Showing papers by "Joshua Abor published in 2017"

Small Business Financing Initiatives in Ghana

Abstract: Access to finance has been identified as a dominant constraint facing the Ghanaian Small and Medium Enterprises (SME) sector This study examines how the finance gap for SMEs might be addressed by means of policies to support other financing initiatives other than commercial finance by the conventional financial institutions This study through a questionnaire survey investigates the awareness and use of these various financing schemes (quasi-commercial credit) available to the SME sector The study also ascertains the difficulties SMEs encounter in accessing these financing sources The results of the study reveal low awareness and usage levels of the various financing initiatives among SMEs Most of the schemes are perceived as difficult to access A number of specific action areas have been identified for proactive public policy for small business finance in Ghana

Dividend policy and shareholders' value: evidence from listed companies in Ghana

Abstract: This study examines the effect of dividend policy on shareholder value of listed companies in Ghana. It analyses the factors affecting dividend policy and how dividend policy affects shareholders’ value. Data from 2009 to 2014 financial reports of listed companies on the Ghana Stock Exchange were used. The data was analysed using pooled OLS panel regression. The findings reveal that ROE, firm age, tax, tangibility, GDP growth and interest rate are statistically significant in explaining dividend policy. The study suggests that firms consider the use of dividend yield as an appropriate measure when making choices in dividend policy. The study finds a positive relationship between dividend per share and shareholders’ value. More so, firms with higher dividend yield tend to reduce shareholders’ value, as confirmed by a negative and significant relationship between dividend yield and shareholders’ value. It concludes that dividend policy has a strong relationship with shareholders’ value. The study recommends that managers should embark on prudent investment activities that would generate higher returns (both dividend and capital gains) to shareholders in order to increase shareholder value.

Freedom, competition and bank efficiency in Sub-Saharan Africa

Abstract: Purpose This study aims to consider the effect of financial (banking) freedom and competition on bank efficiency. Design/methodology/approach With data from 11 Sub-Saharan African countries over the period 2006-2012, the study estimates both competition (market power) and bank cost efficiency using the same stochastic frontier framework. Subsequently, Tobit models, including instrumental variable Tobit regression, are used to assess how financial freedom affects the relationship between competition and bank efficiency. Findings The results show that increase in market power (less competition) leads to greater bank cost efficiency, but the effect is weaker with higher levels of financial freedom. This is not consistent with the quiet life hypothesis. Practical implications Policymakers usually take the view that opening up banking markets to greater competition may lead to higher efficiency. However, the results have shown that allowing banks to maintain some level of market power may be necessary to ensure banking system efficiency. Originality/value This study deepens the understanding of the inconsistent relationship between competition and bank efficiency, by using the same framework to measure both competition and efficiency, and by providing new empirical evidence on how the level of financial freedom affects this relationship.

External Debt among HIPCs in Africa: Accounting and Panel VAR Analysis of Some Determinants

Abstract: 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.

Correlates of poverty in Africa: Exploring the roles of remittances, financial development, and natural resources

Abstract: 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.

Do Remittances Matter in Accelerating Labour Productivity and Capital Accumulation

Abstract: In this paper, we examine the effect of remittances on labour productivity and capital accumulation through various channels. Our panel includes 25 African countries with data from 1990 to 2013. We employ the two-step generalized methods of moments estimator. The main results from this study are that remittances on their own do promote labour productivity but not capital accumulation. Indeed, remittances are observed to have a positive impact on labour productivity and a negative impact on capital accumulation. Moreover, remittances do not promote labour productivity in the presence of high natural resource endowment. The effect of remittances on labour productivity is not clear when we interact remittances with life expectancy. Further, remittances tend to promote capital accumulation in the presence of high quality human capital.

Introduction to Entrepreneurial Finance

Abstract: By the end of this chapter, you should be able to: • explain the concept of entrepreneurial finance • discuss entrepreneurship and the importance of finance to the entrepreneur • distinguish between entrepreneurial finance and corporate finance • define micro, small and medium enterprises • explain the characteristics and importance of micro, small and medium enterprises • identify the constraints to the development of micro, small and medium enterprises

New Venture Development and Sources of Financing

Abstract: At the end of this chapter, you should be able to: • explain the various forms of business ownership • discuss the consequence of information asymmetry in new venture and small business financing • identify the stages of a venture life cycle • discuss financing through the venture life cycle • describe the sources of financing available to MSMEs • explain the elements of deal structure and how deals are closed

Evaluating Capital Investment Decisions: Capital Budgeting

Abstract: By the end of this chapter, you should be able to: • explain the rationale for capital budgeting • discuss the factors that affect capital budgeting decisions • list and explain the steps involved in the capital budgeting process • explain the techniques or methods used in evaluating capital budgeting projects • show how capital budgeting decisions are arrived at based on independent and mutually exclusive projects • determine how capital budgeting decisions are influenced by capital rationing • appreciate the importance of following, monitoring and taking corrective measures after the capital budgeting decision has been made

The Financial Environment and Small Businesses

Abstract: By the end of this chapter, you should be able to: • identify the components of the financial environment • explain how the financial environment affects business decisions • describe the purpose of the financial market • identify the types of financial institutions • discuss the functions of financial institutions • explain how interest rates are determined

Venture Capital Finance

Abstract: By the end of this chapter, you should be able to: • explain the nature of venture capital • discuss the advantages and disadvantages of venture capital • show how venture capital firms are organised • explain how venture capitalists enter into contracts • indicate what venture capitalists consider before investing • identify what constitute venture creation by venture capitalists

West African Monetary Union and its implications for Ghanaian firms

Abstract: This study sought to find out the expectations of Ghanaian firms and some experts’ opinion on the possible implications of a West African monetary union for Ghanaian firms. The study revealed that most of the firms sampled for this study were aware of the intention to create a monetary union in the West African sub-region. With regards to the views of experts, they were very optimistic about the creation of the monetary union and were of the opinion that, synchronizing the economies would lead to a wider market, increased trade, and create opportunities for economies of scale. They however cautioned about the adverse socio-economic effects associated with the creation of such monetary unions.

Harvesting the Business Venture Investment

Abstract: By the end of this chapter, you should be able to: • identify the various techniques involved in harvesting • describe the process involved in going public and how investors can use going public to harvest their investment • explain how investors can harvest their investing through acquisitions • show how management buyout can be used as a form of harvesting • describe how employee stock ownership can be used for harvesting • discuss the factors that influence the investors’ harvesting decisions

Financial Planning and Forecasting

Abstract: By the end of this chapter, you should be able to: • explain the concept of financial planning and the financial planning process • understand how to prepare a cash budget • appreciate how to prepare a sales forecast for an existing business • understand how to prepare a sales forecast for a new business • show the interrelationship between planning, budgeting and forecasting • illustrate how to project financing needs and growth of MSMEs • explain how to project financing needs using break-even analysis • identify the determinants of MSMEs’ financing needs

Valuation of New Ventures and Small Businesses

Abstract: By the end of this chapter, you should be able to: explain how new ventures and small businesses are valued use the various valuation methods appreciate the strengths and weaknesses of the valuation methods understand the criteria for selecting a venture valuation model