages and languages. According to the All Pakistan National Education Conference (PNE) in 1947, the aim was to achieve free and compulsory education in the first five years so that the balance in education can be attained. At the PNE Conference that same year, Urdu was established as the national language even though Urdu was not spoken in any of the five provinces. *Corresponding author (Tariq Mehmood Bhuttah) Email: tariqmehmoodbhuttah@outlook.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05N http://TUENGR.COM/V11/11A05N.pdf DOI: 10.14456/ITJEMAST.2020.94

Table 2: Analysis of policy from the perspective of primary education since Independency.

Policy Pakistan Education Conference 1947 National Education Commission 1959 The New Education Policy 1970

The Education Policy 1972 National Education Policy 1979 National Education Policy 19922002

1998-2010 National Education Policy

Education for All National Plan of Action 2001-2015

National educational policy 2017

Targets

Strategies Compulsory and free primary education Compulsory and free Universal The imposition of a special tax to support primary education Primary Education until 1967 Primary school age is 6-11 years To encourage the private sector to start primary schools Compulsory, free, universal and religious Primary To achieve universal primary Education education up till 1974 Female teachers at the primary education level To provide additional funding. To eliminate the drop out of rapid expansion by prominent Primary Universal Enrollment up schools till 1980 To stress upon the female enrollment Female teachers at primary level Free universal and compulsory primary education To attain universal primary Prioritizing the rural areas education for boys and girls by To stress upon the female enrollment 1979 and 1984 respectively Identical school buildings with lower cost To attain universal primary To expand female education education for boys and girls by To encourage the mosque and street schools for reducing the 1986-87 and 1992 respectively, ratio of drop-outs Recruit new primary teachers and arrange a training program Universal primary education for them. through community participation To encourage the participation of the community for and restructuring the existing achieving universal primary education education system Special program related to the importance of female students Additional fund at primary school Same curriculum for all schools regardless of public and private. To improve the participation of To ensure political support and resource deployment related service teachers, Reduce the to primary schools. existing educational inequalities Implementation of Free, Compulsory and universal primary till 2010 and 45,000 New Formal education Primary Schools Opening To evaluate and revise the existing examination and assessment system To make compulsory primary education accessible and free To attain Gross participation rate at by 2015 for all children a primary level of about 88% and To eradicate gender inequalities in primary and secondary universal primary education education level up till 2005 and attain gender equality by completion until 2015 2015 with the emphasis girls education Free and compulsory primary education To implement the Early Childhood Education and Care (ECEC) program To provide financial support to needy To meet the basic learning and cognitive needs through Universalization of Primary contents and skills Education by universalizing To make school inclusive and child-friendly access and enrolment, To improve the management structure on the primary universalizing completion and education level. universalizing the achievements To arrange a teacher training system according to the based on minimum standards of professional standards of Teaching education To bring better educational reforms in curriculum, teaching methods, monitoring and assessment, and evaluation. To increase the share of education expenditure especially allocated for primary education. Source: Bari, Ejaz and Shah 2005, National education policy 2017

Seemingly contradictory to the changes already mentioned, the founders of Pakistan established Universal Primary Education (UPE) as a goal. But because of the security tensions concerning India led to comparatively higher spending on the military and lower on education. While the state struggled to set up a national education infrastructure, a parallel system of private

T.M. Bhuttah, H.Ullah, S.Javed, Chen Xiaoduan

schools and Madrassahs existed from the start. The overwhelming majority of children not in school are not being restricted by legal prohibition or threats from terrorists, but more complex problems. The categories outlined below demonstrate the extent to which Pakistan’s education system is falling significantly short of its constitutional obligation to provide universal primary education to Pakistanis. Given the magnitude of the problems facing the education system in Pakistan, Pakistan’s own National Education Policy of 2009 addressed the need for a “Paradigmatic Shift.” There are impressive private initiatives and NGO-run schools in the country, but Pakistan, as a nation, is unable to provide basic education to its ever-expanding population that threatens to become a feeding pool for terrorist organizations. Overhauling and implementing an education system that was never successfully created in a nation during a time when an insurgency is tearing the nation apart will be a significant challenge. The enemy must be widely recognized as ignorance, with education reform a critical solution to the survival of the state. The solution cannot be oversimplified by developing a new fiscal solution and hoping for improvements, although management of and expenditure of resources must be addressed. A significant factor commonly identified as a source of the failing education system in Pakistan is the dismal percentage of the country’s GDP dedicated to expenditure on education. However, a review of international contributions to education has more than subsidized for this deficiency without producing improvements in literacy rates. Likewise, the experience of the World Bank and the failed Social Action Program demonstrate that merely applying more money has proven ineffective. Resources and the management of resources are indeed critical, but improvement in this one crucial area will not repair the failing system alone. Analysis of study abroad programs currently available through internet research reveals a multitude of programs in technical and medical fields, but education programs are scarce. The United States promotes educational professional development for teachers by broadening existing study abroad programs and initiating new ones to educate future teachers of Pakistan. Study abroad programs for Pakistani teachers will provide the benefit of exposure to functioning programs and increase the perceived value of education within Pakistan. Offering scholarships or grants to the students will allow them to pursue higher education in their field and return to their community with an enhanced understanding of their profession. Students must be guaranteed a salaried position, preferably with their local community upon return from their study abroad. The money to support this exchange program can come from that allocated in the 2009 PEACE Act. Exposing western students to the education system in Pakistan using study abroad programs will also work to publicize the state of the education system and highlight the challenges in reforming the system. U.S. exchange students can benefit from the program, but the focus must be on educating Pakistani teachers. The Provincial Annual Development Programs (ADPs) FY2018 aims to provide the facilities, advancement in primary schools, construction of new schools, scholarship and stipends for girls, infrastructure, establishment of IT/Science labs, Early Childhood Education (ECE) at Primary level and support the Provincial Institutes of Teacher Education (PITE). Specific budget allocation of education for all provinces to meet the prerequisites of education. *Corresponding author (Tariq Mehmood Bhuttah) Email: tariqmehmoodbhuttah@outlook.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05N http://TUENGR.COM/V11/11A05N.pdf DOI: 10.14456/ITJEMAST.2020.94

6. INTERNATIONAL SUPPORT FOR EDUCATION

Since 1947, Pakistan receives foreign aid for different programs with a different share for educational development programs. Being specific to primary education and foreign aid, although it positively affects human development yet there exists a contradiction about its effect on the primary completion rate. On one side, aid has a negative influence on the primary completion rate (Fielding, et al., 2006), while, on the other side, it significantly enhances the completion rate of primary school. Regardless of the effect of foreign aid on education, several donor agencies, including United Nations, World Bank, Department for International Development, etc. have been working at their best in Pakistan to promote education. The primary aim of these donor agencies is to meet the MDG target of achieving the primary competition rate. Although these donor agencies have their agenda, every government follows their plans accordingly, which is obvious through the U.S. policies for Afghanistan, which drove Al Qaeda and the Taliban into Pakistan. USAID has constructed and equipped 65 primary, middle, and high schools in five different agencies of the FATA in collaboration with the Japanese Government. USAID’s education program also provides training, technical assistance, and infrastructure for the public and the private sector of education in Pakistan so that high-quality education in the entire country can be accomplished. The very first MDG of education was to achieve a 100 percent primary completion rate. UN and other donor agencies provided funds to Pakistan to reach this goal. Similarly, the teacher's training program was supported by the Canadian International Development Agency, and the Department for International Development took initiatives for student’s enrolment drive and teacher training programs and so on. Further, between the late 1980s and 1990s, including the World Bank and several donor organizations have also disbursed billions of dollars in Pakistan on a “Social Action Program.” After ten years, that program failed because of not addressing the problem of corruption and inefficiency within the Pakistani education bureaucracy.

7. ISSUES AND CHALLENGES The above facts, figures have shown that the educational system of Pakistan is continuously facing many familiar problems at the primary level in the form of access, equality, and quality. However, there is a strong emphasis on free and compulsory primary education, encouraging private schools for primary education, imposing taxes or deployment of resources for funding, recruiting female teachers to reduce gender disparity, training teachers, revising curriculum and assessments methods and prioritizing rural area, The national and international standards seem impossible to achieve as Pakistan was not successful in achieving the MDG of universal primary education till 2015. The findings of the study summarize that high dropouts and low enrollment rates at the primary level are because of the economic factors, physical factors, geographic factors, and administrative factors. Economic factor includes lower economic development, lower per capita income, lack of basic facilities in schools and funds, poor health condition of the children. Physical Factors like outrageous behavior of teachers toward students, shelter-less schools, Orientation on the first day in school, Learning disabilities, Repellent school environment, and a high number of students in classes.

T.M. Bhuttah, H.Ullah, S.Javed, Chen Xiaoduan

Long-distance of schools from homes and natural disasters in hilly areas as geographic factors, whereas lack of supervision and weak administration, teacher absenteeism, and political interference as regulatory factors are holding standards of primary education back. Further learning and teaching factors including irrelevant Curriculum, expensive books, and learning materials, no audio-visual aids, rigid system of examinations, lack of teachers and especially female teachers in remotely located schools, old teaching methods, teachers’ inappropriate way of dealing with students, inadequate knowledge about child psychological needs. Primary education is the major concern for the education sector in Pakistan, but unfortunately, it receives one-third of total education aid. So the basic education does not get the deserved attention from the donors so that it could deal with the issue of out of school children.

8. PROPOSED EDUCATIONAL REFORMS

The constant inflow of foreign aid has been using by corrupt government high positions officials for their agendas rather than the actual motives. It not only increases the gap between rich and poor but also helping the wealthy minority in repressing the poor majority, and thus depriving the poor people of their fundamental right to education and, therefore, to improve their economic situations. The long inherit history of corruption is initiating more challenges for the education sector to invest resources in a significant way. There is a need for better financial reforms that can cope with inherent corruption. The quality of the current curriculum is also debatable. There are plenty of schools that are not registered in the government system, so these schools can easily manipulate the curriculum and teaching strategies, which result in violence. There are also few cases where schools are forced to adopt the below standard curriculum or teaching methods. Thus, the curriculum is weeding out of political influence.

The great success of CAI stems from a profound understanding of human psychology. Empowering the people through their initiative is the basis of the “Three Cups of Tea Concept” (TCOT), allowing residents, parents, and civic leaders to design their school systems by themselves. They are empowered by selecting and donating the land, providing the labor and security for the schools, and benefit from watching as their children become educated. The local leaders can choose the range of initiatives to put in place. This opportunity initiates interest, discussion, and involve citizen at a significant level. Citizens who are more concerned about improving education can bring positive changes at their level rather than waiting and expecting from the government to take action or being forced to carry out instructions from the Pakistani government in Islamabad. Reducing the number of students in class size can also play a very important role in education policy reform. The smaller PTR can enhance their learning achievements. The quality of in-service teachers can be improved through training programs (ASER, 2013). Governance reform should update the regulatory system and find new ways of the collaboration of public, private, and civil sectors. Financial reform should provide a better wat to use resources because it will stimulate more resources, as there is a strong need to pour money into an old education system (UNESCO, 2017). A reform plan should increase students’ enrolment as well as the development of teachers through training. Reforms related to the pay incentives for teachers about performance can also help in *Corresponding author (Tariq Mehmood Bhuttah) Email: tariqmehmoodbhuttah@outlook.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05N http://TUENGR.COM/V11/11A05N.pdf DOI: 10.14456/ITJEMAST.2020.94

improving the quality of education. The education system also needs an education system that can create thinking abilities in students and make them creative. The foreign aid should be given more to education as a priority, and its share of primary education should also be increased. While continuing to target important educational indicators, there is a strong need for implementation of the reform of public education on its own. Finally, yet importantly, the government should follow up its commitment by raising the education budget to four percent of GDP.

9. CONCLUSION The primary education system of Pakistan is surrounded by the higher dropouts and lower completion or survival rate at the primary level because of several reasons. These reasons include the shortage of teacher, repellent school environment, unavailability of basic facilities, low quality of education, incompetent and uncommitted teachers, overburdened curriculum, old teaching methods, inaccessibility of educational materials, no activity-based learning environment, lack of monitoring, ineffective assessment system, low allocations of resources for education and then currently generated security issues. Corruption is a lead issue of Pakistan’s public education system, in the form of teachers’ absenteeism, but ready to collect their paychecks at the end of the month. The policies can only start the different educational programs, and foreign aid can only support these programs, but the Pakistani government must need to deal with corruption and inefficiency within the system. There is a strong need to focus on primary education with well-defined goals by SDG. These goals can be achieved by addressing all the aspects of primary education simultaneously, such as governance, financing, access, equality, teachers training, curriculum, ICT, water, electricity, sanitation, etc.

10. DATA AND MATERIAL AVAILABILITY Information regarding this study is available by contacting the corresponding author.

11. REFRENCES ASER. (2013). Annual Status of Education Report, Pakistan. Gulzar H. Shah, Faisal Bari, and Nadia Ejaz, The Role of NGOs in Basic and Primary Education in Pakistan: LUMS-McGill Social Enterprise Development Programmed, Lahore University of Management Sciences, report (Lahore: Versatile Printers, 2005), 5. Husain, I. (2015). Education, Employment and Economic Development in Pakistan. State Bank of Pakistan, www.sbp.org.pk/about/speech/human_development/2005/Edu_Emp_Dev_Apr_15.pdf (accessed 2017). Javed, S. Wenlan, Z., Ghaffari, A.S., Bhuttah, T.M. (2020). The Mediating Role of Technology Between Students' Attitudes and Engagement Towards Science: A Quantitative Study of Students' Perception. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 11(3), 11A03H: 1-10. National Education Policy. 2009, Ministry of Education, Government of Pakistan, 1.11 “The Way Forward: A Paradigmatic Shift,” http://www.moe.gov.pk (accessed October 2017).

T.M. Bhuttah, H.Ullah, S.Javed, Chen Xiaoduan

Stern, N. (2001), “Investing for Growth and Poverty Reduction: Institutions and People”, Speech delivered at Islamabad on March 29. Tariq Mehmood Bhuttah is a PhD Scholar, School of Education, Shaanxi Normal University No. 199, South Chang’an Road Xi’an, China. He holds a Master’s degree in Philosophy, a Master’s degree in Education, a Master of Science in Sociology, an LLB & a PGD (IT). His research interest includes Curriculum & Teaching Methodology, Educational Psychology, Comparative Theories and Philosophy.

Dr.Hakim Ullah is a Research Assistant, School of Education, Shaanxi Normal University No. 199, South Chang’an Road Xi’an, China. He got a Master of Education and a Doctorate of Philosophy degree in Curriculum & Teaching Methodology. He is interested in Curriculum & Teaching Methodology, Educational Psychology.

Saima Javed is a Ph.D. Scholar, the School of Education, Shaanxi Normal University, Xian, China. She holds a Master of Philosophy in Economics. Her research interests include Curriculum & Teaching Methodology, Educational Psychology, English Language Learning, Technology, Policy Analysis.

Professor Chen Xiaoduan is Professor of Curriculum and Instruction in the School of Education at Shaanxi Normal University, Xi’an, China. He is Vice Director-General, National Association for Theories of Teaching (China). He is also Director, National Association for Theories of Curriculum (China). He got a Bachelor of Education from Xi’an Institute of Physical Education, a Master of Education from Shaanxi Normal University. His research focuses on Teacher Education and Teacher’s Professional Development.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05O

CUSTOMER LOYALTY EVALUATION AND PREDICTION BASED ON DECISION TREE AND ARTIFICIAL NEURAL NETWORK: CASE OF OFOGH KOOROSH STORES IN TEHRAN 1*

Amirreza Estakhrian Haghighi , Abdolreza Shirazi

, Department of Computer & Information Technology, Shiraz Branch. Islamic Azad University, IRAN.

ARTICLEINFO

Article history: Received 30 May 2019 Received in revised form 09 December 2019 Accepted 16 December 2019 Available online 26 December 2019

Keywords:

Decision Tree method; Artificial Neural Network (ANN); Learning algorithm; Customer loyalty prediction; Data Mining; Data training; K-Means clustering; Multilayer perceptron (MLP).

A B S T RA C T

The secret to staying in the business world today is having satisfied and pleased customers who buy the company services over and over again and introduce such products/services to others. These companies need to know what the customer wants and how they can adapt to the customer's needs according to customer preferences over time. In this work, the factors affecting customer satisfaction and loyalty of Ofogh Koorosh stores were studied and then analyzed using data mining techniques and methods and the extent to which each factor influenced their loyalty. The results of the decision tree and artificial neural network (ANN) with different segmentation of observed data and evaluation criteria of the obtained models show that in the decision tree model with clustering criteria and dividing data set into six clusters the burden of computation and classification accuracy have been increased, and each criterion is initially prioritized within itself. The results of these clusters are combined and the results accurately predict customer loyalty. The proportionality between accuracy and readability criteria in this algorithm indicates that the considered criteria values are well averaged and have a uniform distribution because the detection rates of the samples with low priority over the samples compared with high priority are almost equal. In other words, criteria have well recognized the high and low-priority decision tree algorithm. In neural networks both in modeling (training) and in the validation (testing) it shows the high coefficient of explanation but with the observation of error rate of both modeling and validation it can be concluded that it is possible to have unbalanced data in our dataset. The error rate of the decision tree is less than the ANN according to F-values, indicating the decision tree as a whole is more successful in estimating burnout and prioritization than ANN. Disciplinary: Multidisciplinary (Information Sciences, Management). ©2020 INT TRANS J ENG MANAG SCI TECH.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 Paper ID:11A05O http://TUENGR.COM/V11/11A05O.pdf DOI: 10.14456/ITJEMAST.2020.95

1. INTRODUCTION

Today is no longer the age of loyalty of the six, neither ccustomer loyalty, employee loyalty, management loyalty, loyalty to society and principles, etc. Many studies have shown that loyalty is not the ultimate key to success and profitability. In fact, the marketing concepts that have been emphasizing it until today are no longer recognized it. Today the only happy and glad customer and a customer who has felt a sense of belonging and belonging to the organizations are assets that have long-term profitability and longevity. Given the widespread efforts to improve the quality management tools and expand the customer-centric attitude by researchers, experts, and managers of business organizations, it seems that customer loyalty is now one of the most important factors in determining the success of organizations in business and profitability. Therefore, in order to achieve business development, assessing the behavior, attitude and perception of customers about the quality of products and services provided by business organizations has become inevitable. On the other hand, the organization's aspirations and goals have undergone major changes in recent years due to the intense expansion of global competition and the dynamics of the international economy. While it has long been the main focus of organizations to attract new customers, business strategic policies today focus on maintaining and improving loyalty and increasing customer confidence in the organization. The most important causes of such a change are the increasing public awareness of the desired consequences of customer loyalty. Companies that have gained a larger share of loyal customers due to a variety of reasons, such as resale rates, advertising and verbal product recommendations, reduced willingness to switch and source supplier changes, have greatly increased their organization's profitability.

1.1 QUALITY OF SERVICE AND CUSTOMER LOYALTY

Today, given the fierce competition between competitors to attract new customers, creating customer loyalty is critical to the survival of organizations. To this end, many organizations try to build loyalty to their customers in a variety of ways, including pursuing relational marketing and maintaining their relationship in the long run (Jessy, 2011). Many studies of the relationship between service quality, customer loyalty, and customer loyalty have found that customer loyalty plays a mediating role in the impact of service quality on customer loyalty. In other words, in many studies believe that the quality of customer service and satisfying customer loyalty are two essential prerequisites for customer loyalty.

1.2 SERVICE QUALITY MODELS

Quality is not a one-dimensional phenomenon, but a multi-dimensional phenomenon. Therefore, it is not possible to achieve service quality without identifying important aspects of service quality. In the following, the factors and models that determine the quality of service will be discussed.

1.3 GRONROOS MODEL

Gronroos introduces three dimensions of quality service: Technical quality: The technical or outcome quality that refers to the actual outcome of the service being evaluated after the service has been provided. Outcome is what the customer receives from the organization. Service outcome is often evaluated by the consumer in an objective way.

A.E. Haghighi, A.Shirazi

Functional Quality: Process or operational quality refers to the quality of processes and procedures in producing and delivering customer services. Due to the synchronization of production and service consumption, the quality of the process is usually evaluated by the customer when performing the service. This element of quality refers to the interaction between the provider and the recipient of service and is often perceived in a mental way. Company image: This dimension relates to customer perceptions of the service organization. The subjective image depends on the outcome and functional quality, the price, the extracurricular activities, the physical position, the fitness of the branch, the competence and behavior of the organization's employees (Bayraktar et al., 2012).

2. RESEARCH METHOD

Three main phases were implemented to apply a data mining algorithm to research data to identify and explain hidden patterns between data and obtain applied and functional results: 1) Data mining of research data; 2) Analyzing the results of data mining; 3) Explaining the hidden patterns between the research data and the presentation of applied results. It is important to note that the sequence of these phases greatly enhances the validity and accuracy of the results and can, therefore, serve as a basis for strategic management decisions of organizations in the field of customer interaction and communication, and how customer loyalty systems are adopted, implemented and applied by organizations wanting to use this management tool. Figure 1 shows the research process.

2.1 STATISTICAL POPULATION OF RESEARCH

According to the research done in Ofogh Kourosh stores in Tehran, the selected statistical population is also from this collection, consisting of 800 people. Experts and experienced experts in each department who are familiar with the concepts of knowledge management, its components and factors affecting its adoption and application in organizations, have been utilized. Therefore, in each store, 10 people were selected as the statistical sample, in which for the most part, the selected individuals included fixed customers.

2.2 RESEARCH RELIABILITY

Validity means the extent to which the method or tool used can accurately measure the desired properties. The three main types of validity are as follows: •

Content validity

• •

Criterion-based validity Construct validity

In this study, after distributing the questionnaire to 20 organizational experts in customer loyalty, Cronbach's alpha coefficient was calculated for it, see Table 1. Table 1: Cronbach's alpha coefficient. N of Items 20

N 26

Cronbach’s Alpha 0.949

Figure 1: Research process.

2.3 CRITERIA ANALYSIS

In this section, we first identify the criteria and consider the impact of different criteria on the impact of customer loyalty. Subsequently, according to the comparative matrix of quantitative and qualitative valuation of the sub-criteria, the value of the sub-criteria is determined. It is noteworthy that the final customer loyalty maps are derived from the combination and overlapping criteria and sub-criteria maps.

2.3.1 EVALUATION CRITERIA In order to evaluate the performance of the prioritization algorithms, the total set of data collected for this research is randomly divided into two parts T (training set) and P (test set). The training set contains the data used to train the classifier and the output of this training is the classification that is measured by receiving the test dataset of classification accuracy. Performance evaluation criteria for the proposed method for decision tree will be accuracy, precision, Recall, and F-measure. These criteria have been chosen because of their widespread use in data mining researches. Accuracy and recall are widely used to measure the efficiency of the selection of worn-out areas by the proposed algorithm. Also, performance evaluation criteria are for the neural network method, coefficient of determination, mean square error, and root means square error percentage. Here, for classification method with a decision tree, the customer loyalty problem is turning into a two-class problem and positive class samples represent a high priority for customer loyalty allocation, and negative class samples represent a low priority for customer loyalty. One of the solutions for checking the accuracy of the classification algorithm is the use of a confusion matrix. Figure 2 shows the two-class confusion matrix. The positive class represents the high priority and the negative class indicates the low priority.

A.E. Haghighi, A.Shirazi

Table 2: Confusion matrix Positive Negative

Positive TP FN

Negative FP TN

According to the confusion matrix, TP is the number of samples of high priority and the proposed method has correctly identified the highest priority. The term FP indicates that the classifier has mistakenly placed a high priority on customer loyalty. The term TN is the number of samples that have low priority for loyalty and the proposed method correctly identifies them as a low priority for loyalty. The term FN indicates that the classification has been given a low priority by mistake. The most commonly used scale to evaluate the performance of predictive models is predictive accuracy, which is the ratio of the number of correctly predicted classes (from free and error-free classes) is defined as the total number of classes. The criterion of accuracy (or success rate) for measuring the overall accuracy of predictive precision that from the confusion matrix, the accuracy of the estimation is calculated according to the following relation (Pollard, 1981). AC = (TP + TN) / (TP + TN + FP + FN)

(1).

2.3.2 PRECISION Assuming high priority allocation, the prediction accuracy is obtained by proportionally sampling correctly classified to the total number of available samples. The higher the Precision value, the higher the quality of the algorithm (Fahad et al., 2014). Precision = TP / (TP + FP)

(2).

Recall: Assuming low priority allocation, the prediction accuracy is in the ratio of correctly classified samples to the total number of correctly classified samples. The best value is one. The high recall rate means less FN (Singh & Reddy, 2015). Recall = TP / (TP + FN)

(3).

2.3.3 COMBINED MEASURE F F-measure considers both accuracy and recall for accuracy calculation, which can be interpreted as a weighted measure of accuracy and recall. This weight is denoted by Îą and is usually considered one. The F-value is between 0 and 1, and the closer it is to 1, the better the performance of the classification results (Brijain et al., 2014). F = 2 * (precision. recall) / (precision + recall)

(5).

The main advantage of the root means square error percentage is that the predictions made by the different models allow comparisons to be made and the appropriate models are chosen using the above models (Teli & Kanikar, 2015). In the above relationship, n, yt, đ?‘Śđ?‘Śďż˝đ?‘Ąđ?‘Ą , đ?‘Śđ?‘Śďż˝đ?‘Ąđ?‘Ą are respectively the

*Corresponding author (A.Haghighi, A.Shirazi). Email: amirestakhrian@iau.shiraz.ac.ir, apashanishirazi@yahoo.com ÂŠ2020

number of observations, the observed customer loyalty, the predicted customer loyalty, the average customer loyalty observed. Many classifiers such as decision tree-based or law-based methods are designed so that they generate only one binary output (based on belonging to one of two possible classes). This type of classifier, which produces only one specific output for each input, is called a discrete classifier. Similarly, there are other classifiers such as Bayesian-based classifier or neural networks that generate a probability or score for each input, which represents the degree of input belonging to one of the two available classes. These classes are called continuous classes, and because of the specific output of these classes, a threshold is used to determine the final output. Among classification algorithms evaluation methods (in this algorithm, working routine is such that classification model is built by training dataset and evaluated by the experimental dataset.), the Holdout method can be used to determine how the ratio of data sets (to two training datasets and experimental datasets) depends on the detection of the analyzer, usually two-thirds for training and one-third for evaluating. The main advantage of this method is the simplicity and high speed of the evaluation process, but the Holdout method has many disadvantages, including the training and experimental data sets that will become dependent on each other. In fact, part of the initial dataset that is separated for testing does not have a chance of being in the training phase, and similarly, if one chooses a record for training, there will be no chance of using this record to evaluate the model built. Also, the model built depends largely on how the initial dataset is divided into training and experimental datasets. If we run the Holdout method multiple times and average the results, we have used a method called Random Sub-sampling. The most important disadvantage of this method is the lack of control over the number of times a record is used as a training sample or a testing sample. In other words, some records may be used for learning or evaluation more than others. Also in the comprehensive k-Fold Cross Validation method, the entire data set is divided into k equal parts. The k-1 part is used as the training dataset and the model is built accordingly and the evaluation is performed with the remaining part. The process will be repeated k times so that each k part is used only once for evaluation and each time accuracy is calculated for the built model. In this method, the estimation of the final accuracy of the classifier will be equal to the average of the k calculated accuracy. The most common value for k in scientific literature is 10. Obviously, the larger the value of k, the more accurate the computed accuracy for the classifier will be, and the resulting knowledge will be more comprehensive. The most important problem is increasing the evaluation time. The maximum value of k is equal to the number of records in the original dataset, known as Leaving One Out.

3. SIMULATION ENVIRONMENT

To implement the proposed method, the program is written in Java. For the data pre-processing step, Java is coded using the Eclipse environment and the Weka software APIs in Eclipse are called for clustering, classifying and neural network applications. The results are saved as a file and output has been designed in the form of charts and tables using Excel software. For each version, packages are implemented for grouping and applying the learner and computing the results. This program is executed using the SDK compiler in the Windows operating system and the evaluation charts are drawn using Excel software. The hardware specifications of the proposed operating system are 16 GB main memory and Intel Core i7 CPU and Windows 8.1 operating system. Because of the proposed method on real datasets, we need to implement a scalable and efficient algorithm. For this

A.E. Haghighi, A.Shirazi

reason, in all functions, structures such as a vector or one-dimensional arrays are used for each block and neighborhood information. For classifier applications, classification algorithms are implemented in a Java environment and evaluated with different parameters and using Weka software for decision tree and neural networks to obtain the best classifier. Finally, the experimental data are tested and the evaluation functions are calculated.

3.1 EVALUATION OF METHODS

In this section, the results of applying the methods used to prioritize are presented and the results are analyzed below.

3.2 INITIAL PREPROCESSING

Iran's office system is constantly changing and it is difficult to gather and record this information properly which this process requires a lot of precision. One of the challenges in the field of data collection is the recording and storing of all information without losing data because at any stage it is possible to lose or lose data so in case studies given the amount of data lost, it is possible that the results can be mistaken. In this regard, we tried to examine the preliminary data first and replace the fields whose information is missing or lacking in ways such as averaging or reasoning with new data to achieve acceptable results. For the preprocessing of the collected data, alternate valid data is selected for each field where valid data is not available.

4. RESULTS OF THE DECISION TREE METHOD

To apply the decision tree method to the existing dataset, first, the clustering is done and then we need for a field labeled as described in Table 3.

Cluster Cluster one

Cluster two

Cluster three

Cluster four

Cluster five

Cluster six

Table 3: K-Means clustering results.

Member of cluster ⦁level of closed opportunities ⦁customer return rate ⦁number of sale calls ⦁number of sale calls for each opportunity ⦁Average number of written servicing requests ⦁Average time to fix the problem ⦁Average number of calls per service day ⦁Percentage of Compliance with Service Level Agreements (SLAs) ⦁Percentage of service renewal and support ⦁Level of customer loyalty ⦁Time from complaint to problem resolution ⦁Create interest for customers away from the collection ⦁Files that are closed in one day ⦁Number of cases handled by the employee ⦁Number of service calls ⦁Amount of new revenue ⦁The amount of income in a given time period ⦁Channel closing time ⦁The difference between the selling price of a product or service and the cost of producing it ⦁Duration of the sales phase ⦁Number of potential customers ⦁Number of new customers ⦁Number of customers retained ⦁Number of open opportunities

4.1 K-MEANS CLUSTERING

Cluster formation is a process by which a set of localities or neighborhoods are divided into clusters or groups in such a way that the criteria within each cluster are as similar as possible while the criteria in different clusters are as distinct as possible. The clustering algorithm used in this study is the K-Means algorithm. In this step, clustering is performed using the finalized data set of the previous step. By applying the K-Means algorithm to the dataset, all criteria are finally divided into six clusters.

4.2 LABELING EXISTING SAMPLES

In data mining problems, each row of data is called a sample. Here a row of data about a sub-criterion is called a sample. To classify existing sub-criteria, a label field is required, indicating whether the existing sample has a high priority or a low priority. In other words, if the label field is equal to one, it indicates a high priority, and if the label value is zero, this sample has a low priority. In this study, by combining several fields and their arguments for each field record label is added. To check the value of the label field, to determine the importance level, the impact of the considered criteria, the six criteria; the number of sales calls - the number of sales calls for each opportunity - the amount of new revenue - the amount of revenue within a given time period- the closing time through the channel - the difference between the selling price of a product or service and its cost of production are defined and for the first two criteria are specified sub-criteria.

4.3 INVESTIGATION OF TREE STRUCTURE AND CLASSIFICATION BY DECISION TREE METHOD

The decision tree is a decision support tool that uses trees to model. Regarding data, decision trees create a tree-like structure that acts like the IF and ELSE rules, and ultimately reaches our preferred tags learned from the training data. In fact, the decision tree learning operation is to build the elements and leaves of a tree. Here, the decision tree is extracted by examining the values of existing criteria using the Weka software.

4.4 EVALUATING THE RESULTS OF THE DECISION TREE METHOD

To this point, samples have been prepared to apply the classifier. At this stage, the decision tree classification is applied to the samples, see results Table 4. Table 4: Decision tree results in selective datasets by clustering. Cluster Cluster one Cluster two Cluster three Cluster four Cluster five Cluster six

Accuracy 0.95 0.97 0.96 0.95 0.97 0.98

F-measure 0.96 0.97 0.96 0.95 0.97 0.98

Precision 0.95 0.96 0.97 0.96 0.97 0.98

Recall 0.95 0.97 0.96 0.95 0.98 0.98

The values in Table 4 show that you can rely more on the criteria stated by the sixth cluster. Because the accuracy of the algorithm for the sixth cluster is 98%.

4.5 NEURAL NETWORK METHOD RESULTS

In order to apply the neural network method to the existing dataset, the initial data must first be standardized, which in the following the steps of the neural network until the results are described:

A.E. Haghighi, A.Shirazi

4.6 PREPARING DATA FOR NEURAL NETWORK MODELING

The data used before entering the neural network were standardized to increase the accuracy and speed of neural network processes. To standardize, these relationships are used such that the data are in the range of 0 and 1. (6),

where x is standardized data, xi is used data, xmin and xmax are the lowest and highest data sets in the data set. After data standardization, in order to model data, the ten-segment method is used. In order to model with neural networks, the whole dataset is divided into ten equal parts. The nine parts are used as the training dataset and the model is built on it and the remaining part is evaluated. The process will be repeated 10 times so that each of the 10 parts is used only once for evaluation and each time precision is calculated for the built model. Finally, from the coefficient of determination, the training phase error, the accuracy is averaged. Next, all the data fields are entered to the neural network as input.

4.7 TOPOLOGY OF THE PROBLEM

At this stage, the network type, the number of hidden layers, the number of neurons in each layer, and the base and stimulus functions are selected. Since feedforward networks with backpropagation algorithm are one of the most commonly used neural networks, therefore, the present study used feed-forward neural network with backpropagation algorithm (multilayer perceptron networks). In the present study, 76 variables were introduced as input layer neurons and burnout rate as the priority of facility allocation as output layer neurons to the neural network. Determining the number of neurons in the hidden layer is not easy, one of the most appropriate methods to determine the number of hidden layer neurons for the least amount of error is to use trial and error method [8]. In the present study, the trial and error method was used to determine the number of neurons in the hidden layer. In this way, different neural networks with a different numbers of neurons were constructed in the hidden layer (from eight neurons upwards). This continued until the best model was selected. Among these models with different numbers of neurons was selected the best model with the least error and the most accuracy (in training and experiment stage). Also in feed-forward neural network, sigmoid logarithm function as transfer function and The Levenberg-Marquardt Learning Machine (LM) algorithm has been used as a learning algorithm.

4.8 MULTILAYER PERCEPTRON (MLP) NEURAL NETWORK RESULTS FOR THE DATASET

One of the important indicators in a neural network is the calculation of the root mean square error (RMSE). The R2 criterion also indicates the correlation coefficient for the test data. The values of these two for the selected dataset are reported in Table 5. The results of the above table show that in feed-forward network modeling the coefficient of determination in the training dataset is higher than the test dataset and the average of these two datasets is 0.98. Despite the high coefficient of determination, the root mean square error in both datasets was high, indicating that some data values attempted to mislead the learner, in other words, the data were unbalanced data. Therefore, among the models, in terms of the coefficient of *Corresponding author (A.Haghighi, A.Shirazi). Email: amirestakhrian@iau.shiraz.ac.ir, apashanishirazi@yahoo.com ÂŠ2020

determination and error of training and testing, it can be concluded that the feed-forward neural network with 12 neurons in the hidden layer and the topology variables as their inputs can provide better results. Table 5: Simulated model results with different error measurement statistical criteria Type of network

Number of fold

Feedforward network

đ?‘…đ?‘…2

RMSE

Topology Factors Activation function Logsig Learning algorithm LM training 0.99 testing 0.97 total 0.98 training 0.7839 testing 0.8123 total 0.79

Figure 2: Comparison of actually predicted outputs by neural networks in estimating customer loyalty.

5. CONCLUSION In this research, by first evaluating the criteria and sub-criteria, an initial pre-processing of the data was performed and then the database needed to enter the decision-tree learning algorithm has been extracted. Before applying this algorithm to the dataset, the criteria were clustered using the K-Means clustering algorithm. Since the most important task of a clustering algorithm is to optimally minimize the intra-cluster distance and maximize inter-cluster distance, we have implemented K-Means clustering algorithms and obtained six clusters with similar data within each cluster. Then, the decision tree algorithm was applied for each cluster separately and the priority of different criteria was evaluated. According to the results of the decision tree algorithm, it can be said that the classification pattern of the relevant data was well analyzed and the results were very good. Because each cluster has a high accuracy rate of 96%. In this research, for modeling the problem using MLP grids, a hidden layer starting with eight different neurons and sigmoid function boundary stimulus functions, and among various methods of training, error back-propagation

A.E. Haghighi, A.Shirazi

method by Levenberg-Marquardt algorithm for faster convergence in network education have been used. The reason for choosing a hidden layer is because the middle layers are not directly related to the output, so the changes in these layers do not have much effect on prioritizing adjustment. This layer is also selected to reduce the error. The basis of the error backpropagation method is based on the error correction learning law, which consists of two main paths. Along the way, the input vector is applied to the network and its effects propagate through the middle layer to the output layer, and the output vector produces the real response of the network. One of the challenges of this method is the unbalance of the data that increases the neural network error.

6. DATA AND MATERIAL AVAILABILITY Information regarding this study is available by contacting the corresponding author.

7. REFERENCES

Bayraktar, E., Tatoglu, E., Turkyilmaz, A., Delen, D., & Zaim, S. (2012). Measuring the efficiency of customer satisfaction and loyalty for mobile phone brands with DEA. Expert Systems with Applications, 39(1), 99-106. Brijain, M., Patel, R., Kushik, M., & Rana, K. (2014). A survey on decision tree algorithm for classification. Fahad, A., Alshatri, N., Tari, Z., Alamri, A., Khalil, I., Zomaya, A. Y., ... & Bouras, A. (2014). A survey of clustering algorithms for big data: Taxonomy and empirical analysis. IEEE transactions on emerging topics in computing, 2(3), 267-279. Jessy, J. (2011). An analysis on the customer loyalty in telecom sector: Special reference to Bharath Sanchar Nigam limited. African Journal of Marketing Management, 3(1), 1-5. Pollard, D. (1981). Strong consistency of k-means clustering. The Annals of Statistics, 9(1), 135-140. Raza, H., Burney, A.I., Ahsanullah. (2020). Impacts of Service Quality on Customer Satisfaction: A Comparative Study on Banking Sector of Pakistan Through Weighted Servperf Model. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 11(2), 11A02I: 1-15. Singh, D., & Reddy, C. K. (2015). A survey on platforms for big data analytics. Journal of big data, 2(1), 8. Teli, S., & Kanikar, P. (2015). A Decision Tree Based Survey in Data Mining Approaches. Int. J. Adv. Res. Comput. Sci. Softw. Eng., 5(4), 613–617. Dr.Amirreza Estakhrian Haghighi is an Assistant Professor at Computer & Information Technology Department, Shiraz branch, Islamic Azad University, Shiraz, Iran.

Abdolreza Shirazi is a Master’s degree student in Information Technology (IT) in the e-commerce branch. He has a BA in Software engineering from Islamic Azad University, Shiraz branch. He is interested in applying IT to Management.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05P

BIOLOGICALLY ACTIVE FEED ADDITIVE DEVELOPMENT BASED ON KERATIN AND COLLAGEN-CONTAINING RAW MATERIALS FROM POULTRY WASTE 1*

Victor Volik , Dilaram Ismailova , Valery Lukashenko , 2 3 Irina Saleeva , Vitaliy Morozov All-Russian Scientific Research Institute of Poultry Processing Industry, Branch of the Federal Scientific Center, VNITIP RAS (VNIIPP), RUSSIA. 2 Poultry Production Technology Department, Federal Scientific Center All-Russian Research Institute of Poultry Russian Academy of Sciences (Federal Scientific Center VNITIP RAS), RUSSIA 3 Research and Production Consulting Center, St. Petersburg State Agrarian University, RUSSIA 1

ARTICLEINFO

Article history: Received 06 April 2019 Received in revised form 19 June 2019 Accepted 28 June 2019 Available online 10 July 2019

Keywords:

Protein feed additives; Lipid oxidation; Molecular weight distribution of peptides; Antioxidant capacity; Biologically active feed additives; Antioxidant enzyme (AOE); Hydrolyzate.

A B S T RA C T

Feed additives were obtained using high-temperature hydrolysis in a thin layer and subsequent fermented hydrolysis. In this work, we studied some biochemical properties of biologically active feed additives obtained from raw materials from poultry waste containing keratin and collagen. There were studied the molecular-mass distribution of peptides in samples of biologically active feed additives and found that the bulk of them are represented by low molecular weight peptides with a molecular weight of less than 5 kDa, and the largest share of this fraction is contained in the feed additive from keratin-containing raw materials (91.5%). The antioxidant capacity of the hydrophilic fraction of feed additives concerning the peroxyl radical varies between 142-219 μmol TEQ/g. When studying antioxidant enzyme (AOE) in poultry meat during storage at +4°С for 5 days, it was found that the main differences in AOE in poultry meat samples during storage relate to indicators in the pectoralis muscle of the bird, where the increase in AOE at 38 days of age when using dietary intake No. 3 amounted to 13.7%, and in 49 days of maintenance 67.9% of the AOE in the control group. Consequently, the use of biologically active feed additives in the diet of poultry instead of fishmeal contributes to an increase in the antioxidant capacity of meat and its better preservation. Disciplinary: Technology).

Animal

Sciences

(Animal

Nutrition

and

Feed

1. INTRODUCTION

The creation of a feed base is a determining factor for the successful development of livestock

*Corresponding author (Victor Volik). Email: Doooctor@yandex.ru ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05P http://TUENGR.COM/V11/11A05P.pdf DOI: 10.14456/ITJEMAST.2020.96

and poultry farming. A comprehensive solution to the problem of processing secondary raw materials of animal origin, using deep hydrolysis, to produce high-quality protein and biologically active ingredients, will expand their use for food and feed needs, increase the profitability of poultry production and processing, and will contribute to solving environmental problems of waste disposal (AltÄąnelataman et al., 2019). Given the shortage of meat raw materials and the desire of manufacturers to reduce production costs, the availability of alternative sources of protein and products made from them is extremely important for the domestic meat market in Russia (Chaijan M. 2008). Also, the resulting protein will be able to partially or fully replace the supply of imported protein preparations and additives used in the food and feed industries to our market. The restructuring of traditional technological processes with the aim of rational and integrated use of raw materials is due to the requirements of increasing production efficiency and maximum extraction, useful for food and feed needs, of all its components. Increasing the biological value of animal feed due to more efficient use of raw materials based on the latest physical (high-temperature short-term processing in a thin layer) and biotechnological (use of hydrolytic enzymes) processing methods by most researchers is recognized as the most promising and relevant. It is generally accepted that fishmeal is the most effective source of animal protein in broiler diets. World production of fishmeal is declining, and demand for it is increasing. Therefore, a search is underway for sources of animal raw materials to replace fishmeal in poultry diets. Secondary raw materials obtained during the processing of poultry, such as feather, blood, legs, heads, meat and bone residues, intestines, etc., are widely used as a source of animal protein. The use of this raw material in poultry feeding will make it possible to utilize waste from poultry processing plants and at the same time save on the purchase of expensive feed components. For example, chicken feather contains 85-90% keratin protein. However, the digestibility of feather keratin in the native state is less than 16% (Estevez M. et al. 2006). To be converted into an assimilable form, it is subjected to a special treatment, which destroys the initial structure of the protein and makes accessible the action of proteolytic enzymes in the poultry digestive tract (Contini et al., 2014). A promising technological approach that allows the production of easily digestible protein feed components for poultry is the two-stage hydrolysis of secondary raw materials, combining short-term high-temperature processing and enzymatic hydrolysis. Using these techniques allows you to save 85% of the most valuable amino acids. The obvious advantages of this approach include the reduction of energy consumption, the preservation of components with biological activity and a high degree of protein availability up to 92% (Faustman et al., 2010). The physicochemical properties of the developed feed additives from the secondary products of poultry processing were studied, their safety indicators were studied (Fisinin et al., 2018). Productive indicators of broilers when using the above-mentioned feed additives instead of fishmeal in feeding were studied in the vivarium of the Zagorsk EPH SEC - a branch of the Federal Research Center â€œVNITIPâ€? RAS on Ross-308 broiler chickens. For this, 4 groups of chickens were formed (Kittiphattanabawon et al., 2012). Poultry was grown on a bed of wood shavings, while the same conditions were maintained for all groups, both in microclimate and in other technological parameters.

Victor Volik, Dilaram Ismailova, Valery Lukashenko, Irina Saleeva, Vitaliy Morozov

The first control group of chickens received the complete feed, the source of animal protein in which was a fish meal with a crude protein (SP) content of 67%. In the diet of experimental group 2, fish meal was replaced by a feed additive from keratin-containing raw materials with a crude protein content of 85.7%. In experimental group 3, a feeding diet was used with a feed additive made of keratin-containing raw materials (crude protein 85.7%), using a probiotic preparation consisting of live bacteria Bacillus subtilis, Lactobacillus paracasei, and Enterococcus faecium. Experimental group 4 received feed with a feed additive from a mixture of keratin-containing and collagen-containing raw materials (crude protein 67.1%) with the addition of the same probiotic preparation (Lund et al., 2011). The best group by average live weight was experimental group 3, in which the chickens received a fermented feather hydrolyzate with a probiotic preparation. The studied indicator in this group significantly exceeded control by 8.6% (at p <0.001) and 9% (at p <0.001) at 38 and 49 days of age, respectively. Feed costs per 1 kg of live weight gain of the third experimental group were lower in comparison with control group 1 by 6.7% and 8.1%. The safety in all groups was 100% (Mamelona et al., 2010). Broiler meat obtained using the widely accelerated intensive fattening has several significant disadvantages. About 15% of broiler meat with pronounced signs of pale, soft and exudative meat (PSE-like syndrome), insufficiently formed muscle and connective tissues, unformed bone tissue, low antioxidant capacity, weak smell, and taste. Oxidative stress in the tissues (resulting from various stressful conditions, including conditions of keeping and feeding the bird) leads to functional and/or structural damage to cells and muscle tissues. Active forms of oxygen (AFO) lead to degenerative damage to the structure of myofibril fibers, which in turn affects the quality of meat, for example, its tenderness. AFO also leads to a decrease in the synthesis of collagen in the muscles, and a decrease in its solubility and, therefore, increases the rigidity of meat. Oxidation processes are also one of the main reasons for the deterioration of meat quality during storage. Meat becomes susceptible to oxidative damage due to the high concentration of polyunsaturated lipids, heme pigments, metal catalysts and the presence of several other oxidizing agents in muscle tissue. Oxidative damage in any type of meat is manifested in the form of discoloration, the development of an unpleasant odor, the formation of toxic compounds, and the reduction of shelf life and nutritional value (Mapiye et al., 2012). Under normal physiological conditions, molecular oxygen undergoes a series of reactions that lead to the formation of free radicals. A small part (about 2â€“5%) of oxygen consumed during metabolic reactions turns into free radicals in the form of the AFO. These free radicals, in particular, reactive oxygen species (ROS) and reactive nitrogen species (RNS), interact with proteins and fatty acids, acting as intermediate agents in the main oxidation-reduction reactions (Nikolaev et al., 2016). Lipids are found in meat in the form of triacylglycerides, phospholipids, and sterols. However, lipids are chemically unstable and, therefore, are easily oxidized, especially during the processing and storage of meat. The oxidation of meat lipids results in the appearance of a rancid odor and the development of an unpleasant odor, moisture loss, and discoloration, reduced nutritional value and reduced shelf life, as well as the accumulation of toxic compounds that can harm consumers' health *Corresponding author (Victor Volik). Email: Doooctor@yandex.ru ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05P http://TUENGR.COM/V11/11A05P.pdf DOI: 10.14456/ITJEMAST.2020.96

(Saleeva et al., 2019). The presence of intrinsic antioxidants in the muscle tissue of animals can reduce the progress of lipid oxidation reactions (See Figure 1).

(RH - unsaturated fatty acid; R - free radical)

Figure 1: The reaction of lipid oxidation with the participation of antioxidants Peroxyl radicals (ROO â€˘) formed during lipid oxidation can react with proteins, which leads to the oxidation of the latter. Modification of muscle proteins causes changes in the quality of meat, such as color, taste, aroma, texture, water-holding ability, biological and nutritional values. Protein oxidation also causes numerous physicochemical changes in meat, including a decrease in bioavailability and impaired digestibility of proteins, a change in amino acid composition, and a decrease in protein solubility due to its polymerization (Sae-leaw et al., 2016). Inhibition of lipid oxidation improves the taste, texture and nutritional value of meat products. The hydrolysis and oxidation of edible fats have been the subject of comprehensive studies for many years in terms of studying the mechanism and dynamics of the process itself and identifying ways to inhibit active oxidation that affect the quality of the product (Torkova et al., 2017). Thus, the oxidation of lipids and proteins of muscle tissues affects the qualitative characteristics of meat and meat products. A significant direct correlation was shown between the level of lipid peroxidation indicators (TBARS) and proteins (carbonyl groups) in meat and the appearance of rancid taste and smell in it (Volik, 2011). The purpose of this research was to study the biochemical properties of protein feed additives from keratin-containing and collagen-containing raw materials of poultry processing, namely, the molecular weight distribution of peptides, the determination of antioxidant enzyme (AOE) hydrophilic forms of feed additives and the antioxidant status of poultry meat.

2. MATERIALS AND METHODS To determine the AOE of the hydrophilic components of tissue extracts, 200 mg of pectoral muscle or thigh was placed in a plastic tube, 8 ml of 11.5% potassium chloride solution was added. Homogenization was carried out for 5 min at a temperature of + 4 Â° C into a Silent Crusher S

Victor Volik, Dilaram Ismailova, Valery Lukashenko, Irina Saleeva, Vitaliy Morozov

homogenizer equipped with a 7F nozzle (Heildolph, Germany) at a working knife rotation speed of 75,000 rpm. The homogenate was centrifuged for 20 min at 30000g and a temperature of + 4ºС. The supernatant was separated and diluted with 50 mM FSB, pH 7.40 15-25 times. AOE of the hydrophilic components of poultry meat extracts concerning the peroxyl radical was expressed in micromoles of TE per gram of tissue. Analysis of the antioxidant capacity of homogenized samples of poultry pectoral muscle and thigh meat grown on a standard diet at floor content was measured concerning the peroxyl radical. The peroxyl radical was generated directly in the reaction medium during the thermal decomposition of the azo compound of 2,2′-azobis (2-ethylpropionamidine) dihydrochloride (AAPH), initiated by incubation at 37 ° C for 10 min. The reaction mixture contained 15 μl of a solution of the test sample of poultry meat homogenate or standard (trolox) and 115 μl of 8.16 × 10-8 M freshly prepared solution of sodium fluoresceinate in 75 mM Na-phosphate buffer, pH 7.40. When determining the antioxidant activity of PPI, 3 control options were used. The reaction was initiated by adding 15 μl of a freshly prepared 0.6 M solution of AAPH in 75 mM Na-phosphate buffer pH 7.4 in all variants except control 3. 115 μl of 8.16 × 10-8 M fluoresceinate solution was also added to the reaction mixture of control 1 sodium. 130 μl of 75 mM Na-phosphate buffer, pH 7.40, was added to the reaction mixture of control 2 for 0% fluorescence intensity. To the reaction mixture of control 3, for 100% fluorescence intensity, 15 μl of Na-phosphate buffer and 115 μl of 8.16 × 10-8 M solution of sodium fluoresceinate in 75 mM Na-phosphate buffer, pH 7.40 were added. The reaction mixture was incubated at a temperature of 37 ° C for 30 s with vigorous stirring (rotation speed 1200 rpm) on a microtiter plate shaker-incubator PHMP Grant Bio (Great Britain). The kinetics of the decrease in fluorescence was recorded for 1 h with a measurement interval of 60 s at a temperature of 37°C on a Synergy 2 photometer-fluorimeter (BioTek, United States) in the regime of recording fluorescence intensity (excitation wavelength - 485 nm, emission wavelength 528 nm). The relative fluorescence intensity (Irfi) of the studied samples was calculated as

I rfi =

I − I 0% I 100%− I 0%

(1),

where: I0% is the fluorescence intensity in K2; I100% - fluorescence intensity in K3. The obtained values were used to construct the kinetic curves of a decrease in Irel. Integrating into the OriginPro 8.0 program, the area under the fluorescence intensity decrease curve (AUC) was calculated, which corresponds to the fluorescence sum of fluorescence. The reduced area under the curve (net AUC) was calculated as the difference between the areas under the kinetic curves in the presence of antioxidants (standard or sample) and their absence (control 1). The calibration curve of the dependence of the area (net AUC) for trolox on its concentration in the sample (C, μM) is characterized by a high accuracy of the linear approximation (R2 = 0.9922) and allows one to *Corresponding author (Victor Volik). Email: Doooctor@yandex.ru ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05P http://TUENGR.COM/V11/11A05P.pdf DOI: 10.14456/ITJEMAST.2020.96

calculate the antioxidant activity of poultry homogenates concerning the peroxyl radical in mM trolox equivalents (TE) according to

AOE =

(netAUC − B) × R × 0,001 F ×m

(2),

where: net AUC - reduced area under the curve; B is the free term of the equation describing the calibration graph; R is the dilution factor of the extract; F is the slope of the calibration graph; 0.001 is the volume of extract, l; m is the mass of a tissue sample taken for extraction, g. Determination of the antioxidant capacity of protein feed additives and the fish meal was determined by the method described above, with the difference that the sample was dissolved in distilled water, centrifuged, and the antioxidant activity concerning the peroxyl radical was determined in the supernatant. The molecular mass distribution of the peptides of the enzymatic hydrolysates of the studied feed additives was evaluated by size exclusion chromatography. The chromatographic system included a Varian ProStar HPLC chromatograph (USA), a PS210 SDM pump, a PS410 Autosampler and a BioSep-SEC-S 2000 column (7.8x300 mm) from Phenomenex (USA). This type of column is used for the analytical separation of low molecular weight proteins and peptides by gel filtration. The column was calibrated against standard water-soluble proteins and peptides manufactured by GE Healthcare (USA), Serva (Germany) and Sigma (USA) in the molecular weight range from 451 to 440,000 Da, which covers its operating range. The optical density was recorded using a flow detector with a photodiode array (Varian 335 PDA) in the range of 190-330 nm at a base wavelength of 214 nm. 50 mM Na-phosphate buffer, pH 6.8, was used as eluent. The elution rate was 1 ml/min. The volume of the sample applied to the column was 20 μl. Sample preparation included diluting samples of feed additives in the indicated buffer to a solids concentration of 1-5 mg/ml and double centrifugation at 60,000 g for 40 minutes. The obtained chromatograms were integrated with the calculation of the relative content of the high molecular weight protein fraction (M.W.> 10 kDa), the average molecular oligopeptide fraction (M.W. 5-10 kDa) and the low molecular weight fraction (M.W. <5 and M.W. <0, 5 kDa) containing peptides and free amino acids. Also, the average molecular weight of the hydrolyzate was calculated as i

〈М 〉 = ∑ i =1

M i × Si i

∑S i =1

(3),

where Mi is the molecular mass of the components in the i-th range, Si is the area of the i-th range.

3. RESULT AND DISCUSSION The results of the analysis of the molecular weight distribution of peptides of protein feed additives from keratin-containing and collagen-containing raw materials of poultry processing are presented in Table 1.

Victor Volik, Dilaram Ismailova, Valery Lukashenko, Irina Saleeva, Vitaliy Morozov

Table 1: Molecular mass distribution of peptides of protein feed additives from keratin-collagen-containing raw materials of poultry processing and fish meal. Protein Feed Supplement Sample Fish meal Keratin-containing feed additive Feed additive (feed mixture) from collagen-containing raw materials

Proportion of components with the corresponding range of MV,% >50 25-50 10-25 5-10 <5-0,5 <0,5 kDa kDa kDa kDa kDa kDa 4,57 3,29 5,74 3,86 78,06 4,47 0,36 0,15 2,97 5,03 85,77 5,73 0,84

2,31

6,38

6,80

78,44

5,22

In the studied feed additives, the relative proportion of high molecular weight protein components (MW> 25 kDa) in the fish meal is about 8%, while in the additive from collagen-containing and keratin-containing raw materials - 3% and 0.5%, respectively. The main share is low molecular weight components (MW <5 kDa). The largest fraction of this fraction is contained in the feed additive from keratin-containing raw materials (85.77%), the feed additive from collagen-containing raw materials and fish meal contain 78.06% and 78.44% of this fraction. The largest share of short peptides (below 0.5 kDa) and free amino acids in the feed the additive from keratin-containing raw materials amounted to 5.73%, in the feed additive from collagen-containing raw materials - 5.22%, and in the fish meal - 4.47%. Thus, the key components of the studied protein feed additives are free amino acids and peptides of various lengths and compositions. Antioxidant and antiradical properties are one of the types of biological activity tested for both individual compounds and multicomponent mixtures. An important role in the development of many pathological conditions is played by excess production of the active form of oxygen (AFO) by the cell, which exceeds the reserves of the antioxidant defense system (ADS). To restore balance in the ADS, the intake of antioxidants with food is necessary, therefore, the content of antioxidants is a criterion for the functionality of the product (feed). Antioxidant capacity is due to the level of low molecular weight peptides (Volik et al., 2018). Antioxidant activity of feed additives from keratin-containing and collagen-containing raw materials of poultry processing are presented in Table 2. Table 2: Antioxidant capacity of feed additives from keratin-containing and collagen-containing raw materials of poultry processing concerning peroxyl radical. Sample feed additive Fish meal Keratin-containing feed additive Collagen-containing feed mixture

Antioxidant capacity (ORAC), µmol TE/g 142-152 186-193 213-219

The antioxidant capacity of the hydrophilic fraction of additives concerning the peroxyl radical varies in the range of 142-219 μmol TEQ / g. It should be noted that the highest AOE value for the feed additive from collagen-containing raw materials and the lowest AOE value is for the fish meal feed additive. For comparison, the AOE of hydrolysates obtained from echinoderm processing products is 267-421 μmol TEQ / g (17); from marine fish processing products - 340-530 μmol TEQ / g (18); whey processing - 400-630 μmol TEQ / g (19). The values of AOE for fish waste hydrolysates vary in the range from 260 to 710 μmol TEQ / g of sample (20.21) The results obtained in the determination of antioxidant activity (AOE) in homogenized samples *Corresponding author (Victor Volik). Email: Doooctor@yandex.ru ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05P http://TUENGR.COM/V11/11A05P.pdf DOI: 10.14456/ITJEMAST.2020.96

of poultry and thigh meat grown on standard diets (Diet No. 1 (control)) and 3 experimental diets (Diet No. 2, Diet No. 3 and Diet No. 4) feeding at floor contents for 38 and 49 days are presented in Table 3. Table 3: Antioxidant capacity (AOE) of poultry parts. Sample Diet number 1 Diet number 2 Diet number 3 Diet number 4

AOE, μmol TE / g meat 38 days 49 days Breast Thigh Breast Thigh 42.72±4.1 27.02±3.6 43.73±3.9 31.19±2.3 40.54±5.6 21.53±1.2 55.73±6.1 21.63±1.7 49.76±4.3 25.08±2.3 53.35±4.7 34.14±2.8 42.32±3.8 27.98±3.6 52.83±5.0 25.15±1.7

AOE indicators in poultry meat grown on various diets on day 38 do not statistically significantly different. Moreover, the AOE values of poultry pectoral muscles are statistically significantly higher than the AOE values of poultry femoral muscles for all four feeding diets. On the 49th day of growing, there is an increase in the AOE of the pectoral muscles for the experimental diets compared to 38 days, while in the control group (Diet No. 1) it remains at the same level as on the 38th day. The greatest increase in AOE of the pectoral muscles was noted in the group that was fed using diet No. 2, in which the protein supplement was represented by a hydrolyzate of keratin-containing raw materials. AOE indicators of the femoral muscles of the bird for all four feeding diets on the 49th day did not have statistically significant differences, compared with 38 days. It is known that AOE of meat affects its quality during storage, the higher the AOE of meat, the less intense is the processes of oxidation of muscle proteins. In this connection, the change in AOE indices of poultry and thigh muscles of the bird was studied for all four feeding diets on the 38th and 49th day of growth during storage of poultry carcasses at a temperature of +4°C for 5 days (Table 4). Table 4: Antioxidant capacity of poultry and thigh meat samples during storage. Sample Diet number 1 Diet number 2 Diet number 3 Diet number 4

AOE, μmol TE / g meat 38 days 38 days Breast Breast Breast Breast 47,57±4,5 25,29±1,2 35,89±3,7 29,56±2,8 36,22±2,4 26,54±1,8 33,98±2,5 33,99±2,3 54,11±3,7 28,88±3,2 60,28±4,3 29,53±1,6 36,46±4,6 33,11±3,1 40,64±3,3 38,66±2,7

The main differences between AOE in poultry meat samples during storage are those in the pectoral muscle of the bird, where the increase in AOE at 38 days of age using diet No. 3 was 13.7%, and at 49 days of maintenance, it was 67.9% of AOE in the control group. In the femoral muscles, slight changes were noted in the direction of an increase in AOE with a 49-day bird maintenance. A slightly higher AOE values can be noted in the blood of birds raised for 38 days using rations No. 2 and No. 3. At the same time, when using diet No. 2 (hydrolyzate of keratin-containing raw materials), the level of AOE exceeded 16.8% the same indicator in control (fish meal). And on the 49th day of maintenance, in comparison with the 38th day, the value of AOE in the blood serum of birds of the grown feeding diets No. 1 and No. 2 does not change, while for rations No. 3 and No. 4 it decreases. The lowest value of the indicator of the antioxidant status of the body in birds on day 49 was observed in the group where the birds were raised on a feeding ration No. 4 (2.04 mmol TE compared to 2.59 and 3.0 in groups No. 1 and No. 2, respectively).

Victor Volik, Dilaram Ismailova, Valery Lukashenko, Irina Saleeva, Vitaliy Morozov

4. CONCLUSION

The antioxidant capacity of the hydrophilic fraction of feed additives concerning the peroxyl radical varies between 142-219 μmol TEQ/g. The highest AOE value has the feed additive from collagen-containing raw materials, and the lowest value of AOE is the feed additive from fishmeal. The antioxidant capacity of water-soluble protein homogenates showed similar results and, in this case, we note the highest results when using diet No. 3. The AOE value in the blood serum of birds grown on feeding diets No. 1 and No. 2 does not change, while for rations No. 3 and No. 4 it decreases. The lowest value of the indicator of the antioxidant status of the organism in birds on day 49 was observed in the group where the birds were raised on a feeding ration No. 4. Thus, using protein feed additives from poultry secondary products such as keratin and collagen in poultry feeding, in addition to increasing broiler productivity, meat with a higher antioxidant status can be obtained.

5. AVAILABILITY OF DATA AND MATERIAL

Data can be made available by contacting the corresponding authors

6. ACKNOWLEDGEMENT

The work was prepared with the support of the Russian Science Foundation, Agreement No.17-16-01028.

7. REFERENCES

Altınelataman C. et al. (2019). An in vitro and in silico study on the antioxidant and cell culture-based study on the chemoprotective activities of fish muscle protein hydrolysates obtained from European seabass and gilthead seabream. Food Chemistry, 271, 724-732. Chaijan M. (2008). Review: Lipid and myoglobin oxidations in muscle foods. Songklanakarin Journal of Science and Technology, 30(1), 47–53. Contini C., et al. (2014). Effect of an active packaging with citrus extract on lipid oxidation and sensory quality of cooked turkey meat. Meat Science, 96, 1171–1176. Estevez M. et al. (2006). Effect of natural and synthetic antioxidants on protein oxidation and colour and texture changes in refrigerated stored porcine liver pate. Meat Science, 74, 369–403. Falowo A. B. et al. (2014). Natural antioxidants against lipid–protein oxidative deterioration in meat and meat products: A review. Food Research International, 64, 171–181. Faustman C. et al. (2010). Myoglobin and lipid oxidation in-teractions: Mechanistic bases and control. Meat Science, 86, 86–94. Fisinin V. I., et al. (2018). The productivity of broiler chickens when using easily digestible feed components in combi feeds. Poultry and poultry products, 2, 14-17. Fisinin V. I., Lukashenko V. S., Saleeva I. P., Ovseychik E. A., Zhuravchuk E. V., Volik V. G., Ismailova D. Yu. (2018). Fermented hydrolysates from poultry processing wastes in broiler diets. Poultry, 11-12, 20-22. Kittiphattanabawon P., et al. (2012). Gelatin hydrolysate from blacktip shark skin prepared using papaya latex enzyme: antioxidant activity and its potential in model systems. Food Chem, 135, 1118−1126. Lund M. N., et al. (2011). Protein oxidation in muscle foods: A review. Molecular, Nutrition and Food Research, 55, 83–95. Mamelona J. et al. (2010). Nutritional composition and antioxidant properties of protein hydroly-sates prepared from echinoderm by-products. Int. J. Food Sci. Technol, 45, 147-154. *Corresponding author (Victor Volik). Email: Doooctor@yandex.ru ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05P http://TUENGR.COM/V11/11A05P.pdf DOI: 10.14456/ITJEMAST.2020.96

Mapiye C., et al. (2012). The labile lipid fraction of meat: From perceived disease and waste to health and opportunity. Meat Science, 92, 210–220. Moylan S., et al. (201). Oxidative and nitrosative stress in depression: Why somuch stress? Neurosciene and Biobehavioral Reviews. Nikolaev I. V. et al. (2016). Bioocatalitic conversion of poultre pricessing levtovers: Optimiza-tion of hydrolytic conditions and peptide hydrolysate characterization. J.Food Chemistry, 197, 611-621. Saleeva I. P. et al. (2019). Protein feed additive in feed for broiler chickens. Actual Biotechnology, 3(30), 267-268 Sae-leaw, T., et al. (2016). Antioxidant activities and selected characteristics of gelatin hydrolysates from seabass (Lates calcarifer) skin as affected by production processes. Journal of Food Science and Technology, 53(1), 197–208. Torkova A. A., et al. (2017). Rational design of enzyme compositions for the preparation of functional hydrolysates of serum proteins of cow's milk. Applied Biochemistry and Microbiology, 53(6). 1-12. Volik V. G. (2011). Processing of little-used products for poultry feed. Ptitseprom, 2, 58-63. Volik V. G. et al. (2018). The study of indicators of protein paste from the secondary raw materials of poultry processing. J. Bird and poultry products, 6, 37-40. Volik V. G., Ismailova D. Yu., Zinoviev S. V., Erokhina O. N. (2018). The study of indicators of protein paste from the secondary raw materials of poultry processing. Poultry and poultry products, 6, 37-40. Xiong Y. L. (2000). Protein oxidation and implications for muscle food quality. In E. Decker, C. Faustman, & C.J. Lopze-Bote (Eds.), Antioxidants in muscle foods: Nutritional strategies to improve quality. New York, USA: JohnWiley and Son Publishing, 85–111. Dr.Victor Volik is Chief Scientific VNIIPP. He earned a Doctor of Biological Sciences degree. His research involves Food, Feed and Medical Purposes using Modern Physicochemical and Biotechnological Methods.

Dilaram Ismailova is a Leading Researcher, VNIIPP. She is a Candidate of Biological Sciences. Her research focuses on using of Protein Hydrolysates to increase the Productive and Meat Qualities of Broiler Chickens. Professor Dr.Valery Lukashenko is Professor and Head of the Department of Technology for the Production of Poultry Products. He received a Doctor of Agricultural Sciences degree. His scientific research is Poultry, Feed Additives, Feed. Professor Dr.Irina Saleeva is Professor of the Russian Academy of Sciences, Corresponding Member of the Russian Academy of Sciences, Chief Researcher of the Department of Technology for the Production of Poultry Products, Head of Laboratory for Meat Production Technology. She obtained a Doctor of Agricultural Sciences degree. Her scientific research encompasses Poultry. Dr.Vitaliy Morozov is Director of Research and Production Consulting Center FSBEI HE SPbGAU. He got a Doctor of Veterinary Sciences degree. His scientific research includes Poultry, Feed Additives, Feed, Veterinary Sanitation, Sanitary Microbiology.

Victor Volik, Dilaram Ismailova, Valery Lukashenko, Irina Saleeva, Vitaliy Morozov

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05Q

THE REVIVAL OF TRADITIONAL PASSIVE COOLING TECHNIQUES FOR SCHOOL BUILDINGS THROUGH WINDCATCHERS 1

Suzan T. Ismail *, Fenk D. Miran a

Department of Architecture, College of Engineering, Salahaddin University, Erbil, IRAQ.

ARTICLEINFO

Article history: Received 21 June 2019 Received in revised form 19 November 2019 Accepted 05 December 2019 Available online 26 December 2019

Keywords: CFD analysis; Windcatcher height; Traditional architectural element; IES VE; Classroom thermal comfort; Building performance simulation; Classroom CO2; Classroom relative humidity; Windcatcher function; Classroom temperature; Hot arid climate.

A B S T RA C T

Windcatcher is a traditional element that has been used as a passive cooling technique in hot, dry regions many centuries ago. This study, assess the thermal performance of integrated windcatcher to a prototype school building and its influence on classroom and occupants in a hot arid climate. The research examines the effect of changing the windcatcher morphological feature, specifically the height on its functioning concerning the thermal performance parameters of mean radiant temperature, relative humidity, and CO2 concentration. The simulation process was adopted by using the 2018 IES Virtual Environment simulation tool plus CFD analysis. The results indicate that under the climatic conditions of Erbil city, the height of the windcatcher affects directly the thermal conditions of an integrated space. To create appropriate airflow and provide adequate ventilation rate with the potential to reduce mean radiant temperature 5°C, the height should be less than 9m. Windcatcher with a height of 9m achieved the best results in comparison with higher models as it reduced the cooling load by nearly 60% of the demand energy, compared to the traditional windcatchers design with height more than 15m. Additionally, the findings indicated that constructing a windcatcher with height less than 6m can achieve a similar result to the higher design, besides it costs less and has a more aesthetic preference. Disciplinary: Sustainable Architecture, Cultural Sciences, Energy Conservation, Education Sciences, Environmental Sciences. ©2020 INT TRANS J ENG MANAG SCI TECH.

1 INTRODUCTION The reduction of natural resources, climate change, and the increase of nonrenewable energy prices are real challenges for the next decades. Furthermore, the world witnessed a massive rise of 200% of CO2, caused by population growth from 1995 to 2011 (Masoso and Grobler 2010). According to International Energy Agency (IEA) 2009 data, the building sector represented the *Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

highest energy consumer in the world, with 34%, followed by transportation 28%, the industry came third with 27%, and the least was the non-energy uses with 11% (IEA, 2003). However in the after years, the building sector reached more than 40% of the overall world’s energy consumption (Saadatian et al., 2012), which had a significant effect on increasing greenhouse gas emissions and its predicted to rise further by reasons of urbanisation and population growth (Wheeler and Beatley, 2004). Many non-domestic buildings have often used air conditioning systems and mechanical ventilation to establish better interior environments and the use of such systems has increased dramatically all spread the world during the last decade (Sharples and Bensalem, 2001). Thus, the energy used in the buildings, including ventilation, heating, and air conditioning systems account for almost two-thirds of total buildings energy consumption (Chan et al. 2010; Brown and Dekay, 2006; Saadatian et al., 2012; IEA, 2003), and of this 30–50% is concerned with ventilation and infiltration (Khan et al., 2008). As a result, these systems are considered the main drivers of energy consumption in buildings (Almahoozi 2012). There have also been significant inhabitants’ health problems (Sharples and Bensalem, 2001), ie., sick building syndrome (Ruan et al., 2012). Also, many side effects like overheating, excessive humidity, the build-up of odors, smokes, and pollutants, and condensation as a result of low ventilation (Khan et al., 2008). Ventilation can be used to control many criteria like temperature, humidity, odor, and contamination (Hamzanlui et al., 2011). On the other hand, natural ventilation air can discourage the positive ions that cause depression and drowsiness while substituting it with negative ions (Al-Jawadi and Darwish, 2016). Increasing the CO2 concentration in space is an indication of a lack of ventilation rate leading to a problem series for students such as absenteeism, poor student performance, drowsiness, and the inability to concentrate (Kilpatrick 2017). High levels of CO2 indicate a lack of fresh air intake, which has a negative impact on the occupants' health and learning ability. The majority of building standards use CO2 as the key indicator of performance (ASHRAE 2007). Some studies link the internal CO2 concentration with health, performance, and attendance issues. Mendell & Heath (2005) shows strong correlations between sick building syndrome symptoms and CO2 concentrations exceeding 1500 ppm, indicating insufficient ventilation supply. The importance of natural ventilation is to decrease energy consumption and unpleasant environmental pollutants while with acceptable thermal comfort and satisfactory indoor air quality (Ruan et al., 2012; Sharples and Bensalem, 2001). The windcatcher or wind tower method has been neglected in the building design (Jones and Kirby, 2009). These traditional elements provide natural ventilation and passive cooling in hot arid and humid regions thousands of years ago. Lately, there has been an increasing concern about the application of windcatcher in modern buildings, which initiated the use of the concept of windcatcher more widely, including new technologies.

2 LITURATURE REVIEW Zhe et al. (2012) assessed thermal comfort performance and energy consumption of commercial wind catcher integrated into an office building in Beijing, China. Simulation results in a drop of 2°C in the indoor temperature and showed good potentiality to minimise 17% of the cooling load. Dehnavi et al. (2012) investigated the performance of different designs for square wind catchers in the hot arid climate of Yazd city, on reducing the indoor air temperature. An experimental method conducted by using four selected wind catchers that had almost the same descriptions, including

Suzan T. Ismail, Fenk D. Miran

height, plan dimension and size, but with different types of blades representing +, x, H, and K in square wind catchers. The results reduced 3-7ºC in wind catcher room for all types with the most efficient is the plus blade form. This result agrees with numerical simulations (Zarandi, 2009; Calautit et al. (2012) Reyes et al. (2013) and Badran (2003). Ghadiri et al. (2011) indicated that vernacular windcatcher of a square plan with 6m height could reduce air temperature from 25°C to 21°C in a hot and arid climate of Yazd. Al-Jawadi and Darwish (2016) did a full-scale experiment on a house integrated with a two-sided rectangular windcatcher (dimensions 2.5m * 1.75m). Also, a water spray system was equipped for humidification purposes. The results indicated the effectiveness of the moisturised wind catcher in decreasing inner air temperature 12°C. There is a need for more studies concerning the influence of windcatcher (optimum) height on its performance and potentiality to achieve thermal comfort in particular for a school building in a hot arid climate to improve the thermal comfort of the students and reduce the energy consumption required for cooling. This study deals with the effect of height on windcatcher performance in terms of the parameters of thermal comfort, including air temperature, velocity, and relative humidity for a school building in Erbil city as a hot arid climate region by using IES VE simulation tools.

3 MATERIALS AND METHOD 3.1 PASSIVE COOLING TECHNIQUES

According to UNEP (2003), the heating or cooling of a building to provide thermal comfort is a highly energy consuming process accounting for as much as 60-70% of total energy spending in non-industrial buildings. Of this, nearly 30-50% lost through ventilation and air infiltration (Viktor, 2002). The multi-directional approach is needed, including demand-control, energy-efficient technologies, renewable energy, and energy recovery (Oakley, 2002; McQuiston, et al., 2005; Olsen and Chen, 2003). Natural passive cooling systems are options for maintaining a cool building and decreasing air conditioning costs (Haggag and Elmasry, 2011). The use of passive cooling techniques involving thermal mass, responsive landscaping, natural ventilation, and shading devices have been adopted towards sustainable buildings (Faggianelli et al, 2014; Kamoona, 2016; Khan et al., 2008). Additional cooling techniques such as green façades and green roofs have also been applied recently (Haggag and Elmasry, 2011). The windcatcher is one of the ventilation and cooling techniques in vernacular Middle Eastern architecture (Raof, 2018). It is passive, necessitating no energy to operate (Elmualim, 2006).

3.2 WINDCATCHERS

Windcatcher utilises wind renewable energy (Saadatian et al., 2013; Afshin et al., 2016), improving indoor air quality and thermal comfort inside the buildings (Elmualim, 2009; Soni et al., 2016). The predominant of wind towers and wind catchers in the Middle East and North Africa returns to so many years, and have formed a vital element of the indigenous architecture of these areas. (Sharples and Bensalem, 2001). These uses can also be found in India and Pakistan (El-Shorbagy, 2009). Using roof elements to increase the ventilation of buildings is not new. There is evidence that the idea of windcatcher traced back to the early Paranoiac periods. Examples can be

*Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

recognised in the Eighteenth Dynasty Houses of Tal Al-Amarna. The paranoiac of Neb-Amun House displays a windcatcher with two openings (Almahoozi, 2012; Boloorchi and Eghtesadi. 2014; Roaf, 2005), one for cold air to channeled in, while the other for hot air to get out (El-Shorbagy, 2010). Windcatcher is an architectural feature/spatial devices constructed on the roof to extract fresh air into the rooms and the interior corridors in building (Aljofi, 2016), and providing passive cooling and natural ventilation to the building (Almahoozi, 2012). Tall towers windcatcher rooftops vents catch the wind for cooling the interior spaces (Ghadiri et al., 2013). Windcatcher called Bating in Syria, Malkaf or Malqaf in Egyptian architecture (Saadatian et al., 2012), and Badger or Baud-Geer in Iran (Hughes et al., 2011), Iraq, and Pakistan (Almahoozi, 2012), while it known in Imarets as "Barjeel", Bahrain as "Casteel", and in Qatar as "badkeer" (Aljofi E K. 2016), see Figures 1 and 2.

Figure 1: Different windcatcher forms in the Middle East (Al-Shaali, 2002).

Figure 2: An example of vernacular windcatcher (Saadatian et al., 2012)

Inspired by the vernacular architecture of the Middle East, contemporary architects and engineers have innovated modern windcatchers, to take benefits of traditional windcatcher and eliminate their limits to adopt them with improved building types and technologies (Jomehzadeha 2017). Within this trend, many modern and commercial windcatchers were invented. For example, the University of Qatar in Doha, Qatar, was built between 1985-1991, integrated with a new type of simple windcatcher with several openings on each side (Saadatian et al.,2012; Almahoozi, 2012). Another distinguish example is the French school, named Lycee Charles de Gaulle in Damascus, Syria, with a design to revive the use of local materials and a combination of passive design strategies for natural ventilation. These techniques included installing wind towers, shading classroom roofs, the use of building thermal mass, and small courtyards with landscaping. (Elgendy, 2010). Al Jawadiin (2011) modeled a modern windcatcher installed on a two-floor house with a courtyard in the hot dry climate of Baghdad city. The house also applied other vernacular treatments and proved to reach the house to thermal comfort (Al Jawadi, 2011). The concept of windcatcher has been commercially utilized in the UK for the past 30 years (Jones and Kirby, 2009), with more than 7000 windcatchers installations in the public buildings during the last 15 years (Nejat et al. 2018; Jomehzadeha et al., 2017). Additionally, the windcatcher has been installed in more than 1100 UK schools, achieving thermal comfort and cooling in the summer season (Jones, 2010; Ford et al. , 2010). A windcatcher installed at Stanford Ecology Centre, California, USA, provides passive cooling of the building main lobby without the use of air conditioning (Malin, 2007).

Suzan T. Ismail, Fenk D. Miran

3.3 WINDCATCHER FUNCTION

With two main windcatcher functions, the first function is to catch the prevailing wind and direct it down to the interior spaces of the buildings (Khan et al., 2008; Hamzanlui et al., 2011), the second function extract the stale and polluted air out, thus supplying clean ventilation instead of it (Moghaddam et al., 2011). The natural ventilation provided by the windcatcher has two major goals, the first one is the gain of effective indoor air quality (IAQ) without any electricity consumption and the second the enhancement of thermal comfort by ventilating the occupants. (Chenari et al., 2016; Al-Hemiddi and Megren, 2001; Schulze and Eicker, 2013; Reyes et al., 2013). The operation of a windcatcher natural ventilation system depends on two principals: wind-driven ventilation and stack (buoyancy) effect (Coles and Jackson, 2007; Hejazi and Saradj, 2014; Khan et al., 2008). Extensive researches using computational fluid dynamics (CFD) in addition to full-scale experimental tests have been carried out on different types of windcatchers to conclude the driving forces behind its operation, and it was affirmed that there are two driving forces, the first force is due to the temperature difference and it is called buoyancy effect, while the second force is external wind (Saadatian et al., 2012), see Figures 3 and 4.

Figure 3: Building section showing windcatcher function according to temperature difference.

Figure 4: traction and suction (after Hamzanlui M E., et al., 2011).

Concerning the cooling techniques, the windcatcher cools the air depending on two techniques, the sensible method, and the evaporative cooling. The first is based on decreasing temperature when air passed through space but with no changes in the humidity level, while the evaporative cooling uses a different technique to reduce air temperature by increasing water vapor rate as dry air passes on the water body (Aljofik, 2016). Thus, this technique used successfully in hot arid climates like Jordan, Egypt, Iraq, and Iran (Bouchahm et al., 2008). In spite of the advantage, studies indicate that this method is not efficient for a very humid climate without using modifications, which consume more energy (Chan et al., 2010; Florides et al., 2002). The use of this system is continuous in modern architecture, as water spry and new material to retain wet surface, are some types of this technique (Saadatian, et al., 2012).

3.4 WINDCATCHER TYPES

Generally, windcatchers classified into two groups based on their openings: unidirectional and multi-directional or bidirectional (Erell et al., 2008). Unidirectional windcatcher, which consists of a shaft constructed on the roof a building, is open from one side only facing the prevailing wind. This type of windcatcher attracts the wind and channel it down into the inner spaces then the air is let to exit from another part of the building (Saadatian, et al., 2012). Unidirectional needs to be very high to catch greater wind velocity, especially in crowded areas. The limitation of this type is the location of

*Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

opening as it can catch wind from one direction only and cannot attract it from other directions (Hughes et al., 2012). The multi-directional or bidirectional takes the wind from the top, circulates it across the building and then turns it out again through the lee side of windcatcher (Saadatian O. et al., 2012). It catches the wind from any direction and directs it into the interior spaces of the building (Keshtkaran P., 2011). The bidirectional windcatchers generally divided into their vertical axis. They can be obtained in diverse cross-sectionals with diverse efficiency (Almahoozi S., 2012). The traditional windcatchers were typically divided into four quadrants which made the windcatcher more adaptive to periodic wind changes (Ghaemmaghami and Mahmoudi, 2005).

3.5 WINDCATCHER PROPERTIES

Many researchers have investigated the factors affecting the efficiency of windcatchers. Hughes et al. indicated the design factor that influences the Windcatcher performance; these are; height, number of openings, a cross-section of the air channel, size, and positioning of the openings, construction materials, and form (Hughes et al., 2012). Montazeri and Azizian (2008) identified that cross-section, numbers of opening, the position of windcatchers and the height, represent the main factors that contribute to windcatcher efficiency. Saadatian et al. (2012) showed the effective design factors of windcatcher are; cross-section, height, and the number of openings. On the other hand, Liu et al. (2011) concluded that windcatchers influenced by heights, a number of openings, cross-section, locations in a building, and internal configuration of the windcatcher. 3.5.1 SHAPE (CROSS-SECTION) Maleki (2011) illustrated four types of traditional windcatchers based on cross-sectional plan; rectangular, square, hexagon and octagon windcatchers, see Figure 5.

Figure 5: Cross-sectional plan for diverse vernacular windcatcher shapes (Dehnavi et al., 2012). Elmualim (2002) investigated the efficiency of windcatcher to its cross-section. The findings of the experiment and CFD simulations proved that the performance of the square plan form is much better than the circular cross-sectional due to the sharp edges of the square cross-section windcatcher. Liu and Mak (2007) used CFD simulation to evaluate the efficiency of a 500 mm square plan windcatcher, confirmed the findings of Elmualim. Instead, Gage & Graham (2000) indicated the outperform of rectangular cross-section over those of further geometries, like circular and hexagonal.

Suzan T. Ismail, Fenk D. Miran

These results agree with Montazeri (2010) that a one-sided windcatcher for a zero angle wind direction channels airs into the interior spaces nearly four times more than the two-sided circular windcatcher. The study also determined that a rectangular one and two-sided windcatcher catch a higher induced airflow(Montazeri, 2010). Similarly, Jawadiand and Darwish (2016) find that a windcatcher with rectangular shape is the most effective form plan to be used in the hot arid climate. 3.5.2 OPENINGS The openings number on the windcatcher sides allows it to catch air from various directions. Accordingly, there are classifications for windcatchers based on the number of openings. As for Montazeri et al. (2010) categorized into one-sided opening wind-catcher (unidirectional), two-sided, three-sided, and four-sided wind-catcher. Ghaemmaghami and Mahmoudi (2005) have identified four types of windcatchers based on the number of openings which are; one-directional, two-directional, four directional and eight directional wind catchers. Montazeri examined the performance of windcatchers with a different number of openings. Thus, five models: two, three, four, six and twelve-sided windcatcher experimented. The findings of the study showed that as the number of opening increased, the windcatcher efficiency decreased. The study also indicated that increasing openings number makes the windcatcher less sensitive for different inclination angel (Montazeri, 2010). As a result, in areas with no prevailing wind, the best option is the multi-opening windcatchers (Saadatian et al., 2012). These experimental results go with studies about the ancient windcatchers, as concerning the direction of the openings. The traditional windcatchers positioned in areas where there is a strong prevailing wind directional, the openings aimed in the same direction, contrary to regions, where there is no prevailing wind direction windcatchers with multi openings were used (Lechner, 2014). According to the directional windcatchers are the most popular as they have four main vertical shafts divided by partitions (Roaf, 1982). More than half of wind towers were the four-sided types used in hot dry climates and almost all wind towers in Hot humid climate (Mahmoudi and Shemirani, 2009). This renders the windcatcher as being operational whichever way the wind is blowing. 3.5.3 HEIGHT The height of the windcatcher is an essential aspect that influences its performance. Mainly traditional wind-catcher in the middle east constructed with heights 1.5-32m from the ground level (Montazeri and Azizian, 2008), Gage and Graham (2000) indicated the heights 5-33m. Importantly, the height of traditional windcatcher in hot dry climate areas is different from those in hot humid regions, as the windcatcher in hot dry climate regions has more height compared with hot humid regions. For greater heights in hot dry areas, the air temperature is less while the wind velocity is high (Ghaemmaghami and Mahmoudi, 2005). On the other hand, the height of windcatchers may vary between two regions with the same environmental conditions as hot dry climates. A study conducted by making a comparison between Iranian (Yazd's) windcatchers with those of Egypt. The results showed that Iranian windcatchers have a column with height reaches 3-5 meters from ground level because there is a favourable high-speed wind and windcatcher height has to enlarged via a column. On the contrary, Egyptian windcatchers are one story higher than the roof with no columns, due to the low-altitude favorable wind in Egypt (Boloorchi, and Eghtesadi, 2014). It *Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

concluded that there is a direct connection between height, air temperature, and wind speed. By expanding the structure’s height, wind speeds increase. In addition, air temperature decreases in higher areas. Badran (2003) proved that there is a direct effect between the windcatcher’s height and its performances. Similarly, Hughes et al. ( 2012) demonstrated that the positive pressure on the vertical side of the windcatcher raised due to the increase in height. 3.5.4 MATERIALS Traditional windcatchers in hot dry climates were built either of mud brick or more frequently of baked brick covered with mud plaster (Ghaemmaghami and Mahmoudi, 2005; Maleki, 2011). These mentioned materials act as thermal insulators, for instance, mud can delay the heat transferal from outside to inside areas for approximately eight hours; thus, they are very efficient and applicable (Keshtkaran, 2011). In modern windcatchers, insulation materials are used as well to improve the performance and the efficiency of these windcatchers. Al Jawadiand and Darwish (2016) conducted a full-scale experimental study by building a windcatcher lined with a brick burned at a temperature varying at 750-1150°C. The model proved to be efficient in the hot arid climate. Vali (2009) used computation modelling program and experimental test, demonstrating that when the walls of the windcatcher were insulated, the windcatcher performance became more efficient.

3.6 WINDCATCHER AND ARCHITECTURE IDENTITY

From the very beginning, vernacular architecture has been trying to achieve harmony between nature and buildings as its architectural elements consist of a rhythm between environment, materials, use of space and the needs of living (Kirbas and Hizli, 2016). The architectural heritage stands for as evidence of people’s history. Thus, nations attempt to maintain, explore and evolve the principle of its architectural vocabularies to conserve their values (Aljofi, 2016). Many countries are well known for their architectural features that developed from their geographic, topographical, and climatic conditions. An example can be found in the cities of the middle east as they are rich with architectural elements that been emerged as a result of climatic solutions (Aljofi, 2016). The purpose of these elements was to decrease the severe high temperature along the summer months, enabling people to endure the climatic problems (Almahoozi, 2012). The windcatchers represent one of these architectural devices, which were used to obtain thermal comfort in the interior spaces. (Boloorchi and Eghtesadi, 2014), thus it’s a sign of the design in agreement with the climate (A’zami, 2005). The nowadays buildings ignore the traditional architectural devices of the past, passive systems were replaced by the active methods, which led to more energy consumption for ventilation and cooling. As a result, the cities are about to lose their identity when the new buildings do not retain ecological solutions (Kirbas and Hizli, 2016). Contrary, if contemporary architecture applies traditional elements, it could assist in achieving cultural continuity. Also, it can be directed to reach climate-adaptation and sustainable architecture (Spentzou et al., 2017). Thus, climate consideration is a crucial factor in architectural design with the increase of environmental awareness all around the world. Its goal is to restore identity and harmony with the surrounding environment by using traditional values in a modern way. Climate has a vital effect on identity formation as it is an essential aspect in shaping architectural identity (Al-Shwani and Baper, 2011). Eventually, the use of traditional devices as a windcatcher will aid

Suzan T. Ismail, Fenk D. Miran

the restoration of architectural identity.

4 METHODOLOGY For Semi Hot dry climate zone, the amount of solar heat absorbed by a building is high and causes an increase in the air temperature of the classrooms. Thus, will lead to poor indoor environmental quality and affects the student discomfort thermally and physically (Wargocki et al., 2005). The most defects in schools include insufficient outside air supplied to occupied spaces; inadequate exhaust airflows, poor air distribution or balance; and poor maintenance of heating, ventilation and air-conditioning (HVAC) systems (Angell. and Daisey, 1997; Wargocki. et al., 2002). To provide thermal comfort to the students, windcatcher applied in this project The natural ventilation strategy combined with a four-sided rectangular windcatcher installed in an existing school and the measured results for the hot period from (1/April to 30/Sept) is described. In summer and intermediate seasons outside air is introduced into the building of three stories with a total height of 9 m2. Four of this study four-directional windcatchers integrated into the classes. The tower divided into four shafts by a vertical brick partition, which brings cool air for the internal space of the classes. The purpose of selecting windcatchers with four directional openings is to serve four different orientations (South, North, west, east).

4.1 MODEL AND THE OPERATIONAL PROFILE

In this work, an IES VE sustainable tool is used to examine the efficiency of the passive system on three -floor classroom in a hot arid climate (Erbil city). Figure 6 presents the physical attributes of the Base Case model (the prototype of schools in Erbil city). The windows extend from 1m above floor level to the ceiling, providing a glazed area of 1.8 x 205m. Glazing is assumed to be clear and single glazing and covers a 14% WWR (Window to wall ratio). The constructions of the walls constructed of a single un-insulated leaf wall with a concrete block wall. Classes dimension is 8m x 5m x 4m. The average school classroom occupancy density is 0.65-0.80 persons/m2. An opening set point of 19°C in the winter and 16°C in the summer for both windcatchers and windows. The input parameter is shown in Table 1. Table 1: Base case parameters used in this study. Construction External Wall

Internal ceiling /floor

Roof concrete Glazing partitions

NO. 1 2 3 4 1 2 3 4 1 2 3 4 5 1 2 3

Material (Construction layers from (outside to inside) Limestone hard Cement plaster - sand aggregate (ashrae) Hw concrete block Gypsum plastering Clay tile Fine sand Reinforced concrete Gypsum/ plaster board Roof insulation (ashrae) Felt/bitumen layers Reinforced concrete Cavity Ceiling tiles Clear float 4mm Plaster (lightweight) Hw concrete undried aggregate - hf-c12 Plaster (lightweight)

No.of Layers 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Thickness (mm) 100 20 200 20 10 50 150 10 5 5 150 10 10 4 13 100 13

Total U value W/m2*K 2.15

2.07

1.58 5.7 2

(a) The plan of the base case

(b) The physical appearances of the base case

Figure 6: Classroom building located in Erbil city, Iraq.

4.2 GEOMETRICAL MODEL

A 3D rectangular wind catcher model of dimension 1.5 m x 2.5 m with same plan geometry of the plus blade and three different height of 3.0 m, 6.0 m and 9 m connected to a room with a length of 8 m and width of 5 m, Figure 7. The position of the wind tower was chosen based on the location of the classrooms. The geometry of these models were generated and simulated by IES VE 2018 software and using the integrated Microflo to simulate the CFD. For the run of CFD simulation, the wind speed was set at 12 mph with an angle of 0 degrees, and outdoor temperature was 97F degree which is the average temperature of Erbil city on hot days in summer.

Model #1 (H. 3 m ) Model #2 (H. 6 m ) Model #3 (H. 9 m ) Figure 7: proposed windcatcher dimension (all dimensions are in meters).

4.3 SIMULATION PROCESS

IES adopted for this research to assess the effect of windcatcher performance on the occupants' thermal comfort conditions of a school building in Erbil. The first step includes evaluating the impact of each height on the thermal comfort of the classrooms and the attendance. Due to the unpredictability of weather and continually varying wind speed and direction, three main parameters were selected (mean radiant temperature of the class, Relative humidity, and CO2 concentration). Furthermore, the cooling load was studied to see the amount of energy use after the collaboration of windcatcher. Through each case of wind catcherâ€™s interventions, IES apache simulation been used in this research to examine the thermal comfort of the classroom and the energy performance of wind-catchers. Apache is a dynamic tool used for thermal calculation and analysis based on the heat transfer process and it is driven by real weather data (ASC, 2015). Figure 8 shows the alternatives of windcatcher models in IES.

Suzan T. Ismail, Fenk D. Miran

Figure 8: IES VE model of the three alternatives (Author) With the analysis of the base case completed and results obtained similar to published literature, detailed analysis into CFD run for best height performances conducted. Based on the literature, the CFD method was found to be a more attractive approach as it gives reliable results in predicting ventilation parameters and the advancement in digital computing(Chen, 2009; Liu, et al., 2009). CFD modeling has been used as analytical modeling and for all types of the experimental approach, thus it can analyze and optimize complex 3d designs with high accuracy of temperature, velocity and airflow pattern around or inside the three-dimensional model (Jahar and Soumen, 2009) see Figure 9.

Figure 9: CFD analysis model for windcatchers (created by Authors).

5 RESULTS AND DISCUSSION 5.1 BASE CASE SIMULATION RESULTS The primary results obtained from the analysis of the base case classroom show that the indoor temperature is exceeding 32◦C in almost 90% of hours during the day time, and only 8% is within comfort temperature (22-28◦C). Figure 10 shows Indoor mean radiant temperature in August in the afternoon 1:00 PM is over 40◦C which indicates the need for mechanical ventilation.

Figure 10: Mean radiant temperature for the Base case classroom Another result to indicate the poor indoor quality is the measuring of the CO2 concentration in class, Figure 11. The average accepted standard for CO2 level in a classroom is 1000 (ASHRAE, 2007)., however, the results show that CO2 concentration exceeds 2000 ppm for more than 75% of the total hours that student spends in class, which is more than twice the recommended level. Also, the rate can reach more than 6000ppm when space is fully occupied. This high range may lead to many problems for the occupants and lead to people dissatisfaction.

Figure 11: Room CO2 concentration for Base Case classroom.

Figure 12: Average relative humidity in Base Case classroom.

The acceptable level of Relative humidity (RH) should be between( 30-70% ) (CEC., 1992). The Figure 12 shows that only 40% of the total time in hot period RH is within an acceptable range, while over 30% of the time RH is more than 70% which adds extra heat (latent heat ) into space. Besides, 25% of the total hours the RH is <30 %. These results demonstrate that the classrooms insufficient thermal comfort for the occupants because the rate of human transpiration reduced by high RH and so leads to discomfort, while it increased by a low RH that leads to dehydration (Ibid). The total cooling load of the room was approximately 20 Mwh for the whole year.

Suzan T. Ismail, Fenk D. Miran

5.2 INTEGRATING WINDCATCHER TO THE CLASSROOM AS A MEAN FOR PASSIVE COOLING, THE RESULTS ARE AS FOLLOWING:5.2.1 MEAN RADIANT TEMPERATURE When the outdoor temperature is maximised to 31.5ºC at 1:30 pm, the windcatcher room temperature is 27.5ºC in Model #1, 28 ºC in Model #2 and 28.5 ºC in Model #3. Hence these kinds of wind catchers can decrease the temperature between 3-5ºC while the outdoor temperature is at the highest level. Outdoor temperature decreases gradually in the afternoon while indoor air temperature decline 3-5ºC up to 4 pm Figure 13. As we can see through the chart, indoor air temperature in the windcatcher room with plus form blade windcatcher is than other samples. As 29 ºC is not an ideal comfort temperature, ancient architects used water pond under the windcatcher for evaporative cooling to decrease the indoor air temperature.

Figure 13: Mean radiant temperature comparison between the Base case and other three alternatives, Produced by IES VE by the author. Figure 14 indicates the best performance attained by Model #2 while Model #3 has the least active. The best performance accomplished by Model #2 as the number of hours that the mean radiant temperature is within the comfort zone is nearly 65% in comparison with 60% and 50% for Models #1 and #2 respectively. This result shows an increase of more than four times the base case results during the hot period. These results come in agreement with outcomes found by the study (Malcolm and Agnieszka-Cwiek, 2012) that indicates the air temperature distributions through the natural ventilation system during a hot summer week (31 May to 6 June) for a typical classroom and caused reduction of classroom temperature with 8◦C when the outside air temperature hits its peak at 34.5. Also, it can see that Model #2 has the least number of hours in which temperature exceeded 28◦C with slightly 20% in comparison with more than 85% of total hours that exceeded 28◦C in the base case. Similarly, Model #1 reduced the number of hours that exceeded 28°C into less than 25%. Model #3 also decreased the number of hours exceeding 28°C by 35% and increased number of hours’ that is less than 22◦C by less than 15% similarly with Model #2 15% and 16% for wind towers with 9m height.

Figure 14: The percentage of mean radiant temperatures in hours of the classroom after introducing windcatchers. 5.2.2 CARBON DIOXIDE CONCENTRATION ANALYSIS Figure 14 shows the effect of windcatcher on the CO2 concentration of an occupied classroom with 30-35 students and its influence on the thermal properties. The general trends indicate that there is a tremendous enhancement in the level of the CO2 in comparison with the Base case. Model #3 has the best performance in reducing the level of the CO2 to less than 1000ppm (an average 550ppm) for nearly 90% of the whole time from 8.00 am to 3:00 pm. Models #1 and #2 have similar performance with slightly more than 1000ppm. This result agrees with Mahyuddin et al. (2014) that shows with the operation of the windcatcher, CO2 concentration was not so high regardless of the number of occupants 30-35 students per class. Figure 15, CO2 level starts with a low level in the early morning form 8-9 am with less than 800 ppm due to the less number of occupants. After that, it starts to rise till it reaches to its peak with 1300pmm in the afternoon, which is within the comfort range and remains steady until the end of the classes. Gaining this level of comfortable internal conditions in the classroom are a requirement for studentâ€™s health, wellbeing and productivity.

Figure 15: Spatial distribution of CO2 concentrations with the intervention of three windcatcher models. The results established that according to the adaptive comfort standard and ASHRAE standard, CO2 concentration should not exceed 1000 ppm. A difference was obtained in CO2 concentration

Suzan T. Ismail, Fenk D. Miran

before and after the parametric studies for the hot period (April -30 June) as in Figure 16. The results indicate that there is a considerable enhancement in the total level of CO2 after introducing passive cooling into the classroom. Firstly Model 2 has achieved best result with more than 75% of the total time the space is less than 800ppm and nearly 25% of total hours within comfort range . while Model 1 with height of 3 m has lowest results with only 57% of overall hours the CO2 concentration is less than 2000ppm including more than 37% less than 800ppm. However, more than 40% of the total hours the CO2 is over 2000ppm, which is similar to the base case results. These results may be due to the less amount of the ventilation rate of the space when using a height of 3m. This result agrees with the study by Mahyuddin et al. (2014) as it indicates that with the operation of the windcatcher, CO2 concentration was not so high regardless of the number of occupants 30-35 students per class as the CO2 concentration was below the acceptable value (<1500 ppm) during the morning.

Figure 16: CO2 concentration of the three windcatcher models compared with the base case. Furthermore, mean CO2 values also meet the requirements for Models #2 and #3 of the European Standards 15251 (BSI, 2007) and 13779 (BSI, 2004) and so may be considered to have high indoor air quality and also within thermal comfort Figure 17 which is for the most of the time in summer period the level of CO2 is less than 1500pp. The maximum and mean values for the current study in the summer are: maximum values 3430 ppm, 1268ppm and 1255ppm and mean values are: 1220ppm, 1062ppm, 584 ppm for Models #1, #2, #3 respectively. These results are equivalent to data measured by Jones (2002) who reported maximum and mean CO2 levels of 3383 ppm and 682 ppm, and 227 ppm, respectively when averaged over all of their measured classrooms. His strategy relies on fully open windcatchers over 70% of the time and never fully closed during the summer. Hence, improvement in ventilation rate appears when using a windcatcher with an opening window. This current study indicates that the higher the windcatcher, the more ventilation rate in the space as the maximum CO2 concentration reduced with increasing the height.

Figure 17: Measured CO2 for occupied hours in summer. 5.2.3 RELATIVE HUMIDITY Form literature, CO2, and RH levels are constantly monitored over some time to determine their effect on occupants, such as its influence on the learning performance of children in schools (Bako-Biro et al., 2004). Relative humidity levels in the summer and winter season presented in Figures 18,19, and 20 which show that the mean levels are below 70% for both Models #2 and #3 for the full summer semester while nearly 30% of the total time RH is over 70% for Model #1. Thus, it demonstrates compliance within 30-70% and comes corresponding to building regulations (ODPM, 2006) and the guidelines by the Commission of European Communities (CEC, 1992), which indicates that windcatcher has no much influence on the RH of the classroom. This result is equivalent to Ahmadikia et al. (2012) deduced that using a type of wind-catcher with water spry in hot and arid regions leads to a decreased air temperature and increased relative humidity. Therefore, more pleasant thermal comfort conditions are provided for the spaces in hot and dry days in Hot arid climates. During the winter semester, RH is mostly within comfort range under 70 % for more than 70 %, 80%, and 90% of the total time for all the model cases, respectively. To conclude, RH does not appear to be influenced by the height of the windcatcher.

Figure 18: Spatial distribution of RH % for the Base case and the alternatives.

Suzan T. Ismail, Fenk D. Miran

Figure 19: Measured relative humidity for occupied hours in winter

Figure 20: Measured relative humidity for occupied hours in summer

5.2.4 COOLING ENERGY CONSUMPTION The total cooling load for the base case room was approximately 20 MWh for the whole year. Figure 21 shows the effect of the intervention of three different heights of windcatcher on the total demand for energy by cooling sensible load. The results reveal that windcatcher Model #1 has the potential to reduce energy demand for cooling by nearly 4 kW, which is a reduction of more than 50% in comparison with a base case in one of peak hot days (20th of May). On the other hand, both Models #2 and #3 achieved similar results with a reduction of 4.8 and 5 kW respectively, for the same date.

Figure 21: Cooling load for the base case and each model 5.2.5 ENERGY CONSUMPTION ANALYSIS This study deals with Windcatcher as an architectural element used as a passive cooling design to improve indoor thermal comfort with reducing energy consumption during the hot season. The performance and energy-saving potential of using three different windcatcher systems in Erbil city evaluated through VistaPro simulation in IES of a typical school building installed with commercial *Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

windcatchers. Figure 16 shows the results of all the cases demand cooling load in comparison with the base case energy consumption during the summer semester. Figure 22 illustrates a general trend towards reducing the demand for energy during the hottest period. The use of windcatchers is helpful to lower cooling-related energy consumption due to the temperature reduction caused by natural ventilation. According to the design standard of a public building for energy efficiency building (B 50189-2005) reducing the design temperature of 1Â°C, electricity consumption in air conditioning is reduced 5% of the total energy use. The simulation process indicates that the building will be cooled by an air-conditioning system if the indoor temperature cannot be maintained below 28Â°C by natural ventilation. Model #3 achieved a 43% reduction in the total amount of energy from the period (1/Mar.)to (30/Sep.) and also has the least amount of energy use during each month in comparison with Models #2 and #1, and this due to the high percentage of temperature reduce during the period. While Model #2 achieved a nearly 46% reduction in the total cooling load. It was found that the total cooling load can be reduced from 8.65MWh to 3.95Mwh after using windcatchers Model #1. Thus, a 58% cooling load saved when using windcatchers, and this effect is approximately doubled by also using top-hung windows at night. Consequently, the thermal mass of the building fabrics is cooled using cooler outdoor air. The next morning, the building fabric can absorb more heat gains and consequently contribute to reducing indoor temperature and cooling load as well.

Cooling plant sensible load (MWh)

7 6 5 4

class bascae.aps

windcatcher 3m.aps windcatcher 6m.aps

windcatcher 9 M .aps

1 0 -1

Mar 01- Apr 01- May 01- Jun 01-30 Jul 01-31 Aug 01- Sep 0131 30 31 31 30 Date

Figure 22: Cooling load distribution for the climate condition in Erbil city. 5.2.6 CFD ANALYSIS FOR WINDCATCHER MODEL According to the CFD results, Model #2, which was the windcatcher with 6m, provides higher efficiency in ventilating the indoor air. Figure 23 shows the CFD simulation for the windcatcher Model #2 with a height of 6m, and it describes the distribution of the wind and wind velocity for the windcatcher. The results indicate that when the wind contact with the tower, the air velocity is increased in leeward while it decreased in windward. Wind speed reaches its highest velocity of 1m/s at the top of the windcatcher when the wind enters the top of the windcatcher, which leads to an increase in the volumetric rate of the air a causes fresh air to enter the room via the window on the top of the wall.

Suzan T. Ismail, Fenk D. Miran

Figure 23: Wind velocity on the openings of windcatcher and 2nd floor CFD analysis (Author )

Figure 24: Section on Z-axis wind velocity and airflow movement. Figure 24 indicates the air velocity distribution with axis z, the results show that airflows inside the windcatcher and the space were best driven and turbulent, and excessive velocity airflow mainly appeared in the centre of the room and at the opening of the windcatcher tunnel, which was in favour of removing indoor heat gain especially after opening the side window. CFD was found to give higher volumetric airflow by almost 100%.

6 CONCLUSION Windcatcher is a traditional element that been employed for the buildings of the middle east in general and Iraq, in particular, to act as a passive technique via an evaporating cooling system for achieving thermal comfort in a hot dry region. Adopting traditional windcatcher in modern buildings can add aesthetical value, historical and traditional intervention, and a feasible architecture feature. The main benefit of the windcatchers is that they are passive systems needing no energy for their operation. Wind catcher’s performance can be affected by its height after optimising other morphological parameters such as width, length, and openings as demonstrated in this study. Three prediction models were used to assess the performance of a windcatcher for natural ventilation purposes in classrooms to enhance thermal comfort of students; the main results concluded as follows Windcatcher is more effective during the early mooring than a late afternoon with 3◦C difference in temperature between these two periods. •

Increasing the height leads to enhance windcatchers performance in term of reducing the mean radiant temperature and expanding the number of hours that is within the thermal comfort range. The 6 m height achieved the best results, as it raised the percentage of hours within comfort to more than75% of total hours.

•

Integrating passive cooling via windcatcher has a major influence on decreasing the amount of CO2; with increasing the height, there is a potential to drop the amount of CO2 in the classroom. Due to the rise of the wind pressure on the wind-tower that leads to the expansion of the current wind inside the room as indicated by CFD analysis.

•

Changing the height of the windcatcher does not influence Relative humidity as all the models kept the RH within the thermal comfort range during the summer period when the class fully occupied.

•

Windcatcher has an impact on bringing low energy demand for the cooling system. Rising the height of the windcatcher will lead to a higher reduction of the total amount of energy required for cooling during the hot period.

•

Although the results-driven from height 9m achieved the best outcomes in terms of energy-saving and reduction of the indoor air temperature besides to the dropping of CO2 level, the height 6m which indicates second-best results can be chosen as an optimum parameter as it costs less and has more visually appealing than the higher one. Therefore, the height of 6m is more preferable due to economic and aesthetic reasons.

From the points above, it can be concluded that height has a direct influence on windcatcher performance. Hence, height affects the wind speed and wind temperature which is taken into the building by the windcatcher’s vents. Moreover, in higher areas, the wind-catcher can benefit from the less polluted air. The classification and performance study of wind-catchers, as undertaken in this study, are the initial steps towards providing a more comprehensive guide of wind tower designs for passive cooling.

7 DATA AND MATERIAL AVAILABILITY Information regarding this study is available by contacting the corresponding author.

Suzan T. Ismail, Fenk D. Miran

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Suzan T. Ismail, Fenk D. Miran

Keshtkaran, P. "Harmonization between climate and architecture in vernacular heritage: a case study in Yazd, Iran." Procedia Engineering 21 (2011): 428 - 438. Khan N, Su Y, Riffat SB. "A review on wind driven ventilation techniques." Energy and Buildings 40 (2008): 1586–1604. Kilpatrick, K. Sick Classrooms Caused by Rising CO2 Levels. 1 13, 2017. https://energyalliancegroup.org/sick-classrooms-require-energy-efficient-solutions-2/ (accessed 2019). IEA, Cool Appliances. International Energy Agency. 2003. Kirbas B., Hizli N. "Learning from Vernacular Architecture: Ecological Solutions in Traditional Erzurum Houses." Procedia - Social and Behavioral Sciences 216 (2016 ): 788 – 799. Lechner, N. Heating, cooling, lighting: sustainable design methods for architects. Fourth Edition.2014. Li L, Mak CM. "The assessment of the performance of a windcatcher system using computational fluid dynamics." Building and Environment 42 (2007): 1135–1141. Liu, Jiying & Zhu, & Kim, Moon Keun & Srebric, Jelena. " A Review of CFD Analysis Methods for Personalized Ventilation (PV) in Indoor Built Environments." (Sustainability. ) 11 (2009). Liu, S.C., Mak, C.M. and Niu, J.L. "Numerical evaluation of louver configuration and ventilation strategies for the windcatcher system." Building and Environment 46, (2011): 1600-1616. Mahmoudi, M. and Shemirani, S. Mofidi. “Analyze on typology and architecture of wind catcher and find the best type". Journal of Honar-haye-ziba, 36 (2009). Mahyuddin, N.. Awbi, H. B and Alshitawi, M. "The spatial distribution of carbon dioxide in rooms with particular application to the classrooms." (Indoor and Built Environment) 23(3), (2014). Maleki, B. "Wind Catcher: Passive and Low Energy Cooling System in Iranian Vernacular Architecture." International Journal on “Technical and Physical Problems of Engineering (IJTPE) 3(8) (2011): 130-137. Jones, M., B. Quantifying The Performance Of natural Ventilation Windcatchers, A thesis submitted for the degree of Doctor of Environmental Technology. School of Engineering and Design , Brunel University, 2010. Kamoona, M., G. "Passive Design Strategies to Enhance Natural Ventilation in Buildings" Election of Passive Design Strategies to Achieve Natural Ventilation in Iraqi Urban Environment with Hot Arid Climate"." Journal of Engineering. 22(6), (2016): 16-38. Malin, N. Global Ecology Center. Green Source Magazine, 2007. Masoso, O.T., Grobler, L.J. "The dark side of occupants’ behavior on building energy use." Energy and Buildings 14 (2010): 781–9. McQuiston F C, Parke J D. r, Spitler J D. Heating, Ventilating and Air Conditioning: analysis and design. Hoboken, NJ: JohnWiley and Sons, 6th Ed., 2005. Mendell, MJ, & Heath, GA. "Do Indoor Pollutants and Thermal Conditions in Schools Influence student performance? A Critical Review of the Literature." (indoor air ) 15, no. 1 (2005). Moghaddam, E.H., Amindeldar, S. and Besharatizadeh, A. "New approach to natural ventilation in public buildings inspired by Iranian's traditional windcatcher." International Conference on Green Buildings and Sustainable Cities. 2011. Montazeri H, Azizian R. "Experimental study on natural ventilation performance of one-sided *Corresponding author (S.Ismail). Tel:+96-47504539436 E-mail: suzan.ismail@su.edu.krd ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05Q http://TUENGR.COM/V11/11A05Q.pdf DOI: 10.14456/ITJEMAST.2020.97

windcatcher." Building and Environment 43 ( 2008): 2193–202. Montazeri, H. "Experimental and numerical study on natural ventilation performance of various multi-opening wind catchers." Building and Environment 46 (2010): 370–8. Montazeri, H., Montazeri, F., Azizian, R. and Mostafavi, S. "Two-sided wind catcher performance evaluation using experimental, numerical and analytical modeling." Renewable Energy 35, (2010): 1424-1435. Nejat P., Jomehzadeh F, Hussen H M., Calautit J K and Abd Majid M Z. "Application of Wind as a Renewable Energy Source for Passive Cooling through Windcatchers Integrated with Wing Walls,." Energies 11, 2536, no. 10 (2018). Oakley, G., A combined day lighting, passive stack ventilation & solar heating system. Nottingham: Ph.D. Thesis, University of Nottingham, 2002. Olsen E., Chen Q. "Energy consumption and comfort analysis for different low energy cooling systems in a mild climate." Energy & Buildings 35 (2003): 561–571. Raof, Y., B. "Developing Vernacular Passive Cooling Strategies in (Kurdistan-Iraq)." International Journal Of Scientific & Technology Research 7, no. 3 (March 2018). Reyes VA, Moya SL, Morales JM, Sierra-Espinosa FZ. "A study of air flow and heat transfer in building wind tower passive cooling systems applied to arid and semi-arid regions of Mexico." Energy and Buildings 66 (2013): 211–21. Roaf S. "Air-conditioning avoidance: lessons from the windcatchers of Iran." International Conference “Passive and Low Energy Cooling for the Built Environment". Santorini, Greece, May 2005. Roaf, S. "Wind Catchers, Living With the Desert ." (E. Beazley, Ed : Air&Philips) 1982. Ruan F, Li N, Long J. "Calculation and Assessing Natural Ventilation in a Single Opening Office Room With Different Windows in the Regime of Hot Summer and Cold Winter." 2012. Saadatian, O., Haw, L., Sopian, K., Sulaiman, M. " Review of windcatcher technologies ." Renewable and Sustainable Energy Reviews 16 (2012): 1477–1495. Saadatian O, Sopian K, Salleh E, Lim CH, Riffat S, Saadatian E. "A review of energy aspects of green roofs." Renewable and Sustainable Energy Reviews 23 (2013): 155–68. Schulze T, Eicker U. "Controlled natural ventilation for energy efficient buildings." Energy and Buildings 56 (2013): 221–32. Sharples S., and Bensalem R. "Airflow In Courtyard And Atrium Buildings In The Urban environment: A Wind Tunnel Study." Solar Energy 70(3), (2001): 237–244. Soni SK, Pandey M, Bartaria VN. "Hybrid ground coupled heat exchanger systems for space heating/cooling applications: A review." Renewable and Sustainable Energy Reviews 60 (2016): 724–38. Spentzou, E., Cook, M.J.and Emmitt, S. "Natural ventilation strategies for indoor thermal comfort in Mediterranean apartments." Building Simulation, 2017. UNEP, United Nations Environment Programme. "Handbook for the international treaties for the protection of the ozone layer." Kenya, 2003. Viktor, D. Ventilation concepts for sustainable buildings. Germany: World Renewable Energy Congress VII, 2002. Wargocki, P., Wyon, DP, Matysiak, B., Irgens. "Effects of Classroom Air Temperature and Outdoor Air Supply Rate on the Performance of School Work by Children." Indoor Air, 2005: 5.

Suzan T. Ismail, Fenk D. Miran

Wheeler, S. and Beatley, T. " The Sustainable Urban Development." New York, 2004. Zarandi, M., "Analysis on Iranian Wind Catcher and Its Effect on Natural Ventilation as a Solution towards Sustainable Architecture(Case Study: Yazd)." International Journal of Humanities and Social Sciences 3(6), (2009). Zhe Ji, Su Y., Khan N. "Performance Evaluation and Energy Saving Potential of Windcatcher Natural Ventilation Systems in China." International Journal of Architecture, Engineering and Construction 1, no. 2 ( June 2012): 84-95. Suzan T. Ismail is a Lecturer at Architecture Department, University of Salahaddin-Erbil, Erbil City, Iraq. She gained her B Sc. in Architecture from University of Baghdad, Iraq and her M.Sc. with specialization in Landscape from the same university. Her research interest is in Sustainability, Sustainable Landscape, Green Transportation, and Environmental Design. L.ASST. Fenk D. Miran is an Assistant Lecturer at the Department of Architecture at University of Salahaddin-Erbil, Erbil City. She obtained her BS in Architecture from Salahaddin University–Erbil. She continued her M.Sc. in Sustainable Building and Environment at Newcastle University -United Kingdom. Her research interests include Sustainable Architecture, Environmental Design in Architecture, Heritage Building and Historical Retrofits, considering Architectural Design within a broad Social, Environmental and Economic Context.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05R

DISAGGREGATED ACCRUALS AND PREDICTION OF FUTURE CASH FLOWS: AN EFFECT OF GLOBAL FINANCIAL CRISIS 2008-09 1,2*

Rai Imtiaz Hussain , Noor Saadah , Faridah Ibrahim , 3 4 Jaspal Singh Joginder , Muhammad Hanzla Department of Business, Infrastructure University Kuala Lumpur, Selangor, MALAYSIA. Department of Management Sciences, University of Okara, PAKISTAN. 3 Department of Accounting, Sunway University Business School, Sunway University, MALAYSIA. 4 School of Economics and Management, Beihang University (BUAA), Beijing, CHINA. 1 2

ARTICLEINFO

A B S T RA C T

assets (NTA).

Disciplinary: Economics and Management Sciences (Finance).

The objective of the study was to find out the relationship among further extended disaggregated accruals and forecast of imminent cash flows in the developing market of Pakistan during the global financial crisis 2008-09 and pre and post-global financial crisis. Panel data of 8154 firms-years observations were analyzed through panel least square. Hausman and redundant fixed effect tests suggested a Keywords: fixed-effects model. The stationarity of variables was tested and World Financial Crisis; correlation and regression analysis were conducted. The association of Imminent Cash Flows; variables during the financial crisis and pre and post-financial crisis was Accrual Components; Pakistan Stock Exchange; controlled through dummy variables. The study finds that disaggregated Disaggregated accruals; accruals as extended components of disaggregated accruals regressed Free cash flow (FCF); the estimate of imminent cash flows significantly except financial Trading assets (TA), assets. Additionally, results were not affected throughout the global Financial asset (FA); financial crisis 2008-09 for emerging markets of Pakistan but the Financial liabilities (FL); prediction of future cash flows was affected pre and post-financial crisis Trading liabilities (TL); 2008-09. Furthermore, the association between the pre-financial crisis Post financial crisis; and forecast of imminent cash flows was negative but found positive in Non-trading liabilities the post-financial crisis. (NTL); Non-trading Article history: Received 22 July 2019 Received in revised form 10 December 2019 Accepted 10 December 2019 Available online 26 December 2019

1. INTRODUCTION

Cash flows prediction plays a vital role in the investment decision. The objective of this research is to see the future cash inflows and outflows in advance to make a better decision for both investment and optimum use of funds (Nallareddy et al., 2018). On the other side, it also minimizes the cost of capital borrowings (Rajendra, 2016) as the business knows the future inflows. Previously financial

Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.05 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05R http://TUENGR.COM/V11/11A05R.pdf DOI: 10.14456/ITJEMAST.2020.98

statements such as income statements or earnings were determined as sole indicators for an investment decision. Nowadays, cash flows are deemed more essential for decision making as earnings are easily manipulated through creative accounting theory (Kim & Yoon, 2016). Cash flows always remained information for investors and the discounted value of future cash flows is an investment. Cash flows provide signals to investors for investment in signaling theory. Prior studies (such as Khansalar & Namazi, 2017; Farshadfar & Monem, 2019; Agana et al., 2015; Khansalar, 2012; Chong, 2012; Ebaid, 2011; Toan, 2020; Chotkunakitti, 2005) had predicted forthcoming cash flows through financial ratios, current cash flows, past earnings, EBIT and accruals. Two approaches are used to record financial information in the books of accounts i.e., accruals-based accounting and cash-based accounting. The results are contradictory and inconsistent in the forecast of future cash flows, whereas, FASB (1978) and IASB (2010) preferred accrual-based accounting over cash-based accounting. Some researchers (Efayena, 2015; Agana et al., 2015; Penham & Yehuda, 2009; Farshadfar et al., 2008; Finger, 1994) found cash-based accounting had better predictive abilities over accruals-based accounting for forecast of future cash flows, whereas, other researchers (Ebaid, 2011; Pae, 2005; Kim & Kross, 2005; Greenberg et al., 1986) found contradicted findings than the later. Aggregated accruals and disaggregated accruals were regressed to estimate imminent cash flows in the previous studies of Farshadfar & Monem, (2019) and Khansalar, (2012). Disaggregated accruals were used in many studies but underlying components of disaggregated accruals were not commonly used in the prior studies. Previous studies were directed in established countries like United States, United Kingdom, Australia but not conducted in developing/emerging countries like Pakistan. This research purviews to analyze the underlying components of disaggregated accruals' role in the forecast of imminent cash flows in firms listed at Pakistan stock exchange in consideration of the effect of the global financial crisis 2008-09. Moreover, the study also analyses the association of underlying components of disaggregated accruals and forecast of imminent cash flows during the financial crisis and Pre and Post-financial crisis.

2. LITERATURE REVIEW Accruals-based accounting found a better predictor than cash-based accounting in many prior studies (Kim & Kross, 2005; Dechow et al., 1998; FASB, 1978). The recent debate is to find out which accrual has better predictive abilities in the prediction of imminent cash flows. Barth et al. (2001) decomposed accruals into several key elements that were also used in the studies of Dechow et al. (1998). The theory on the forecast of cash flows was further enhanced in the studies of Farshadfar & Brimble (2008). The researchers used earnings plus depreciation and amortization and working capital from operations in the forecast of imminent cash flows for Australian companies. The inclusion of firm size as an intervening variable made studies more interesting and effective. The results were the same as Chotkunakitti (2005) that cash flows are a better predictor of future cash flows and predictability enhanced with the increase of firm size (Farshadfar & Brimble, 2008). Khansalar (2012) had researched the reliability of accruals and the prediction of future cash flows in the United Kingdom. Three categories of accruals were introduced in the study to confirm which accrual is a better predictor of future cash flows. Financial accruals were found with higher

Rai Imtiaz Hussain, Noor Saadah, Faridah Ibrahim, Jaspal Singh Joginder, Muhammad Hanzla

reliability and found with higher predictabilities for future cash flows and non-trading accruals were on the other extreme side. Farshadfar & Monem, (2019) investigated the predictive abilities of accruals – working, non-current operating accruals and financial accruals and future operating cash flows using Australian firms. The findings of the study were contradicted with many prior studies (such as Khansalar, 2012) as working capital and non-current operating accruals were found better predictor than financial accruals. Moreover, the asset component had better predictive ability than a liability. The current study sees the underlying components of disaggregated accruals (trading assets (TA), non-trading assets (NTA) and financial asset (FA)).

2.1 FURTHER EXTENDED ACCRUALS OF TRADING ACCRUALS

Trading accruals are often known as working capital accruals (Healy, 1985; Dechow et al., 2008; Khansalar, 2012; Farshadfar & Monem, 2019). Trading accruals were decomposed into receivables, inventories, payables, depreciation, amortization and others (Dechow et al., 1998; Barth et al., 2001; Thomas & Zhang, 2002; Dechow et al., 2002; Dechow et al., 2008; Ebaid, 2011; Farshadfar & Monem, 2019) and found with the ability to increase predictive ability about future cash flows. Farshadfar & Monem, (2019) and Khansalar (2012) calculated these accruals as the difference between trading assets and trading liabilities whereas Sloan et al. (2004) and Penman & Yehuda (2009) termed it as a change in operating assets and change in operating liabilities. The trading accruals used in the present study were based on the model developed by Sloan (1996), Sloan et al. (2004), Richardson et al. (2005), Khansalar (2012), and Farshadfar & Monem, (2019). Accruals were considered as current operating assets changes, net cash, and short-term investment fewer current liabilities, net short-term investment (Sloan, 1996; Dechow et al., 2008). Sloan et al. (2004) further decomposed working capital (WC) into a change in current operating assets (∆COA) and current operating liabilities (∆COL). ∆WC = ∆COA- ∆COL

(1).

∆TA = ∆CA - ∆CL

(2),

where ∆TA, ∆CA, and ∆CL refer to trading assets, current asset, and current liability. Trading accruals are considered a mostly better predictor of future cash flows. Trading accruals are based on working capital accruals and mostly represents a change in accounts receivable, change in accounts payable, change in inventory, plus depreciation, amortization and other accruals (Barth et al., 2001; Richardson et al., 2005; Khansalar, 2012; Farshadfar & Monem, 2019) and recorded as a change in current operating assets and change in current operating liabilities (Richardson et al., 2005; Khansalar, 2012). Trading accruals were found better predictors in prior literature (such as Richardson et al., 2005; Khansalar, 2012; Farshadfar & Monem, 2019). H1: Trading assets were deemed better predictor than other underlying components of accruals in the forecast of imminent operating cash flows in companies listed at PSX Pakistan. H2: Trading liabilities are deemed better predictor than other components of accruals in the forecast of imminent operating cash flows in companies listed at PSX Pakistan.

2.2 FURTHER EXTENDED ACCRUALS OF NON-TRADING ACCRUALS

These accruals are associated with non-current assets of the firm that are not frequently bought and sold, for example, property, plant, and equipment, intangibles, and investments (Guay & Sidhu,

2001; Dechow et al., 2008; Farshadfar & Monem, 2019). These accruals are aligned with non-trading assets (also called non-current operating assets) and non-trading liabilities (also called non-current operating liabilities) and found from the difference of non-trading assets (∆NTA) and non-trading liabilities (∆NTL). Sloan et al., (2004) and Farshadfar and Monem, (2019) called these accruals as non-current operating accruals (∆NCO). These accruals are measured from the change in non-current assets, net of long-term investment and advances, less change in non-current liabilities, net of long-term debt. These accruals were ignored in previous studies. These accruals are based on management's subjectivity and discretion; therefore, non-trading accruals are assigned with a low level of reliability (Dechow et al., 2008; Khansalar, 2012). Non-trading accruals were often not used in the prediction of future cash flows in prior studies. Richardson et al., (2005) worked on non-current operating accruals in his studies and found it significant in the prediction of future cash flows. Khansalar (2012) used non-trading accruals in the prediction of future cash flows and also assigned non-trading liabilities with high reliability than non-trading assets. On the other side, non-current operating accruals were not found reliable for the prediction of future cash flows in the studies of Farshadfar & Monem, (2019). H3: Non-trading assets are deemed better predictor than other components in the forecast of imminent operating cash flows in companies listed at PSX Pakistan. H4: Non-trading liabilities are deemed better predictor than other components in the forecast of imminent operating cash flows in companies listed at PSX Pakistan.

2.3 FURTHER EXTENDED ACCRUALS OF FINANCIAL ACCRUALS

Farshadfar & Monem (2019) represented financial accruals in terms of financial activities such as dividends, allotment of bonds and shares and debt service. Sloan et al., (2004) and Khansalar (2012) referred to financial accruals as a change in financial activities (∆FIN). Financial accruals include the difference between long term investment, short term investment, long-term debt, short-term debt and stock (both ordinary and preferred) (Dechow et al., 2008). Prior studies did not include financial accruals in their research (like Healy, 1985; Dechow et al., 1998; Barth, Cram & Nelson, 2001; Richardson et al., 2005) but were well-addressed in studies of Sloan et al., (2004), Khansalar (2012) and Farshadfar & Monem, (2019). Financial accruals were allotted high reliability (Dechow et al., 2008; Khansalar, 2012) as these accruals fluctuate with market fair value; even sometimes considered as cash equivalents (Dechow et al., 2008). The company's shares are traded in the stock exchange that represents the current market value of the company (Dechow et al., 2008). Long term debt and short-term debt show the current cost of estimated cash flows and that is to be paid after a specific time with interest (Khansalar, 2012). Therefore, financial accruals are assigned with high reliability in the present study also. Financial accruals were found more predictable in future cash flows generation (Khansalar, 2012). Khansalar (2012) used regression models to compare predictabilities of trading accruals, non-trading, and financial accruals and found the financial accruals more predictable than trading and non-trading accruals. Financial accruals were found more persistent in the prediction of future cash flows in the findings of Richardson et al., (2005). On the other hand, financial accruals were not found significant in the prediction of future cash flows in the studies of Farshadfar & Monem (2019) and Oei et al. (2008).

Rai Imtiaz Hussain, Noor Saadah, Faridah Ibrahim, Jaspal Singh Joginder, Muhammad Hanzla

H5: Financial assets are deemed better predictor than other components in the forecast of imminent operating cash flows in companies listed at PSX Pakistan. H6: Financial liabilities are deemed better predictor than components in the forecast of imminent operating cash flows in companies listed at PSX Pakistan.

2.4 GLOBAL FINANCIAL CRISIS 2008-09

The financial crisis of 2007-08 is known as the global financial crisis. The effect of the financial crisis in the emerging economy of Pakistan was seen in 2008-09. The current study examines the effect of the global financial crisis 2008-09 on the financial markets (PSX) of Pakistan. The following two hypotheses were developed to see the effect of the global financial crisis on predictive powers of components of disaggregated accruals. H7: Disaggregated accruals have better predictive abilities than aggregated accruals in the forecast of imminent cash flows in companies listed at PSX Pakistan during the global financial crisis. H8: Disaggregated accruals have better predictive abilities than aggregated accruals in the forecast of imminent cash flows in companies listed at PSX Pakistan at Pre and Post global financial crisis.

3. RESEARCH METHODOLOGY Panel data was obtained from the 485 manufacturing firms listed at Pakistan Stock Exchange (PSX) for 1999-2016. Data were directly recorded from the published financial statements of these firms. The delisted, merged or firms who changed their financial year were excluded from the analysis for consistency. Therefore, the data was obtained from 453 firms. Ordinary least square was used in most of the prior studies (such as Farshadfar & Monem, 2019; Ebaid, 2011; Khansalar, 2012, Chong, 2012) to predict future cash flows through disaggregated accruals. Accruals were divided by total assets to deflated the value and to minimize the problem of heteroskedasticity. The free cash flow (FCF) regression model is given as FCFi,t+1 = α + β1∆Trading Assets i,t + β2∆Trading Liabilities i,t + β3∆Non-Trading Assets i,t + (3). β4∆Non-Trading Liabilities i,t + β5∆Financial Assets i,t + β6 ∆Financial Liabilities i,t + ε The regression coefficients β1, β2 , β3 , β4, β5, β6, are for each term, to be obtained from the regression analysis, with α is the intercept and ε is the model error term.

4. EMPIRICAL FINDINGS 4.1 DESCRIPTIVE STATISTICS The descriptive statistics in Table 1, the maximum operating cash flow was 176.15, whereas TA was 29.12. Furthermore, trading liabilities (TL) was 20.04, NTA was 85.09 and non-trading liabilities (NTL) was 17.44. Whereas financial assets (FA) was 29.14 and financial liabilities (FL) was 49 in this equation. Meanwhile, the minimum operating cash flow was -64.96, TA was -0.51 and TL was 0.00. Moreover, NTA was 0.00 and NTL was -0.20. FA and FL were zero. Table 1 also depicted the values of mean, median, standard deviation and observations of the data. The mean of operating cash *Corresponding author (Rai Imtiaz Hussain). Email: rai.hussain@uo.edu.pk ©2020 International Transaction Journal of

flows was 0.14, TA was 0.50, whereas, TL was 0.55 and NTA was 0.86. The value of the mean for NTL was 0.09. The value of mean for FA was 0.06 and FL was 0.41. The total number of observations of operating cash flows, TA, TL, NTA, NTL, FA, and FL were 8154 for each. Table 1: Descriptive Statistics (N= 8154). Variables TA TL NTA NTL FA FL FCF

Mean 0.504 0.553 0.866 0.093 0.062 0.418 0.140

Median 0.380 0.396 0.604 0.000 0.000 0.257 0.012

Maximum 29.121 20.040 85.087 17.441 29.145 49.009 176.154

Minimum -0.516 0.000 0.000 -0.202 0.000 0.000 -64.966

SD. 1.208 1.065 3.489 0.673 0.970 1.439 4.991

Skewness 15.587 10.523 19.021 17.573 24.146 20.459 29.646

Kurtosis 303.638 148.936 408.231 356.891 607.115 569.183 1069.313

4.2 CORRELATION ANALYSIS

The correlation coefficient is presented in Table 2. Correlation among independent variables and the dependent variable is shown. The perfect correlation was found where the value of correlation was one (r = 1). The results revealed that any value of the correlation coefficient was not exceeding the benchmark of 0.9 recommended by Hair et al., (2016) and Field (2017) for multicollinearity. Therefore, it was evident that the problem of multicollinearity did not exist in this model. A positive but weak correlation was found between net operating cash flows and TA, TL, NTA, and NTL. Whereas, a negative weak correlation was found between net operating cash flows and FA and FL. Table 2: Results of Correlation (N=8154).

Variables FCF TA TL NTA NTL FL FA

1 1 0.053 0.005 0.025 0.004 -0.007 0.001

1 0.800 0.889 0.622 0.676 0.466

1 0.710 0.510 0.549 0.591

1 0.529 0.677 0.272

1 0.335 0.631

1 0.318

4.3 STATIONARITY TEST

Table 3 displays the results of the stationarity test, that all variables of interest were found stationary at 1st difference which meant series were integrated at order one and the series was i(1). These results suggested all variables were stationary and could be used for penal data analysis. Table 3: ADF Unit Root Test Results. Variables TA TL NTA NTL FA FL FCF

I (0) (means at level) -7.222 -6.321 -9.014 -9.793 -9.892 -7.252 -29.129

Prob.** <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.001

4.4 THE DECISION OF THE FIXED EFFECT METHOD VERSUS COMMON CONSTANT METHOD To decide whether to go with a common constant method or fixed effects method of the panel regression model, redundant fixed effects tests were run. The results showed that the value of Chi-square was significant which suggested that the fixed effect model was appropriate.

Rai Imtiaz Hussain, Noor Saadah, Faridah Ibrahim, Jaspal Singh Joginder, Muhammad Hanzla

Table 4: Redundant Fixed Effects Tests

Effects Test Cross-section F Cross-section Chi-square

Statistic 1.383 636.737

d.f. (452,7697) 452

Prob. <0.001 <0.001

4.5 THE DECISION OF THE RANDOM EFFECT METHOD VERSUS FIXED EFFECT METHOD

Hausman Test was used to decide whether to go with a random effect method or fixed effects method of a panel regression model. The results reported in Table 5 suggested that the fixed effect model is appropriate. Table 5: Correlated Random Effects - Hausman Test Test Summary Cross-section random

Chi-Sq. Statistic 37.293

Chi-Sq. d.f. 4

Prob. <0.001

4.6 PANEL REGRESSION ANALYSIS

The results of the regression analysis were presented in Table 6. The hypotheses were developed in section 2 of this study that disaggregated accruals had better predictive abilities in the forecast of imminent operating cash flows than aggregated accruals in companies listed at PSX (Pakistan). Panel Regression analysis was conduction to test these predictions. Operating cash flows were regressed on underlying components of accruals i.e. TA, TL, NTA, NTL, FA, and FL. The results reported in Table 6 showed that trading assets (β = 1.1575, p = 0.0000) were a significant predictor of future operating cash flows, therefore, H1 was accepted. TL (β = -0.353510, p = 0.0029) was a significant predictor of future operating cash flows, providing support for H2. NTA (β = -0.119805, p = 0.0171) was a significant predictor of future operating cash flows, providing support for H3. NTL (β = -0.431583, p = 0.0021) was a significant predictor of imminent operating cash flows, providing support for H4. FA (β = -0.33568, p = 0.7621) was an insignificant forecaster of imminent operating cash flows, rejecting H5. Similarly, a significant negative relationship with operating cash flows was found for the FL (β = -0.340590, p = 0.0000), which supports H6. The output in Table 6 showed 3.25% of the explanatory power of the model that was represented by the adjusted R-square. It means a 3.25% dependent variable was being explained by the independent variables in this model. The value of F-statistic was significant that identify the model as best fits the population from which the data were sampled. In this equation, only one variable (FA) was insignificant and did not explain the dependent variable. All other variables were significantly different from zero and had predictive abilities to explain the dependent variable. Table 6: Results of Regression Analysis Variables Constant TA TL NTA NTL FA FL R-squared Adjusted R-squared F-statistic Prob (F-statistic)

Net Operating Cash Flows Coefficient Std. Error Prob. 0.041 0.074 0.578 1.157 0.152 <0.001 -0.353 0.118 0.002 -0.119 0.050 0.017 -0.431 0.139 0.002 -0.335 0.110 0.762 -0.340 0.050 <0.001 0.086 0.032 1.598 <0.001

The results reported in Table 7 showed that FL (β = -0.340, p = 0.000) had a significant negative influence on forecast of imminent cash flows. NTA (β = -0.119, p = 0.017) was found significant forecaster of imminent cash flows. A significant negative relationship was found between the NTL (β = -0.429, p = 0.0022) and FCF. The insignificant value of financial assets (β = -0.033, p = 0.7692) showed that FA had not influenced the FCF. Similarly, insignificant negative relationship was found for the financial crisis period, D1 (β = -0.042, p = 0.7735) with FCF which showed that financial crisis period had not affected the FCF. Table 7: Results of Regression Analysis – During Financial Crisis Period 2008-09 Variables Constant TA TL NTA NTL FA FL D1 R-squared Adjusted R-squared F-statistic Prob (F-statistic)

Net Operating Cash Flows Coefficient Std. Error Prob. 0.048 0.078 0.535 1.157 0.152 <0.001 -0.355 0.118 0.002 -0.119 0.050 0.017 -0.429 0.140 0.002 -0.033 0.110 0.769 -0.340 0.057 <0.001 -0.042 0.146 0.773 0.086 0.032 1.595 <0.001

Table 8 showed a significant negative relationship with FCF for the pre and post-crisis period (β = -0.410, P = 0.002) which indicated the influence of accruals on the prediction of future cash flow significantly different in pre and post-crisis periods. The results also showed that in the pre-crisis period, accrual was negatively influencing the FCF while in the post-crisis period, it had a positive effect on the FCF. Table 8: Results of Regression Analysis – Pre and Post Financial Crisis Period 2008-09. Variables

Net Operating Cash Flows Coefficient Std. Error Prob. Constant 0.2030 0.1091 0.062 TA 1.5106 0.1853 <0.001 TL -0.3281 0.1412 0.020 NTA -0.2476 0.0643 <0.001 NTL -0.4418 0.1711 0.009 FA -0.0542 0.1343 0.686 FL -0.3877 0.0652 <0.001 D2 -0.4106 0.1339 0.002 R-squared 0.094 Adjusted R-squared 0.028 F-statistic 1.440 Prob (F-statistic) <0.001 *D2 = Pre and Post Financial Crisis Period Dummy

5. CONCLUSION In this study, the researcher examined the role of components of disaggregated accruals in the prediction of future cash flows in the emerging market of Pakistan. The study answered the question that disaggregated accruals enhanced the predictive abilities of future cash flows than accruals. Furthermore, the ability of underlying components of disaggregated accruals i.e. TA, TL, NTA, NTL, FA and FL to predict imminent cash flows. The study used 8154 firm-year observation related to 453

Rai Imtiaz Hussain, Noor Saadah, Faridah Ibrahim, Jaspal Singh Joginder, Muhammad Hanzla

firms and 1999-2016 period. The panel least square regression models were calculated as we found a fixed effect method through the Hausman test. The results of the study found that TA, TL, NTA, NTL, FA, and FL were relevant in explaining imminent cash flows but financial assets were not significant. The comparative abilities of underlying assets and liabilities components of accruals, we found that trading assets had better power to explain future cash flows than other assets and liabilities. Furthermore, the results suggested that the financial markets of Pakistan were not affected by the global financial crisis 2008-09. The results were also robust to estimate dummy variable i.e. pre and post-global financial crisis was significant. This research surges our familiarity with the disaggregated accruals in the prediction of imminent cash flows. The decomposition of accruals into trading accruals, non-trading accruals, and financial accruals enhances our understanding of accruals. Moreover, the knowledge was further improved through the disaggregation of accruals into underlying assets and liabilities components. The results were found consistent with the prior studies of FASB (1978), IASB (2010), Khansalar (2012) and Farshadfar & Monem (2019) that disaggregation of accruals increase the predictive abilities of accruals. The findings from the study provide guidelines to users of financial statements, such as financial analysts, creditors and future stockholders, which parts (operating, investing and financing) of financial statements, they must focus for future profits in the companies and investment decision making. Findings from this study hope to enhance the reliability, accuracy of future operating cash flows estimations and share value on the stock exchange. The stakeholders can predict future cash flows for quite a few years using prediction models while making investment decision making. Moreover, new variables like stock prices as the dependent variable can be introduced in the model to see the predictive abilities of accruals. Stock prices largely depend on the reliability of accruals (Nallareddy et al., 2018). Secondly, the balance sheet approach is used in most of the prior studies (such as Khansalar, 2012) to measure accruals that could have the problem of mergers and acquisitions. Therefore, the study should be conducted to see the accruals on the aggregated basis, not on a deflated basis.

6. AVAILABILITY OF DATA AND MATERIAL

Data can be made available by contacting the corresponding authors

7. REFERENCES Agana, J.A., Mireku, K., Appiah, K.O. (2015). Comparative Predictive abilities of Earnings and Operating Cash Flows on Future Cash Flows: Empirical Evidence from Ghana, Accounting and Finance Research. 4(3): 40-45. Barth, M.E., Cram, D.P., Nelson, K.K. (2001). Accruals and the prediction of future cash flows, The Accounting Review. 76(1): 27-58. Chong, W.K. (2012). Comparative predictive abilities of accrual-based accounting and operating cash flow information for future operating cash flow prediction; An empirical study from Malaysia. DBA thesis, Southern Cross University, Lismore, NSW. Chotkunakitti, P. (2005). Cash Flows and accruals accounting in predicting future cash flows of Thai listed companies. DBA thesis, Southern Cross University, Lismore, NSW. *Corresponding author (Rai Imtiaz Hussain). Email: rai.hussain@uo.edu.pk ÂŠ2020 International Transaction Journal of

Dechow, P., Richardson, S., Sloan, R. (2008). The persistence and pricing of the cash component of earnings, J. Account. Research. 46(2008): 537-566. Dechow, P.M., Kothari, S.P., Watts, R.L. (1998). The Relation between Earnings and Cash Flows, J. Account. Econ. 25(2): 133-168. Ebaid, I. (2011). Accruals and the prediction of future cash flow: Empirical evidence from an emerging market. Manage. Research. Rev. 34(7): 838-853. Efayena, O. (2015). The Role of Accrual Accounting Basis in the Prediction of Future Cash Flows: The Nigerian Evidence, Research. J. Finance. Account. 6(4): 171-180. Farshadfar, S., Monem, R. M. (2019). Further evidence of the relationship between accruals and future cash flows, Account. Finance. 59(1): 1-34. Farshadfar, S., Ng, C., Brimble, M. (2008). The relative ability of earnings and cash flow data in forecasting future cash flows, Pacific. Account Rev. 20(3): 251-268. FASB (1978). Financial Accounting Standards Board: Objectives of financial reporting of business enterprises. Statement of Financial Accounting Concepts No. 1. FASB, Stamford. Field, A. (2017). Discovering Statistics Using IBM SPSS Statistics (5th ed.). Sage Publications Ltd., London. Finger, C.A. (1994). The ability of earnings to predict future earnings and cash flows, J. Account. Research. 32(2): 210-223. Greenberg, R.R., Johnson, G.L., Ramesh, K. (1986). Earnings versus Cash flows as a predictor of future cash flow measures, J. Account. Audit. Finance. 1(4): 266-277. Guay, W.R., Sidhu, B.K. (2001). The Usefulness of Long-Term Accruals, ABACUS. 37(1): 110-131. Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. (2016). Multivariate Data Analysis (7th ed.). Pearson Education Limited, Edinburgh. Healy, P. (1985). The Effect of Bonus Schemes on Accounting Decisions, J. Account. Econ. 7(1985): 85-107. IASB (2010). International Financial Reporting Standards 2007 (including International Accounting Standards (IAS) and Interpretations as of 1 January 2010), LexisNexis. Khansalar, E. (2012). The reliability of Accruals and the prediction of future cash flow, Inter. J. Bus. Manage. 7(2): 45-57. Khansalar, E., Namazi, M. (2017). Cash Flow Disaggregation and Prediction of Cash Flow, J. App. Account. Research. 18(4): 464-479. Kim, M., Kross, W. (2005). The ability of earnings to predict future operating cash flows has been increasing - not decreasing, J. Account. Research. 43(5): 753-780. Oei, R., Ramsay, A., Mather, P. (2008). Earnings Persistence, Accruals and managerial share ownership, Account. Finance. 48(2008): 475-502. Pae, J. (2005). Expected Accruals Models: The Impact of Operating Cash Flows and Reversals of Accruals, Rev. Quantit. Finance. Account. 24(2005): 5-22. Penham, S.H., Yehuda, N. (2009). The Pricing of earnings and cash flows and the affirmation of accrual accounting, Rev. Account. Stud. 14(4): 453-479. PSX

(2018). Pakistan Stock http//www.psx.com.pk

Exchange:

All

the

information

about

listed

Rai Imtiaz Hussain, Noor Saadah, Faridah Ibrahim, Jaspal Singh Joginder, Muhammad Hanzla

companies.

Richardson, S., Sloan, R., Soliman, M., Tuna, I. (2005). Accrual Reliability, Earnings Persistence and stock prices, J. Account. Econ. 39(2005): 437-485. Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? The. Account. Rev. 71(3): 289-315. Sloan, R.G., Richardson, S.A., Soliman, M.T., Tuna, A.I. (2006). The Implication of Accounting Distortions and Growth of Accruals and Profitability, The. Account. Rev. 81(3): 713-743. http//doi.org/10.2308/accr.2006.81.3.713. Thomas, J. K., Zhang, H. (2002). Inventory Changes and Future Returns. Rev. Account. Stud. 7: 163-187. Toan Ngoc Bui. (2020). Domestic Credit and Economic Growth in ASEAN Countries: A Nonlinear Approach. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 11(2), 11A02N: 1-9. Rai Imtiaz Hussain is a PhD Candidate in Business Administration at the Faculty of Business and Accounting at the Infrastructure University, Kuala Lumpur, Malaysia. He is also a Senior Lecturer at the Department of Management Sciences, University of Okara, Pakistan.

Professor Dr. Noor Saadah Zainal Abidin is a Professor at Faculty of Business and Accounting, Infrastructure University Kuala Lumpur, Malaysia. She is interested in Management, Business Strategic Management, Leadership, Entrepreneurship, Strategic Planning, Human Resource Management.

Professor Dr. Faridah Ibrahim is a Professor of Journalism and Communication, Infrastructure University Kuala Lumpur, Malaysia. She is interested in Peace Journalism, Media Framing, Agenda Setting, Media Ethics, Media Management. Dr. Jaspal Singh Joginder is a Senior Lecturer at Department of Accounting, School of Business Sunway University MALAYSIA. He got a Bachelor’s degree in Accountancy and a Master’s degree in Info. Tech. (Accounting Information Systems), from Universiti Kebangsaan Malaysia. He got a PhD in Accounting, from Universiti Sains Islam Malaysia. He is interested in Accounting Information Systems and its Impact on Accounting Education and Practice, Impact of Integrated Reporting on Governance (Corporate and Human) and Sustainability of Firms, Accounting Ethics, Fraud and Sustainability of Firms. Muhammad Hanzla is associated with the School of Economics and Management, Beihang University (BUAA), Beijing, China. He is also a Research Associate at the Institute of Aviation Studies (IAS) University of Management and Technology (UMT), Lahore, Punjab, Pakistan.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

PAPER ID: 11A05S

ELASTICITY MEASUREMENT OF FOOD DEMAND IN PAKISTAN: CROSS-PRICE AND OWN PRICE ELASTICITY ANALYSIS 1

Kausar Naheed , Ijaz Hussain 1

Department of Economics, Gomal University, Dera Ismail Khan, PAKISTAN.

ARTICLEINFO

A B S T RA C T

The structural change is considered as the heart of development and each country is required to change its strategies due to the economic changes as well as the shift in external as well as domestic environments. In this connection, Pakistan has experienced different complexed phases during the past decades and thus introduced various reforms towards the different sectors of economies. In many developing countries like Keywords: Food Demand; Elasticity Pakistan, nutrient deficiencies tend to hinder the development of human potentials and social and economic development of the country, food Measurement; biologically is a basic need, hence plays a very impotent role in lifestream Marshallian elasticity; of all the existence of human being. As all food items are less or more Food price elasticity; important but a yardstick which measures their need is called elasticity of Cross-price elasticity; Elasticity of food demand food demand items. In Pakistan, starvation, in this regard, is solemn items. apprehension that is gloomily experienced in children and mothers and no further development is evident. The malnutrition leading causal influences are poor health status and insufficient food intake as subjective to a shortage of resources and deficiency to food access, family size and feeding practices. This study objective also estimates capacities spent and economical stake by projected price elasticity for prediction in the future towards total food demand in Pakistan. Article history: Received 08 August 2019 Received in revised form 14 November 2019 Accepted 03 December 2019 Available online 26 December 2019.

1. INTRODUCTION

For the survival of human beings, food is playing an imperative role which allows the physique to make all kinds of profitable activities. The foods, in other words, maybe drunk/eaten which might be captivated by the body and become the energy source. For this purpose, it is essential to examine the food demand and elasticity. The elasticity denotes the capability of material as well as an entity to recommence its usual form when compressed/stretched (Ehtisham, 1987). In economics, elasticity is a dimension of proportional change of economic inconstant in reaction to variation in other variables. In this link, the changeable factor is the variable that returns proportionally more than the fluctuations

*Corresponding Author (Kausar Naheed) Email: naheedkosar125@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05S http://TUENGR.COM/V11/11A05S.pdf DOI: 10.14456/ITJEMAST.2020.99

in other factors (Eatazaz, 2007). Conversely, the inelastic factor is also considered as an important variable in economics. The elasticity is thus the dominant economics concept applied in different circumstances. The rudimentary supply and demand study clarifies that economic factors like demand, income, and price are unconcernedly interconnected. The provision of important information is the main concern of elasticity regarding the weakness and strength of such connections. The cross-price elasticity of demand measures the sensitivity of the demanded quantity for goods in exchange for the prices of other goods (Angus & Muellbaver, 1980). This demand for elasticity price is considered as a change percentage in the claimed quantity of the services and goods shared by price change percentage. In Pakistan, the pattern consumption agonizes the substantial variations in income increases over time with actual manners (Rui, 2000). Therefore, decisions of investments should be planned by considering food demand elasticities. Food is a simple requirement; it has a massive influence on households in the Pakistani context. In this connection, it is imperious to advantage over an acquaintance of causes of food elasticities and demand, so as to plan inclusive social policy and agricultural food to expand food access which made up the forte of the domestic objects towards the better food admittance (Huseyin, 2003).

2. LITERATURE REVIEW The description of earlier studies explaining the phenomenon of food demand elasticities is as under. Thus, Siddiqui (1981) concluded that, with the growth of income, consumption pattern is expected to undergo major change overtime in Pakistan. In many studies, explanatory variables are considered. For each product they found income and household size to be the only significant variables but other variables to be insignificant. The conclusion of this study shows that spending control for certainly lower, lower household elasticities and expenditure elasticities for luxury objects are greater. Thus, Carthy & Desmond (1981) proposed a theory of consumer behavior that varies from approaches of conventional manners which explains that elastic values are presented for goods as a quality measure. The quality effects problem on the behavior of the consumer is measured in the demand model that is rather diverse from approaches traditional. The experiential outcomes on patterns for the consumption of food show that when the income increases, the individuals then spend the larger portion of their income on luxuries goods and varieties of goods increases with advanced prices. The consequences of the said phenomena are argued for package meant at development in alimentary eminence. In this connection, the usual concerns get develops and conclude as when income upturns, individuals put away extra though ample upsurge drives to purchasing the priced higher variabilities. For example, as the size of the household rises, higher consumption varieties priced rises. The dwellers in urban are prone more to buying price higher goods. As levels of prices increases, consumed quantity cascades, however, the stronger even outcome is marked to those individuals who change to the varieties of priced lower. Tahir (1987) classified various food items into necessities and luxuries about their income elasticities has important policy implications especially the factors contributing to a household decision for the nutritional status of the family. Ahmad, (2007) showed that Chinese reforms in markets of foods have assumed consumersâ€™ better choices and freedom in decisions of the consumption. The model of LA/A is practical to market wholesale for vegetables to extend the sensitivity in the prices as compared to the open markets. The required data-set for 1988-1994 is shared in two stages to examine how consumption of vegetables is

Kausar Naheed, Ijaz Hussain

returning to reforms. The consumers in China are brought into being to be priced more receptive in period latter denoting that consumers are a pleasing benefit of competition increased in markets. The present study works on the approximation linear of virtually model system of Demand (Deaton & Muellbaur, 1980). The elasticities concerning expenditure and income are similar broadly in extents for both stages with no down or up trends. It infers that in China, growth in income will clue to consumption increased of vegetables. In China, vegetable production is hence expected to rise amid poor those who eat meat and beneath what circumstances to respond to this query, the Tobit exploration was assumed. The outcomes show that meat consumption probability by household poor is better (Jabrian, 2005). When households are led by individuals elderly and by secondly women, by household urban location is declined. When more or one household are farmers then automatically the change in prices might be experienced than the household of non-farming and there is a rise in equivalence adults. This study empirical outcomes further recognized the significance of the income high demand elasticity to meet amid middle-class people. This paper results in social standing and relevance of factors of competition in feed-feed, therefore inspiring the extensions suggested of applications and analysis to other countries likewise Thailand/China wherein fast rising is happening in what are really agricultural cultures like Pakistan. In this drive, Tahir, (1987) since the establishment of the People’s Republic of China, economic growth along with rising per capita income needs a comparative study. So year-wise comparison of the said growth has been given in the study. The results indicate Engel’s law accuracy in a manner that as income increases the food proportion declined steadily. Abdullai, (2004) pointed out that malnutrition is caused usually by insufficient nutrition and causes that mark utilization nutrients in the body of a human. The confirmation for an individual on income and price elasticity food groups and food is actually squeaky. Thus present study backs the literature by means of the fresh survey data in Tanzania to observe how characteristics of socio-economic, expenditure and prices affect nutrient demand and food. Ozear (2003) stated that estimation in demands for food does not provide only evidence feet to describe the structure of food demand, nonetheless provide also consistent and complete background to assess influence of changes in policies as both the human capital and price policies are linked to nutrition and health are interrelated to resolve of income (expenditure) elasticity. Wyatt (2004) treated Group expenditure as exogenous when demand estimating constraints for commodities group with an ideal almost system of demand (Rehana, 1981). Now, the method is measured in the case of Japanese wherein the demand meat with equation sample more to group estimate expenses. The addition of a simple relatively equation of expenditure extensively changes calculations for elasticity which results in an examination of how exclusion or inclusion of group-single equation of expenditure elasticity affects. Balcome et al. (2003) account for linear approximate estimation of demand almost system for Jordon demand for meat viva micro-data. A system of the censored regression equation for the method is rummage-sale to examine consumption meat designs. Model estimated was recycled to get estimates of expenditure demand and Hicksian, Marshallian elasticities for meats in Jordan.

3. RESEARCH METHODOLOGY This study estimates the regression quantities for 9 commodities including Tea, Sugar, Pulses, *Corresponding Author (Kausar Naheed) Email: naheedkosar125@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05S http://TUENGR.COM/V11/11A05S.pdf DOI: 10.14456/ITJEMAST.2020.99

Milk, Meat, Fruit, Cereals, Ghee, and Vegetables. Working-Leser model is being used. Of course, other models are also available like Almost-Ideal Demand Systems (AIDS), linear Expenditure System (LES) Tobit model but due to data constraint and usefulness of the model, the Working-Leser model is used. It is important to recall that we will use the regression equation for 9 commodities separately for the overall country and for all 8 regions of the country (urban-rural regions of the 4 provinces). The study also estimates cross-price and own-price elasticities for all these 9 commodities for 4 provinces and 8 regions and overall country.

3.1 POPULATION OF STUDY

The population is the entire element of the research which is under consideration for a specific objective. The population of the said study is the entire country of Pakistan.

3.2 SAMPLE OF STUDY

The Statistics for Federal Bureau has led the sample survey approximately covering 76,520 households to offer indicators for district level in different sectors like Health, Education, Water Sanitation & Supply and Economic Situation Household & Gratification by services and facilities used.

4. DATA COLLECTION AND ANALYSIS The database is taken from Pakistan National Bureau of statistics which is a national uniform survey called Pakistan living and social standards measurement 2004-05 conducted in every province in Pakistan. The survey basically follows the approach of the Core Welfare Indicators Questionnaire which was conducted.

5. RESULT OF STUDY There has been growing interest in estimating the food demand elasticities in Pakistan because of their importance for assessing the future food demand in a country of 200 million people in Pakistan. Own-Price Elasticity: Change in the demand for, e.g., tea with respect to change in the price of tea (Marshallian) it can be expressed in the form đ?›˝đ?›˝

e i j=-Î´ij+ďż˝ đ?‘–đ?‘–đ?‘–đ?‘– ďż˝ đ?‘¤đ?‘¤đ?‘–đ?‘–

âˆ€đ?‘—đ?‘— = 1,2, . . . , đ?‘›đ?‘›

(1),

where e for elasticity, i & j are food items. Î´ij is the Kronecker delta that is unity if i equals j and zero otherwise. đ?›˝đ?›˝đ?‘–đ?‘–đ?‘–đ?‘– is a parameter to be calculated, đ?‘¤đ?‘¤đ?‘–đ?‘– is weight.

Cross-Price Elasticity: Change in the demand for tea w.r.t change in the price of other items (Hicksian). Price and elasticity estimates of the effect of household demographic variables on Pakistan food items are estimated using a household survey data 2004-05, in overall areas in Pakistan. However, look into the study more deeply, see Table 1 for the information about Pakistan, an agrarian, developing country facing food scarcity problems.

Kausar Naheed, Ijaz Hussain

Table 1a: Own and Cross Price Elasticity of Food Items.

Tea Sugar Pulse Milk Meat Item Coefficient P-value Coefficient P-value Coefficient P-value Coefficient P-value Coefficient P-value Tea -0.551 <0.001* 0.060 <0.001* 0.052 <0.001* -0.128 <0.001* -0.012 0.004** Sugar -0.003 0.584 -0.860 <0.001* <0.001 0.167 -0.026 0.006* 0.031 0.005** Pulse 0.113 <0.001* 0.024 0.446 -0.740 <0.001* 0.146 <0.001* -0.015 0.658 Milk -0.013 0.011** -0.030 0.001* <0.001 0.360 -1.038 <0.001* 0.146 <0.001* Meat 0.000 0.929 -0.067 <0.001* <0.001 0.008* -0.058 <0.001* -0.697 <0.001* Cereals 0.029 0.001* -0.024 0.153 -0.104 <0.001* -0.006 0.665 0.151 <0.001* Ghee 0.018 0.020** -0.037 0.009* -0.052 0.030** 0.050 <0.001* 0.042 0.005* Vegetable -0.005 0.377 0.059 <0.001* 0.260 <0.001* -0.272 <0.001* 0.087 <0.001* Fruit 0.002 0.447 -0.020 <0.001* <0.001 0.099 -0.025 <0.001* 0.045 <0.001* Expenditure 0.229 <0.001* 0.780 <0.001* 0.375 <0.001* 1.570 <0.001* -0.012 0.004**

Table 1b: Own and Cross Price Elasticity of Food Items.

Tea Sugar Pulse Milk Meat Cereals Ghee Vegetable Fruit Expenditure

Cereals Coefficient 0.017 -0.042 -0.201 -0.065 -0.051 -1.260 -0.143 -0.011 -0.067 1.042

p-value 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.000* 0.272 0.000* 0.002*

Ghee Coefficient 0.004 -0.064 -0.044 -0.050 -0.059 0.023 -1.018 0.016 0.006 0.900

p-value 0.263 0.000* 0.077 0.000* 0.000* 0.074 0.101 0.055 0.118 0.000*

Vegetable Coefficient p-value -0.003 0.015** -0.013 0.000* 0.003 0.750 -0.013 0.000* -0.005 0.001* -0.013 0.003* -0.003 0.359 -0.035 0.000* -0.008 0.000* 0.070 0.000*

*Significant 1% **significant 5% Source PSLM (2004-2005)

Fruit Coefficient p-value -0.048 0.000* 0.027 0.035** 0.080 0.038** 0.085 0.000* 0.013 0.067 0.163 0.000* 0.107 0.000* 0.253 0.000* -0.835 0.000* 0.696 0.000*

Cross price elasticity means a demand change for the product in line for the change in the price of other commodities. So in the above table, cross-price elasticity of Tea is significant for Sugar, Pulse, Milk, Meat in Table 1(a), Cereals, Vegetables and Fruit in Table 1(b), Similarly, cross-price elasticity of Sugar is significant for Milk, Meat in table (a), Cereals, Ghee, Vegetables and Fruit in table (b). Pulse cross-price effect is significant for Tea, Milk, Cereals, Fruit. For Milk, the cross-price effect is significant for Tea, Sugar and Meat, while Cereals, Ghee, Vegetables and Fruit. Meat, elasticity cross price is significant for Suger, Pulse, Milk, Cereals, Ghee, and Vegetables. Cereals elasticity cross price is significant for Tea, Pulse, Meat, Vegetable, Fruit. Ghee significant elasticity cross-price for Tea, Suger, Pulse, Milk and, Meat, Fruit. Similarly, Vegetable, significant cross-price elasticity for all except Tea, while only Fruit. Cross price elasticity of Fruit is significant for only Suger, Milk and Meat while for Ghee and vegetable.

6. CONCLUSION

When summarizing analysis, we come to know that cross-price and own-price elasticity are core determinants for policymakers to decide the production of those food commodities, which fewer respondents to the price change and change in other goods and services. From Tables 1a and 1b, researchers can very easily come to categories these mentioned goods. For instance, the Marshallian Own-price elasticity generated from Working-Lesser model using OLS, provided significant information about different items. Results meant that Milk, Cereals and Ghee consumption was more own-price changes sensitive, while Vegetable ingesting was least sensitive to the change in its own prices. The Hicksianâ€™s cross-price elasticity generated from the Working-Lesser model were positive for Tea, indicating the substitution relationship with Sugar and Pulse. In particular, a one percent increase in Sugar price caused a 6% increase in Tea consumption while a 1% increase in Pulse price increased Tea consumption by 5%. A complimentary relationship was found for tea with milk and meat consumption, while sugar and pulse were found to have a substitution relationship. *Corresponding Author (Kausar Naheed) Email: naheedkosar125@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN 2228-9860 eISSN 1906-9642 CODEN: ITJEA8 Paper ID:11A05S http://TUENGR.COM/V11/11A05S.pdf DOI: 10.14456/ITJEMAST.2020.99

7. AVAILABILITY OF DATA AND MATERIAL

Relevant information can be made available by contacting the corresponding author.

8. REFERENCES

Abdullai, A. (2004). A cross-section analysis of household demand for food and nutrients in Tanzania. Agricultural economics, 31, 67-79. Ahmad, E. (2007). Household Budget Analysis for Pakistan under varying the Parameter Approach. Pakistan Institute of Development Economics Islamabad. Working Papers 41. Deaton, A., & Muellbaver, J. (1980). An almost ideal demand system. The American Economic Review, 70(3), 312-326. Ehtisham, A. (1987). Aggregate and regional demand response patterns in Pakistan. Eatazaz, A. (2007). Household Budget Analysis for Pakistan under varying the Parameter Approach. Pakistan Institute of Development Economics Islamabad. Working Papers 41. Angus, D., & Muellbaver, J. (1980). An almost ideal demand system. Rui, J. (2000). Evolution of Rural Consumption Pattern in China. Consumer Interests Annual, 46. Carthy, F., & Desmond, U. (1981). Quality Effects in Consumer Behavior. The Pakistan Development Review, XX (2). Huseyin, O. (2003). Consumption pattern of major food items in Turkey. The Pakistan development review 42(1), 29-40. Jabrian, S. A. (2005). Estimation of Meat Demand System in Jordan an Almost Deal Demand System International Journal of Consumer Studies, 29(3), 232-238. Rehana, S. (1981). Analysis of Household Consumption Patterns in Pakistan Research Report Series No 121 Islamabad. Siddiqui, R. (1981). Analysis of Household Consumption Patterns in Pakistan Research Report Series No 121 Islamabad. Tahir, T. (1987). An Analysis of the food consumption behaviour Economics Department Quaid-i-Azam University Islamabad. Ozaer, H. (2003). Consumption pattern of major food items in Turkey. The Pakistan development review 42 (1), 29-40. Wyatt, T. (2004). Using elasticity from an Almost Ideal Demand System! Watch Out for Group Expenditure. American Agricultural Economics Association. American Journal of Economics. 86(4), 1108-1116. Balcome, K., Rapsomanikis, G., & Klonaris, S. (2003). Cross Entropy Estimation of the Almost Ideal Demand System for Greek Consumption. Journal of Agricultural Economics, 54 (3), 447-466. Kausar Naheed is a PhD Scholar at Department of Economics, Gomal University Dera Ismaiel Khan (KPK) Pakistan. She is a Principal of Quid-e-Azam Academy for Educational Development Kamalia.

Dr. Ijaz Hussain is an Associate Professor at Department of Economics, Gomal University Dera Ismail Khan. He got a PhD degree in Economics. His research is in the field of Economics. He can be reached at ijazecoqau @ gmail.com

Trademarks Disclaimer: All product names including trademarksâ„˘ or registeredÂŽ trademarks mentioned in this article are the property of their respective owners, using for identification and educational purposes only. The use of them does not imply any endorsement or affiliation.

Kausar Naheed, Ijaz Hussain

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PAPER ID: 11A05T

USE OF WHITE LUPINE IN THE DIETS OF MEAT CHICKENS OF BASELINE AND BROILER CHICKENS OF SELECTION OF SGC "SMENA" Ivan Egorov

, Vardges Manukyan , Tatyana Lenkova , Tatyana Egorova , Ilya Nikonov

Federal State Budget Scientific Institution Federal Scientific Center "All-Russian Research and Technological Poultry Institute" of Russian Academy of Sciences, RUSSIA. 2 Perm State Agro-Technological University named after Academician D.N. Pryanishnikov, RUSSIA. ARTICLEINFO

Article history: Received 07 August 2019 Received in revised form 19 November 2019 Accepted 28 November 2019 Available online 26 December 2019

Keywords: Broiler chickens; Digestive enzymes; Zootechnical indicators; Hen live weight; Plimutrok breed; Sweet lupine; Initial lines B6; B7 and B8 of meat chickens.

A B S T RA C T

This article presents the results of studies on the use of white lupine in compound feeds for meat chickens of the three source lines and broiler chickens of the SGC “Smena” selection. The objective of the research was to determine the effect of different white lupine in animal feed from plant components on the zootechnical parameters of broiler chickens and meat chickens of the initial lines B6 (Cornish breed), B7 (Plimutrok breed) and B8 (Plimutrok breed). To achieve this goal, zootechnical and physiological experiments were conducted under the conditions of the FSBI SGC "Zagorsk EPH" VNITIP. Studies on the baseline lines of meat chickens showed that replacing soybean meal in compound feeds with white lupine made it possible to ensure high productivity of the experimental bird. Disciplinary: Animal Sciences (Poultry Science, Animal Nutrition and Feed Technology), Biotechnology. ©2020 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION In Russia, the production of feed for poultry is constrained by the lack of protein feeds of plant and animal origin. This leads to Russia's dependence on imports primarily soybean meal and fishmeal. Soybean is grown in the Far East, the Krasnodar Territory and southern regions of Russia do not cover the needs of poultry farming. From this perspective, the expansion of the use of such a crop as lupine in poultry farming is promising. However, the presence of alkaloids in it (lupinin, lu, etc.) is the reason that it did not find wide application in fodder production. Plant breeders have now bred sweet varieties of this crop with a harmful substance content of 0.008-0.12%, and in bitter varieties, the content of alkaloids reaches 3%. In sweet varieties of lupine, the total polysaccharide content is 34–40% and less than 1% is due to starch. Only sweet varieties of this crop are recommended for bird feed. Of great importance in this regard is the use of protein feed products of the processing industry, *Corresponding author (Ivan Egorov) Tel: +7-81223166-83 Email: egorov@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05T http://TUENGR.COM/V11/11A05T.pdf DOI: 10.14456/ITJEMAST.2020.100

obtained on the basis of innovative technologies and enzymes, which will make it possible to more widely use vegetable feeds in feeding poultry. In general, in world agriculture, lupine occupies about 1% of the cultivated area. The leaders in lupine cultivation at present are Australia, New Zealand, Poland and Belarus [1]. Legumes are high in protein (20â€“40%) and essential amino acids, lipids and unsaturated fatty acids, vitamins B, E, C, and carotenoids. The most widespread among them in poultry farming was soy. Due to the increased (over 40%) protein content, soybean meal occupies the main place in compound feeds for poultry. They are used in feeding birds, and especially in feeding broilers, full-fat soy. However, soybean is demanding on soil and climatic conditions and its productivity in the Central Federal District for many years does not exceed 10 kg/ha. Therefore, the need for poultry in soybean meal is largely satisfied thanks to imports. Constantly increasing prices for legumes, primarily soybeans, lead to an increase in the cost of feed and poultry products. In solving this problem, lupine (Lupinus) has great potential. Of the more than 200 known species of this culture, 4 were found in Russia - perennial (L. polyphyllus Lindl), narrow-leaved (L. Angustifolia), yellow (L. luteus) and white (L. albus) [3, 7]. The undoubted advantages of lupine include high nitrogen fixation activity, ability to grow on poor and acidic soils, extract phosphorus from trisubstituted phosphates, create favorable conditions for air and water regimes of the soil, be the best precursor for spring and winter crops [1, 2, 6]. By the amount of crude protein in the grain, white lupine is superior to legumes such as peas, vetch and fodder beans, and in terms of quality and digestibility, it is not inferior to soy but surpasses it in yield. The amount of essential amino acids in lupine is higher than that of other legumes but slightly inferior to soy (Table 1). Table 1: Content of crude protein (%) and amino acids (% to crude protein) in legumes Amino acids Full Fat Soya Crude protein 34.5 Lysine 2.12 Methionine 0.50 Cystine 0.54 Threonine 1.37 Tryptophan 0.38 Arginine 2.60 Valine 1.64 Isoleucine 1.67 Leucine 2.81 Phenylalanine 1.70 Histidine 0.94 Glycine 1.52

Lupine Forage beans 32.5 24.7 1.47 1.32 0.36 0.26 0.32 0.27 0.95 0.89 0.20 0.29 3.07 2.04 1.14 1.35 3.35 1.39 3.37 2.01 1.40 1.01 1.01 0.73 0.92 1.05

Vetch 24.0 1.30 0.26 0.23 0.84 0.16 1.62 0.69 1.14 1.17 0.87 0.64 0.99

Peas 20.7 1. 0.20 0.17 0.80 0.14 1.33 0.99 0.97 0.98 0.90 0.69 0.75

Among the advantages of white lupine over other types of this crop and soybeans can be called a large yield potential, relative drought tolerance and high attachment of beans. The purpose of this research was to study the effectiveness of the use of white lupine in compound feeds for meat chickens of the three source lines B6, B7 and B8, and broiler chickens.

Ivan Egorov, Vardges Manukyan, Tatyana Lenkova, Tatyana Egorova, Ilya Nikonov

2. METHOD The work was carried out on three initial lines of the bird: B6 - the maternal line of the paternal parent form of the Cornish breed, fast-growing, fast-changing. The main breeding traits are growth rate, feed conversion, meat quality, egg production. B7 is the paternal line of the maternal parent form of the plimutrok breed, fast-fledging, breeding by egg production, hatchability, growth rate, feed conversion, viability. B8 is the paternal line of the maternal parent form of the plimutrok breed, which is slowly changing and is selected for egg production, hatchability, growth rate, feed conversion, and viability [8, 9]. The objective of the research was to determine the effect of different white lupine in animal feed from plant components on the zootechnical parameters of broiler chickens and meat chickens of the initial lines B6 (Cornish breed), B7 (Plimutrok breed) and B8 (Plimutrok breed). To achieve this goal, zootechnical and physiological experiments were conducted under the conditions of the FSBI SGC "Zagorsk EPH" VNITIP. The birds were kept in special cages of 25 animals per group from 21 to 62 weeks of age, and broiler chickens were raised in Big Dutchman type cell batteries from daily to 35 days of age. The light, temperature and humidity conditions, the front of feeding and watering were in accordance with the recommendations of VNITIP (2015). The bird was fed with loose feed with nutrition according to the standards of VNITIP (2018). The level of exchange energy in feed for broiler chickens up to 21 days of age was 12.98 MJ / kg; from 22 to 28 days - 13.19 MJ / kg and from 29 days to slaughter - 13.4 MJ / kg, with a crude protein level of 23%, 21, 20%, respectively, with age, and the fiber level was the range of 3.7-4.2%. Laying hens received compound feed normalized taking into account live weight in the amount of 147â€“162 g per day per head, with an exchange energy level of 11.3 MJ / kg up to 49 weeks and 11.1 MJ / kg from the 50th week at the level of crude protein 17.0 and 16.0%, respectively, age. When preparing recipes for compound feeds, the normalization of amino acids was carried out taking into account their digestibility, and all vitamins and minerals were introduced into compound feeds through a 1% premix. The experiments on broiler chickens and laying hens were carried out according to the scheme shown in Table 2.

Group

Table 2: Scheme of the experiment on broilers and laying hens

Feeding Features The main ration balanced in all nutrients in accordance with the norms of VNITIP Control 1 (MR). MR with the inclusion of 15% crushed white lupine instead of soybean meal for Experienced 2 broilers and 10% for laying hens *. * The experiment was carried out according to a single scheme for chickens of the B6, B7 and B8 line, and rational levels of input of white lupine in compound feeds were determined in previous studies.

The study took into account the following indicators: The chemical composition of white lupine; preservation of livestock by accounting for waste and establishing its causes; live weight of broilers at the age of: day, 21, and 35 days, and laying hens at the age of 21 and 62 weeks by individually weighing the entire population in groups; average daily gain in live weight; feed costs per 1 kg gain in *Corresponding author (Ivan Egorov) Tel: +7-81223166-83 Email: egorov@gmail.com ÂŠ2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05T http://TUENGR.COM/V11/11A05T.pdf DOI: 10.14456/ITJEMAST.2020.100

live weight at the end of the experiment; feed intake, for the entire growing period, kg per head; the digestibility and use by birds of the main nutrients of compound feed according to the results of physiological experience at the age of 30-35 days; the chemical composition of the liver and pectoral muscles of broilers at the end of cultivation, egg-laying on the initial laying layer for 62 weeks, the mass of eggs at 30 weeks of age and the yield of hatching eggs.

3. RESULT AND DISCUSSION An analysis of the chemical composition of white lupine showed that the content of crude protein in it was 32.5% at a level of crude fat of 10.5%, crude fiber 10.7%, calcium 0.32% and phosphorus 0.41%. The exchange energy was at the level of 10.09 MJ/kg. Zootechnical indicators obtained in the experiment on broilers are presented in Table 3. Table 3: Zootechnical indicators in the experiment on broiler chickens Indicator Preservation,% The average live weight in 1 day, g 4 days 7 days 14 days 21 days, g 35 days on average, including Cockerels Chickens 35 days, g Cockerels Hens The average daily gain in live weight, g Feed intake 1 head, kg in 35 days The cost of feed per 1 kg of increase in live weight, kg, for 35 days

Group 1c 2 100.0 100.0 43.4 ±0.11 43.7 ±0.09 90.1 ±0.34 92.2 ±0.44 140.2±1.20 147.2±1.50 400.2±4.12 444.4±7.17 800.4±13.7 832.4 ±17.1 1962.8 2033.5 2118.3±30.16 2161.4±50.02 1807.3±29.22 1905.7±29.40 1976.5 2018.91 2090.50±29.91 2135.98±33.24 1862.5±27.20 1901.84±23.45 54.83 56.85 3.009 3.011 1.568

1.513

From the data of Table 3, it follows that the introduction of white lupine in the amount of 15% in the diets of broilers ensures the safety of young animals at the level of 100%. The live weight of broilers in experimental group 2 at 21 days of age was 890.3 g; at 35 days of age, this indicator was at the level of 2033.5 g, which is higher than the control bird by 3.4 and 3.6%, respectively, of the age periods. At 35 days of age, the live weight of the hens in experimental groups 2 was 5.4% higher; and cockerels - by 2.0 compared with the control group. The research results showed that the males and hens equally reacted with live weight when white lupine was included in the feed. When using white lupine in broiler diets in an amount of 15%, the average daily gain in live weight was higher than the control by 3.7%. The higher live weight of the experimental young animals by the end of the cultivation provided a high feed conversion. The cost of feed per 1 kg gain in live weight in the experimental group was 1.513 kg and was lower than the control group by 3.5%. The main indicators of digestibility and use of feed nutrients are presented in Table 4.

Ivan Egorov, Vardges Manukyan, Tatyana Lenkova, Tatyana Egorova, Ilya Nikonov

Table 4: Key indicators of digestibility and use of feed nutrients in broiler chickens aged 30-35 days Indicator Digestibility of protein,% The use of nitrogen,% Availability, %: lysine methionine Digestibility of fat,% Use,%: calcium phosphorus

Group

89.4

91.0

50.6

51.9

82.2 81.6 73.0

82.8 82.2 74.9

35.1 37.8

35.4 38.0

The digestibility of protein in the experimental group, of chickens that received 15% white lupine as part of the feed, was 91.0% and was 0.6% higher than that in the control group. The use of feed nitrogen in the experimental group was higher than 1.3% compared with broilers in the control group. The availability of lysine and methionine from the experimental feed was 82.8 and 82.2%. The digestibility of fat from feed containing 15% white lupine in broilers of the experimental group was 74.9%, exceeding the control by 1.9%. The use of calcium and phosphorus in experimental broilers practically did not differ from the birds of the control group. Based on the chemical composition of the pectoral muscles, it can be said that when using white lupine in broiler feeds, there was a tendency to increase the level of protein in the pectoral muscles of experimental young animals compared to the bird of the control group by 0.4%. The content of fat and ash in the pectoral muscles of the experimental and control groups was practically the same. There were no significant differences in the content of dry matter broilers in the pectoral muscle. In the experiment on laying hens of the initial lines B6, B7, and B8, it was found that the safety of the livestock for the period of the experiment (21–62 weeks) was at the level of 96% (table 5). Table 5: Zootechnical indicators of meat chickens of the initial lines B6, B7 and B8 for the experiment period of 21–62 weeks. Indicator The safety of the livestock,% Live weight g: at the beginning of the experiment 21 weeks at the end of the experiment 62 weeks Egg-laying on the initial layer for 62 weeks, pcs The mass of eggs at 30 weeks of age, g The output of hatching eggs,%

1c 96.0

Line B6

2 96.0

1c 96.0

2417± 36.1

2427± 30.1

4503± 42.2

Groups Line B7

Line B8

2 96.0

1c 96.0

2 96.0

2299± 32.4

2301± 31.5

2292± 29.1

2297± 29.9

4514± 35.8

4032± 41.4

4029± 41.3

4040± 43.3

4035± 37.7

120

121

160

162

159

161

62.4± 0.20

62.7± 0.22

60.8± 0.21

60.7± 0.23

60.4± 0.23

60.7± 0.25

91.0

91.1

93.2

93.5

93.1

*Corresponding author (Ivan Egorov) Tel: +7-81223166-83 Email: egorov@gmail.com ©2020 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 11 No.5 ISSN2228-9860 eISSN1906-9642 CODEN: ITJEA8 Paper ID:11A05T http://TUENGR.COM/V11/11A05T.pdf DOI: 10.14456/ITJEMAST.2020.100

Studies on the baseline lines of meat chickens showed that replacing soybean meal in compound feeds with white lupine made it possible to ensure high productivity of the experimental bird. In 62 weeks, egg-laying on the initial laying hen amounted to 121 eggs in the experimental group and 120 in the control group; along the B7 line - 162, in the control - 160; and along the line B8 - 161 eggs, in the control - 159. According to the mass of eggs on each line at 30 weeks of age, there were no significant differences between the control and experimental birds. The yield of hatching eggs along line B6 was in the range of 90.0 and 91.1%; along the line B7 - 93.2 and 93.5% and along the line B8 - 93.1 in the control and experimental groups. Thus, studies have established that white lupine is a valuable protein and energy product. It contains 10.08 MJ of metabolic energy per 1 kg and 32.5% of crude protein; 10.5% crude fat.

4. CONCLUSION Thus, the results of the study show that the inclusion of white lupine in the amount of 15% in the feed of broilers and 10% in the feed of laying hens of the original lines B6, B7 and B8 with a balanced feed for amino acids and other nutrients allows you to get good zootechnical performance.

5. AVAILABILITY OF DATA AND MATERIAL Data can be made available by contacting the corresponding author.

6. ACKNOWLEDGEMENT The study was performed at the FSC ARRTPI RAS, with the aid of the Russian Science Foundation, grant No. 16-16-04089-P, for the study of the physiological and microbiological characteristics of the embryonic and postembryonic digestion in meat chicken to develop feeding programs ensuring complete use of genotype potential.

7. REFERENCES [1] Gataulina, G. G., Medvedev, N. G. (2008). White lupine is a promising forage crop. Advances in Science and Technology AIC. 9 (10): 49-51. [2] Gataulina, G.G., Medvedeva, N.V., Tsygutkin, A.S. (2010). Varieties of white lupine selection FSEI HPE RGAU-MSHA named after K.A. Timiryazev. Guidelines. M.: RGAU-MSHA. 24 p. [3] Egorov, I.A., Andrianova, E.N., Anchikov, E.V. (2009). Feed with lupine enriched with phytase for broiler chickens and laying hens. In the materials of the XVI conference "Achievements in modern poultry farming: research and innovation." - Sergiev Posad: VNAP Russian branch. P. 95-98. [4] Egorov, I. A., Andrianova, E. N., Prisyazhnaya, L. M., Shtele, A. L. (2009). The use of feed with white lupine, enriched with enzymes in the feeding of laying hens. Poultry farming. 9: 25-27. [5] Osmanyan, A.K., Tsygutkin, A.S., Shtele, A.L., Popova, L.A. (2009). Use of the new Carotino CAF 100 vitamin-fat supplement for the production of hatching and food eggs with a given quality. Guidelines. M .: RGAU-ICCA.16 p. [6] Novikov, M.I., Tuzhilin, V.M., Takunov and others. (2002). Lupine in the Vladimir region. Practical recommendations for cultivation and economic use (edited by A.S. Eskov A.I.). Vladimir: VNIPTIOU.85 p. [7] Petibskaya, B.C., Baranov, V.F., Kochegura, A.V., Zelentsov, S.V. (2001). Soya: quality, use, production. - M.: Agrarian Science. 64 p.

Ivan Egorov, Vardges Manukyan, Tatyana Lenkova, Tatyana Egorova, Ilya Nikonov

[8] Egorova, A.V., Tuchemsky, L.I., Emanuilova, Zh.V., Efimov, D.N. (2015). Productivity of the parental forms of meat chickens of the Breeding genetic center “Smena”. Zootechnics. 6: 2-4. [9] Egorova, A.V. (2012). Meat chickens of the parent herd: assessment, selection and selection of birds. Poultry farming. 12: 8-10. Dr.Ivan Egorov is Head of Scientific Direction - Poultry Nutrition, Federal State Budget Scientific Institution Federal Scientific Center "All-Russian Research and Technological Poultry Institute" of the Russian Academy of Sciences (FSC ARRTPI RAS). He holds Doctor of Biological Sciences. He is interested in Poultry Nutrition and Feed Technology. Dr.Vardges Manukyan is Head of Poultry Nutrition Department, Federal State Budget Scientific Institution Federal Scientific Center "All-Russian Research and Technological Poultry Institute" of the Russian Academy of Sciences (FSC ARRTPI RAS). He holds a Doctor Of Agricultural Sciences. He is interested in Poultry Nutrition and Feed Technology. Dr.Tatyana Lenkova is a Principal Researcher, Scientific Secretary, Federal State Budget Scientific Institution Federal Scientific Center "All-Russian Research and Technological Poultry Institute" of the Russian Academy of Sciences (FSC ARRTPI RAS). She holds a Doctor of Agricultural Sciences. She is interested in Poultry Nutrition and Feed Technology. Tatyana Egorova is a Deputy Director for Science, Federal State Budget Scientific Institution Federal Scientific Center "All-Russian Research and Technological Poultry Institute" of the Russian Academy of Sciences (FSC ARRTPI RAS). She holds a Doctor of Agricultural Sciences degree. She is interested in Poultry Nutrition Development. Ilya Nikonov is a Leading Researcher, Scientific Research Unit “Agrotehnopolis”, Perm State Agro-Technological University named after Academician D.N. Pryanishnikov. He is a Candidate of Biologic Sciences. He is interested in Poultry, Nutrition, and Feed Technology.

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