Ramil Hasanov

Bank deposits are vital for the economy, serving as a primary source of funding for banks that facilitate lending, investment, consumption, and overall economic growth. This article aims to examine how oil price fluctuations and inflation, two critical macroeconomic variables, influence bank deposits in Azerbaijan, an energy-exporting country. The primary purpose is to reveal the extent to which these factors, particularly in the context of Azerbaijan’s role as an energy exporter, affect the stability and liquidity of the banking sector. Using the Autoregressive Distributed Lag (ARDL) model and Granger causality testing, the study analyzes the dynamic relationships among these variables. The findings demonstrate a significant long-term relationship and causal effects between oil prices, inflation, and bank deposits. Specifically, a one-unit increase in oil prices results in a 0.057-unit rise in bank deposits, underscoring the positive impact of oil price increases on banking sector liquidity. Conversely, a one-unit increase in inflation decreases bank deposits by 0.812 units in the long term, highlighting inflation’s detrimental effect on financial stability.

The impact of research and development (R&D) expenditure is crucial for understanding contemporary economic development strategies. This study investigates the relationship between R&D spending as a percentage of GDP and economic growth, focusing on the South Caucasus countries (Azerbaijan, Georgia, and Armenia) and Israel, which is notable for its substantial R&D expenditure (5.71% of GDP in 2020). The objective is to evaluate the impact of R&D expenditure on economic development through the application of rigorous empirical methods. By employing a quantitative approach, this study aims to offer a detailed analysis of the impact of R&D investment on economic growth across various countries. Ordinary least squares (OLS) regression analyzes the association between R&D expenditure and GDP levels. Granger causality tests are utilized to investigate the causal relationships. The results demonstrate a significant positive relationship between R&D expenditure and GDP across all studied countries. Furthermore, the analysis reveals that GDP growth stimulates increased R&D investments in Azerbaijan and Armenia, as evidenced by Granger causality tests. To sum up, this paper underscores the critical role of R&D spending in driving economic development and highlights the necessity for policy initiatives focused on strengthening R&D frameworks.

Analyzing the connection between military expenditure and economic growth is interesting due to its policy implications, particularly in geopolitically strategic regions. In the case of Azerbaijan, where defense spending accounts for a significant share of the national budget, this relationship is especially relevant. The present study explores the long-term equilibrium between military expenditure, expressed as a percentage of GDP, over a three-decade period marked by consistent economic growth and substantial defense investments. To investigate this relationship, the study applies the Johansen cointegration method to check for a stable long-term relationship. It employs the Granger causality test to determine the causal direction between the variables. The findings show cointegrating relationships, indicating a long-term equilibrium between military expenditure and economic growth. Furthermore, the Granger causality analysis indicates a bidirectional causal link, implying that changes in military expenditure influence GDP per capita growth and vice versa. Specifically, the results show that military expenditure Granger causes GDP per capita at a lag of 3 (p-value = 0.012). Similarly, GDP per capita Granger causes military expenditure at the same lag (p-value = 0.0001). The findings reveal the dual impact of military spending on economic development, providing insights for Azerbaijani policymakers to balance defense needs with economic growth.

The paper investigates the causal interaction between renewable energy consumption and manufacturing value added in Kazakhstan, a relationship of growing importance in the context of sustainable industrial development. The aim of the study is to assess the direction and nature of causality between these variables over the period from 2000 to 2021. To this end, the Toda-Yamamoto Granger causality test is applied, offering robust results regardless of the order of integration of the time series data. The empirical analysis identifies a statistically significant bidirectional causal relationship. Specifically, renewable energy consumption has a significant impact on manufacturing value added (p = 0.003), while manufacturing value added also significantly influences renewable energy consumption (p = 0.006). These findings reveal a reciprocal mechanism in which the expansion of renewable energy supports industrial growth, and industrial development, in turn, enhances renewable energy usage. The results underscore the strategic importance of integrating renewable energy policies with industrial development plans. From a policy perspective, the study provides practical insights into fostering sustainable economic growth by aligning environmental and industrial objectives in Kazakhstan.

Type of the article: Research Article

Abstract
This study aims to examine the relationship between public education expenditure, student enrollment, and crime among educated individuals in Azerbaijan over the period 1998–2023. Using annual time-series data, the analysis investigates whether education-related public investment and educational participation are associated with changes in criminal activity within the educated population. The empirical findings reveal the existence of a stable long-run relationship among the variables, indicating that education expenditure, student enrollment, and crime dynamics evolve in an interconnected manner over time. The results further demonstrate that both public education expenditure (Wald = 11.356, p = 0.003) and student enrollment (Wald = 27.576, p < 0.001) possess statistically significant predictive power in explaining variations in crime among educated individuals. In particular, the stronger statistical effect observed for student enrollment suggests that broader participation in the education system may play a particularly important role in shaping long-term crime patterns. Overall, the findings indicate that education policy extends beyond its conventional function of human capital development and may contribute to broader social outcomes, including the reduction of crime-related vulnerabilities. By providing empirical evidence from Azerbaijan as a transition economy, this study contributes to the growing literature examining the wider societal implications of education policy and its role in promoting long-term social stability and sustainable development.

Type of the article: Research Article

Abstract
This study explores potential factors associated with renewable energy consumption in Azerbaijan by examining the relationships among economic growth, human development, per capita CO₂ emissions, and urban population growth. The analysis applies an exploratory machine learning framework based on the XGBoost algorithm combined with SHapley Additive exPlanations (SHAP) to examine possible nonlinear associations and evaluate the relative contribution of selected socioeconomic and environmental variables. Correlation analysis indicates a negative relationship between renewable energy consumption and CO₂ emissions (−0.55), while human development and economic growth exhibit generally positive associations with renewable energy use, suggesting a possible role of socioeconomic development in the energy transition process. The exploratory model produced performance indicators of R² = 0.81, RMSE = 1.18, and MAE = 1.04, suggesting that the model captures variation within the available sample; however, given the limited dataset, these results should not be interpreted as evidence of strong or robust predictive performance. SHAP-based interpretation suggests that human development and environmental pressure may represent relatively important variables within the model framework, while the effects of economic growth and urbanization appear comparatively moderate and context-dependent. Overall, the study provides preliminary exploratory evidence regarding possible nonlinear patterns linking socioeconomic development, environmental conditions, and renewable energy consumption in Azerbaijan, offering directions for future research using larger datasets and complementary empirical approaches.

Type of the article: Research Article

Abstract
This study examines the predictive relationship between real non-oil economic growth and household bank deposit growth in Azerbaijan using annual data for 2000–2024. Real non-oil GDP and individual bank deposits are measured at constant 2010 prices and transformed into annual logarithmic growth rates. The empirical analysis combines conventional linear Granger causality testing with a nonlinear Kernel Granger causality approach based on radial basis function kernel ridge regression. Nonlinear predictive performance is assessed through expanding-window rolling-origin cross-validation and a circular-shift permutation test. The results indicate a modest improvement in predictive accuracy when nonlinear information is incorporated, with mean squared error declining from 402.41 to 376.16, corresponding to a 3.32% reduction in root mean squared error. Nevertheless, the Kernel Granger statistic is statistically insignificant (KGC = 0.067, p = 0.416), providing no robust evidence of nonlinear predictive causality. Conventional linear Granger testing initially suggests unidirectional causality from non-oil GDP growth to household deposit growth (F = 5.305, p = 0.032), with no evidence of reverse causality. However, introducing a 2015–2016 crisis pulse dummy substantially reduces the lagged GDP growth coefficient from 1.818 to 0.689 and eliminates its statistical significance, while the crisis indicator remains highly significant. These findings suggest that the apparent linear relationship is largely driven by the 2015–2016 macro-financial shock rather than a stable underlying mechanism. Overall, the evidence does not support a robust linear or nonlinear predictive relationship between non-oil economic growth and household deposit growth in Azerbaijan.