Research Articles
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A research article reports the results of original research, assesses its contribution to the body of knowledge in a given area, and is published in a peer-reviewed scholarly journal. The faculty publications through published and on-going articles/researches are captured in this community
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Item 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 institutionsItem Central bank independence, elections and fiscal policy in Africa: Examining the moderating role of political institutions(International Journal of Emerging Markets, 2019-12-02) Agoba, A.M.; Abor, J.Y.; Osei, K.; Sa-Aadu, J.; Amoah, B.; Dzeha, G.C.O.Purpose – The purpose of this paper is to primarily investigate the ability of independent central banks (central bank independence (CBI)) to improve fiscal performances in Africa, accounting for election years, and also to examine whether the effectiveness of CBI in improving fiscal performance is enhanced by higher political institutional quality. Design/methodology/approach – Using recent CBI data from Garriga (2016) on 48 African countries, 90 other developing countries and 40 developed countries over the period 1970–2012, the authors apply a two stage system GMM with Windmeijer (2005) small sample robust correction estimator to examine the impact of CBI and elections on fiscal policy in Africa, other developing countries and developed countries. Findings – The authors provide evidence that unlike in other developing countries and developed countries, CBI does not significantly improve fiscal performance in Africa. However, the effectiveness of CBI in improving fiscal performance in Africa is enhanced by higher levels of institutional quality. Although elections directly worsen fiscal performance in Africa, institutional quality enhances CBI’s effect on improving fiscal performance in election years across Africa, other developing countries and developed countries. Practical implications – The findings of the study are significant as they provide insight into the benefits of having strong institutions to complement independent central banks in order to control fiscal indiscipline in election years. Originality/value – The study is the first among the studies of CBI-fiscal policy nexus, to measure fiscal policy using net central bank claims on government as a percentage of GDP. In addition to the use of fiscal balance, this study also uses cyclically adjusted fiscal balance as a measure of fiscal policy. This is a critical channel through which independent central banks can constrain governItem 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.Item Financing the Growth of SMEs in Africa: What are the Constraints to SME Financing within ECOWAS?(ELSEVIER, 2017) Quartey, P.; Turkson, A.; Abor, J.Y.This study attempts to provide some understanding about SMEs’ access to finance within the West African sub-region with particular interest inestablishing whether there are similarities and/or differences in the determinants of SMEs access to finance across countries in SSA. For robustnesssake, we developed both subjective and objective measures of access to finance. Using data from World Bank’s Enterprise Survey data set, weexamine the determinants of access to finance both at the sub-regional level and at the country-level. We found that, generally, at the sub-regionallevel, access to finance is strongly determined by factors such as firm size, ownership, strength of legal rights, and depth of credit information,firm’s export orientation and the experience of the top manager. However, we found important differences in the correlates of firms’ access tofinance at the country level. The findings of this study therefore have important implications for policyItem External Debt among HIPCs in Africa: Accounting and Panel VAR Analysis of Some Determinants(Emerald Publishing Limited, 2017) Mensah, D.; Aboagye, A.; Abor, J.Y.; Kyereboah-Coleman, A.urpose The management of external debt among highly indebted poor countries (HIPCs) in Africa still remains a challenge despite numerous packages and attempts to ameliorate the consequences of such odious debt. The purpose of this paper is to establish the factors that contribute to the growth rate of external debt and how these factors respond to shocks to external debt growth rate in Africa. Design/methodology/approach Data were obtained from 24 African countries and analyzed using a panel vector autoregression estimation methodology. Findings The study found that external debt growth rates respond positively to unit shock or changes in government investment spending, consumption spending, and domestic borrowings over a long period of time. In the medium term, external debt growth rates respond negatively to shocks in tax revenue, inflation, and output growth rates. The paper also provides empirical support that external debt may be consumed rather than invested among HIPCs in Africa. Research limitations/implications The findings of this paper are limited to only HIPCs in Africa. Practical implications This study has some few debilitating implications for external debt management among HIPCs in Africa. First, the paper suggests that debt repayment may be a problem. This is largely because external debt is consumed rather than invested. External debt sustainability needs a holistic approach in less developed countries. The findings place much emphasis on improvements in gross domestic product and tax revenues as the principal routes out of the debt doldrums. However, this option must be exploited with great caution as there is ample evidence that these poor countries increase their external borrowing capacities with improvements in economic outlook.Item Private capital flows and economic growth in Africa: The role of domestic financial markets(Journal of International Financial Markets, Institutions and Money, 2014) Agbloyor, E.K.; Abor, J.Y.; Adjasi, C.K.D.; Yawson, A.This study examines the relation between private capital flows and economic growth in Africa during the period 1990-2007. We estimate the empirical relation with a panel Instrumental Variable Generalized Method of Moments (IV-GMM) estimator which allows for arbitrary heteroskedasticity and endogeneity. Decomposing private capital flows into its component parts, we find that foreign direct investment, foreign equity portfolio investment and private debt flows all have a negative impact on economic growth. Countries with strong domestic financial markets, however, benefit more by being able to transform the negative impact of private capital flows into a positive one. Private capital flows, thus, promote economic growth in the presence of strong domestic financial markets. These results suggest that strong financial markets are needed for private capital flows to impact economic growth positively. Our results are robust to the control of population size, savings, financial openness and institutional quality. © 2014 Elsevier B.V.Item External Debt among HIPCs in Africa: Accounting and Panel VAR Analysis of Some Determinants(Emerald Group Publishing, 2017) Mensah, D.; Abor, J.Y.; Aboagye, A.; Kyereboah-Coleman, A.Purpose The management of external debt among highly indebted poor countries (HIPCs) in Africa still remains a challenge despite numerous packages and attempts to ameliorate the consequences of such odious debt. The purpose of this paper is to establish the factors that contribute to the growth rate of external debt and how these factors respond to shocks to external debt growth rate in Africa. Design/methodology/approach Data were obtained from 24 African countries and analyzed using a panel vector autoregression estimation methodology. Findings The study found that external debt growth rates respond positively to unit shock or changes in government investment spending, consumption spending, and domestic borrowings over a long period of time. In the medium term, external debt growth rates respond negatively to shocks in tax revenue, inflation, and output growth rates. The paper also provides empirical support that external debt may be consumed rather than invested among HIPCs in Africa. Research limitations/implications The findings of this paper are limited to only HIPCs in Africa. Practical implications This study has some few debilitating implications for external debt management among HIPCs in Africa. First, the paper suggests that debt repayment may be a problem. This is largely because external debt is consumed rather than invested. External debt sustainability needs a holistic approach in less developed countries. The findings place much emphasis on improvements in gross domestic product and tax revenues as the principal routes out of the debt doldrums. However, this option must be exploited with great caution as there is ample evidence that these poor countries increase their external borrowing capacities with improvements in economic outlook. Originality/value This paper fills a research gap that identifies specific components of government deficit budgets that may be contributing to the growth rate of external debts among HIPCs.Item Correlates of Poverty in Africa: Exploring the Roles of Remittances, Financial Development, and Natural Resources(Emerald Publishing Limited, 2017) Dwumfour, R.A.; Agbloyor, E.; Abor, J.Y.Purpose The purpose of this paper is to examine how remittances, financial development (FD), and natural resources and their different transmission channels can be used to reduce poverty in Africa. Design/methodology/approach Using the Human Development Index (HDI) as the measure of welfare, the authors specify these relationships using the System GMM estimator approach. Findings The authors hypothesise that for remittance to effectively improve welfare, the recipient of remittances must have access to credit to profitably utilise the monies. Again, the authors assert that FD can be effective in improving welfare when development of the sector actually benefits the poor. The authors provide empirical support for these hypotheses using 54 African countries covering the period 1990-2012. The findings also show that the North African region has been able to utilise its oil rents in particular to improve welfare unlike the Sub-Saharan counterpart. Originality/value This paper is the first to jointly estimate the impact of remittances, FD, and natural resources on welfare using a comprehensive measure of poverty – HDI.Item Financing the Growth of SMEs in Africa: What are the Constraints to SME Financing within ECOWAS?(Open Access, 2017-06) Quartey, P.; Turkson, E.F.; Abor, J.Y.; Iddrissu, A.M.This study attempts to provide some understanding about SMEs’ access to finance within the West African sub-region with particular interest in establishing whether there are similarities and/or differences in the determinants of SMEs access to finance across countries in SSA. For robustness sake, we developed both subjective and objective measures of access to finance. Using data from World Bank’s Enterprise Survey data set, we examine the determinants of access to finance both at the sub-regional level and at the country-level. We found that, generally, at the sub-regional level, access to finance is strongly determined by factors such as firm size, ownership, strength of legal rights, and depth of credit information, firm’s export orientation and the experience of the top manager. However, we found important differences in the correlates of firms’ access to finance at the country level. The findings of this study therefore have important implications for policy.Item External Debt Among HIPCs in Africa: Accounting and Panel VAR Analysis of some Determinants(Emerald Publishing Limited, 2016-10-10) Mensah, D.; Aboagye, A.Q.Q.; Abor, J.Y.; Kyereboah-Coleman, A.Purpose The management of external debt among highly indebted poor countries (HIPCs) in Africa still remains a challenge despite numerous packages and attempts to ameliorate the consequences of such odious debt. The purpose of this paper is to establish the factors that contribute to the growth rate of external debt and how these factors respond to shocks to external debt growth rate in Africa. Design/methodology/approach Data were obtained from 24 African countries and analyzed using a panel vector autoregression estimation methodology. Findings The study found that external debt growth rates respond positively to unit shock or changes in government investment spending, consumption spending, and domestic borrowings over a long period of time. In the medium term, external debt growth rates respond negatively to shocks in tax revenue, inflation, and output growth rates. The paper also provides empirical support that external debt may be consumed rather than invested among HIPCs in Africa. Research limitations/implications The findings of this paper are limited to only HIPCs in Africa. Practical implications This study has some few debilitating implications for external debt management among HIPCs in Africa. First, the paper suggests that debt repayment may be a problem. This is largely because external debt is consumed rather than invested. External debt sustainability needs a holistic approach in less developed countries. The findings place much emphasis on improvements in gross domestic product and tax revenues as the principal routes out of the debt doldrums. However, this option must be exploited with great caution as there is ample evidence that these poor countries increase their external borrowing capacities with improvements in economic outlook. Originality/value This paper fills a research gap that identifies specific components of government deficit budgets that may be contributing to the growth rate of external debts among HIPCs.