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Showing papers by "Joshua Abor published in 2018"


Journal ArticleDOI
TL;DR: In this article, the authors employ the multipurpose nature of mobile telephony to investigate its welfare implications using a large sample of households in Ghana, using seemingly unrelated probit and instrumental features.
Abstract: The paper employs the multipurpose nature of mobile telephony to investigate its welfare implications using a large sample of households in Ghana. We use seemingly unrelated probit and instrumental...

147 citations


Journal ArticleDOI
TL;DR: In this article, the authors examined the effects of financial freedom and competition on bank profitability and found that higher market power is positively related to bank profitability, but operating efficiency is a more important determinant of profitability than market power.
Abstract: This paper aims to examine the effects of financial freedom and competition on bank profitability.,The study uses system generalized method of moments and data from 139 banks across 11 Sub-Saharan African countries during the period 2006-2012.,The results of the study show that higher market power (less competition) is positively related to bank profitability, but operating efficiency is a more important determinant of profitability than market power. Also, both financial freedom and economic freedom show a positive impact on bank profits. The authors find evidence that banks with higher market power operating in countries with higher freedom for banking activities are more profitable than their counterparts in countries with greater restrictions on banking activities.,The results have shown that allowing banks greater freedom to operate would enhance their performance, without necessarily damaging the economy, as operating efficiency appears to be a more important reason for the observed profitability than market power.,This study provides insight on the ambiguous relationship between competition and bank profitability by considering the moderating effect of financial freedom which has not been taken into account in previous studies.

20 citations


Journal ArticleDOI
TL;DR: In this article, the effect of debt holdings on the sensitivity of firms' investment to availability of internal funds was examined for a panel data set of 27 Ghanaian listed firms for the period 2007-2013.
Abstract: The purpose of this paper is to examine the effect of debt holdings on the sensitivity of firms’ investment to availability of internal funds.,For a panel data set of 27 Ghanaian listed firms for the period 2007–2013, the paper applies the Euler equation approach to the empirical modeling of investment.,The study finds support for the assertion that listed firms face less severe corporate control problems and lower financing constraints, and thus, have lower investment cash flow sensitivities. The study also finds that a significant positive sensitivity of investment to internal funds is associated with firms that have high debt holdings.,An implication of this study is that firms with high debt holdings face greater challenges in accessing external finance. These firms are likely to experience under-investment which at a macro level would translate into lower investments and economic growth for the country.,Empirical literature document that in the presence of market imperfections, investments of financially constrained firms become sensitive to the availability of internal finance. There are also contradictory evidences regarding the pattern of the observed investment cash flow sensitivity. This study examines the effect of debt holdings on the sensitivity of firms’ investment to availability of cash flow. This is yet to be empirically tested despite some theoretical explanations.

16 citations


Journal ArticleDOI
TL;DR: In this article, the authors investigate how domestic institutional capacity determines the ability of developing countries to benefit from remittance inflows, and they find that remittances stimulate economic growth in the full sample and in low income and lower middle income countries, but do not foster growth in upper middle and high-income countries.
Abstract: The extant literature is unclear about the effects of remittances on economic growth and the role of governance institutions. This study contributes to knowledge by investigating how domestic institutional capacity determines the ability of developing countries to benefit from remittance inflows. We employ data for 106 developing countries over a 13-year period (1996 to 2013) to test two related hypotheses. First, we test the hypothesis that countries with weak institutions will 'import' growth in the form of international remittances, to make up for any loss in growth arising from the 'bad' institutions. We call this the growth importation hypothesis . Second, we test the hypothesis that the synergetic growth value of the interaction between weak institutions and remittances will be positive due to the fact that the urgency to apply remittances efficiently in countries with weak institutions is high because of limited alternatives (that is, the opportunity cost of misapplying remittance proceeds is high). We call this the urgency hypothesis . We find strong evidence of the existence of both hypotheses. Specifically, we find that remittances stimulate economic growth in the full sample and in low income and lower middle income countries, but do not foster growth in upper-middle and high-income countries. On their own, domestic institutions in low income and lower middle-income countries do not promote growth unless they are combined with remittances. However, in upper middle and high-income countries, institutions, on their own, are strong enough to promote growth, and, in doing so, act as substitutes to remittances in economic growth. It is clear from the positive effect of institutions, physical capital and inflation on growth in upper-middle-income and high-income countries that, the strengthening of institutions, the rapid accumulation and effective utilization of physical capital, and the pursuit of macroeconomic stability are vital for promoting growth in these countries. For low income and lower middle-income countries, they must upgrade their institutions to reduce market imperfections, and ensure investments in growth enhancing projects. But until then, low income and lower middle-income countries must facilitate remittance inflows in order to spur growth.

11 citations


Journal ArticleDOI
TL;DR: In this article, the authors employ the nonparametric Malmquist productivity index to decompose total factor productivity (TFP) into technical change and technical efficiency and further investigate the effect of remittances on the technical change.
Abstract: Based on evidence from the literature that the relationship between remittances and total factor productivity (TFP) is inconclusive, we employ the non-parametric Malmquist productivity index - Data Envelope Analysis to decompose total factor productivity (TFP) into technical change and technical efficiency and further investigate the effect of remittances on the technical change and technical efficiency. We employ the Seemingly Unrelated Regression estimation (SUR) technique in a panel of twenty-three African remittance recipient countries across a twenty-three-year period (1990-2013). We show that remittances received by households have a positive and significant impact on technical efficiency but no significant on technical change (innovativeness). We further show that remittances received by skilled labour is significant to technical efficiency but has a lowering effect on technical efficiency.

3 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined differences in determinants of bank profit persistence among Sub-Saharan African (SSA) countries, using system generalized method of moments and data from four SSA countries during the period 2006-2012.
Abstract: The purpose of this paper is to examine differences in determinants of bank profit persistence among Sub-Saharan African (SSA) countries.,Using system generalized method of moments and data from four SSA countries during the period 2006–2012, this study considers differences in determinants of bank profit persistence across countries.,Efficiency in cost management is a major determinant of profit persistence in all the countries. However, concentration is found to be insignificant in all the estimations, suggesting that efficiency may be a more important determinant of profit persistence than concentration. Economic freedom associates negatively with profit persistence in Ghana, but its effect is insignificant in Tanzania, Kenya and South Africa. Lending specialization translates into less profit persistence in South Africa, but greater persistence in Tanzania. Higher levels of financial development result in lower profit persistence in Kenya and Ghana, but does not matter in Tanzania and South Africa.,The level of profit persistence gives an indication of the effectiveness of competition policies, and the differences observed in their determinants in this study suggest the need for tailor-made policy responses in the different countries.,This study improves the understanding of why some banking market competition policies have not achieved the desired outcomes in some countries. It is evident that blanket rules or wholesale importation of policies from other countries may not work in different contexts.

2 citations


Journal ArticleDOI
01 Jan 2018
TL;DR: In this paper, the effect of total factor productivity (TFP) on human development contingent on the level of remittances in Africa is examined. And the interaction effect turns out to be positive suggesting that countries that receive higher remittance are able to transform the negative impact of TFP into a positive one.
Abstract: Using panel data of 21 African countries over the period 2010-2014, we examine the effect of total factor productivity (TFP) on human development contingent on the level of remittances in Africa. We contribute to literature in three folds: 1) we conceptualise how remittance impact human development through TFP; 2) we empirically test the interactive effect of remittance and TFP on human development using the system generalised methods of moments (SGMM); 3) we used the inequality-adjusted human development index as a proxy for human development which is a better measure. We find that TFP has a negative effect on human development whilst remittances have a positive effect. Their interaction effect turns out to be positive suggesting that countries that receive higher remittances are able to transform the negative impact of TFP into a positive one.

1 citations