Finance & Economics Review
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Does Fiscal Policy Tools have the Potential to Stimulate Performance of Manufacturing Sector in Nigeria?
Get PDFPurpose: There is no denying the fact that the Nigerian manufacturing sector is not performing up to the expectation. The poor performance of the manufacturing sector is attributed largely to the poor state of basic infrastructures, especially power supply, and good road networks. To this end, this study examined the potential of fiscal policy to stimulate manufacturing sector performance in Nigeria.
Methods: The model estimation employed the Ordinary Least Square (OLS) estimation technique, while the effect of estimation was carried out using the Granger causality test based on the data from the Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS) for the period of 1986 to 2019.
Results: The result of the analysis revealed that recurrent expenditure has no significant effect on manufacturing sector performance. However, capital expenditure, fiscal deficit, and the company’s income tax significantly affect manufacturing sector performance.
Implications: The Federal, State, and Local governments should stop wasteful expenditure on unnecessary entertainment on meetings, seminars, workshops, foreign trips, etc. to increase spending on basic industrial infrastructures, most importantly on the power supply and road network to stimulate the manufacturing sector performance
Fiscal Policy and Stock Market Development in an Emerging West African Economy: The Case of Nigeria
Get PDFPurpose: This article presents a study on the effect of fiscal policy on stock market development in an emerging West African economy with an emphasis on Nigeria for the period of 1986 to 2018. Specifically, we evaluated the effect of fiscal deficit on all share index including government total expenditure on market capitalization ratio, the value of stock traded, and turnover ratio using data from the Central Bank of Nigeria (CBN) and Nigerian Stock Exchange (NSE).
Methods: The Auto-regressive Distributive Lag (ARDL) was the estimation technique employed in ascertaining the nature of the short-run relationship between fiscal policy and stock market development indices, whereas the effect of fiscal policy on stock market development was actualized under the granger causality analysis.
Results: The result of the analysis revealed that fiscal deficit has no significant effect on all share index; government total expenditure has no significant effect on stock market capitalization ratio; government total expenditure has a significant effect on the value of stock traded ratio; government total expenditure has no significant effect on the stock market turnover ratio.
Implication: Government should implement its fiscal policies to carefully accommodate the development of the stock market, as changes in fiscal policy affect the overall activities in the market and ultimately the economy
Farm Households’ Willingness to Contribute Labor for Conservation of Bamboo Forest Ecosystem: The case of Mao Komo Special Woreda Benishangul Gumuz Regional State, Ethiopia
Get PDFPurpose: This study was designed for the assessment of farm households’ willingness to contribute labor for conservation of bamboo forest ecosystem with the specific objectives of describing farmer’s attitude toward bamboo forest protection, exploring the amount of labor, the household’s would be willing to contribute for bamboo forest conservation and identifying factors affecting farmers\u27 willingness to contribute labor for bamboo forest conservation.
Method: Data for the study were collected from both primary and secondary sources. The multistage random-sampling technique was used in selecting 135 respondents followed by a probability proportional to size. The data were analyzed using descriptive statistics and bivariate probit model.
Results: The result of the bivariate probit model shows that the mean willingness to contribute labor for the conservation of bamboo forest was 14.15 man-days per year per household. The result from seemingly unrelated bivariate probit model indicates that household\u27s literacy status, income from bamboo forest, contact with extension agents, total cultivated land and access to credit have positive significant effects on willingness to contribute labor, while age of the respondent, distance from home to forest, initial bid, follow up bids and dependency ratio have a negative and significant effect on willingness to contribute labor. The study shows that the farmers in the study area are knowledgeable about intensive mass flowering of bamboo and massive depletion of bamboo forest and they are willing to participate in the conservation of bamboo forest to regenerate and return to the original position.
Implications: An effort would be needed to strengthen literacy, increase farmers’ awareness about the importance of conservation practices, ensure credit facilities and increase the frequency of extension contact is important to conserve the bamboo forest in the study area
Estimating Economic Effectiveness of Economic Infrastructure: A Methodological Exploration
Get PDFPurpose: Economic Infrastructure is a prerequisite for economic development. To this end, it is necessary to reveal the theoretical background for estimating the effectiveness of economic infrastructure and establish the methodology for estimating the effectiveness. Until now, there have been a number of qualitative and quantitative studies that investigate the effect of infrastructure on the economy. However, we can hardly say that there is an agreed-upon methodology for estimating such effectiveness. The aim of this paper is to solve methodological problems arising in estimating the effectiveness of infrastructure in terms of economic, physical-value, and spatio-temporal aspects.
Methods: The first section of the paper discusses theoretical problems for estimating the effectiveness of economic infrastructure. For this, we analyze the preceding studies on economic infrastructure as an economic concept, and on this basis, systemize its specific features and roles in a new way. The second section illustrates the main indicators and methodology for estimating the effectiveness of economic infrastructure. In this section, we apply various indicators related to physical and value aspects to suggest the methodology for estimating the space-time effectiveness of economic infrastructure.
Results: Based on the drawbacks of the previous approaches, this paper finds the rationality to estimate the economic effectiveness of economic infrastructure using the benefit to cost approach rather than the functional approach.
Implications: This study can be of significance to the policymakers or investors in decision-making related to infrastructural investment. They can calculate the economic effectiveness using the proposed methodology, upon which they can select optimal infrastructural projects for the short term or long term
Effect of Board and Audit Committee Characteristics on Profitability: Evidence from Pharmaceutical and Chemical Industries in Bangladesh
Get PDFPurpose: The objective of this study is to investigate the relationship between corporate governance (CG) elements, namely board characteristics (board size, independence, expertise) and audit committee characteristics (audit committee size, independence, expertise) with profitability, present by two proxy ROA and ROE.
Method: This study includes all listed firms of DSE in Bangladesh under the category of pharmaceutical and chemical industry, i.e. total 31 firms for 3 years from 2015/16 to 2017/18 means 93 firm year observations. Theoretical model of the study is framed under agency theory. This study applied panel data set in regression model Using Fixed-Effects with Driscoll and Kraay’s Standard Errors to test the hypothesis by STATA 13 software. The study model also consider two control variables: firm size and leverage according to literature.
Results: Empirical result of the study presents that board size, board expertise and audit committee size have significant positive relationship with both proxy of profitability i.e. ROA and ROE. Moreover, audit committee expertise has significant negative relationship with ROA but insignificant relationship with ROE. However, all other variables does not have significant influence on profitability.
Implications: This study will extend the literature of CG and profitability in an emerging economy like Bangladesh. Agency problem can be solved with more vigilant practice of CG. This study could be extended further by considering all listed firm of DSE which will give us more insight of CG practice in Bangladesh
Public Debt, Foreign Direct Investment and Economic Growth in Nigeria
Get PDFoai:ojs.pkp.sfu.ca:article/10Purpose: The study examines the short run and the long-run effects of public debt (disaggregated into external and domestic debt) and FDI on economic growth in Nigeria using the Bounds test approach to co-integration and error correction analysis. The short-run causal relationships among the variables are also examined using the Toda-Yamamoto’s approach to Granger non-causality test.
Method: Annual time series data spanning the period from 1981 to 2016 are utilized for the analysis.
Results: The study finds a significant negative effect of domestic debt on economic growth in Nigeria in the short-run and the long-run. It also finds the growth effect of external debt to be non-significant in the short-run, but positive and significant in the long-run. The growth effects of FDI on economic growth are found to be non-significant in the long-run and in the short-run. Further evidence from the study is that trade openness negatively affects economic growth in the short-run, while its long-run effect is also negative, but not statistically significant. Unidirectional causation was found only from domestic debt to economic growth. No significant causal relationships were found to exist among other variables.
Implications: In view of the empirical evidence, the study proffers as recommendations for policy consideration efforts by the government to enhance the creditworthiness of the country so as to be able to access external loans for financing long-run growth. It further recommends some degree of restrictions on imports (especially of consumption goods) as a measure to enhance the country\u27s long-run growth