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1 – 10 of over 11000John Kwaku Amoh, Abdallah Abdul-Mumuni and Richard Amankwa Fosu
While some countries have used debt to drive economic growth, the asymmetric effect on sub-Saharan African (SSA) countries has received little attention in the empirical…
Abstract
Purpose
While some countries have used debt to drive economic growth, the asymmetric effect on sub-Saharan African (SSA) countries has received little attention in the empirical literature. This paper therefore examines the asymmetric effect of external debts on economic growth.
Design/methodology/approach
The panel nonlinear autoregressive distributed lag (NARDL) approach was employed in the study for 29 sub-Saharan African countries from 1990 to 2021. The cross-sectional dependence test was used to determine the presence of cross-sectional dependence, while the second-generation panel unit root tests was used to examine the unit-root properties.
Findings
The empirical results show that external debt has an asymmetric effect on economic growth in both the short and long run. In the long run, a positive shock in external debts of 1% triggers an upturn in economic growth by 0.216% while a negative shock triggers 0.354% decline in economic growth. This implies that the negative shock of external debts has a much stronger impact on economic growth than the positive shock. In the short run, a positive shock in external debts by 1% triggers a decline in economic growth by 0.641%, while a negative shock of 1% triggers a fall in economic growth of 0.170%.
Originality/value
The paper used the NARDL model to examine the asymmetric impact of external debt on the economic growth of SSA countries, which has not been extensively studied. It is recommended that governments in the selected countries in sub-Saharan Africa should drive economic growth by promoting domestic revenue mobilization since external debts impede economic growth.
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Lin Yang, Zhibin Lin, Rose Quan, James Cunningham and Wei Huang
In today's competitive business environment, understanding how leadership traits shape outcomes is critical. Chief executive officer (CEO) narcissism, an intriguing and debated…
Abstract
Purpose
In today's competitive business environment, understanding how leadership traits shape outcomes is critical. Chief executive officer (CEO) narcissism, an intriguing and debated trait, raises questions about its impact on organisational behaviour, particularly regarding entrepreneurial orientation (EO). This study aims to examine how CEO narcissism affects EO, both as aggregate and specific measures, encompassing internal and external growth. It also considers the organisational context by examining how factors such as capital intensity, firm ownership and CEO duality moderate this relationship.
Design/methodology/approach
To test the hypotheses, the authors used a sample of firms drawn from China's ChiNext database (2008–2017). After an initial screening, the final sample consists of 251 CEOs from 239 companies. Data on CEO narcissism are collected from the firm's official website and major online sources, whilst additional data are extracted from the WIND daabase. The authors use multiple regression and ordinary least squares (OLS) for data analysis.
Findings
The results show that CEO narcissism leads to external asset growth investments but not internal research and development (R&D). There is a positive relationship between CEO narcissism and EO as an aggregate measure and also different managerial discretions play varying roles in the relationship. Specifically, capital intensity weakens this relationship, but state ownership strengthens it.
Originality/value
This study helps to clarify the relationship between CEO narcissism and EO and advances the literature by showing that firms' EO actions may take various forms of innovation and venturing as new entry initiations of EO. The study findings have important implications for firms to capitalise on narcissistic CEOs' entrepreneurial tendencies, balance internal R&D and external asset growth and leverage various managerial discretions.
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Gildas Dohba Dinga, Dobdinga Cletus Fonchamnyo and Nges Shamaine Afumbom
This study examines the effect of external debt and domestic capital formation on economic development in Sub-Saharan African (SSA) economies.
Abstract
Purpose
This study examines the effect of external debt and domestic capital formation on economic development in Sub-Saharan African (SSA) economies.
Design/methodology/approach
Using the Dynamic Common Correlation Effects (DCCE) technique and the Driscoll and Kraay fixed-effect technique, this paper conducts a multidimensional assessment of external debt and domestic investment on economic development across a panel of 35 SSA countries from 1995 to 2018. The data utilized are sourced from the World Development Indicators (2021) and the United Nations Development Program (UNDP) database (2021).
Findings
The results reveal that domestic investment has a positive impact on economic development in SSA countries, consistent across all three dimensions of the human development index (income, education and life expectancy). However, external debt exhibits an adverse effect on economic development, consistently yielding negative outcomes for life expectancy, education and income.
Practical implications
Based on these findings, the authors recommend that SSA economies implement appropriate policies, such as reducing bureaucratic requirements and addressing corruption, to enhance domestic capital investment. Additionally, efforts should be directed toward channeling contracted debt into productive sectors like road construction and electricity provision.
Originality/value
This study is among the first to assess the impact of domestic investment and external debt on the three dimensions of human development outlined by the UNDP. Furthermore, it employs a robust econometric method that considers cross-sectional dependence (CD).
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Zélia Serrasqueiro, Beatriz Pinto and Filipe Sardo
This study aims to seek to analyse the relationships between profitability, productivity, external debt and growth in SMEs. The authors also analyse firm size and age as…
Abstract
Purpose
This study aims to seek to analyse the relationships between profitability, productivity, external debt and growth in SMEs. The authors also analyse firm size and age as explicative variables of small and medium-sized enterprise (SME) growth.
Design/methodology/approach
In this paper the data were collected for 3309 SMEs for the period 2010–2019. The authors estimate the model using the system generalised method of moments dynamic estimator.
Findings
The results show that after a certain level of profitability, this determinant positively impacts SME growth. Productivity influences positively the firm growth. There is a positive effect of external debt on SME growth, which can be explained by the insufficiency of internally generated funds. The authors obtained a negative signal between size and firm growth, contradicting Gibrat's Law (1931). Moreover, the results suggest that SMEs grow less after a certain age, suggesting that small firms grow less after reaching the minimum scale of efficiency.
Practical implications
For SME owner-managers, this study enhances the importance of profitability and labour productivity for firm growth. For policymakers, the results suggest the need for favourable conditions for SMEs in accessing external finance.
Originality/value
Profitability negatively impacts on SME growth. However, the authors found that above a certain level of profitability, probably, as firms accumulate retained earnings, profitability has a positive effect on SME growth. Moreover, this study shows that labour productivity and debt positively impact on SME growth, evidencing the importance of the availability of financial resources to sustain the growth of these firms.
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Mesbah Fathy Sharaf and Abdelhalem Mahmoud Shahen
This study aims to examine the symmetric and asymmetric impact of external debt on inflation in Sudan from 1970 to 2020 within a multivariate framework by including money supply…
Abstract
Purpose
This study aims to examine the symmetric and asymmetric impact of external debt on inflation in Sudan from 1970 to 2020 within a multivariate framework by including money supply and the nominal effective exchange rate as additional inflation determinants.
Design/methodology/approach
The authors utilize an Auto Regressive Distributed Lag (ARDL) model to examine the symmetric impact of external debt on inflation, while the asymmetric impact is examined using a Nonlinear ARDL (NARDL) model. The existence of a long-run relationship between inflation and external debt is tested using the bounds-testing approach to cointegration, and a vector error-correction model is estimated to determine the short parameters of equilibrium dynamics.
Findings
The linear ARDL model results show that external debt has no statistically significant impact on inflation in the long run. On the contrary, the results of the NARDL model show that positive and negative external debt shocks statistically affect inflation in the long run. The estimated long-run elasticity coefficients of the linear and nonlinear ARDL models reveal that the domestic money supply has a statistically significant positive impact on inflation. In contrast, the nominal effective exchange rate has a statistically significant negative impact on inflation.
Practical implications
The reliance on symmetric analysis may not be sufficient to uncover the existence of a linkage between external debt and inflation. Proper external debt management is crucial to control inflation rates in Sudan.
Originality/value
To date, no empirical study has assessed the external debt-inflation nexus and its potential asymmetry in Sudan, and the current study aims to fill this gap in the literature.
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This study aims to build on the emerging understanding that small enterprise growth results from a confluence of different factors. This study seeks to provide additional insights…
Abstract
Purpose
This study aims to build on the emerging understanding that small enterprise growth results from a confluence of different factors. This study seeks to provide additional insights into the nature of these factors and how they influence the growth process of small businesses in rural communities in Ghana.
Design/methodology/approach
This study undertook a qualitative investigation of 28 small enterprises in three Ghanaian rural districts. Interviews were conducted with owners of the businesses.
Findings
The results indicate that growth-enabling conditions such as entrepreneurial ambition, market demand and infrastructure combine with finance to define small enterprise growth trajectories in rural Ghana. However, finance may not always be the major factor driving the growth.
Originality/value
Most past studies about small enterprise growth in Africa have concentrated on firms in urban communities and see finance gap as the most serious constraint to growth. This study joins the few recent studies about rural enterprise growth in Ghana, showing that the growth of these businesses depends on an interplay of a variety of factors.
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Expectations for 2024 suggest lower inflation than last year, but risks persist. The OECD forecasts moderate GDP growth, highlighting inflation and interest rate concerns. Minimum…
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DOI: 10.1108/OXAN-DB284490
ISSN: 2633-304X
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Geographic
Topical
This paper aims to revisit the relationship between sales growth and profitability by exploring the direct and indirect effects of cost stickiness in the growth process. Cost…
Abstract
Purpose
This paper aims to revisit the relationship between sales growth and profitability by exploring the direct and indirect effects of cost stickiness in the growth process. Cost stickiness refers to asymmetric variations of costs associated with increases and decreases in sales. Cost stickiness is analyzed as a strategic liability that negatively affects profitability because it contributes to organizational rigidity that causes opportunity costs.
Design/methodology/approach
The empirical design is based on a large sample of 65,599 French firms drawn from the Amadeus database and it covers the period 2010 to 2019. The authors take advantage of the presentation of expenses made by nature in Amadeus to calculate cost stickiness in a more direct way than what is commonly done in the literature. The authors use various regression models to test the hypotheses.
Findings
For firms that experience rapid growth in sales, cost stickiness has a positive moderating effect on the relation between sales growth and profitability because of a higher asset turnover efficiency. However, for firms that experience slow growth, no growth or a decrease in sales, cost stickiness plays a negative moderating effect on the relation between sales and profitability.
Originality/value
This work contributes to the discussion about the conditions under which high growth is associated with greater profitability and conceptualizes cost stickiness as a strategic liability. The empirical context, privately held firms, has been overlooked by previous research.
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Yahuza Abdul Rahman, Anthony Kofi Osei-Fosu and Daniel Sakyi
This paper examines correlations of the underlying structural shocks and the degree of synchronization in the impulse responses of output, inflation and trade to a one standard…
Abstract
Purpose
This paper examines correlations of the underlying structural shocks and the degree of synchronization in the impulse responses of output, inflation and trade to a one standard deviation shock to non-oil commodities price index and exchange rates within the West African Monetary Zone (WAMZ) countries from 1990q1 to 2020q1.
Design/methodology/approach
This paper uses the structural vector autoregressive model to isolate the underlying structural shocks and compares them with the West African Monetary Union (WAEMU) countries.
Findings
Findings from the study suggest that correlations of underlying structural shocks are more profound in the WAEMU than in the WAMZ. Impulse responses of output to price and exchange rate shocks are more symmetric in the WAEMU than in the WAMZ. However, impulse responses of inflation to price and exchange rate shocks are symmetric in the WAMZ than in the WAEMU and responses of trade in both sub-groups are not uniform.
Practical implications
The paper concludes that the WAMZ does not constitute an Optimum Currency Area concerning the correlations of the structural shocks and output. However, it has achieved convergence in inflation and there are adequate adjustment mechanisms to shocks in the WAMZ than in the WAEMU. Therefore, the WAMZ may not suffer from joining the monetary union. Thus, economic Community of West African States may take steps to roll out the monetary union.
Originality/value
The paper examines correlations of the underlying structural shocks, impulse responses of output and inflation to shocks to commodities price and exchange rates in the WAMZ and compares them with the WAEMU.
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Thembeka Sibahle Ngcobo, Lindokuhle Talent Zungu and Nomusa Yolanda Nkomo
This study aims to test the dynamic impact of public debt and economic growth on newly democratized African countries (South Africa and Namibia) and compare the findings with…
Abstract
Purpose
This study aims to test the dynamic impact of public debt and economic growth on newly democratized African countries (South Africa and Namibia) and compare the findings with those of newly democratized European countries (Germany and Ukraine) during the period 1990–2022.
Design/methodology/approach
The methodology involves three stages: identifying the appropriate transition variable, assessing the linearity between public debt and economic growth and selecting the order m of the transition function. The linearity test helps identify the nature of relationships between public debt and economic growth. The wild cluster bootstrap-Lagrange Multiplier test is used to evaluate the model’s appropriateness. All these tests would be executed using the Lagrange Multiplier type of test.
Findings
The results signify the policy switch, as the authors find that the relationship between public debt and economic growth is characterized by two transitions that symbolize that the current stage of the relationship is beyond the U-shape; however, an S-shape. The results show that for newly democratized African countries, the threshold during the first waves was 50% of GDP, represented by a U-shape, which then transits to an inverted U-shape with a threshold of 65% of GDP. Then, for the European case, it was 60% of GDP, which is now 72% of GDP.
Originality/value
The findings suggest that an escalating level of public debt has a negative impact on economic growth; therefore, it is important to implement fiscal discipline, prioritize government spending and reduce reliance on debt financing. This can be achieved by focusing on revenue generation, implementing effective taxation policies, reducing wasteful expenditures and promoting investment and productivity-enhancing measures.
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