Showing papers in "Journal of Developing Areas in 2017"

Leadership styles and employees' motivation: Perspective from an emerging economy

Abstract: Leadership deficit has been Pakistan’s most pressing issue for decades, and this problem is even more pervasive in public organizations than private sector. Tackling the leadership crisis is now increasingly a question of what constitutes an appropriate leadership style to augment motivation of employees. Thus the purpose of the study is to explore the intriguing question of the most pragmatic leadership style and its potential impact on employees’ motivation. For this purpose, autocratic, democratic, and laissez-faire styles are considered as independent variables, while employees’ motivation is the dependent variable. Data is collected via survey questionnaire, based on closed-ended Multifactor Leadership Questionnaire (MLQ), from a sample of 110 senior level and middle level managers working at WAPDA, an autonomous organization of Pakistan working under the administrative control of federal government for the development of energy resources. Descriptive statistics, reliability statistics, multiple regression model and analysis of variance are deployed to test hypotheses of the study and derive practical implications. Autocratic leadership style is found to be more dominant and exhibits significant negative relationship with employees’ motivation, whereas democratic and laissez-faire leadership styles are shown to positively predict motivation of employees. However, the positive relationship between democratic leadership and employees’ motivation comes out to be insignificant, which depicts the bureaucratic and decentralized nature of the organization. The research findings are in line with the theoretical assumptions for autocratic and laissez-faire style, but inconsistent with democratic leadership style. The paper proposes the preference for democratic and laissez-faire leadership style in the face of deleterious bureaucratic environment. Though few researchers investigated the relationship between leadership styles and employees’ performance, there is hardly any study that focuses on bureaucratic environment of an emerging economy. The study offers broader policy implications to strengthen institutions by establishing democratic leadership style. In a context marked by bureaucracy and sluggishness, top management needs to focus on leadership development programs and pursuance of democratic leadership style.

Financial inclusion, financial development, and economic diversification in Nigeria

Abstract: The current oil-induced fiscal crisis in Nigeria has, once again, brought the country into the headlines as suffering great economic hardship. As a result, economic diversification is currently at the center of the debate on how Nigeria can improve its economic performance and achieve higher incomes. This discussion, however, has most of the times lacked an explanation of how financial development and financial inclusion can help to drive economic diversification in Nigeria. The literature is scanty in this regard. The objective of this study, therefore, is to contribute to this empirical evidence to the understanding of the impact of financial development and financial inclusion on economic diversification in Nigeria. The data for the study is from CBN Statistical Bulletin and World Development Indicators, for the period 1981 to 2014. It is well-known in the literature that employing the standard OLS techniques on non-stationary data may lead to spurious results. This study, therefore, uses the fully modified least square (FMOLS) which is designed to provide optimal estimates of cointegrating regressions. The results show that financial development has a positive effect on economic diversification, though the effect is not statistically significant. Additionally, financial inclusion, in terms of financial access and financial usage, has positive and significant effects on economic diversification. In other words, financial inclusion has contributed significantly to the diversification of the Nigerian economy. As well, GDP per capita, capital formation, and human capital development have positive and significant effects on economic diversification. FDI has positive effects on economic diversification, though the effects are not significant. On the contrary, exchange rate and trade openness have negative and significant effects on economic diversification. Financial inclusion can, therefore, be seen as a potent accelerator of economic diversification, and can help realize the national objectives of building shared prosperity and abolishing extreme poverty in Nigeria.

Does Financial Inclusion Spur Economic Growth in India

Abstract: Financial inclusion is a multi-dimensional concept with heterogeneous views prevailing across the globe. The motto of financial inclusion is to provide affordable financial services to all sections of society to improve their standard of living. This is an integral part of economic growth as it not only assures financial sector development but also spreads affordable financial services for the betterment of each section of the society. Broadly, it is the process of allocation of the financial services to the weaker section of the society at an affordable cost. The motivation of this study is to examine the effect of financial inclusion on economic growth in India over the 1980 to 2014 period. The present study uses annual time series data on number of deposit and credit account from scheduled commercial banks in proportion to 1,000 adults, number of bank branches in proportion to 1,000 adults, and number of bank employees as the ratio of bank branches, amounts of deposits and credits as ratio of GDP collected from Basic Statistical Returns, RBI. Data for other macroeconomic controls like inflation, total trade, total secondary school enrollment (as a proxy for human capital) and government expenditure are collected from World development Indicators.The study employs Principal Component Analysis (PCA) to construct a financial inclusion index which measures the financial access in the Indian economy. Using the Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM), the study finds a positive impact of financial inclusion on economic growth both in the long run and short run. In addition, the empirical estimates posit a unidirectional relationship between financial inclusion and economic growth. Moreover, this study reports that financial liberalization policy has contributed to the economic growth in India. Our estimates suggest that the most important task for the government of India is to improve the efficiency of financial institutions, which will simultaneously stimulate financial inclusion as well as economic growth.

Factors Affecting Entrepreneurial Intention Among The Malaysian University Students

Abstract: Entrepreneurship is regarded as one of the key economic development strategies to advance a country’s economic growth and to sustain its competitiveness in facing the increasing trends of globalization. This study aims to explore the factors that affect students’ intentions to be an entrepreneur. Furthermore, it also aims to examine the moderating effects of entrepreneurship education in enhancing entrepreneurial intentions among Malaysian university students. Findings of this study note a positive significant effect on the relationship between innovativeness, risk-taking propensity, family background, and a supportive environment. Findings also note a negative and significant effect in the relationship between entrepreneurship barrier and students’ intentions to be an entrepreneur. Furthermore, in terms of the moderating effects of entrepreneurship education, this study finds no significant support on the moderation of entrepreneurship program on the relationship between Innovativeness, Risk-Taking Propensity, Family Background, and Entrepreneurship Barrier with Entrepreneurial Intention. However, findings of this study note that the entrepreneurship program in entrepreneurship education moderates the relationship between supportive environment and entrepreneurial intention. This could be explained by suggesting that students who undergo entrepreneurship programs in their universities may improve their knowledge on the entrepreneurship programs and policies instituted by the government to produce graduates who want to be entrepreneurs. Moreover, this study also finds no significant support on the moderation of service quality of entrepreneurship education on the relationship between innovativeness, risk-taking propensity, family background, and supportive environment with entrepreneurial intention. However, findings of this study note that the service quality of entrepreneurship education moderates the relationship between entrepreneurship barrier and entrepreneurial intention. This could be explained by suggesting that students who perceive lack of experience and lack of social capital as barriers for them to start a business would be more motivated to pursue their career in entrepreneurship if their lecturers manage to instil knowledge and suggest solutions to overcome the barriers. This study provides empirical evidence of the factors that influence entrepreneurial intention and the moderating role of entrepreneurship education. Findings of this study also provide a clear indication to academicians and academic policy makers about the effectiveness of the current entrepreneurial education designed and practiced by public universities in Malaysia.

Corporate Governance and Performance in Hong Kong Founded Family Firms: Evidence From the Hang Seng Composite Industry Index

Abstract: Background of Problem: This research investigates the corporate governance and performance between founding family firms and non-founding family firms in Hong Kong, and the performance inside founding family firms under three different management status. Agency costs will be generated by the divergence between CEO interest and those of the outside shareholders if the owner-manager sells equity claims on the corporation. There are two different mainstreams of views regarding relationships between ownership and performance in family business: negative and positive effect generated from family ownership and control. To what extents the two different views are relevant to Hong Kong family firms are still unclear. Research Method and Data: By focusing on Hong Kong business, this research seeks to study 75 Hong Kong listed companies in HSCII for 5 years, yielding 347 observations, using archival data. The empirical result suggests that the founding family firms in Hong Kong may not outperform nonfamily firms, and the founding family firms with founders as CEOs are one of best performers among founding family firms. This research not only studies the performance behaviours of Hong Kong founding/non-founding family business and inside founding family business, but also sets a foundation for further research. This research gives insights for entrepreneurs to manage their businesses and plan the succession of founding family business in Hong Kong. This research into corporate governance is different to that of countries such as USA, Taiwan, and Mainland China. The founding family firms in Hong Kong may not outperform the nonfamily firms and the founding family firms with the founder as CEO is one of the best management techniques inside founding family firms. This research shows agency costs inside founding family firms affects performance and succession of family firms, as descendants may not be the best successors for firm value maximization, and business continuity. Owners of Hong Kong founding family business should pay more attention on business governance and succussion planning.

Determinants Of Financial Inclusion In Bangladesh: Dynamic Gmm & Quantile Regression Approach

Abstract: Financial Inclusion has been recently acknowledged as a key enabler for reducing poverty and improving prosperity. However, more than 50% adults of the poorest households are still unbanked globally. According to IMF (2016), 45% people of Bangladesh are out of formal financial services. High interest rate, vast rural population and low literacy rate are among the prominent factors that restrained the government and the World Bank joint initiatives to reach universal financial access. Researchers have reasons to believe, there are certain other factors that remain unnoticed by the policy maker and which in turn, probably affecting their ability to formulate effective policy. The quest to identify these factors materialize this study. In this study, the determinants of financial inclusion have been clustered in two broad areas: bank specific factors and macroeconomic factors. Then, econometrically try to analyse which group of factors has more influence in determining the level of financial inclusion in a country. In the study, static model like, random effects and dynamic panel models like, generalized methods of moments (GMM) methodologies have been applied. Data from 25 banks: 18 conventional and 7 Islamic banks operating in Bangladesh during the period 2005–2014, is collected to analyze the role of both types of banks in financial inclusion. For robustness, this study also employs Quantile regression approach. The study found that, on the supply side, the size of a bank, its efficiency, and the interest rate it charges has a directs impact on financial inclusion. Where on the demand side, literacy rate is positively and age dependency ratio is negatively related to financial inclusion. In addition to that, quantile regression analysis found that bank size has a significant impact on both deposit collection and loans & advances disbursement of a bank. The study can be beneficial for both government and bank authorities in developing their policy decisions to ensure more inclusive financial system. Setting the loan interest rate close to international level and extending the branch facilities can encourage excluded population to use formal financial services. Finally, the study also signifies that, by developing human capital developing country countries can improve their financial market participation and therefore can foster economic growth.

Causality Between Tourism And Economic Growth: Evidence From Sub Saharan Africa (SSA)

Abstract: The tourism industry is among the largest and fastest growing sectors in the world. The contribution of tourism towards economic growth has become increasing important and many governments have incorporated several measures to upgrade their tourism industries in order to enjoy the benefits associated with a vibrant tourism sector. While some scholars found evidence supporting the tourism-led growth hypothesis (TLGH), there is also evidence that economic growth causes tourism development and that there exists a bidirectional causality between economic growth and tourism development. This study attempts to understand the relationship between tourism development and economic growth in Sub-Saharan Africa (SSA). Specifically, the current study examines causality between tourism development and economic growth for 10 SSA countries using annual time series data for the period 1994-2014. Our empirical methodology consists of unit root tests, cointegration analysis, vector error correction modeling and Granger causality testing for each country included in our sample. In order to control for the potential indirect relationship between tourism and economic growth, our empirical analysis incorporates the ratio of trade to GDP and the ratio of capital formation to GDP in a multivariate setting. Our empirical results showed support for the economic growth-led tourism development hypothesis, and the tourism-led growth hypothesis for 40% and 60% of the countries included in the study, respectively. The economic growth-led tourism development result suggests that 40% of the SSA countries mostly used their incomes to improve their tourism infrastructure with the objective of accelerating long-run economic growth. On the other hand, 60% of the SSA countries depend in part on tourism revenues to drive economic growth. In addition, the differences in the direction of causality across SSA countries could be due differences policies governing the tourism industry, colonial origin and other country specific institutional factors. We suggest different policy implications for SSA countries based on our causality results. Countries for which results confirmed the tourism-led growth hypothesis should allocate resources toward supporting the tourism industry and tourism related industries this will benefit economic growth. Alternatively, countries with results consistent with the economic growth-led tourism development should allocate their resources other sectors such as the manufacturing sector as well as the tourism industry and tourism related industries will benefit tourism development. Once developed, the tourism industry may help drive economic growth in these countries.

Board Attributes and Financial Performance: The Evidence from an Emerging Economy

Abstract: In last few decades, impact of corporate governance and financial performance gained tremendous attention of the researchers and policy makers. From agency theory and resource dependence perspective different characteristics of the board can help to achieve the goal of good governance and ultimately affect financial performance. Abundant literature is available on the link between board parameters and firm's financial performance but for developing economies the exploration is still in drought. Considering this, the purpose of this study is to explore the impact of board characteristics on financial performance of the listed companies in Pakistan Stock Exchange, Pakistan. Various board parameters such as board size, number of meetings, board independence, audit committee independence, gender diversity in board and executive directors' compensation are addressed in this study. Data for this research is collected from the listed companies of Pakistan Stock Exchange (PSX) represent six different sectors of the economy. The annual data of selected companies collected from 2009 to 2015. The overall year–firm observations are 1074. Data related to board characteristics and financial performance collected from the audited published annual reports and balance sheets of the selected companies as well as from the publications of State Bank of Pakistan. Accounting and market measures are taken as indicators of financial performance and consider as the outcome variables in this study, whereas the board characteristics are taken as explanatory variables. Panel Data regression analysis revealed that, after controlling for size of firm, board size, audit committee independence are positively linked with firms financial performance, whereas board independence and gender diversity are negatively associated with firms financial performance. However, board meetings found to be insignificant variable. Furthermore, Analysis of Variance describe that there is significant variation with respect to financial performance and board parameters among different sectors of the economy. The study determines that board characteristics influence the firm financial performances in emerging country's perspective have some consistent findings. However, some findings differ as compared to developed country's context, which limit the generalization of the study.

The Effects of Foreign Aid on Economic Growth in Developing Countries

Abstract: Decades of research regarding the effect of foreign aid on economic growth in less developed countries have produced inconclusive results. Research in this literature has been plagued by a variety of empirical impediments. Among them, measurement and endogeneity issues, sparse sets of control variables that may be correlated with both foreign aid and economic growth such as institutional quality, and disagreements regarding the appropriate econometric methodology. This paper highlights a further issue: the heterogeneous effects of foreign aid on growth across less developed countries. Previous studies have pooled all of the developing countries together, treating them as homogenous, despite that developing countries are vastly different across both observable and unobservable dimensions. Developing countries differ in their stages of development, per capita income, socio-economic, financial, and political characteristics. For this reason, the World Bank (2012) broadly classifies the developing countries into two categories: low income developing countries (LIDCs) and high income developing countries (HIDCs) based on per capita income. Our hypothesis is that the relationship between foreign aid and economic growth should be different among LIDCs and HIDCs. For this reason, we analyze the relationship between foreign aid and economic growth separately for LIDCs and HIDCs, producing estimates using samples which are more likely to be homogenous. Integrating the fullest set of control variables thus far in the literature such as unemployment rate, capital formation, government budget surplus, inflation rate, degree of trade openness, and corruption, and using GMM methodology in a dynamic setting we find that foreign aid has positive effects on growth in high-income developing countries and negative effects on growth in low-income developing countries. We also find that higher unemployment rates, higher inflation, and higher levels of corruption reduce economic growth in both LIDCs and HIDCs. Additionally, higher level of capital formation, a larger budget surplus, and higher degrees of trade openness contribute positively to economic growth in both LIDCs and HIDCs. We do not find any evidence that time trends in the data affect our results. The result remains after accounting for endogeneity concerns and when a measure of institutional quality proxied by corruption. The finding implies that foreign aid has beneficial effects in high-income developing countries which are at latter stages of development. This suggests that countries need to gain some "traction" before foreign aid can help.

Executive Compensation And Banking Sector Performance: Evidence From Nigeria

Abstract: There is an increasing interest towards the relationship between executive compensation and bank performance in Nigeria in recent years following the profligate lifestyle of some bank executives. This raises the question whether the banking sector performance justifies bank executives' compensation. Extant literature on the relationship between executive compensation and banking sector performance is inconclusive. While the findings of some studies indicate a positive and significant relationship, other studies found a significant negative relationship. Also, the outcomes of some studies suggest no correlation between executive compensation and banking performance. In the light of this, the study examined the relationship between executive compensation and banking sector performance in 12 commercial banks in Nigeria over the period 2005-2014. The study captured bank performance with customer deposit (CDP), return on equity (ROE), and the equity-asset ratio (EAR). The study obtained the data on these variables from the annual financial reports of the selected commercial banks. Using the impulse response of the panel vector error correction model (PVECM), the study found that EXC responds positively to CDP and EAR but responds negatively to ROE. The variance decomposition also revealed that CDP accounts for greater variation in EXC. Also, the study employed the PVECM Granger causality/block test and found that there is no causal relationship between the bank performance variables investigated with executive compensation. The outcome of the study suggests that the banking sector performance does not determine the executive compensation in the Nigerian banking sector. Findings of the study have an important implication on both the shareholders and the regulator of the banking sector. There is a need for shareholders to ensure that executive compensation is aligned with bank performance to deter bank executives from lavishly spending the resources in their custody. The regulator of the banking industry, Central Bank of Nigeria, should continuously check the excesses of bank executives to ensure that they act in the best interest of the bank and shareholders.

Institutional Logics and ERP Implementation in Public Sector Agency

Abstract: This paper aims to explain the ERP implementation in public sector agency in UAE. It explores the relationships between institutional logics and institutional work when a new accounting change is occurring in the field. This paper presents a case study of Community Development Authority (CDA). It draws on the institutional logics lens to inform Enterprise Resource Planning (ERP) System. It proposes that this system produces a duality of change. On one hand, this system is subject to institutional forces and institutional processes that set the rules of rationality. On the other hand, it is also an important embodiment of institutional commitments and serves to preserve these rules by constraining the actions of human agents. By examining a case of the CDA, the findings compare differentiated institutional work and institutional logics of ERP implementation, as well as analysis of mechanisms that led to different business outcomes. Through institutional analysis of interviews and documents and archival data, the study found that institutional logics (rules) based on correspondent institutional work (actions). The findings also show that CDA was able to align institutional works with its logics built in ERP, resulting in a success in the standard version. It identifies the success factors, software selection steps, and implementation procedures that are critical to a successful implementation of ERP system. The implementation of ERP confirms the practice variance between the institutional logics and situated logics as evident in Dubai Smart Government. This paper can be considered as a one of very few studies about the implementation of ERP system in the Middle East. This study has important implications for academic and practitioners alike by examining the interaction between institutional logics and institutional work when a new accounting change is taking place in the public sector.

CSR, organizational identification, normative commitment, and the moderating effect of the importance of CSR

Abstract: Commitment results from an assessment of situations found at the work place linking employees to their organization, and their effort towards achieving goals. Corporate Social Responsibility (CSR) is management's obligation, not solely to maximize economic profit, but also represent humanitarian social causes. CSR has been linked employee organizational identification (EOI) and to commitment. This research examines the moderating effect of the perceived importance of corporate social responsibility (ICSR) on the relationships among CSR, EOI and commitment. The constructs were numerically measured and the model was analyzed using partial least square structural equation modeling. Cross-sectional data was collected through convenience sampling targeting employees working at different organizations within Lebanon (a country in the Middle East and North Africa region). 287 participants fully completed the survey. The questionnaire contains 15 items measuring CSR, 5 questions relating to EOI, 8 items measuring the normative commitment, a 5-item scale to measure the importance of ethics and social responsibility to employees, and demographics. Based on previous research, all scales used are valid and reliable.Empirical evidence indicate that employee identification mediate the relationship between CSR and normative commitment. Also, ICSR was found to moderate some of these relationships. These findings were obtained by first, demonstrating the reliability and validity of the measurement model, and then by calculating the structural model path coefficients and determining their significance. Also, cluster analysis was used to partition the respondents into two groups on the bases of whether or not they view CSR as important. Multi-group analysis was then conducted to determine the moderating effects of ICSR on the relationship between CSR, EOI, and normative commitment. In particular, significant effects were found between CSR towards customer, employees, and stakeholders on employee identification. Additionally, results show that employee identification moderates the relationship between the employees and stakeholders' components of CSR and normative commitments. It is recommended when formulating CSR initiatives, companies take into consideration what employees value and perceive as important, so that their company identification is enhanced leading to increased commitment. As such, companies ought to align their corporate values and interests with that of employees when determining CSR activities.

The impact of social grant-dependency on agricultural entrepreneurship among rural households in Kwazulu-Natal, South Africa

Abstract: Developing entrepreneurship is key to achieving the rural poverty reduction goals in South Africa. The concern that social grants, which benefit millions of the poor, may inhibit the growth of entrepreneurship among rural households should be empirically investigated. This study assess the extent to which dependency on social grants influences the development of agricultural entrepreneurship among rural farming households. The study adopts the competency approach in understanding agricultural entrepreneurship, as this approach is readily applicable to firms that are smaller in size and dominated by the entrepreneur such as smallholder farming units. A total of 513 rural farming households were randomly selected in three purposively chosen districts of KwaZulu-Natal. The data were analyzed using the factor score regression method, which was estimated in two steps. The first step involved generating the agricultural entrepreneurship index using principal component analysis, while the second step involved using the computed agricultural entrepreneurship index as a dependent variable in a linear regression. The empirical results indicated that dependency on social grants, in line with the disincentive hypothesis, was negatively associated with agricultural entrepreneurship. This suggests that social grants are spilling-over to unintended groups, creating disincentive effects which inhibit entrepreneurial development among the rural farming households. The study results further indicated that the household's risk-bearing ability through asset endowment (land size, livestock size), access to government support services (extension, credit and training), and institutional and/or infrastructural support (tenure security, market access and irrigation access) had positive effects on agricultural entrepreneurship. The disincentives effects of social grants on entrepreneurship have negative implications on the government's drive to increase production and commercialization levels of smallholder farmers. Given that the entrepreneurial competencies can be learned and changed, the study identified a number of policy variables to enhance agricultural entrepreneurship. In particular, the study recommends that policy-makers should prioritize increasing the risk-bearing abilities of households as well as access to government support services to increase agricultural entrepreneurship.

Economics of farming household's food intake and health-capital in Nigeria: A two-stage probit regression approach

Abstract: Persistent hunger, malnutrition, and public health problems inextricably threaten the ability of several countries to develop. The burdens of these trios on economic development in African continent cannot be overemphasized. This study investigates the effect of farming households’ nutrition on health in the Southwest Nigeria. The data used were collected with structured questionnaire through a multistage sampling of 420 agricultural households from the southwest geopolitical zone of Nigeria. Data were analyzed using descriptive statistic and Probit regression and Two-Stage Probit regression (2SPR).About 42.38% of the respondents eat ≤ 3 types of food, 50.71% eat 4-6 food, 5.71% took 6-9 food while 1.19% eat within 9-12 food types within the qualitative 24hours recall period of food consumed. In addition, average body mass indices of 25.63 kg/m² ±2.67 (overweight), 26.42 kg/m² ± 2.76 (overweight) and 26.22 kg/m² ± 3.2 (overweight) were recorded in Oyo, Ogun and Osun states respectively. Also, Two-Stage Probit Regression estimate was used to determine the effect of respondents’ nutrition on health status. Result shows that respondents’ nutrition status (p

Mediation role of job satisfaction on HRM-operational performance relationship: A three-way moderation effect by gender

Abstract: The impact of Human Resource Management (HRM) practices on performance behavior and job satisfaction have drawn much attention around the world over the past 25 years (Khera, 2010; Savaneviciene& Stankeviciute, 2012).Past researchwas conducted on either HRM practices and job satisfaction or HRM practices and employee performance. Researchers in the study try to integrate both the topics in a single edge. Covering the existing research gap, the study aims at to predict high school teachers' operational performance on HRM practices and notice whether the job satisfaction mediates the relationship between HR practices and operational performance. The research is a non-experimental study utilizing structured questionnaires. During the survey, information confidentiality and respondents' anonymous were established. The study has adopted the cross-sectional survey approach and investigated 140 teachers from 14 high schools, located at Sylhet City, Bangladesh. A three-step hierarchical regression model was fitted to regress operational performance on control variable, HRM related independent variables as well as job satisfaction to know the variance explained by each step and to test the effect size. Further, three mediation models were also developed to delineate how HRM practices i.e., discipline and compensation were related to operational performance through job satisfaction. In doing so, mediating role (either complete or partial) of job satisfaction was examined. Results revealed that training and development, discipline and compensation significantly predictedhigh school teachers' perceived operational performance effort; and job satisfaction has shown both partial and complete mediation effects in the relationships between HRM practices and operational performance. Moderating variable,viz., gender did moderate none of relationships among independent, mediator and predicted variables. Thus, school teachers' operational performance and job satisfaction resultant from HRM practices do not differ significantly by gender status. The key implication of the study is assisting the management committee of higher secondary schools in focusing on specific HRM practices to draw out school teachers' performance effort. And all HR practices more or less important for educational institutions but to boost up employee performance effort training & development, discipline and compensation system are more imperative.

An Empirical Analysis Of Multivariate Causality Between Electricity Consumption, Economic Growth And Foreign Aid: Evidence From Bangladesh

Abstract: The indispensable role of electricity in expediting the process of industrialization leading to economic development, of developing nations in particular, cannot be questioned. Thus, researchers and policy makers all around the globe have endeavored themselves in identifying the contribution of electricity consumption in spawning economic growth of a nation. Furthermore, energy is also acknowledged as a key factor in attainment of the Social Development Goals (SDGs).Besides, it is globally acclaimed that foreign aid plays a direct role in attributing to economic growth of the recipient nation, while it also plays an indirect growth-role via enhancing electricity generations. The aim of this paper is to investigate the causal relationships between electricity consumption, economic growth and foreign aid inflow in Bangladesh incorporating relevant data from 1980 to 2013. Augmented Dickey Fuller (ADF) unit root test was used to test the stationarity of all the concerned variables. Johansen cointegration test is then employed to determine the long run relationships between the variables. Moreover, using Granger causality test, we observe various long run causal relationships between the variables while the Vector Error-Correction Model (VECM) approach provides the short run causalities. Results from the ADF test confirms that all our variables are stationary at their first differences, I (1) which eliminated the possibility of our regression being spurious. The Johansen cointegration test results provide evidence suggesting the existence of long run associations between the concerned variables. Moreover, results from the Granger causality test reveals a unidirectional causality running from electricity consumption to economic growth in Bangladesh in the long run. In addition, the VECM approach findings also confirm the unidirectional causality running from electricity consumption to economic growth in the short run as well. Thus, the 'growth hypothesis' is found to be valid in context of Bangladesh. As electricity consumption is found to be influencing the growth of the economy, it is recommended that Bangladesh ensures its energy security through effective energy diversification policies that are in line with the global trends in energy transition. Besides, the government can also consider its option to engage in Cross-Border Electricity Trade (CBET) with regional countries.

Capital Structure and Corporate Governance

Abstract: Capital structure determination is considered as one of the key corporate financing decisions and managers often face difficulty in finding the optimal one. There are various theories regarding this phenomenon in the finance literature and this issue has been discussed since long. No theory can be regarded as the conclusive one as varying evidences found regarding this complex issue. Presently, the need to determine an optimal capital structure has become more troublesome as well as important due to the emergence of a need of the best corporate governance practices. To mitigate agency problem, the organizations may implement code of corporate governance. This study aims to investigate about the impact of corporate governance on capital structure determination. Secondly, this study focuses on three well known capital structure theories i.e. trade-off theory, agency theory and pecking-order theory. Quantitative research design is used for this empirical study. Sample consists of panel data of the non-financial sector companies listed at Pakistan Stock Exchange for five years 2009-2013. The data of the variables of interest are collected from annual reports published by companies and the publications of State Bank of Pakistan. The companies are selected by taking a representative sample from the whole non-financial sector. Stratified Random Sampling technique is used by taking 10% of each sector and final selected firms are 40.Then, simple random sampling technique is used for the selection of a representative sample by using random number method. Panel data analysis and Hausman test reveal that fixed effects model is better than other options and Board size has a significant impact on Debt to equity ratio in positive direction in case of Pakistani firms operating in nonfinancial sector. We may infer that Pakistani firms have positive relationship between managerial ownership and capital structure. Since this relationship is insignificant in all regressions. The negative relationship of return on assets (ROA) and debt to equity ratio suggests that Pakistani firms earn higher returns on assets and such firms rely more on internal financing resulting in less use of debt, strong negative association has been found between liquidity and debt to equity whereas the relationship with firm size is observed negative as well as insignificant. The findings of this study can help to policy makers to give importance to Board size as it is an important determinant of capital structure as larger the size of board is, the better the monitoring and decision making process

Logistics Capability, Logistics Performance, And The Moderating Effect Of Firm Size: Empirical Evidence From East Coast Malaysia

Abstract: Based on the underlying Resource-Based View (RBV) perspective, the main objective of this study is to empirically examine the relationship of logistics capability and logistics performance, and the moderating effect of firm size on this relationship. This study adopted a cross-sectional design and collected quantitative data from a total of 81 logistic service providers (LSP) registered with the Federation of Malaysian Manufacturers (FMM) Directory of Malaysian Industries 2013, from three states (i.e., Kelantan, Terengganu, and Pahang) in Peninsular Malaysia. This study used the Pearson correlation and the moderated multiple regression (MMR) to test if the logistics capability has a significant positive effect on firm performance and the moderating effect of firm size on the relationship between logistics capability and firm performance. Findings of this study revealed that logistics capability has a significant positive relationship with logistics performance. Logistics service capabilities and flexible capabilities delivered by firms are vital for liner shipping services. Moreover, this relationship is significantly affected by firm size, which suggests that, in comparison, the inclusion of firm size (large vs. medium/small LSPs) in the logistics capability – logistics performance relationship has a significant moderating effect in changing the degree (volume) of performance. The moderating effect of firm size is shown to be capable of changing the nature of relationship and explains the conditions in which capability causes LSPs to perform better. The presence of a significant moderating effect of firm size (large and medium/small LSP firms) exceeded the linear relationship between logistics capability and logistics performance. The study has bridged the literature gaps in such a way that it offers empirical evidence on the moderating effect of firm size on the relationship between logistics capability and logistics performance using a Malaysian sample. In order to foster the economic development through effective logistics services, the logistics services development policies and programs should therefore focus on providing a supportive platform for logistics service providers to improve their capacities, which would ultimately lead to better performance and the sustainability of the logistics service providers in Malaysia.

The impact of microfinance on financial inclusion in Nigeria

Abstract: Many attempts have been made throughout history to establish institutions for supplying credit to the poor. In Nigeria, strategies to increase the income of the poor have existed in the form of rotating contributory savings schemes (referred to as Esusu, Itutu, Adashi, Bambam and Ajo in different parts of the country). However, in recent years, microfinance has become a veritable institutional mechanism for enhancing credit access for low-income groups. With the increasing number of microfinance banks in Nigeria and the mounting drive for inclusive financial systems, therefore, it would be worthwhile to assess the impact of microfinance on financial inclusion in the country. To achieve this objective, this study uses the fully modified OLS (FMOLS) and the Dynamic OLS (DOLS) which were designed to provide optimal estimates of cointegrating regressions. The benefit of using the two approaches was to effectively assess the robustness of the parameter estimates to different specifications. This study, therefore, employs annual data of total commercial banks’ loans and advances, number of microfinance banks in Nigeria, and gross domestic product (GDP) as well as lending interest rates for the 1981–2014 period. The study found that microfinance and financial inclusion are linked by a set of long-run relationships. In the short run, the study found that microfinance has a positive but insignificant impact on financial inclusion, but in the long run, microfinance has a positive and statistically significant impact on the level of financial inclusion. The negative interest rate has a statistically significant impact on the level of financial inclusion both in the short and long run. Therefore, this study has established that microfinance, as well as interest rates, is a significant driver of financial inclusion in Nigeria. To increase financial inclusion in Nigeria, heightened drives for microfinance will be required. Microfinance represents a vehicle for the promotion of financial inclusion in Nigeria and should remain at the core of the pursuit of financial participation across all income levels.

Macroeconomic Determinants Of Non-Performing Loans In Nigeria: An Empirical Analysis

Abstract: The intermediation role of banks which is vital for the development of any nation can be adversely affected by non-performing loans. This study investigated the macroeconomic determinants of non-performing loans in Nigeria, using time series data for the period 2005 to 2014 collated from Central Bank of Nigeria Statistical Bulletin, Nigeria Deposit Insurance Corporation annual report, World Bank Development Indicators and International Financial Statistics. The choice of the period 2005 to 2014 was premised on the fact that the number of banks in Nigeria was reduced from 89 to 25 in 2005 due to the banking recapitalization exercise initiated by the CBN which led to the consolidation of banks. The dependent variable used in the study was non-performing loan (NPL). Independent variables were gross domestic product growth rate (GDPGR), inflation (INF), lending rate (LR), exchange rate (ER), money supply to gross domestic product (M2GDP), and unemployment rate (UR). The outcome of the regression result showed that GDPGR has a positive relationship with NPL. The result also revealed that INF and ER have a positive relationship with NPL while LR, M2GDP, and UR have a positive and significant relationship with NPL. Of the six macroeconomic variables used in the study, it can be observed that only LR, M2GDP, and UR determine NPL in Nigeria while GDPGR, INF, and ER have a positive relationship with NPL but do not influence or determine NPL in Nigeria. The policy implication of this study is that the monetary authorities should ensure that the lending rate charged on loans by deposit money banks is reasonable to enable borrowers to repay the borrowed fund. Finally, the government should direct its monetary and fiscal policies towards reducing unemployment by creating an enabling environment conducive for business growth through the provision of social and infrastructural facilities.

Determinants of house prices and new construction activity: an empirical investigation of the namibian housing market

Abstract: The demand for and supply of housing are heterogeneous and differ across countries, provinces and cities. In the Namibian context, the housing market has experienced a substantial increase in house prices. Such an unexpected growth rate in house prices suggests that the Namibian housing market may not be sustainable in the long term. This means that there is a high probability of a housing price bubble in Namibia if the house prices continue to increase. The aim of this study was to conduct an econometric analysis of endogenous and exogenous determinants of house prices and new construction activity in Namibia. This study also attempted to establish whether there is evidence of overvaluation of house prices in the Namibian housing market and this is important in identifying the possibility of a housing price bubble in Namibia. In addition, the study is relevant during the current period where Namibia is faced with a continuous increase in house prices. A restricted VAR model with a Johansen cointegration approach was used to analyse monthly data from January 2000 to December 2014. The selection of the data set was aimed at providing representatives for various housing demand drivers and housing supply determinants. For modelling on the supply side, new construction investment as a percentage of GDP was employed. The other variables incorporated as exogenous variables include the economic growth rate, the consumer price index, nominal wages as a percentage of GDP, the short-term interest rate, mortgage loans as a share of GDP and population in the 15-64 cohort as a percentage of GDP. Results show that the house price index in Namibia has proved more sensitive to changes in population, mortgage loans and inflation; whereas the construction activities were found to be more sensitive to the house price index and inflation. Granger causality results show that there is a bidirectional causality between the house price index and new construction activity in Namibia. The study therefore found evidence of overvaluation of house prices in the Namibian housing market, which may lead to a house price bubble in the Namibian economy. Namibian policymakers, through the Bank of Namibia, should come up with policies which ensure that the majority of mortgages given by the banks are for constructing new houses instead of financing the purchase of existing houses.

Explaining the Growth of Government Spending in Ghana

Abstract: Government spending is a reflection of government policy choices. However, the implications of government spending growth necessitate an understanding of the drivers of the growth of government spending. The present paper modifies the median voter model to explain the growth of government spending by introducing foreign aid, public debt, and democracy. The paper argues that these variables are important drivers of government spending for developing countries, hence a model explaining the growth of government spending of these group of countries that ignores the potential impact of foreign aid, public debt and democracy does not capture fully what determines the growth of government spending. Such a model is too simplistic and less relevant for policy purposes. The paper therefore makes use of annual time series data to determine the long-and short-run impact of per capita income, tax share, minimum wage, population growth, foreign aid, public debt and democracy on the growth of government spending in Ghana over the period 1980-2012. The autoregressive distributed lag (ARDT) bounds test for cointegration and the error correction model (ECM) procedures were used for the estimation. Additionally, the paper provides results of generalized forecast error variance decomposition in order to determine the effect of innovations in both the dependent and independent variables on the dependent variable. The findings reveal that per capita income, tax share, population growth, minimum wage, foreign aid, public debt, and democracy are key determinants of the growth of government spending in the long-run. With the exception of minimum wage, these variables are also key determinants of the growth of government spending in the short-run. Variance decomposition results suggest innovations in per capita income and population growth generally account for the largest variations in government spending over the horizon considered. Also, innovations in foreign aid, public debt, and democracy are responsible for significant variations in government spending. The findings and policy recommendations of the paper provide vital information for policy implementation in Ghana.

Self-employment in Latin America

Abstract: This paper investigates the determinants of self employment in a sample of six Latin American countries (El Salvador, Costa Rica, Honduras, Ecuador, Paraguay and Jamaica) by the estimation of OLS equations that express the change in the rate of self employment in terms of the rate of: unemployment, salaried employment, participation, economic growth, and remittances. The paper finds that female and male self employment have different responses to participation, unemployment, remittances and economic growth, suggesting the need for particular attention to gender. Particular importance resides in the result that male self employment increases as male unemployment increases, but it does not respond to female unemployment. As well, male self employment decreases when economic growth increases, a response that does not take place in the case of female self employment. Human development and per capita social expenditures represent "lifeguards" that prevent falling into self employment, particularly important to women, and remittances have a stronger "push" effect on women to work in self employment than men. The results indicate that self employment is a means of subsistence in response to unemployment, economic stagnation, and inequality of opportunity and, as such, it is associated with poverty. Given the evidence that poor people die at an earlier age than the non-poor, in both developed and developing countries, the paper finds associations between self employment, poverty and premature death in Latin America. The paper concludes that self employment is a manifestation of a historical framework of inequality of opportunities and low taxation, which gives rise to persistent poverty trap. Low taxation results from income inequality and of the "capture" of government by the high income strata. This is a situation where tax increases are blocked and, in consequence, the public sector does not have sufficient revenues to strengthen equality of opportunity. The results contradict the argument that low taxation is conducive to the creation of jobs; instead, the results demostrate that the lack of sufficient tax revenues have incidence upon the expansion of the informal economy, poverty, and premature death. Low taxation relative to social needs violates the rights to live and work as contained in the Universal Declaration of Human Rights.

Poverty and economic growth in Ethiopia: a multivariate causal linkage

Abstract: The relationship between economic growth and poverty reduction has long been researched in numerous studies around the world; yet, the results are far from being conclusive. Although it is now widely recognised that economic growth is good for poverty reduction through the trickle-down effect, alternative views still exist. This paper, therefore, investigates the dynamic causal linkage between poverty reduction and economic growth in Ethiopia during the period from 1970 to 2014. To address the omission of variable bias, the study includes financial development and investment as intermittent variables – thereby creating a multivariate Granger-causality model. The study uses two proxies to measure the level of poverty in Ethiopia, namely: household consumption expenditure and the infant mortality rate. The study further uses the newly developed autoregressive distributed lag (ARDL) bounds testing approach to cointegration and the ECM-based Granger-causality test to examine this linkage. The study finds that there is a short-run bi-directional causality between economic growth and poverty reduction – irrespective of which variable is used as a proxy for poverty reduction. However, in the long run, the study finds unidirectional causality from economic growth to poverty reduction (proxied by infant mortality rate); but it fails to find any causal relationship between household consumption expenditure and economic growth. The study, therefore, concludes that while poverty reduction and economic growth are mutually beneficial in the short run; in the long run, it is economic growth that leads to poverty reduction when the infant mortality rate is used as a proxy for poverty reduction. The study recommends that policy makers in Ethiopia should pursue both pro-poor policies and pro-economic-growth strategies in the short run; since poverty reduction and economic growth have been found to have a mutual causal relationship in the short run. It is further recommended that such policies should be complementary and mutually reinforcing. If the economic growth and poverty reduction policies are well crafted and co-ordinated; in the short run, a reduction in poverty could lead to an increase in economic growth – in a way that reinforces further reduction in poverty and inequality and benefits the population at large, while promoting higher economic growth in turn. However, in the long run, pro-growth policies should be prioritised; since economic growth has been found to Granger-cause poverty reduction in the long run. This would ensure that poverty in all its forms is reduced as far as is possible.

Linkage Between Rural Non-Farm Income and Agricultural Productivity in Nigeria: A Tobit-Two-Stage Least Square Regression Approach

Abstract: Multiple motive prompt agricultural households to diversify their income activities. Some of these activities were due to the "push" and "Pull" factors. The consequence(s) of these factors are the widespread households' income diversification. One of such is Non-farm activity which seems to offer a pathway out of poverty. This study therefore examines the effect of rural non-farm income on agricultural productivity in Nigeria. Data from Nigeria General Household Survey–Panel 2010 was used to generate information on households' access to non-farm income, agricultural production, investment and socio-economic characteristics. Data were analyzed using descriptive statistic (mean, frequency and percentage) and inferential statistics such as Tobit regression and Two Stage Least Square (2SLS). Tobit regression was used to analyze factors influencing non-farm income in the study area. While 2SLS model was further employed to analyze the effect of non-farm earnings on agricultural productivity of the respondents. In this study, the descriptive result shows that the mean age of households' head in Nigeria was 52 years, with most households being married and having mean households' size of about 12 persons. Also, the majority (88.3%) of the households were male headed. The mean non-farm income among the participating households was 251, 723 ($1,678.18) per annum. In addition, the mean value of surplus crop produced was 34, 274 ($228.49) while mean area cultivated was 1.99 Ha per respondent. Also, of the six regions in the country, South west was the most favourable to earnings in both cropping and non-farm activities. The households participating in non-farm activities were more productive agriculturally than their non-participating counterparts. Tobit regression result of the factors influencing non-farm income across rural areas in Nigeria indicates that estimates of equation of the model are jointly significant at 1% level of significance. The pseudo R square was 38% and from the thirteen included variables only four (Educational attainment, non-farm enterprise investment, sex of households' head and marital status) were statistically significant at different levels. Furthermore, the effect of nonfarm income on agricultural productivity is positive and significant at 5% in both the 2SLS and Ordinary Least Square Regression (OLS). Educational attainment of the household and capital investment significantly increase the ability of a typical rural household in Nigeria to earn non-farm income. The important linkage between farm and non-farm activities among rural households in Nigeria therefore suggests that attention needs to be given to non-farm sector for rural development as non-farm activity was not only a source of income for the participating household but a source of investment fund to boost agricultural productivity.

What drives China’s outward FDI? A regional analysis

Abstract: China has become one of the world's biggest source of outward FDI in the past decade. A fair amount of literature have emerged explaining home determinants of China's outward FDI at country- and firm-level. Our study attempts to examine drivers of China's overseas investment from a fresh angle – China's regional outward FDI. While central outward FDI is made by large central firms which are directly supervised and managed by the State Council, regional outward FDI is from regional firms that are owned by regional governments and the private sector. The rising importance of regional outward FDI compared with central outward FDI warrants a thorough investigation on the former. We propose a theoretical framework that incorporates an extended Investment Development Path (IDP) theory, home locational constraints, policy incentives and geographic factors. Many variables examined in our study have never been introduced previously to analyse China's outward FDI. Empirically, we employ the Bayesian Averaging Maximum Likelihood Estimates method to address model uncertainty. This is the first time this method is used in FDI literature. All proposed theories (except the geographic factors) are found to capture important perspectives explaining China's regional outward FDI. Our results particularly highlight the importance of government policies (presence of SOEs, willingness to approve local outward FDI, and investment in R&D), but do not support the original IDP hypothesis that outward investment is automatically generated as income grows. We found two variables based on the extended IDP theory, namely trade openness and agglomeration effect to be robust determinants. Pollution is the only home locational constraint that is robust, and geographic factors have little impact on regional outward FDI. Our findings have both regional and central policy implications. Central policy makers need to recognise that local outward investment may response to different set of factors compared with central investment abroad and take this into account when setting outward FDI policies. At regional level, our study provides direct reference on tools local government can employ to facilitate outward investment.

Bank, Stock Market And Economic Growth: Bangladesh Perspective

Abstract: The paper empirically investigates the relationship between bank, stock market and economic growth in Bangladesh. In investigating empirical relationship, GDP at the current price, private sector credit given by banks and market capitalization are considered as indicators of economic growth, banks' development and stock market development, respectively. Three possible regression models are estimated to know the relationship between economic growth and financial sector development. The paper shows that bank's credit to the private sector is both positively and robustly contributing to the economic development of the country when bank credit to private sector entered alone in regression as an independent variable. Besides long-term relationship, contemporaneous change in bank's credit to the private sector has profound positive short-run feedback effects to the economic growth. In assessing impact of stock market development on economic growth, no significant long-run relationship is found between stock market development and economic growth in Bangladesh. However, net positive subdued short-term effect of stock market development is evident. But when both bank and equity market jointly enter the model to find out the relationship of both variables with economic growth, a long-run relationship has been evident without statistical significance. It indicates that Bangladeshi financial system comprising both banking sector and stock market jointly is not still a strong promoter of its economic growth, although banking development alone is robustly associated with economic development.Bangladesh therefore needs to enhance the efficiency of banks for increasing credit to the private sector. An immediate initiative is also required to make both equity and debt market as regular sources of finance for the economy. In this perspective, ensuring smooth operation of primary and secondary market, increasing financial literacy among investors, minimizing volatility of the market, expanding issuer base, creating both individual and institutional investors, enhancing efficiency of the brokerage house, adding innovative financial services, initiating knowledge based trading, introducing shelf registration system, creating more professional trustee and ensuring authenticate credit rating from the rating agencies are required to be ensured.

Development, Poverty and Inequality: A Spatial Analysis of South African Provinces

Abstract: The literature that relates average income rise of the economy with increase in average income of the poorest population is well established. However poverty continues to be predominant in Africa indicating that income rise is not sufficient to decrease poverty. As a middle-income country, South Africa has consistently held the unappealing record of the country with the most unequal income distribution in the world. The increasing inequality in South Africa represents a substantial policy challenge to policymakers as it affects socio-political stability and economic development. This paper investigates the relation between growth, poverty and inequality in South Africa at the regional level using data over the annual period of 1996-2013. We adopt a spatial econometric model motivated by two noteworthy facts: (i) the high rate of poverty in South Africa and (ii) the high levels of poverty and inequality in the studied regions. In addition we account for the spatial dependence between regions which might affect the relationship between growth and poverty. Also, we develop and test five hypotheses and account for the possible endogeneity in specified model. The results reveal that the autoregressive parameter, lagged poverty is positive and statistically significant in all cases, which supports the use of a dynamic panel data model. Furthermore it reveals poverty increases along the period and the autocorrelation poverty variable is also found to be positive and statistically significant. The trend also reveals that poverty increases but at a decreasing rate, with the latter indicated by the square trend term. Log per capita income increases poverty and is statistically significant. Log GDP Growth is also statistically significant but only in the Arellano-Bond model, signifying that it is an endogenous variable. Log Employment increases poverty and is statistically significant. The Gini indicator (a measure of inequality) is found to increase poverty; signifying that poverty and inequality are affecting each other. This result signifies that poverty is increasing in South Africa at decreasing rate. Moreover the economic variables (for example, income per capita, GDP growth and employment) are also decreasing poverty. Therefore it appears that South Africa is on the right road to decrease poverty, but the spatial slipovers on poverty implies that the government needs an active anti-poverty policy to attack this persistent problem, since it cannot rely on economy growth to overcome it.

A Study of the Moderate Growth of Online Retailing (Ecommerce) In the UAE

Abstract: E-commerce is now one of the most significant activities carried out over the Internet .The research question and problem centred around as to what are the determinants of moderate growth of online retailing in UAE. The key determinants as variables addressed are transaction cost, lack of trust, lack of awareness, culture and local regulation. The last variable – local regulation – was identified by the respondents and experts during the pre-testing of the questionnaire. Both primary and secondary data were collected. Primary Initially a pilot survey was conducted with 35 respondents and subsequently 10 respondents were interviewed face to face to obtain feedback on the questionnaire and their suggestions for improvement data was collected from industrial exerts and customers of supermarkets, and on lines stores in UAE. . Smartpls3.0 is used to analyse the data collected by building a partial least squares structural equation model (PLS-SEM). The SmartPLS3.0 tool was used to build and test the research framework and hypothesis. The relationships between the variables were obtained by performing partial least squares (PLS). To develop the trust among customers, the e commerce companies must improve the quality of their website and ensure they have genuine ratings to back them. Transaction costs include the policing costs and search costs which can be addressed by creating more awareness and by holding a wide variety of products. Regulations in favor of ecommerce retailers will motivate them to enter the market. It was also observed that the prevalence of mall culture is also one reason why there is no rapid growth in online retailing. The observations of this study will be of benefit to all stakeholders in e-commerce firms in UAE particularly consumers who intend to use online stores which would increase the growth rate of online retailing in the region. Companies providing payment solutions can leverage the finding of this research. The primary implications of this study would boost the moderate growth to speedier growth rate of online industry in the region.

What factors make micro-firms sustainable? a proposal for a model

Abstract: Drawing on resource-based view (RBV) and dynamic capability view (DCV) of firm, we suggest that the growth of micro-firms (MFs) does not take place in a vacuum; rather, it is a function of various resources and capabilities. However, the existing literature does not adequately address the association between these resources and capabilities. Thus, the objective of this paper is to propose a model for the MFs by critically examining the literature. We use a literature analysis approach. This approach starts with literature selection. The literature selection includes several phases and picks 22 papers. The selected papers are analysed by using the content analysis method. This method helps to identify key variables, factors and the links between factors. The content analysis is applied in two phases. The initial step deals with individual papers and the later step involves the integration of these individual papers. Both inductive and deductive logical thinking skills are applied to extract and classify the factors. Based on content analysis, a graphical and a mathematical model are developed respectively. The proposed model is hierarchical, multifactor, second-order model, consists of five factors and 13 subfactors in the antecedents’ phase and one factor and three subfactors in the outcome phase. This study suggests that entrepreneurial orientation (EO) and sustainable performance construct as reflective while human capital, social capital, financial capital and business environment as formative construct. The conceptualization of reflective and formative factors is based on a theoretical foundation. The study finding also recommends to run both the measurement and structural model by using exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and multiple regression model respectively to verify the variables and hypotheses. The model that emerges from the analysis embodies a new understanding of the factors that make for growth of MFs. The study and the new model together enable policy makers to better understand the significant resources and capabilities that affect sustainable growth of MFs. Because these factors and their links is becoming increasingly important due the MFs contribute in poverty alleviation and employment generation. And developing countries are focusing their needs for inspiring economic development through MFs.