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1 – 10 of over 1000Serena Santis, Giuseppe Grossi and Marco Bisogno
The purpose of this paper is to review and analyze the literature on consolidated financial statements (CFS) in the public sector published from 1980 to 2015 in public sector…
Abstract
Purpose
The purpose of this paper is to review and analyze the literature on consolidated financial statements (CFS) in the public sector published from 1980 to 2015 in public sector accounting and management journals, and propose a future research agenda.
Design/methodology/approach
Adopting a structured literature review methodology, the authors investigate how the CFS literature is developing and what its focus is.
Findings
The authors identify five major topics: the definition of the consolidation area; the identification of the reporting entity; the private vs public sector accounting standard dichotomy; the relationship with the statistical rules; and the usefulness of CFS.
Originality/value
The authors analyze these topics, highlighting the growing implementation of CFS in different contexts (mainly focusing on governments outside the USA) and provide suggestions for future research.
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Adrian David Saville, Mluleki Shongwe and Amy Fisher Moore
On completion of the case study, students will understand the following learning objectives: the characteristics of quantitative easing (QE) and when it may be appropriate to…
Abstract
Learning outcomes
On completion of the case study, students will understand the following learning objectives: the characteristics of quantitative easing (QE) and when it may be appropriate to implement QE; how QE differs from a conventional bond purchasing programme; the impact of direct financing of the fiscus by the central bank on its independence; how the macro-economic and political environments affect and influence national economic policy; the difference between traditional and unconventional monetary policies and potential implications for an economy like South Africa. The learnings from this case study can be used in other global economic environments, particularly in emerging markets. This case study provides valuable insights into decision-making, institutional independence, policy coordination, deficit financing, causes and consequences of price inflation, risks relating to monetary instability and the correct application of monetary policy.
Case overview/synopsis
After the announcement of the COVID-19-related lockdown in March 2020 and the subsequent slow-down of economic activity in South Africa, the South African Reserve Bank (SARB) had to consider appropriate macro-economic tools to ensure both price and financial stability in South Africa. The macro-economic policy tools had to be considered in light of the South African economic context, which included acknowledgement of South Africa’s debt crisis and slow economic growth. The central bank responded by introducing the following measures: reducing interest rates to a record low of 3.5% to give consumers financial relief and to promote spending in the economy; purchasing government bonds in the secondary markets to stabilise financial markets; facilitating the loan guarantee scheme that was aimed at providing financial relief to small- and medium-sized enterprises; relaxing the capital and liquidity adequacy requirements that commercial banks are required to meet; and ensuring availability of liquidity to banks through facilities such as the weekly repo auctions. However, despite introducing these interventions, the SARB faced calls from politicians, analysts and academics to do more. Various commentators argued that the SARB could introduce QE and directly finance government spending by purchasing government bonds. Some commentators argued that the reluctance of the SARB to pursue these suggestions was a result of the close alignment and relationship between the SARB and National Treasury. The dilemma faced by Governor Lesetja Kganyago of the SARB was threefold, namely, whether it was appropriate for the central bank to pursue the initiatives and, if so, whether the bank could pursue them without compromising its independence, and if the introduction of those initiatives would not adversely affect the ability of the central bank to fulfil its mandate of price stability and financial stability. In this regard, the governor and his executive team were required to consider the long-term implications of introducing the initiatives on consumer price inflation, independence of the SARB and the appropriate use of monetary policy tools to fulfil the central bank’s mandate. But the question was: What policies should the governor favour?
Complexity academic level
This case study is based on various macro-economic theories. Therefore, it would be useful to teach this case study in macro-economic courses in the following programmes: master’s in business administration, bachelor of commerce, bachelor of economic sciences and business science studies, as well as on executive education programmes, which consider macro-economic policy. In general, students who undertake economics, business and general management, finance, legal, commerce and banking studies could learn from this case study.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 3: Entrepreneurship.
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Daniel Kipkirong Tarus and Philip Otieno Manyala
The purpose of this paper is to examine the determinants of bank interest rate spread in Sub-Saharan African countries, which were categorized into macro-specific, bank-specific…
Abstract
Purpose
The purpose of this paper is to examine the determinants of bank interest rate spread in Sub-Saharan African countries, which were categorized into macro-specific, bank-specific and institutional variables.
Design/methodology/approach
The authors used fixed effects estimations to analyze the data. The data were drawn from a pool of 20 Sub-Saharan African countries for a period of ten years spanning 2003–2012. The countries were categorized into low-income, lower middle-income and upper middle-income countries based on World Bank income classifications.
Findings
The results show that inflation has a negative and significant effect on interest rate spread, while operating costs and bank concentration have a positive and significant effect on interest rate spread. Similarly, government effectiveness, rule of law and political stability are negatively related to the interest rate spread.
Practical implications
The paper provides evidence that interest rate spread is determined by both bank-specific, macro-economic and institutional variables. The paper also indicates that the income status of a country is important in explaining the variations in the interest rate spread across the region. Therefore, the policy makers should design policies that take into account the variables in order to help in planning by all economic agents, including banks.
Originality/value
The paper uses data from Sub-Saharan Africa and introduces institutional variables in the model, which have been found to be critical in the context.
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Dhulika Arora and Smita Kashiramka
Shadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated…
Abstract
Purpose
Shadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated with them, such as their unchecked leverage and interconnectedness with the rest of the financial system. In light of this, the present study analyses the impact of the growth of shadow banks on the stability of the banking sector and the overall stability of the financial system. The authors further examine the effect of the growth of finance companies (a type of NBFIs) on financial stability.
Design/methodology/approach
The study employs data of 11 EMEs (monitored by the Financial Stability Board (FSB)) for the period 2002–2020 to examine the above relationships. Panel-corrected standard errors method and Driscoll–Kray standard error estimation are deployed to conduct the analysis.
Findings
The results signify that the growth of the shadow banking sector and the growth of lending to the shadow banking sector are negatively associated with the stability of the banking sector and increases the vulnerability of the financial system (overall instability). This implies that the higher the growth of the shadow banks, the higher the financial fragility. Finance companies are also found to negatively affect financial stability. These findings are validated by different estimation methods and point out the risks posed by the NBFI sector.
Originality/value
The extant study builds a composite index (Financial Vulnerability Index (FVI)) to measure financial stability; thus, the findings contribute to the evolving literature on shadow banks.
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Kwasi Dartey‐Baah, Kwesi Amponsah‐Tawiah and David Aratuo
The purpose of this paper is to examine the Ghanaian economy within the context of its macro‐economic indicators and the performance of the agricultural sector against the…
Abstract
Purpose
The purpose of this paper is to examine the Ghanaian economy within the context of its macro‐economic indicators and the performance of the agricultural sector against the backdrop of the exogenous economic explanation of the resource curse. This is aimed at equipping policy makers with the tools needed in identifying symptoms of the Dutch disease as it transitions from an agrarian to an oil economy.
Design/methodology/approach
This is a research paper, employing quantitative and qualitative data of the macro‐economic indicators in the last ten years (2000‐2010) and policy initiatives since the discovery of oil in commercial quantities in Ghana. Furthermore, it also examines theoretical perspectives of the Dutch disease as frames of analysis to gauge the existence of any symptoms of the latter.
Findings
The paper questions a previous World Bank (2009) report classifying the Ghanaian economy as already showing signs of the Dutch disease. The paper suggests that the macro‐economic indicators show resilience and stability of the economy which is necessary for growth. It is observed that various government policies are aimed at improving agriculture inspite of the emerging oil industry. The paper recognizes some areas of concern and recommends further studies to observe the changes in dynamics when the “petro‐dollars” begin to flow into the economy.
Originality/value
This is a pioneering work which seeks to provide early warning signals of the Dutch disease in an emerging oil economy.
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Tham Siew Yean and Loke Wai Heng
The conclusion of the Uruguay Round (UR) in 1994 and the subsequent establishment of the World Trade Organisation (WTO) in January 995 signaled a new era in terms of global trade…
Abstract
The conclusion of the Uruguay Round (UR) in 1994 and the subsequent establishment of the World Trade Organisation (WTO) in January 995 signaled a new era in terms of global trade. At the same time the prolonged years of negotiations of the UR also witnessed an increase in the expansion and extension of various regional arrangements. Consequently, the global environment has shifted toward institution‐driven globalisation and regionalism concurrently. The new international horizon promises significant opportunities and challenges for Malaysian industries. The objective of this paper is to assess the ability of Malaysian manufacturing to face these opportunities and challenges by evaluating their competitiveness. The findings of this study reveal only three sub‐sectors that are competitive even before the advent of the financial crisis. Further, the crisis has worsened the competitive position of the manufacturing sector. Hence, it is imperative that current government policies work toward restoring macro‐economic and political stability. At the same time, the medium‐ and long‐term needs of this sector call for a shift in industrial policy from mere export promotion to technology and human resource promotion.
D.M. Nachane and M. Shahidul Islam
The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset…
Abstract
Purpose
The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset deflation. The purpose of this paper is to focus on how the crisis impacted the four major economies of South Asia, viz. Bangladesh, India, Pakistan and Sri Lanka and how, by a combination of swift actions on the monetary, fiscal and exchange rate fronts, the worst consequences of the crisis were averted.
Design/methodology/approach
The regulatory and supervisory systems in these four economies are then benchmarked against certain desirable norms, which have emerged out of post‐crisis international deliberations.
Findings
It is felt that the South Asian regulatory systems perform fairly well vis‐à‐vis these norms.
Practical implications
The paper also touches upon the major highlights of the crisis impact, policy responses and post‐crisis recovery in the Southeast Asian region.
Originality/value
The several similarities and the few contrasts between the two regions on these aspects are also presented.
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The distribution dynamics of incomes across Indian states are examined using the entire income distribution. Unlike standard regression approaches, this approach allows us to…
Abstract
The distribution dynamics of incomes across Indian states are examined using the entire income distribution. Unlike standard regression approaches, this approach allows us to identify specific distributional characteristics such as polarisation and stratification. The period between 1965 and 1997 exhibits the formation of two convergence clubs: one at 50% and another at 125% of the national average income. Income disparities across the states declined over the sixties and then increased from the seventies to the nineties. Conditioning exercises reveal that the formation of the convergence clubs is associated with the disparate distribution of macro-economic factors such as capital expenditure and fiscal deficits. In particular, capital expenditure, fiscal deficits and education expenditures are found to be associated with the formation of the upper convergence club.
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Masudul Alam Choudhury and Mohammad Ziaul Hoque
The theme of micro‐foundation of economic theory has not been adequately addressed. This is true even of those who pioneered the area of micro‐foundation of macro‐economics. The…
Abstract
The theme of micro‐foundation of economic theory has not been adequately addressed. This is true even of those who pioneered the area of micro‐foundation of macro‐economics. The great missing link in economic theory, both of micro‐economics and macro‐economics, is the inability to methodologically integrate ethical and moral values through preference mapping. This missing methodology disables the study of institutions, policy formulation and normative statements of structural transformation. On the other hand, such issues are once again haunting the human race in the murky and troubled global relations today – from capitalism to war to governance. This paper addresses the preference mapping and embedding of ethical and moral issues as endogenous dynamics in economic theory. The approach is rigorous and methodological.
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