Department of Banking and Finance
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Item Drivers of income diversification in credit unions: Do size, resource, liquidity, and environment matter?(M.D.E., 2021) Bokpin, G.A.; Amoah, B.; Ohene-Asare, K.; et al.Abstract This paper investigates income diversification in credit unions in Ghana. We make use of the random effect, Hausman–Taylor, and fractional regression to assess income diversification. We find empirical support that there exist differences between workplace credit union income diversification and other types of credit union. We also find that within nonfinancial income, size, liquidity, loan portfolio, net worth, and economic growth are important. For within liquid financial investment diversification, size, liquidity, resource usage, age, net interest margin, bank concentration, inflation, and economic growth matter. We recommend that with excess reserves, credit unions should pursue liquid financial investment.Item Financial consumer protection and economic growth(International Journal of Emerging Markets, 2019-03-11) Kriese, M.; Abor, J.Y.; Agbloyor, E.Purpose – The purpose of this paper is to examine the link between financial consumer protection (FCP) and economic growth. Design/methodology/approach – The authors use cross-country data on 114 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013) and endogenous treatment regressions for the estimation. Findings – The results indicate that FCP enhances economic growth through fair treatment, responsible lending, enforcement and dispute resolution and recourse regulations. The authors find no evidence to suggest that disclosure and compliance monitoring regulations have an effect on economic growth. Practical implications – This study provides rich insight into the important question faced by policy makers, as to which FCP regulatory mechanisms to put in place to enhance economic growth. Originality/value – This study provides current, cross-country empirical evidence on the debate as to whether FCP enhances economic growthItem External Debts, Institutions and Growth in SSA(Journal of African Business, 2018-03) Mensah, L.; Bokpin, G.; Boachie-Yiadom, E.The study investigates the impact of institutional quality on the external debt–growth nexus in SSA. Data from 36 SSA economies over the 1996–2013 periods were used. The results from the IV-System GMM imply that institutional quality has robust effects on the external debt–growth nexus. Thus, the impact of external debt on growth is through host nation’s institutional quality. However, the mediating effect of institutional quality on this nexus is up to a point. When a country is on the wrong side of the debt-laffer curve, external debt becomes irrelevant; and institutional quality can no longer help.Item 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.Item Economic growth in Africa: The role of corporate governance and stock market developments(Corporate Ownership and Control, 2006) Kyereboah-Coleman, A.The study explored the link between corporate governance, stock market developments and economic growth by using data on selected African countries. Analysis was done within the Arellano-Bond Dynamic Panel data modelling. Results show that corporate governance and particularly the independence of corporate boards is important for firm performance and economic growth and that stock markets also play an important role in economic development. However, while market size is conclusive, our findings points to the fact that an increase in stock market activities must be focussed and carefully supported with appropriate mix of policies and programs in order to achieve the desired impact on economic growth because too many policies could erode the effect of critical indicators.Item Enhancing the economic growth of Africa: Does banking sector efficiency matter?(Research in Accounting in Emerging Economies, 2012-01) Mensah, E.; Abor, J.; Aboagye, A.Q.Q.; Adjasi, C.K.D.Purpose - The purpose of this paper is to examine the relationship between banking sector efficiency and economic growth in Africa. Methodology/approach - The paper used the stochastic frontier approach stating the banking sector cost function as a Fourier flexible to estimate bank efficiency. We then used the Arellano-Bond GMM estimator to investigate the relationship between banking sector efficiency and economic growth. Annual data for banking sector financial statements were used in estimating efficiency scores. Findings - The study found banking sector efficiency in the sample to be 69%. We also found a positive relationship between banking sector efficiency and economic growth, confirming the critical role banks play in the economy. Practical implications - Banking sector efficiency score of 69% implies banks in Africa could save up to 31% of their total cost if they were to operate efficiently. Policy direction should therefore focus on policies and incentives that will improve the efficiency of the banking sector and hence economic growth. The study brings to the fore the importance of the qualitative aspect of the banking sector in allocating financial resources in the real economy. Focus in the real economy should not be only on the size of the banking system but also on the quality with which resources are allocated. Originality/value of paper - This study is among the first dedicated solely to African countries. It does set the pace for future research in the area and also confirms in Africa the Schumpeterian hypothesis that the banking sector is key in allocating resources in the real economy. Copyright © 2012 by Emerald Group Publishing Limited.Item Insurance-growth nexus in Ghana: An autoregressive distributed lag boundscointegration approach(Elsevier - Science Direct (Review of Development Finance), 2014) Alhassan, A.L.; Fiador, V.This paper examines the long-run causal relationship between insurance penetration and economic growth in Ghana from 1990 to 2010. Usingthe autoregressive distributed lag (ARDL) bounds approach to cointegration by Pesaran et al. (1996, 2001), the study finds a long-run positiverelationship between insurance penetration and economic growth which implies that funds mobilized from insurance business have a long run impacton economic growth. A unidirectional causality was found to run from aggregate insurance penetration, life and non-life insurance penetration toeconomic growth to support the ‘supply-leading’ hypothesis. The findings have implications for insurance market development in Ghana.Item Convergence in carbon dioxide emissions and the role of growth and institutions: A parametric and nonparametric analysis.(Springer International Publishing AG, 2017-04) Karimu, A.,; Br ̈annlund, R.,; S ̈oderholm, P.This paper examines convergence of per capita carbon dioxide (CO2) emission for a panel of 124 countries taking into account the impact of economic growth and the quality of government institutions. The analysis builds on both parametric and non-parametric panel data techniques, and we examine the β-convergence hypothesis in a neoclassical growth model setting with institutional quality as one of the independent variables influencing both emissions and output growth. The results reveal evidence in support of β-convergence of per capita CO2 emissions for the global sample, and for the sub-samples comprising OECD versus non-OECD countries and high- versus low-income countries, respectively. There is, however, heterogeneity in β-convergence and it tends to vary with the level of the initial per capita CO2 emissions. We also report evidence of a negative direct effect of institutional quality on growth in per capita CO2 emissions, especially for the global and high-income samples. However, institutional quality also promotes economic growth, thus generating a positive indirect effect on emissions growth. Overall the empirical results suggest a positive net effect of institutional quality on growth in per capita CO2 emissions in the global sample. Finally, the non-parametric approach reveals some evidence of bias in the parametric approach, in particular in the case of the estimates for the convergence parameter at either end of the distribution.Item Assessing the impact of export processing zones on economic growth in Ghana(2017) Aboagye, A.Q.Q.; Bokpin, G.A.; Quaico, A.The study examines the impact of free zones exports and investments on economic growth in Ghana. A vector error correction model (VECM) was employed to ascertain the impact of the Free Zones Programme on economic growth in Ghana on a quarterly time series data spanning 1998–2015. The results show that both free zones exports and free zones investments have significant negative relationship with economic growth. Trade openness also has a significant negative relationship with economic growth but insignificant positive relationship with investment and export. The study concludes that the Free Zones Programme has not served its purpose of promoting economic growth in Ghana. It is universally known that the concept of free zones is actually a second best option and as such is not meant be a lasting policy for promoting economic growth. For this reason, given the negative effect the programme has had on economic growth, the Government of Ghana should scrap it and possibly look at opening up the whole country, especially in terms of infrastructure and other incentives for all firms, so that economic activity can freely take place in every corner of the country to realise balanced and more sustainable growth of the economy.Item Fiscal policy, private investment and economic growth: the case of Ghana(Studies in Economics and Finance 2(25): 112–130, 2008) Soli, V. O.; Harvey, S. K; Hagan, EPurpose – This paper aims to examine the relationship between disaggregated government fiscal policy variables; private capital investment and economic growth in Ghana, as well as the similarities and differences in the impact of these variables on private investment (PI) and economic growth. Design/methodology/approach – Cointegration and error-correction models are used, with time series properties of the variables investigated using augmented Dickey-Fuller test and cointegration of the variables tested using Engel-Granger two step procedure. Findings – The findings indicate that changes in government recurrent expenditure, current government capital expenditure and international trade taxes are significant for growth while changes in tax on domestic goods and services, tax on international trade and tax on income and property matter for private capital investment. The major difference between the impact of fiscal policy on PI and economic growth, however, lies in the direction of the impact. Practical implications – Based on the findings of this study, it is recommended that different policies be pursued in the promotion of PI and economic growth. Also, given the low correlation between PI and economic growth, it is recommended that the Ghanaian private sector be focused on and fully developed in order to perform its role as an engine of growth. Originality/value – Growth has been shown to be influenced by government expenditure and international trade taxes while private capital investment is influenced by taxes on domestic goods and services, international trade and on income and property. Fiscal policy authorities will find these useful.