Browsing by Author "Osei, K.A."

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Anti-money laundering regulations and financial sector development
(International Journal of Finance & Economics, 2020) Ofoeda, I.; Agbloyor, E.K.; Abor, J.Y.; Osei, K.A.
This paper is aimed at establishing the effect of anti-money laundering regulations on financial sector development across the globe. Using data from 2012 to 2018 across 165 economies across different continents, income levels and regulatory environments, we test a number of complex and related hypotheses. (a) We examine the effect of anti-money laundering regulations on financial sector development. (b) We examine if this effect differs across developing countries and developed economies. (c) We examine the nonlinearities in the anti-money laundering regulations-financial sector development nexus. We use the Prais-Winsten approach and the panel threshold estimation approaches to test our hypothesized relationships. We find evidence that anti-money laundering regulations generally promote financial sector development; however, this positive effect is concentrated in developing economies. We also find evidence of threshold effects of anti-money laundering regulations for our sample. Consistent with the earlier findings, the positive effect of anti-money laundering regulations on financial development is concentrated in countries below the threshold value of anti-money laundering regulations. These countries are mostly developing countries. Our findings suggest that strengthening anti-money laundering regulations will be beneficial to developing countries.
Bank productivity in Africa
(International Journal of Productivity and Performance Management, 2019-06) Nartey, S.B.; Osei, K.A.; Sarpong-Kumankoma, E.
Purpose – The purpose of this paper is to provide a total factor productivity index for the African banking industry. It also investigates the impact of some internal and external determinants affecting bank productivity. Design/methodology/approach – The biennial Malmquist productivity index and various regression models (ordinary least squares, Tobit and truncated bootstrapped regression) are employed in analyzing data from 120 banks in 24 African countries from 2007 to 2012. Findings – The results indicate a general decline in productivity of banks in Africa, largely due to inadequate technological progress. State banks are found to be more productive than foreign and private banks. The regression analyses showed that non-executive directors, leverage, management quality, credit risk, competition and exchange rate have significant impact on bank productivity, but ownership and CEOduality do not. Practical implications – The results have implications for management of banks, governments and regulators. It shows the need for policy and investments that improve state-of-the art technology. The findings also seem to suggest poor management practices in input usage, especially in operational management, as well as costs emanating from non-interest sources. Bank managers need to address these deficiencies to improve productivity in African banking markets. Originality/value – A major contribution of this paper is the productivity index provided for the African banking industry. This study is also the first to apply the biennial Malmquist to analyze productivity in the African banking industry.
The demand for micro insurance in Ghana
(Journal of Risk Finance, 2011-05) Akotey, O.J.; Osei, K.A.; Gemegah, A.
Purpose – The purpose of this paper is to identify the factors which influence the demand for micro-insurance services among the informal sector workers of Ghana who are quite vulnerable to various risks in the economy. Design/methodology/approach – The study adopts a quantitative technique based on primary data sampled randomly from 100 informal sector workers from four major market centers in Accra, Ghana. The probit regression model was used for the empirical investigation. Findings – Empirical investigation using the probit model indicates that premium flexibility, income level and nodal agency are significant determinants of micro-insurance demand. Insurance knowledge, expectation (trust) and marital status were also found to have positive and significant impact on the demand for micro insurance. Interestingly, the empirical analysis shows that formal education is not a significant determinant; rather one's level of insurance knowledge has a positive and significant impact on micro-insurance demand. Social implications – Insurers must consider the nature of the cash-flow of informal workers in the design of premiums. The government must integrate micro insurance into its poverty reduction program. Originality/value – The micro-insurance market is very new and unresearched in Ghana. This foundational study is, therefore, very original and a most valuable guide to commercial insurance companies which want to venture into this huge untapped opportunity in the Ghanaian informal sector. © 2011, © Emerald Group Publishing Limited.
Determinants of Universal Bank Lending Rate in Ghana
(University of Ghana, 2015-07) Adoah, I.; Aboagye, A.Q.Q.; Osei, K.A.; University of Ghana, College of Humanities, Business School, Department of Banking and Finance
The factors that determine the level of universal bank lending rate are important to policy makers, investors, the banking industry and the public at large. The market for loans from universal banks is competitive and rates on these loans have tendency to reduce the deposit rate and increase the cost of borrowing. This study sought to investigate the determinants of lending rates in the universal banks in Ghana by answering the, what are the determinants of lending rates of Universal banks in Ghana. In order to quantify the effect of the various factors on lending rate during the period, we use panel estimation techniques. The study found that factors that affect the determinants of the lending rate in Ghana are Policy rate, Exchange rate, Treasury bill rate, GDP, Inflation, Bank size and HHI. The study recommends participation of all the stakeholders on reviews of existing policies on stability and sound practices in the economy. Banks should also explore internally and industry driven strategies that will militate against some of the bank specific factors associated with higher lending rate in Ghana.
Dividend Policy and Shareholders’ Value: Evidence from Listed Companies in Ghana
(2017) Odor-Sasu, D.; Abor, J.Y.; Osei, K.A.
Purpose – This paper seeks to investigate the relationship between capital structure and profitability of listed firms on the Ghana Stock Exchange (GSE) during a five-year period. Design/methodology/approach – Regression analysis is used in the estimation of functions relating the return on equity (ROE) with measures of capital structure. Findings – The results reveal a significantly positive relation between the ratio of short-term debt to total assets and ROE. However, a negative relationship between the ratio of long-term debt to total assets and ROE was found. With regard to the relationship between total debt and return rates, the results show a significantly positive association between the ratio of total debt to total assets and return on equity. Originality/value – The research suggests that profitable firms depend more on debt as their main financing option. In the Ghanaian case, a high proportion (85 percent) of the debt is represented in short-term debt.
Do emerging financial markets matter in investment opportunity set? A dynamic panel analysis
(Journal of Money Investment and Banking, 2009) Abor, J.; Adjasi, C.K.D.; Bokpin, G.; Osei, K.A.
Do Independent Central Banks Exhibit Varied Behaviour in Election and Non-Election Years?: The Case of Fiscal Policy in Africa
(Journal of African Business, 2019-03) Agoba, A.M.; Abor, J.Y.; Osei, K.A.; Sa-Aadu, J.
The study primarily investigates if the behavior and effectiveness of CBI on fiscal policy varies between non-election and election years. It also examines whether the effectiveness of CBI in improving fiscal performance is enhanced by higher institutional quality. Using recent CBI data f on 48 African countries, 90 other developing countries and 40 developed countries over the period 1970–2012, we apply a two-stage system GMM with Windmeijer small sample robust correction estimator and find that due to the strong incentives of political authorities to influence economic outcomes in election years, CBI has stronger effects on fiscal performance in election years compared to non-election years in developed countries only. However, given higher levels of institutional quality, CBI has stronger effects on fiscal performance in election years compared to non-election years in Africa and other developing countries also.
Effect of Funding Sources on Lending Patterns of Banks in Ghana
(University of Ghana, 2013-06) Alu, A.A.; Osei, K.A.; Amidu, M.
This study set out to investigate the effect of funding sources on the lending patterns of banks in Ghana. Using a large and representative sample of 22 banks operating in Ghana from 2005 to 2011, the study investigates the funding sources, the lending patterns of banks in Ghana as well as the effect of funding sources on lending patterns.The study made use of a panel data methodology using a panel corrected errors estimation technique. The findings of the study indicate that deposits comprise the majority of funding sources while non deposit funding sources and internal funding follow in that order. On lending patterns of banks in Ghana, the study finds that most of the loans are allocated to the tertiary sector followed by the secondary sector with the primary sector lagging behind. Additionally, the regression results show a positive and significant relationship between lending to the primary economic sector, the tertiary economic sector, total lending and deposits. Furthermore, the findings suggest that in Ghana, bank loans to the primary and secondary sector are financed by internal funds. The study gives rise to very important policy recommendations. The study recommends that policy makers should put in placepolicies that would make it more attractive for banks to channel more of their lending to the primary economic sector especially as their deposits increase.
Executive compensation, corporate governance and corporate performance: A simultaneous equation approach
(Managerial and Decision Economics, 2013-10) Ntim, C.G.; Lindop, S.; Osei, K.A.; Thomas, D.A.
This paper investigates the association between executive compensation and performance. It uniquely utilises a comprehensive set of corporate governance mechanisms within a three-stage least squares (3SLS) simultaneous equation framework. Results based on estimating a conventional single equation model indicate that the executive pay and performance sensitivity is relatively weak, whereas those based on estimating a 3SLS model generally suggest improved executive pay and performance sensitivity. Our findings highlight the need for future research to control for possible simultaneous interdependencies when estimating the executive pay and performance link. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, executive pay and performance proxies. © 2013 John Wiley & Sons, Ltd.
Explaining Bank Liquidity in Ghana
(University of Ghana, 2015-07) Na-Ihmatu, S.; Aboagye, A.Q.Q.; Osei, K.A.; University of Ghana, College of Humanities, Business School, Department of Banking and Finance
Holding adequate liquidity is very crucial for the survival of banks. Nevertheless, reserving liquidity in excess hinders the development of interbank markets and suggests that banks are forgoing financial intermediation (hence, returns) and are inefficient. It is against this background that this study sought to find explanations on why bank liquidity in Ghana has for about a decade now remained above global average levels. In attaining this objective, I argued that a more complete liquidity indicator will be a better measure than the traditional measures. With an unbalanced data set of 22 banks over a 7-year period spanning 2007 to 2013, the ratio of liquidity created to total assets is constructed. This ratio captures illiquidity and as such, is employed as an indirect measure of bank liquidity. Subsequently, based on the Hausman’s test, the random effects model is utilized in estimating the factors that explain bank liquidity in Ghana. Findings of the study confirmed that, indeed, Ghanaian banks are highly liquid. Capital, size, ratio of loans to total assets and annual average inflation showed a positive and significant relationship with liquidity.Net interest margin, industry concentration and GDP growth rate exhibited a negative significant relationship with liquidity of banks. Growth in money supply was insignificant in explaining liquidity of banks. The study recommended that, the Central Bank considers the more comprehensive way of measuring liquidity as it quantifies liquidity creation, which is an important function of banks. It is also a good predictor of financial crunches and is a more complete measure of bank liquidity unlike the traditional measures. It is also recommended that banks decrease their equity, net interest margins and the ratio of loans to total assets to cut down excess liquidity reserves. Policies that enhance competition should also be enacted if the need be to further boost liquidity.
Explaining underpricing of IPOs in frontier markets: Evidence from the Nigeria Stock Exchange
(Research in International Business and Finance, 2011-09) Adjasi, C.K.D.; Osei, K.A.; Fiawoyife, E.U.
The paper provides empirical analyses of IPO underpricing on the Nigerian Stock Exchange, from the period 1990 to 2006. The results indicate an average abnormal initial day returns of 43.1%. There is evidence of long-run underperformance of 0.6%. Results from our regression model explaining initial abnormal returns for the IPOs of Nigeria show that size of firm and audit quality are important variables affecting underpricing. The results also show the presence of a non-linear relationship between the offer price and underpricing. © 2011 Elsevier B.V.
Financial inclusion and financial sector development in Sub-Saharan Africa: a panel VAR approach
(International Journal of Managerial Finance, 2019-04) Anarfo, E.B.; Abor, J.Y.; Osei, K.A.; Gyeke-Dako, A.
Purpose: The purpose of this paper is to investigate the dynamic link between financial inclusion and financial sector development (FSD) in Sub-Saharan Africa. Design/methodology/approach: This paper employs a panel vector autoregressive framework to examine the dynamic link between financial inclusion and FSD in Sub-Saharan Africa. Findings: The findings indicate that there is a reverse causality between FSD and financial inclusion in both the Sub-Saharan Africa countries sample and the full sample. It is evident that financial inclusion is a driver of FSD and vice versa. Practical implications: The practical implication of this study is that financial inclusion should not only be pursued as a policy objective but it could also be an outcome variable of FSD and vice versa. This implies that African economies and governments in their effort to enhance financial inclusion, FSD can serve as a policy tool. This means that policies aimed at promoting financial inclusion will not impede FSD because the two are complementary. This suggests that we can achieve financial inclusion without sacrificing FSD and vice versa. Originality/value: This paper provides first empirical evidence of the link between financial inclusion and FSD from the Sub-Saharan Africa perspective using data sourced from World Development Indicators spanning from 1990 to 2014 for 48 Sub-Saharan African economies and 217 economies in the world for the full sample. © 2019, Emerald Publishing Limited.
Financial regulation and financial inclusion in Sub-Saharan Africa: Does financial stability play a moderating role?
(Research in International Business and Finance, 2019-07-25) Abor, J.Y.; Anarfo, E.B.; Osei, K.A.
This study examines the impact of financial regulation on financial inclusion in Sub-Saharan Africa, considering the moderating role of financial stability. By analysing the relationship between financial inclusion and the most prominent macro-prudential regulation (capital adequacy), we find that tightening prudential regulations could negatively impact access to finance, thereby conflicting with Sub-Saharan African economies’ financial inclusion goals. More specifically, the capital adequacy requirement tremendously reduces banks’ capacity to provide financial services and this could lead to credit rationing thereby reducing financial inclusion. The results also indicate that, the interaction of financial regulation with financial stability positively impacts financial inclusion. Thus, financial stability augments financial regulation to have an affirmative impact on financial inclusion. The practical implications of this paper are that, one of the ways central governments and policy makers in Sub-Saharan African countries can increase and get the most out of financial inclusion is to formulate policies targeted at reducing capital adequacy requirements of financial institutions and other constraints that limit the operations and efficiency of financial institutions. Such policies should also aim at creating an enabling environment to promote financial stability.
The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa
(Journal of Emerging Market Finance, 2020-01-14) Agoba, A.M.; Abor, J.Y.; Osei, K.A.; Sa-Aadu, J.
Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions
Monetary Policy and Financial Inclusion in Sub-Sahara Africa: A Panel VAR Approach
(Journal of African Business, 2019-03) Anarfo, E.B.; Abor, J.Y.; Osei, K.A.; Gyeke-Dako, A.
This article investigates the dynamic and bi-causal link between monetary policy and financial inclusion in sub-Saharan Africa using a panel VAR framework. The researcher obtained data from World Development Indicators (WDI) spanning from 1990 to 2014 for 48 sub-Saharan African economies. The findings suggest that a bi-causal relationship exists between monetary policy and financial inclusion. Specifically, it is evident that monetary policy affects financial inclusion, and financial inclusion is also influenced by monetary policy. The policy implication of this study is that the effectiveness of monetary policy depends on financial inclusion. Hence, the efforts of governments in sub-Saharan African countries should aim at policies that enhance financial inclusion for effective implementation of monetary policy. Also, promoting financial inclusion will require governments in sub-Saharan Africa to reduce their monetary policy rates.
Resource constraints and private sector investment in emerging economies: A review of the literature
(University of Ghana, 2015-04-17) Ababio, J.O-M.; Osei, K.A.; Bokpin, G.
This paper is a review and classification of literature on Private Sector Investment in Emerging Economies. Hundred and ten (110) articles published in a broad range of internationally recognized journals covering four major private sector investment (PSI) issues in Emerging Economies (EEs) were explored and analyzed. This paper also reviewed literature on the main segments of private sector investment: domestic investment, foreign direct investment, and international (private) portfolio investment in EEs. A review of the major streams of PSI research examining the determinants, constraints, uncertainties, management and performance as well as relevance and magnitude of PSI activities points out the current gaps and contributions for the growth and survival of private firms and the importance of PSI for economic growth and development in EEs. A unified perspective on these research, identifies and highlights imperative gaps for future research. Consequently, the review will serve as a roadmap indicating the current state, contributions and direction of research topics for the academics and practitioners.
Risk Exposure and Corporate Financial Policy on the Ghana Stock Exchange
(Emerald Group Publishing Limited, 2010) Bokpin, G.; Aboagye, A.Q.Q.; Osei, K.A.
Purpose – The purpose of this paper is to examine the extent to which corporate managers alter their capital structure in response to risk exposures on the Ghana Stock Exchange (GSE). Design/methodology/approach – A panel data covering the period from 2002 to 2007 was employed under the framework of the seemingly unrelated regression approach. Findings – The paper finds that the direction and magnitude of the impact of risk exposures depends on capital structure measurement variables; namely, financial leverage, debt ratio, or short‐term debt to equity. The paper also finds that corporate managers adjust their capital structure differently in response to different kinds of risk exposures namely business risk or financial risk. Specifically, operating risk, bankruptcy risk, and bankruptcy cost in addition to other firm level characteristics such as asset structure, firm size and profitability are found to be significant driving factors in shaping corporate financial policy on the GSE. Originality/value – The main value of this paper is to analyze the relationship between risk exposures and corporate financial policy from a developing country perspective.
Risk exposure and corporate financial policy on the Ghana Stock Exchange
(Journal of Risk Finance, 2010) Aboagye, A.Q.Q.; Bokpin, G.A.; Osei, K.A.
Risk Exposure and Financial Policy: An Empirical Analysis of Emerging Markets
(2009) Abor, J.; Sarpong-Kumankoma, E.; Fiawoyife, E.; Osei, K.A.
Purpose – This paper aims to evaluate the effect of risk on the financial policy of emerging market firms. Design/methodology/approach – Using data from 34 emerging markets during a 17‐year period, 1990‐2006, a panel data model is employed for the analysis. Findings – The results of this study indicate that firms with high probability of survival are likely to employ more debt. The level of risk exposure, particularly business risk is important in influencing the financial decisions of firms in emerging market economies. It is argued that since the use of debt increases firms' exposure to financial risk, firms with high business risk would shy away from using more debt. Also, finance providers in the financial market may not be interested in lending to firms with high business risk. This study also identified profitability, dividend, asset tangibility, growth opportunities, and GDP per capita as important determinants of the financial policy of emerging market firms. Originality/value – This study contributes to the extant literature by providing empirical evidence regarding the effect of risk on the financial policy of emerging market firms.
Risk exposure and financial policy: an empirical analysis of emerging markets
(Journal of Economics Studies, 2009) Abor, J.; Sarpong-Kumankoma, E.; Fiawoyife, E.; Osei, K.A.