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1 – 10 of over 1000Asabea Shirley Ahwireng-Obeng and Frederick Ahwireng-Obeng
Despite being a viable source of funds, African sovereign bond markets are relatively underexplored. The empirical literature fails to consider the impact of exclusively…
Abstract
Purpose
Despite being a viable source of funds, African sovereign bond markets are relatively underexplored. The empirical literature fails to consider the impact of exclusively macroeconomic factors and the volatile contexts in which African markets operate. The purpose of this paper is to fill the vacuum by proposing a context-sensitive theoretical framework. The study targets, specifically, macroeconomic factors and assesses the extent to which they affect bond market development.
Design/methodology/approach
Using panel data on sovereign bond markets from 26 African economies, the study extends previous methodologies used in similar studies by accounting for downside risk in a generalized method of moments (GMM) framework and employing tighter robustness measures.
Findings
This study finds that inflation, domestic debt, external debt, GDP at PPP, fiscal balance and exports are important macroeconomic drivers of sovereign bond market development in African emerging economies.
Research limitations/implications
While GMM estimation is beneficial in the presence of endogeneity between the dependent variables that are instrumented with lagged independent variables, it guarantees consistency but, not unbiased estimations.
Practical implications
Market-oriented government funding with well-defined debt management strategies must be implemented to support the development of sovereign bond markets. External debt must be set at a sustainable level, and government should be dedicated to the confirmation of this. Furthermore, inflation rates must be kept low and stable.
Social implications
If policymakers are to take this study seriously, bond markets may begin to be viable sources of funds for African emerging economies.
Originality/value
This study introduces a methodology for measuring bond market development that considers the systemic volatility in emerging markets and proposes a theoretical framework for African emerging economies. In addition, the authors identify a new macroeconomic determinant of bond market development in the region.
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This paper aims to analyze the impact of Covid-19 on the stock market volatility and uncertainty during the first and second waves.
Abstract
Purpose
This paper aims to analyze the impact of Covid-19 on the stock market volatility and uncertainty during the first and second waves.
Design/methodology/approach
This study has applied event study and autoregressive integrated moving average models using daily data of confirmed and death cases of Covid-19, US S&P 500, volatility index, economic policy uncertainty and S&P 500 of Bombay Stock Exchange to attain the purpose.
Findings
It is observed that, during the first wave, the confirmed cases and the fiscal measure have a significant impact, while the vaccination initiative and the abnormal hike of confirmed cases have a significant impact on the US stock returns during the second wave. It is further observed that the volatility of Indian and US stock markets spillovers during the sample period. Moreover, a perpetual correlation between the Covid-19 and the stock market variables has been noticed.
Research limitations/implications
At present, the world is experiencing the third wave of Covid-19. This paper has considered the first and second waves.
Practical implications
It is expected that business leaders, stock market regulators and the policymakers will be highly benefitted from the research outcomes of this study.
Originality/value
This paper briefly highlights the drawbacks of existing policies and suggests appropriate guidelines to successfully implement the forthcoming initiatives to reduce the catastrophic impact of Covid-19 on the stock market volatility and uncertainty.
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Joseph Mawejje and Nicholas M. Odhiambo
This study investigates the dynamic causality linkages between fiscal deficits and selected macroeconomic indicators in a panel of five East African Community countries.
Abstract
Purpose
This study investigates the dynamic causality linkages between fiscal deficits and selected macroeconomic indicators in a panel of five East African Community countries.
Design/methodology/approach
The research design is based on panel cointegration tests, panel cross-section dependence tests, panel error correction-based Granger causality tests and panel impulse response functions.
Findings
Results show that there is long-run feedback causality among fiscal deficits and each of the variables include gross domestic product (GDP) growth, current account balance, interest rates, inflation, grants and debt service. Short-run Granger causality dynamics indicate that there is feedback causality between fiscal deficits and GDP growth; no causality between fiscal deficits and inflation; no causality between fiscal deficits and current account; no causality between fiscal deficits and interest rates; feedback causality between fiscal deficits and grants; and no causality between fiscal deficits and debt service. Impulse response functions show positive and significant impacts of current account balance, inflation and grants; negative and significant impacts of real GDP growth and lending rates; and insignificant effects of debt service.
Research limitations/implications
While the study examines the dynamic causality between fiscal deficits and selected macroeconomic indicators in the East African Community, the analysis excludes South Sudan due to significant data limitations.
Practical implications
In light of the East African Community's aspirations to achieve convergence on key macroeconomic targets, including the fiscal deficit, this research provides novel insights on fiscal policy determinants and causality dynamics.
Social implications
The dynamic relationships between fiscal policy and macroeconomic variables may have social implications for welfare, equitable growth and distribution of resources.
Originality/value
With a focus on the East African Community, this paper contributes to the literature on the macroeconomic determinants of fiscal deficits in regional economic communities.
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The objective of this study is to construct a theoretical framework concerning wage determination, grounded in principles and supplemented by conventional theories. It discusses…
Abstract
Purpose
The objective of this study is to construct a theoretical framework concerning wage determination, grounded in principles and supplemented by conventional theories. It discusses the Islamic perspectives on minimum wage and examines contemporary challenges and intricacies in its application.
Design/methodology/approach
This study uses thematic analysis to create the conceptual framework, drawing upon a review of pertinent literature such as academic papers, books and articles published up to 2023.
Findings
The framework encompasses various categories, namely, employee characteristics, job characteristics, market factors, compensation practices and Islamic principles. Each category consists of multiple variables. The resulting framework offers a holistic and ethically grounded methodology for wage determination, aligning with both Islamic and conventional perspectives. This study notes the absence of a universally agreed-upon minimum wage. Islamic economics faces challenges due to the unclear application of principles, limited awareness, legal constraints and a lack of empirical evidence on wage systems, along with complexities in their implementation.
Research limitations/implications
The paper’s limited scope focuses solely on the Islamic perspective on wage determination, without comparing it to the conventional viewpoint. This may have implications for future research.
Practical implications
The insights on Islamic principles and wage determination guide scholars and policymakers interested in promoting just and equitable wages.
Originality/value
This study is distinct in its integration of various factors to propose an all-encompassing framework for wage determination, rooted in the Quran and principles, while also reinforcing the framework with conventional theories. Additionally, it adds to the growing body of literature by investigating the Quran’s stance and principles on minimum wage, as well as discusses the challenges involved in implementing an Islamic approach to wage determination, which has received limited attention in Islamic literature.
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Clement Moyo and Pierre Le Roux
The impact of financial reforms and financial development on an economy has received considerable attention over the recent past. This paper aims to investigate whether financial…
Abstract
Purpose
The impact of financial reforms and financial development on an economy has received considerable attention over the recent past. This paper aims to investigate whether financial liberalisation and financial development increase the likelihood financial crises in Southern African development community (SADC) countries.
Design/methodology/approach
Due to the binary nature of the dependent variable, the logit model is used for the analysis using data for the period 1990 to 2015.
Findings
The results showed that financial liberalisation captured by real interest rates reduces the likelihood of financial crises. Furthermore, regulatory quality strengthens this reductive effect of financial liberalisation on the probability of financial crises. On the other hand, financial development represented by bank credit increases the incidence of financial crises. The results also suggest that financial liberalisation may increase the likelihood of financial crises indirectly through financial development.
Research limitations/implications
The study recommends that a sound regulatory and supervisory framework be established as well as institutional quality raised to curb the effect of financial development on the incidence of financial crises.
Originality/value
There is scant evidence on the role that financial liberalisation and financial development play in the incidence of financial crises in the SADC. This study incorporates the effect of institutional quality in the analysis which has been neglected by most studies on financial reforms in SADC countries. A number of recent studies in SADC countries conclude that financial development resulting from financial reforms, may hinder economic growth. Therefore, this study sheds light on this negative relationship.
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Oluwaseun Damilola Ajayi and Omokolade Akinsomi
The purpose of this paper is to contribute to the literature on secondary equity offerings (SEOs) by examining the impact of the Black Economic Empowerment (BEE) policy on…
Abstract
Purpose
The purpose of this paper is to contribute to the literature on secondary equity offerings (SEOs) by examining the impact of the Black Economic Empowerment (BEE) policy on secondary equity offering (SEO) pricing dynamics of South African Real Estate Investment Trusts (REITs).
Design/methodology/approach
With a sample of 152 SEOs of South African REITs from 2010 to 2020, ordinary least squares (OLS) models, fixed effect models, parametric and non-parametric tests were applied to test for the impact of BEE on the underpricing of SEOs.
Findings
Significant underpricing is discovered in highly compliant (BEE) REITs; in other words, SEOs pricing of BEE compliant REITs are more underpriced compared to non-compliant BEE REITs. With this, BEE compliant REITs and more so, highly compliant BEE REITs in particular leave more money on the table.
Practical implications
The government is therefore aware of the impact policy interventions play when REITs raise financing through SEOS. With these, highly compliant BEE REITs will need to be more strategic when making BEE compliance decisions as this is shown in our study to impact the underpricing of SEOs.
Originality/value
This is the first study to investigate SEO underpricing for the BEE policy using the South African REITs context.
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The purpose of this study is to explore the role of gold as a hedge against inflation in the case of the United Arab Emirates.
Abstract
Purpose
The purpose of this study is to explore the role of gold as a hedge against inflation in the case of the United Arab Emirates.
Design/methodology/approach
The study utilizes monthly data on the local sharia-compliant spot gold contract traded on the Dubai Gold and Commodity Exchange (DGCX) and the corresponding consumer price index series over the period December 2015 to January 2021. The econometric approach employed by the study involves a unit root testing procedure that allows the timing of significant breaks to be estimated. A cointegration analysis is then conducted using a nonlinear autoregressive distributed lag (NARDL) model, taking into consideration the presence of structural breaks in addition to short- and long-run asymmetries.
Findings
The results reveal that consumer and gold prices are cointegrated, which implies that investing in gold can hedge against inflation in the long run. No sufficient evidence, nonetheless, is found in support of the ability of gold to serve as a hedge against inflation in the short run.
Originality/value
The findings have several important policy implications for policymakers and investors that are further discussed in the study.
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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 examined the roles of public spending and population moderating characteristic structure of selected African economies on bank-based financial development through…
Abstract
Purpose
This study examined the roles of public spending and population moderating characteristic structure of selected African economies on bank-based financial development through credit to private sector.
Design/methodology/approach
The study sampled 37 selected African economies for the years 1991–2018, and it applied a pooled mean group (PMG) estimator to account for short-run and long-run causal effects, and confirmed short-run adjustments towards the long-run convergences between the variables. Specific suitable tests were also applied.
Findings
Evidence confirms positive impacts of both capital formation and final consumption expenditures on financial development in the short run and long run. The moderation of population structures on expenditure structures help to speed up convergences.
Originality/value
This work attests its innovation by accounting for the separate effects of the expenditure types, the moderation effects of young and mature populations for capital and final consumption expenditure on financial development among selected economies in Africa.
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