The drivers of external debt in GhanaMensah, Lord; Arku, Felix Kwasi
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-10-2023-0418
This paper aims to examine the factors that contribute to the external debt growth in Ghana.Design/methodology/approachThe study adopts the autoregressive distributed lag (ARDL) model and the error correction model (ECM) to establish the short-run and long-run relationships between the dependent variable (external debt) and the independent variables (debt service, exchange rate, gross domestic product, government expenditure, import and trade openness), using a time series data spanning from 1990 to 2019.FindingsThe results indicate that debt service, GDP, government expenditure and trade openness have a positive and significant relationship with external debt, while import and exchange rates have a negative relationship with external debt in the long run. In the short run, debt service, import, exchange rate and trade openness have a positive and significant relationship with external debt, while GDP has a negative relationship with external debt.Practical implicationsThe study found that variables such as government expenditure, debt service and import contribute significantly to the nation’s external debt stock. These findings suggest that policymakers should focus on prioritising and cutting down expenditure in their quest to curtail the debt menace facing the nation. Since existing debt service has the tendency of influencing debt stock, it is recommended that government should reduce borrowing in order avoid debt trap. Home-grown policies to reduce imports must also be encouraged. As these drivers of external debt are tackled head-on, Ghana can be rightly positioned to record lower levels of public debt and subsequently reap the benefits of economic growth.Originality/valueThe study adds to the public debt literature, specifically addressing the idiosyncratic determinants of external debt within the Ghanaian context.
Effects of some macroeconomics variables on estimated tax evasion: evidence from Sub-Saharan AfricaYa'u, Abba; Umar, Mohammed Abdullahi; Yunusa, Nasiru; Rengasamy, Dhanuskodi
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-06-2023-0233
Most research on tax evasion focused on microeconomic variables revolving around perceptions and decisions of individual taxpayers. However, a new wave of research is now investigating the role of macroeconomic variables in inducing tax evasion. This study adds to the limited studies in this new direction of research. Previous studies found that inflation, low gross domestic product (GDP) growth and gross fixed capital formation causes recession, increases unemployment, raise interest rates, hurts both domestic and foreign direct investments. This study examined the relationship between these variables and estimated tax evasion in Sub-Saharan Africa.Design/methodology/approachThe study adopts a correlation research design with 2,300 data points collected from 23 countries in Sub-Saharan Africa. Specifically, tax to GDP ratio, gross fixed capital formation per GDP and the GDP annual growth report from each country for the period 2011–2020 was retrieved. Generalised least square regression technique was employed to analyse the data due to the presence of heteroskedasticity in the model and random effect was utilized based on the Hausman test. To avoid misspecification and biased result; therefore, all relevant test was conducted including the multicollinearity test.FindingsThe results indicate that GDP annual growth and gross fixed capital formation have a significant negative impact on estimated tax evasion in Sub-Saharan Africa. The findings further indicate a negative but insignificant relationship between inflation and estimated tax evasion in Sub-Saharan Africa. The study concludes that both GDP annual growth rate and gross fixed capital formation negatively influence estimated tax evasion and the policy implications in the African continent were discussed.Originality/valueThe new findings on the effects of GDP annual growth, growth fixed capital formation and inflation on estimated tax evasion provide novel knowledge that is currently lacking in the current literature, specifically Sub-Saharan African continent.
Multidimensional poverty analysis of women, children and households in Nigeria: the first order dominance approachOkogun, Oluwanishola; Hiwatari, Masato
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-02-2023-0059
This study examines the dynamics of multidimensional poverty in Nigeria from 2003 to 2018, focusing on women and children, to understand the reality of poverty in Nigeria, where poverty reduction has been stagnant.Design/methodology/approachThis study employed the first-order dominance (FOD) methodology to conduct a multidimensional analysis of poverty among households, women and children in Nigeria, using data from the Demographic and Health Surveys (DHS) conducted in 2003, 2008, 2013 and 2018. We examined how the relative position of multidimensional poverty in each zone has changed for approximately 20 years.FindingsThe results indicated that the north-south poverty gap in Nigeria persisted as of 2018 and, regarding within the north and south, changes in the relative pecking order of poverty between the zones have occurred considerably over the past two decades. Different trends were also observed for child and female poverty, suggesting the influence of the unique dimensions of poverty and cultural differences.Originality/valueThis study is the first poverty analysis to apply the FOD approach to children and women in Nigeria, the country with the highest poverty, over a relatively long period of 2003–2018.
An empirical evaluation of the performance of Nigerian pension fund managersAjadi, Adedeji David
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-06-2023-0214
This paper evaluates the risk-adjusted returns, selectivity, market timing skills and persistence of the performance of Nigerian pension funds.Design/methodology/approachAnnual return data of 23 pension funds that operated in Nigeria between 2018 and 2022 were obtained from the National Pension Commission (PenCom). Risk-adjusted return was appraised using the Treynor ratio, Sharpe ratio and Jensen alpha, while the Treynor–Mazuy and Henriksson–Merton multiple regression models were applied to decompose selective and timing skills. Performance persistence was assessed using the contingency table and rank correlation models.FindingsEvidence shows that pension funds deliver excess risk-adjusted returns and exhibit selective skills. However, the evidence does not support the presence of timing skills, and there is overwhelming evidence that good (bad) performance does not repeat.Practical implicationsAn evaluation of the investment performance of pension funds is crucial for ensuring the financial stability of retirees, maintaining economic stability and making informed investment decisions. It serves the interests of pensioners, pension fund managers, regulators and the broader economy. Our evidence that pension funds generate positive excess returns is a departure from most of the literature on managed funds. We recommend that more Nigerians should leverage the pension fund industry to grow their wealth and prepare for retirement.Originality/valueThis study, to our knowledge, is the first to appraise all the key facets of the investment performance of pension funds in the Nigerian context.
Market power, human capital efficiency and bank performance in KenyaKariuki, Peter Wang’ombe
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-03-2023-0103
The study evaluates the influence of human capital efficiency (HCE) and market power on bank performance.Design/methodology/approachThe study employs two measures of bank performance: profitability and stability. Unbalanced panel data of 35 banks operating in Kenya for 2005–2020 collected from published financial statements is utilized. The study employs the feasible generalized least squares (FGLS) method in the analysis and the two-step system generalized method of moments (GMM) for robustness check.FindingsThe study affirms an inverted U-shaped relationship between market power and bank performance. The effect of market power on bank profitability is enhanced when a bank has highly efficient human capital. Further, HCE significantly impacts bank stability for banks with low HCE. Interestingly, a further increase in HCE narrows the net interest margins for banks with high HCE, conferring welfare benefits to customers as interest rate spreads shrink.Practical implicationsThis study provides important insights into the role of human capital in bank performance. First, banks ought to invest in promoting HCE through training and development. As regulators root for bank consolidation, attention to HCE is imperative for fostering profitability and stability.Originality/valueThe study fills an essential gap in the literature by evaluating the effect of firm-level market power on bank performance in an emerging market. We adopt a novel stochastic frontier estimator to generate the Lerner index. Further, this is the first study known to the authors to evaluate the effect of market power on bank performance in the context of human capital efficiency variations.
Pay dissatisfaction and withdrawal behaviour of employees in the civil service: does personal income tax regime matter?Court, Timinepere Ogele; Appiah, Alaowei Kingsley
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-02-2023-0063
The aim of the study is to explore the links between multiple personal income tax regimes, pay dissatisfaction, employee lateness and absenteeism. Accordingly, this paper examines the relationships between income tax policies, pay dissatisfaction and the work withdrawal behaviours of employees in the public service.Design/methodology/approachThe study adopted a quantitative design, and data were collected through a structured questionnaire from a sample of 252 respondents from the Bayelsa State Civil Service in Nigeria. Data were analysed by applying multivariate regression and structural equation modelling through the use of Stata software version 12 and SmartPLS version 4.FindingsThe results demonstrated that there was a positive relationship between personal income tax regimes and pay dissatisfaction; there was a positive relationship between pay dissatisfaction and work withdrawal behaviour of employee tardiness and absenteeism and pay dissatisfaction mediated the relationships between personal income tax regimes and work withdrawal behaviours of public sector employees.Originality/valueThe study appears to be the first to explore the nexus between personal income tax regimes and pay dissatisfaction and withdrawal behaviours of employee tardiness and absenteeism as well as the mediating role of pay dissatisfaction in public service organisations.
Understanding the link between supervisor and co-worker support, job characteristics, work engagement and employee resilience: evidence from UgandaNabawanuka, Hamidah; Ekmekcioglu, Emre Burak
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-05-2023-0184
The purpose of this study is to investigate the relationship between support (i.e. supervisor support (SS) and co-worker support (CS)), job characteristics (job autonomy, job complexity and skill variety) and work engagement (WE). Furthermore, the study examined whether there is a mediating effect of employee resilience (ER) on the aforementioned variables.Design/methodology/approachData were collected from employees working in SMEs in Uganda. A sample of 324 responses was used for data analysis. Structural equation modelling and bootstrapping procedures were used to test the hypothesized relationships.FindingsThe study findings confirmed that SS, CS and job characteristics were positively related to WE. The study revealed that SS, job autonomy, job complexity and skill variety were found to foster WE through ER. Yet, CS was found not to have an indirect impact on WE through ER.Research limitations/implicationsBecause this study was conducted using a cross-sectional research methodology, it makes it hard to draw causal inferences.Originality/valueThis study’s findings contribute to the existing body of literature on WE and job characteristics and also adds to the growing body of research on ER.
The impact of fiscal shocks on economic growth and income inequality in Ghana: is there a trade-off?Mustapha, Zenabu; Takyi, Paul Owusu; Ayibor, Raphael Edem; Adusah-Poku, Frank
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-04-2023-0133
The study examines the impact of fiscal policy shocks on economic growth and income inequality in Ghana. This has become necessary because of the interdependence between growth and income inequality and the role fiscal policy plays in this relationship in the development process of a country. Thus, a study that investigates how government expenditure shock and tax revenue shock influence the relationship between economic growth and income inequality could assist policymakers to adopt the best policy mix to ensure income equity and sustained economic growth in Ghana.Design/methodology/approachIt employs sacrifice ratio from structural VAR model using quarterly time series data from 1996 to 2019 on Ghana.FindingsOur results show that government expenditure shock impacts economic growth, exchange rate and education positively and significantly in the long run. Also, tax revenue shock has a positive impact on income inequality, economic growth and education. The findings further show that there exists a trade-off between economic growth and income inequality in the long run.Originality/valueThe relationships between fiscal policy shocks, economic growth and income inequality have been extensively discussed among scholars. Understanding how these three macroeconomic variables are determined and their interrelationships are crucial for policymakers. This is because fiscal policy aids in both economic growth and income inequality. In the empirical literature, the emphasis has been on independently estimating the growth effects of fiscal policy or the distribution effects of fiscal policy, leaving out the existence of possible trade-off between economic growth and income inequality following a fiscal shock. To the best of our knowledge, no empirical study has been done on Ghana to empirically examine the trade-off between economic growth and income inequality as we do in this paper.
FinTech and financial development: the role of traditional financial institutionsEmuron, Abraham; van der Nest, D.P.; Coffie, Cephas Paa Kwasi
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-10-2023-0406
This paper employs data from the World Bank to examine the effect of traditional banks on FinTech and financial development in the Southern African Development Community (SADC) region.Design/methodology/approachThe study employs the Generalized Method of Moments (GMM) as the primary data analysis method.FindingsThe findings of the study demonstrate a bi-directional relationship between traditional financial institutions and FinTech. Traditional financial institutions are observed to facilitate the adoption of FinTech solutions, whilst the disruptive effects of FinTech incentivize traditional banks to adapt to the changing financial landscape and tailor their service and product offerings to reflect recent technological advancements. Consequently, there exists a positive relationship between traditional financial institutions and financial development in the SADC region.Practical implicationsOur findings suggest the need for market liberalization and enhanced institutional quality controls for policymakers. Traditional banks must adapt their business models and incorporate FinTech solutions to remain competitive and relevant. Collaborative partnerships between traditional banks and FinTech firms have emerged as a practical approach to leverage the strengths of both sectors.Originality/valueThis is one of the first studies to examine the role of traditional financial institutions in FinTech and financial development using GMM in the SADC region.
The mediating role of organizational learning culture in the nexus of human resource development practices and employee competenciesOtoo, Frank Nana Kweku
2024 African Journal of Economic and Management Studies
doi: 10.1108/ajems-10-2023-0387
A learning-focused culture promotes creativity, innovativeness and the acquisition of novel insights and competencies. The study aims to explore the relationship between human resource development (HRD) practice and employee competencies using organizational learning culture as a mediating variable.Design/methodology/approachData were collected from 828 employees of 37 health care institutions comprising 24 (internationally-owned) and 13 (indigenously-owned). Construct reliability and validity was established through a confirmatory factor analysis. The proposed model and hypotheses were evaluated using structural equation modeling.FindingsData supported the hypothesized relationships. The results show that training and development and employee competencies were significantly related. Career development and employee competencies were significantly related. Organizational learning culture mediates the relationship between training and development and employee competencies. However, organizational learning culture did not mediate the relationship between career development and employee competencies.Research limitations/implicationsThe generalizability of the findings will be constrained due to the research’s health care focus and cross-sectional data.Practical implicationsThe study’s findings will serve as valuable pointers to policy makers and stakeholders of health care institutions in developing system-level capacities that promote continuous learning and adaptive learning cultures to ensure sustainability and competitive advantage.Originality/valueBy evidencing empirically that organizational learning culture mediates the relationship between HRD practices and employee competencies the study extends the literature.