Deposits and financial sustainability of deposit-taking microfinance institutions: evidence from low income Sub-Saharan Africa
Zibusiso Moyo; Sophia Mukorera; Phocenah Nyatanga
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 229 - 245
This study examined the relationship between deposits and financial sustainability of Deposit-taking Microfinance Institutions (DTMFIs) due to a number of such institutions having collapsed previously in Africa. Panel data spanning 2006 to 2017 from the Microfinance Information Exchange of 64 DTMFIs sampled across 18 Low Income Sub-Saharan Africa (LISSA) countries was utilised. Through probit regression, the study found that the likelihood of attaining financial sustainability by the LISSA DTMFIs is negatively affected by small scale deposits, unfavourable loan loss provisions, deteriorating loan portfolio quality and costly branch coverage. The study recommends low cost, large scale deposit operations, efficiency in managing operating expenses, credit enhancements and restrictive deposit-taking licencing.
Category: Uncategorized
Islamic religiosity and corporate capital structure: evidence from Malaysia
Islamic religiosity and corporate capital structure: evidence from Malaysia
Yee Peng Chow
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 192 - 228
This paper examines the relationship between Islamic religiosity and capital structure and how firm-specific factors, managerial characteristics and corporate governance measures moderate this relationship. This study employs the pooled ordinary least squares estimation procedure, drawing on a panel of non-financial listed firms in Malaysia. The results reveal that Islamic religiosity is positively associated with leverage as proxied by short-term, long-term and total debt ratios. Further investigation confirms that there are certain firm-specific factors (e.g., firm size and age), managerial characteristics (e.g., founder status and excessive shareholdings) and corporate governance measures (e.g., board independence and separation between the CEO and chair) which moderate the positive effects of Islamic religiosity. Several important policy implications can be drawn regarding the selection process of the firms' top executives which should consider certain managerial characteristics, the formulation of appropriate financing strategies according to the firms' characteristics and the implementation of good corporate governance measures.
Credit risk and bank performance: a Sub-Saharan African perspective
Credit risk and bank performance: a Sub-Saharan African perspective
Adamu Yahaya; Fauziah Mahat; Aliyu Mamman
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 170 - 191
Credit risk is one of the dominant risks that pose a great threat to the performance of banks. This study examines the effect of credit risk on the performance of banks in Sub-Saharan Africa (SSA). A total sample of 50 banks was drawn from six Sub-Saharan African countries which include Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania from 2010-2018. A two-step system GMM is applied and the findings reveal a significant negative relationship between credit risk and bank performance in the SSA region. The risk committee has a significant positive impact on the performance of banks in the SSA region. Bank management is encouraged to embrace a modern and efficient credit risk management technique to have better control of the rate of credit risk experienced in banks.
Impact of country-level governance on entrepreneurial performance: a cross-country analysis
Impact of country-level governance on entrepreneurial performance: a cross-country analysis
Najib H.S. Farhan; Faozi A. Almaqtari; Waleed M. Al-Ahdal; Mohd Mohd Yasir Arafat
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 143 - 169
The current study aims to investigate the impact of country-level corporate governance and directors' liability on entrepreneurship performance. The study sample consists of 52 European and non-European countries for the period from 2014 to 2021. Factor analysis is used which results in selecting three dimensions out of 20 dimensions of entrepreneurship. The study runs PCSE estimation on balanced panel data. The empirical outcome of the work revealed that R&D transfer is positively impacted by voice and accountability and government effectiveness; negatively affected by quality of regulatory framework, rule of law, and directors' liability. It is also found that aggregate early-stage entrepreneurial activity is negatively associated with rule of law and government effectiveness. Further, aggregate early-stage entrepreneurial activity is positively impacted by regulatory quality, control of corruption, and directors' liability. Moreover, this work includes directors' liabilities to examine their impact on entrepreneurship.
The nexus between free cash flow, audit committee characteristics, and earnings management practices
The nexus between free cash flow, audit committee characteristics, and earnings management practices
Dea'a Al-Deen Omar Al-Sraheen; Nofan Hamed Al-Olimat; Mohammad Naser Hamdan
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 281 - 296
Research models are developed to address firstly the relationship between free cash flow, audit committee independence, audit committee meeting, and the members' expertise and earnings management. Secondly, the model is developed to examine the moderating role of audit committee effectiveness in the relationship between free cash flow and earnings management. Based on a sample of 255 firms belonging to the Amman Stock Exchange from 2016 to 2020, the results highlight the managers' opportunistic behaviour in presence of free cash flows in order to increase reported earnings. It is shown that the independence and expertise have a vital monitoring role of managers' behaviour that reduces earnings management. In addition, the moderating regression indicates also that the audit committee effectiveness affected positively the relationships between free cash flow and earnings management. Thus, the presence of such a committee restricts the managers in practising their opportunistic behaviours in presence of a free cash flow problem.
Reported risk categories in the prospectus and IPO valuation in Indian stock market: an empirical investigation
Reported risk categories in the prospectus and IPO valuation in Indian stock market: an empirical investigation
Krishan Lal Grover; Pritpal Singh Bhullar; Seshadev Sahoo
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 297 - 316
The current study aims to identify the risk categories that may impact initial public offering (IPO) performance. It also investigates the impact of selected mutually exclusive risk categories on IPO performance. The current analysis examined 131 IPOs from 2011 to 2020 on the main board of the NSE in India. We gathered all the risk statements from the issuers' IPO prospectuses and analysed their substance. To standardise and accept these categories across the research fraternity, a five-point Likert scale was established. Using principal component analysis, we find six broad categories of risk factors have been disclosed by the IPO firms, i.e., operational, compliance, management, equity, investment, technology and innovation risk. The results suggest that corporations prioritised financial soundness (liquidity position) over equity risk when disclosing investment risk. We also find that IPO firms with higher operational risk are more underpriced than firms with lower operational risk.
Systemic risk, contagion and risk factors in the Tunisian banking system context: measures and determinants
Systemic risk, contagion and risk factors in the Tunisian banking system context: measures and determinants
Mohamed Amin Chakroun; Mohamed Imen Gallali
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 2 (2024) pp. 246 - 280
This research paper investigated the systemic risk in the Tunisian bank sector. The researchers paid a special attention to the variable accountings and macroeconomics in the explanation of the systemic risk. The results pointed out that the three first banks with an important systemic ranking are public banks (STB, BNA, and BH). The empirical validations revealed the presence of a positive dependence connection between the public and private banks and that the generation probability of a systemic situation is getting more important during the distress periods. The results of the determinants analysis explored that the liquidity risk, the credit risk and the financial institution's inefficient level represent the main trigger factors of a systemic risk, along with an expansionist monetary policy that may lead to an accumulation of a systemic risk.
Informational content of cash dividends and retained earnings: evidence from South Africa
Informational content of cash dividends and retained earnings: evidence from South Africa
Atanas Sixpence; Olufemi Patrick Adeyeye; Rajendra Rajaram
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 1 (2024) pp. 1 - 21
Net profit for the year can either be distributed as dividends or be retained by the firm. We examine informational content of both channels of conveying value to shareholders of Johannesburg Stock Exchange-listed companies between 2010 and 2017. Motivated by conflicting dividend policy theories and respective empirical findings, the study is aimed at proffering empirical evidence that assists equity investors' investment decisions. Using an autoregressive distributed lag model in system GMM with panel data, both cash dividends and retained earnings exhibited a positive association with market capitalisation but, in both cases, the association lacks statistical significance. This means that both variables do not have information that explicates firm value variations. To forecast firm value, equity investors should therefore not rely on models anchored on either cash dividends or retained earnings. By extension, company executives are advised to avoid making dividend policy changes with the aim of positively influencing firm value. A novel contribution of this study is that investors are not worried about how value created is conveyed to them because they can still enjoy it in either form. We conclude that payment or non-payment of dividends neither creates nor destroys firm value.
Developing of an asset/liability allocation model for banks
Developing of an asset/liability allocation model for banks
Mohsen Mohammadloo; Nasser Motahari Farimani; Mehdi Feizi; Mohammadali Pirayesh
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 1 (2024) pp. 115 - 141
Asset-liability management is one of the solutions for implementing banking policies in the economy. This study is aimed to determine the parameters, variables, and constraints of multi-objective modelling for asset-liability management of banks. Therefore, the standard balance sheet of Bank A (as research variables), which is one of the branches of a state-owned bank in Iran, was reviewed at the end of its fiscal year in 2017. Using the Delphi technique, a linear multi-objective model was presented, the most significant feature of which was the inclusion of new constraints and strategic goals, such as increasing joint income, increasing the share of low-cost deposits, and increasing productive assets. To solve that model, Microsoft Excel was used through the lexicography method. By solving the model, the optimal values of balance sheet variables were calculated for Bank A.
The effect of corporate social responsibility disclosure on financial performance: evidence from Palestinian banks and insurance public listed companies
The effect of corporate social responsibility disclosure on financial performance: evidence from Palestinian banks and insurance public listed companies
Hanna'a Shehada; Mohammed Alashi; Hisham Madi; Maher Durgham
Afro-Asian J. of Finance and Accounting, Vol. 14, No. 1 (2024) pp. 100 - 114
This study aims at investigating the effect of corporate social responsibility (CSR) disclosure on the financial performance of Palestinian financial listed firms. Content analysis of 13 financial firms' annual reports from the period 2010 to 2016 is assessed based on the existence and comprehension of CSR disclosure. Findings of Pooled OLS regression reveal that the mean value of CSR disclosure is low. The results reveal that CSR disclosure is insignificantly affected by financial performance measured by ROA and Tobin's Q. This study contributes to the existing CSR disclosure literature by extending the prior research to provide additional empirical results from emerging economies including Palestine which rarely has been studied through investigating the effect of CSR disclosure on financial performance. Therefore, this study adds to CSR disclosure literature new empirical results from emerging economies like Palestine with a unique business environment.