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Investigation of optimal inflation targets for 15 major oil exporting Sub-Saharan African countries: A panel threshold estimation
Get PDFPurpose: The purpose of this paper is to investigate the optimal inflation targets for an appropriate exchange rate policy in 15 major oil exporting countries in Sub-Saharan African (SSA).
Design/methodology/approach: Dynamic heterogeneous panel threshold techniques are used via threshold-effect test and threshold regression. This procedure is achieved through a grid search and bootstrapping replications method to stimulate the asymptotic distribution of the likelihood ratio test of the null hypothesis on no-threshold as against the alternative hypothesis. The p-values validate the threshold estimates.
Findings: Findings revealed that the optimal inflation target has a turning point and its impact on the real exchange rate is up to a threshold level of 14.47 per cent. Furthermore, the inflation rate above the threshold level overwhelmingly revealed its effect on real exchange regimes.
Research limitations/implications: It would have been a good idea to investigate optimal inflation targets for all African countries but due to inadequate data the selection criteria was narrowed to oil-exporting countries in Sub-Saharan Africa.
Practical implications: Inflation targeting beyond the threshold level would have serious implications on the monetary policy.
Originality/value: To the best of the knowledge, this is the first study to look at optimal inflation targets for 15 major oil exporting countries in general and SSA countries in particular. The findings provide a critical analysis of an inflation regime for a typical oil-producing country that oil exports being their source of revenue.
Doi: https://doi.org/10.1108/JEFAS-12-2018-013
The mediating role of adoption of an electronic tax system in the relationship between attitude towards electronic tax system and tax compliance
Get PDFPurpose: The purpose of this paper is to examine the mediating effect of adoption of electronic tax system in the relationship between attitude towards electronic tax system and tax compliance using evidence from small business enterprises (SBEs) of an African developing economy.
Design/methodology/approach: This study used a quantitative research approach where questionnaires with close-ended questions were used. This study’s research design was cross-sectional and correlational. Usable questionnaires were received from 214 managers of SBEs, and data were analysed with the help of SPSS v22 and MedGraph program (Excel version).
Findings: Adoption of electronic tax system is a partial mediator in the association between attitude towards electronic tax system and tax compliance. Results further indicate that adoption of electronic tax system and attitude towards electronic tax system are significantly associated with tax compliance.
Research limitations/implications: This study was cross-sectional, and monitoring changes in behaviour over time was not possible. The study used a quantitative research approach, and this limits respondents from expressing their feelings fully. The study was conducted in Uganda, and it is possible that the results of this study can be generalized to developing countries with environments similar to that of Uganda.
Originality/value: Whereas there has been a number of studies on tax compliance, this study provides an initial empirical evidence on the mediation effect of adoption of electronic tax system in the relationship between attitude towards electronic tax system and tax compliance using evidence from SBEs of an African developing economy – Uganda.
Doi: https://doi.org/10.1108/JEFAS-07-2018-006
The impact of transaction costs in portfolio optimization A comparative analysis between the cost of trading in Peru and the United States
Get PDFPurpose. This paper aims to analyze the impact of transaction costs in portfolio optimization in Peru. The study aims to compare the transaction costs structure applied in Peru with respect to the ones applied in the USA, and over a few dimensions.
Design/methodology/approach. The paper opted for an empirical study analyzing the cost of rebalancing portfolios over a set period and dimensions. Stocks have been carefully selected using Bloomberg terminals, and portfolio designed then rebalanced using VBA programming. Over a few dimensions as type and number of stocks, holding period and trading strategy, the behavior of these different transaction costs has been compared. The analysis has been done for four different portfolios.
Findings. The paper provides empirical insights about how a retail investor actively trading in Peru can pay up to 14 times more in transaction costs than trading the same portfolio in the USA. These comparatively high transaction costs prevent retail investors to trade in the Peruvian stock market while fueling illiquidity to this market.
Research limitations/implications. The paper deals with a limited amount of Peruvian stocks. Researchers are encouraged to test the proposition further, including other dimensions.
Practical implications. The paper includes implications for any retail investor that wants to invest in Peruvian stocks, giving an insight about how expensive it is to actively rebalance a portfolio in Peru.
Original/value. This paper fulfils an identified need to study how much it costs to actively invest on the stock market in Peru.
Doi: https://doi.org/10.1108/JEFAS-12-2017-012
The relationship between the income and behavioural biases
Get PDFPurpose. The purpose of this paper is to test the relationship between the annual income earned by the investors and eight behavioural biases exhibited by the investors such as mental accounting, anchoring, gambler’s fallacy, availability, loss aversion, regret aversion, representativeness and overconfidence.
Design/methodology/approach. The relationship is derived based on a questionnaire survey conducted on 436 secondary equity investors residing in Chennai, India.
Findings. Analysis of variance test was performed on the normalised and non-normalised version of the biases divided in terms of the annual income earned by the investor. The test found that for the significant biases except the overconfidence bias, the investors with higher annual income were less prone to the biases when compared to investors with lower annual income. On the other hand, with respect to the overconfidence bias, the investors with higher annual income were prone to exhibit overconfidence bias when compared to the investors with lower annual income. Correlation analysis showed that the investors with high annual income were more likely to exhibit higher overconfidence bias but lower representativeness, loss aversion, availability and mental accounting biases.
Originality/value. A contribution in the financial and economic front which would benefit the financial advisors to now consider the income earned by the clients as an important factor while giving financial advice to the clients and while guiding them about the biases they are prone to exhibit.
Doi: https://doi.org/10.1108/JEFAS-10-2018-011
Return and volatility spillover across equity markets between China and Southeast Asian countries
Get PDFPurpose. This paper aims to study the daily returns and volatility spillover effects in common stock prices between China and four countries in Southeast Asia (Vietnam, Thailand, Singapore and Malaysia).
Design/methodology/approach. The analysis uses a vector autoregression with a bivariate GARCHBEKK model to capture return linkage and volatility transmission spanning the period including the pre- and post-2008 Global Financial Crisis.
Findings. The main empirical result is that the volatility of the Chinese market has had a significant impact on the other markets in the data sample. For the stock return, linkage between China and other markets seems to be remarkable during and after the Global Financial Crisis. Notably, the findings also indicate that the stock markets are more substantially integrated into the crisis.
Practical implications. The results have considerable implications for portfolio managers and institutional investors in the evaluation of investment and asset allocation decisions. The market participants should pay more attention to assess the worth of across linkages among the markets and their volatility transmissions. Additionally, international portfolio managers and hedgers may be better able to understand how the volatility linkage between stock markets interrelated overtime; this situation might provide them benefit in forecasting the behavior of this market by capturing the other market information.
Originality/value. This paper would complement the emerging body of existing literature by examining how China stock market impacts on their neighboring countries including Vietnam, Thailand, Singapore and Malaysia. Furthermore, this is the first investigation capturing return linkage and volatility spill over between China market and the four Southeast Asian markets by using bivariate VAR-GARCH-BEKK model. The authors believe that the results of this research’s empirical analysis would amplify the systematic understanding of spillover activities between China stock market and other stock markets.
Doi: https://doi.org/10.1108/JEFAS-10-2018-010
Herrada Bazán, Víctor. La exclusión de socios en la Ley General de Sociedades. Lima: Gaceta Jurídica, 2017
Get PDFIn the 21st century, the growth of various industries and economic sectors has generated that the companies try to adapt to the demands of the of the market. Within the legal scope, such adaptation is not alien, as it establishes a direct relationship with the corporate form adopted by the companies in reality, being that a certain company will be constituted (anonymous, limited, closed, etc.) according to the functionality and treatment legal basis for its creation. With this, a diversity arises of problems and issues that deserve special attention. Within the contemplated by the General Companies Law (hereinafter, LGS), it is presented the corporate figure of the exclusion of partners, a subject that has not been studied in depth in our national legislation.En pleno siglo XXI, el crecimiento de las diversas industrias y sectores económicos del país ha generado que las empresas procuren adaptarse a las demandas del mercado. Dentro del ámbito legal, dicha adecuación no es ajena, pues se establece una relación directa con la forma societaria adoptada por las empresas en la realidad, siendo que se constituirá determinada sociedad (anónima, en comandita, cerrada, etc.) de acuerdo con la funcionalidad y tratamiento legal que fundamenta su creación. Con ello surge una diversidad de problemas y cuestiones que merecen especial atención. Dentro de lo contemplado por la Ley General de Sociedades (en adelante, LGS), se presenta la figura societaria de la exclusión de socios, tema que no ha sido estudiado a profundidad en nuestra legislación nacional
Determinants of innovation A multivariate analysis in Colombian micro, small and medium-sized enterprises
Get PDFPurpose. This paper aims to study the influence of innovation on micro, small and medium-sized enterprises (MSME) performance in Colombia through the 403 MSMES survey analysis. In particular, this paper measures the effect of participation in R&D alliances, product innovation and process innovation on it.
Design/methodology/approach. MSME performance is measured through a composite index, estimated through principal components analysis using polychoric correlations, which is based on eight selfreported assessments of MSME performance. Then, this measure of performance is related to MSME participation in R&D alliances and the product and process development stance of the MSME based on an adaptation of the Miles and Snow business classification scheme, by means of an ANOVA and a linear regression.
Findings. Colombian SMEs are not significantly benefitted from participation on R&D alliances. Instead, their performance appears to be dependent upon their internal innovation efforts directed to product development. Moreover, the results suggest that imitators get a performance almost as high as innovators.
Originality/value. Innovation activities in Colombian SMEs are carried out informally, as they are mostly uninterested to engage in R&D activities and to develop new products by own initiative. Moreover, few of them have an R&D department. In regard to technology, results suggest that almost half of SMEs are classified as followers, namely, they use the same technology as competitors.
Doi: https://doi.org/10.1108/JEFAS-09-2018-009
Editorial
Get PDFWe would like to introduce the 48th issue of the Journal of Economics, Finance and Administrative Science. It is the second issue of the year, and it counts ten articles, according to the requirements of the most prestigious international databases.
The first article, “Uncertainty under hyperbolic discounting: the cost of untying your hands”, proposes a finite horizon model that is readily generalized to include risk and uncertainty on future income within a hyperbolic discounting framework. It provides evidence that workers are vulnerable to contract renegotiations and about the need for a regulator that restores ex-ante efficiency. The article is relevant, as it has measurable implications when analysing commitment or self-control, adherence to healthy habits (e.g. exercising or dieting), procrastination tendencies or savings.
Then, “Fractional differencing in stock market price and online presence of global tourist corporations” aims to explore the behaviour of the stock market prices according to the autoregressive fractional differencing integrated moving-average (ARFIMA) model. The study sample comprises the companies listed at the STOXX® Global 3000 Travel & Leisure. Google Finance and Yahoo Finance, along with Google Trends, were used, respectively, to obtain the data of the stock prices and search results, for a period of five years (October 2012-October 2017).
Doi: https://doi.org/10.1108/JEFAS-11-2019-12
“Fool me once, ...”: deception, morality and self-regeneration in decentralized markets
Get PDFPurpose. This paper aims to provide an overall review and assessment of the virtues and flaws of decentralized self-regulated markets, discussing in particular the extent to which deceiving attitudes by some market participants might be potentially diluted and contradicted.
Design/methodology/approach. To approach deception and morality in markets, the paper follows two paths. First, the relevant recent literature on the theme is reviewed, examined and debated, and second, one constructs a simulation model equipped with the required elements to discuss the immediate and longterm impacts of deceiving behaviour over market outcomes.
Findings. The discussion and the model allow for highlighting the main drivers of the purchasing decisions of consumers and for evaluating how they react to manipulating behaviour by firms in the market. Agents pursuing short-run gains through unfair market practices are likely to be punished as fooled agents spread the word about the malpractices they were allegedly subject to.
Research limitations/implications. Markets are complex entities, where large numbers of individual agents typically establish local and direct contact with one another. These agents differ in many respects and interact in unpredictable ways. Assembling a concise model capable of addressing such complexity is a difficult task. The framework proposed in this paper points in the intended direction.
Originality/value. The debate in this paper contributes to a stronger perception on the mechanisms that attribute robustness and vitality to markets.
Doi: https://doi.org/10.1108/JEFAS-04-2018-003
Financial development and economic growth: panel evidence from BRICS
Get PDFPurpose. The purpose of this paper is to examine the relationship between financial development and economic growth for five major emerging economies: Brazil, Russia, India, China and South (BRICS) during 1993 to 2014 using banking sector and stock market development indicators.
Design/methodology/approach. To begin with, the study first examined some of the principal indicators of financial development and macroeconomic variables of the selected economies. Next, using generalized method of moment system estimation (SYS-GMM), the relationship between financial development and growth is investigated. The banking sector development indicators used in the study include size of the financial intermediaries, credit to deposit ratio (CDR) and domestic credit to private sector (CPS), whereas the stock market development indicators are value of shares traded and turnover ratio. Also, some macroeconomic control variables such as inflation, exports and the enrolment in secondary education were used.
Findings. The examination of the principal indicators of financial development and macroeconomic variables have shown considerable differences between the selected economies. Results from the dynamic one-step SYS-GMM estimates confirm that in presence of turnover ratio, all the selected banking development indicators such as size of financial intermediaries, CDR and CPS are positively significantly determining economic growth. Similarly, in presence of all the selected banking sector development indicators, value of shares traded is found to be positively significantly associated with economic growth. However, the same is not true when turnover ratio is regressed in presence of banking sector variables. Overall, the evidence suggests that banking sector development and stock market development indicators are complementary to each other in stimulating economic growth.
Practical implications. A positive association between financial development and growth indicates that the policymakers should take necessary measures toward simultaneous development of both banking sector as well as stock market for inducing growth.
Originality/value. The present paper attempts to examine the relationship between financial development and growth using both banking sector and stock market development indicators which has not been attempted before for BRICS. Also, most of the existing studies are found in case of developed economies. This paper tries to fill this void by studying five major emerging economies.
Doi: https://doi.org/10.1108/JEFAS-12-2017-012