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Article
Publication date: 15 January 2018

Baah Aye Kusi, Agyapomaa Gyeke-Dako, Elikplimi Komla Agbloyor and Alexander Bilson Darku

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267…

2036

Abstract

Purpose

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.

Design/methodology/approach

The authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.

Findings

The results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.

Practical implications

From these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.

Originality/value

This study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 14 September 2022

Baah Aye Kusi, Joseph Ato Forson, Eunice Adu-Darko and Elikplimi Agbloyor

Financial crises (FC) remain a global threat to the financial stability of financial institutions and international bank regulatory capital requirement (IBRCR) by the…

Abstract

Purpose

Financial crises (FC) remain a global threat to the financial stability of financial institutions and international bank regulatory capital requirement (IBRCR) by the Committee on Banking Supervision provides mechanism for curbing the adverse effect of FC on financial stability. Hence, the purpose of this study is to provide, evidence on how IBRCR tones down the adverse FC effects on bank financial stability (BFS).

Design/methodology/approach

The study uses 102 economies between 2006 and 2016 in a two-step dynamic generalized method of moments model.

Findings

The results show that while FC and IBRCR negatively and positively impact BFS, respectively, it is observed that under the increasing presence of IBRCR, the negative effect of FC on BFS declines. Additionally, the results show that economies that maintain minimum IBRCR above 10.5% recommended by BASEL III are able to reinforce a significant reduction in the negative effect of FC on BFS.

Practical implications

These findings imply that in as much as financial crisis is injurious to BFS, regulators and policymakers can rely on IBRCR to avert the injurious effects of FC on BFS. Clearly, while IBRCR is necessary for reinforcing BFS through FC, bank managers who maintain IBRCR above the recommended 10.5% stands a better chance to taming the avert effect of FC on BFS. Additionally, economies that have not full adopted the BASEL minimum capital requirement may have to do so given its potential of dampening the adverse effect of FC on BFS.

Originality/value

The study presents an international perspective of how BASEL capital requirements can help tame global financial crisis using a global sample of 102 economies.

Details

Journal of Financial Regulation and Compliance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 21 February 2022

Gloria Clarissa Dzeha, Christopher Boachie, Maryam Kriese and Baah Aye Kusi

This study provides empirical evidence for the first time on how different measures of monetary policy affect banking profitability in Ghana.

Abstract

Purpose

This study provides empirical evidence for the first time on how different measures of monetary policy affect banking profitability in Ghana.

Design/methodology/approach

Providing empirical evidence on how different measures of monetary policy affect banking profitability in Ghana using 29 banks for period between 2006 and 2016, new monetary indexes are developed and a robust panel random effect models is employed with year effect controls.

Findings

The results show that while increase in monetary policy basis point reduced banking profitability, average monetary policy rate stimulated banking profitability. Interestingly, the monetary policy basis point and rate indexes developed reduced and enhanced banking profitability, respectively. While these results may sound contradictory, they have both theoretical and empirical backing. Thus, basis point increments serve a monetary policy tightening condition which leads to higher loan prices, lower borrowing and declined profitability in the short run. However, in the long run, banks adjusted their loan prices and deposits to reflect basis point changes in their favor, hence the positive effect of average monetary policy rate on banking profitability. Additionally, monetary policy easing which represents decline in monetary policy basis point and rate enhances banking profitability.

Practical implications

These findings imply bank managers may take advantage of monetary policy easing to maximize profits in the banking sector of Ghana. Also, the monetary policy committee must be mindful of monetary policy tightening through basis point change since upward basis point increments reduce banking profitability.

Originality/value

This study provides empirical evidence for the first time on how different measures of monetary policy (developing indexes from monetary policy basis point and monetary policy rate) affect banking profitability in an emerging economy as Ghana.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 9 July 2021

Baah Aye Kusi

This study aims to examine the effect of private (PRST) and public (PUST) sector-led financial sector transparencies on bank interest margins (BIM) termed as social cost…

Abstract

Purpose

This study aims to examine the effect of private (PRST) and public (PUST) sector-led financial sector transparencies on bank interest margins (BIM) termed as social cost of financial intermediation in different institutional quality setups.

Design/methodology/approach

This study uses a two-step dynamic generalized method of moments panel data and bootstrapped quantile models with 91 economies between 2004 and 2016. Data is sourced from World Development Indicator and Global Development Finance databases.

Findings

The results show that under strong and weak political and financial regulatory institutional setups, the reducing effect of PRST on BIM are observed and reported while the full sample reports no significant nexus between PRST and PUST on BIM. Furthermore, under political institutional quality sample, economies with strong corruption control and regulatory quality are able to reinforce the dampening effect of PRST on BIM while under the same political institutional quality sample, economies with weak rule of law are able to heighten the reducing effect of PRST on BIM. Moreover, under financial regulator institutional quality sample, economies with strong overall weighted and unweighted, chief executive officer and policy dependent central banks are able to intensify the diminishing effect of PRST on BIM while under the same financial regulator institutional quality sample, economies with weak limits on lending are able to amplify the reducing effect of PRST on BIM. However, PUST is reported to propel lower levels BIM in the bootstrap models, especially in strong institutional economies.

Practical implications

These findings imply that policymakers may rely on PRST to reduce BIM, especially under financial regulatory institutional quality. Additionally, economies must be careful on their reliance on PRST because the effectiveness of PRST to tame high BIM is dependent on the strength of political and financial regulatory institutions.

Originality/value

To the best of the authors’ knowledge, this study presents first time international evidence on the effect of private and public sector-led financial transparency on BIM in strong and weak political and financial regulatory institution economies.

Details

Journal of Financial Regulation and Compliance, vol. 29 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 23 June 2022

Solomon Nborkan Nakouwo, Daniel Ofori-Sasu and Baah Aye Kusi

This paper aims to examine the effect of natural resources on the national productivity of high and low globalized economies in Africa.

Abstract

Purpose

This paper aims to examine the effect of natural resources on the national productivity of high and low globalized economies in Africa.

Design/methodology/approach

This study uses two-step generalized method of moments dynamic panel data of 30 African economies between 2006 and 2016 to achieve the purpose of the study.

Findings

The results suggest that natural resources promote productivity within African economies regardless of the level of globalization. However, while natural resources have an overall enhancing effect on national productivity in both high and low globalized economies, the enhancing effect varies according to the forms of globalization. The findings of this study suggest that globalization can alter the nexus between natural resources and national productivity in Africa. The results imply that African Governments and their related policymakers can rely on globalization to promote the effect of natural resources on productivity of African economies.

Practical implications

This result is good and welcoming news, especially when natural resources in Africa have been described by prior studies as a curse to the continent. While globalization can be a tool for policymakers in Africa to deploy the positive effect of natural resources on national productivity, they might as well be careful as to which form of globalization they pursue, given that different forms and different levels or extent (high or low) of globalization yields different results on the nexus between natural resources and national productivity.

Originality/value

To the best of the authors’ knowledge, this study is the first of its kind to examine how natural resources affect national productivity in high and low globalized economies, especially in Africa.

Details

critical perspectives on international business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 8 June 2021

Richard Angelous Kotey, Richard Akomatey and Baah Aye Kusi

This study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.

Abstract

Purpose

This study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.

Design/methodology/approach

This study employs a panel dataset of 64 Ghanaian insurance brokerage firms spanning 2011–2015. Static [ordinary least squares (OLS), fixed effect and random effect and dynamic (two-step generalized method of moments (GMM))] estimation techniques are employed to analyze the data.

Findings

The study finds the existence of both economies and diseconomies of scale and scope theories in the Ghanaian insurance brokerage industry confirming the existence of nonlinear nexus between size and performance. This finding is consistent for both stakeholder and shareholder profit performance. Thus, the results show that size improves profitability of insurance brokerage firms, but beyond a certain threshold, the relationship turns negative as size negatively affects profitability.

Practical implications

The research findings have implications for both policy and research; the study recommends that Ghanaian brokerage managers should understand that not all growth is good and exercise a duty of care when applying growth strategies by monitoring size effect on performance so as not to go beyond the inflection point. Further research can be done to examine this effect in other contexts, timeframes and jurisdictions.

Originality/value

This research is unique in that it employs a panel dataset consisting of 96% of insurance brokerage firms in Ghana whilst employing both static and nonstatic regression models to examine the effect of size. The research analysis adopted is robust, and the findings are significant. Also, the lack of empirical studies on the operations and dealings of auxiliary institutions such as the insurance brokerage firms adds value to this research.

Details

African Journal of Economic and Management Studies, vol. 12 no. 3
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 9 July 2021

Maryam Kriese, Gladys Awinpoak Abindaw Nabieu, Daniel Ofori-Sasu and Baah Aye Kusi

Existent literature suggests that Africa is heavily endowed with agriculture resources and entrepreneurship remains an important mechanism for promoting national…

Abstract

Purpose

Existent literature suggests that Africa is heavily endowed with agriculture resources and entrepreneurship remains an important mechanism for promoting national productivity and other economic outcomes. Despite these, empirical evidence on how agriculture resources promote the effect of entrepreneurship on national productivity in Africa is nonexistent given the abundance of agriculture resources and the need for Africa to increase its productivity, which has implications for improving welfare. Hence, this study aims to examine the interplay of how agriculture resources and entrepreneurship influence national productivity by way of exploring for threshold and complementarity effects of agriculture resources in Africa.

Design/methodology/approach

This uses panel data of 29 Africa economies between 2006 and 2016 in a bootstrap quantile regression model.

Findings

First, it is reported that initial levels of agriculture resources in the form of crop and arable lands reduce national productivity while the extreme increase in agriculture resources promotes national productivity in Africa. This implies a nonlinear direct U-shape effect of agriculture resources on national productivity indicating that the enhancing effect of agriculture resources on national productivity is only achieved beyond a certain threshold of average agriculture resources. Second, agriculture resources complement entrepreneurship (which initially reduced national productivity) to promote national productivity. This implies that there is a synergetic-complementarity relationship between entrepreneurship and agriculture resources on national productivity.

Practical implications

These findings suggest that governments that are interested in boosting national productivity through agriculture resources may have to commit more financial resources to develop and reclaiming more agriculture resources (in the form of crop and arable lands) given that some threshold of agriculture resources are needed to promote national productivity. Similarly, developing agriculture resources by policymakers can help complement entrepreneurship to further improve the effects of entrepreneurship on national productivity.

Originality/value

This study attempts to present first-time evidence on the interplay between agriculture resources and entrepreneurship on national productivity by way of exploring for threshold and complementarity effects of agriculture resources in Africa.

Details

Journal of Enterprising Communities: People and Places in the Global Economy, vol. 15 no. 5
Type: Research Article
ISSN: 1750-6204

Keywords

Article
Publication date: 28 June 2021

Baah Aye Kusi, Elikplimi Komla Agbloyor, Asongu Anutechia Simplice and Joshua Abor

The purpose of this paper is to examine the effect of foreign bank assets (FBA) and (FBP) presence is examined on banking stability in the economies with strong and weak…

Abstract

Purpose

The purpose of this paper is to examine the effect of foreign bank assets (FBA) and (FBP) presence is examined on banking stability in the economies with strong and weak country-level corporate governance (CLCG) in Africa between 2006 and 2015.

Design/methodology/approach

Using a Prais–Winsten panel data model of 86 banks in about 30 African economies, findings on how FBA and presence influence banking stability in strong and weak corporate governance economies under different regulatory regimes are reported for the first in Africa.

Findings

The findings show that foreign bank presence (FBP) and assets promote banking stability. However, the positive effect of FBA and presence is enhanced in economies with strong CLCG, whereas the positive effect of FBA and presence is weakened in economies with weak CLCG. After introducing different regulatory regimes, it is observed that the enhancing effect of FBP and assets on banking stability in the full sample and economies with strong and weak CLCG systems is deepened or improved under the loan loss provision regulation regime. However, under the private and public sector-led financial transparency regulations, the reducing effect of FBP and assets on banking stability in economies with weak corporate governance systems is further dampened.

Practical implications

These findings show that the relationship between FBP and assets is deeply shaped by corporate governance systems and regulatory regimes in Africa. Hence, policymakers must build strong corporate governance and sound regulatory regimes to enhance how foreign bank operations promote banking stability.

Originality/value

This study presents first-time evidence on how FBA and presence influence banking stability under strong and weak governance systems while considering different regulatory regimes.

Article
Publication date: 28 August 2019

Baah Aye Kusi, Abdul Latif Alhassan, Daniel Ofori-Sasu and Rockson Sai

This study aims to examine the hypothesis that the effect of insurer risks on profitability is conditional on regulation, using two main regulatory directives in the…

Abstract

Purpose

This study aims to examine the hypothesis that the effect of insurer risks on profitability is conditional on regulation, using two main regulatory directives in the Ghanaian insurance market as a case study.

Design/methodology/approach

This study used the robust ordinary least square and random effect techniques in a panel data of 30 insurers from 2009 to 2015 to test the research hypothesis.

Findings

The results suggest that regulations on no credit premium and required capital have insignificant effects on profitability of insurers. On the contrary, this study documents evidence that both policies mitigate the effect of underwriting risk on profitability and suggests that regulations significantly mitigate the negative effect of underwriting risk to improve profitability.

Practical implications

The finding suggests that policymakers and regulators must continue to initiate, design and model regulations such that they help tame risk to improve the performance of insurers in Ghana.

Originality/value

This study provides first-time evidence on the role of regulations in controlling risks in a developing insurance market.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

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