Does bank size significantly explain the variations in bank stability? Does bank funding risk significantly impact bank stability? This paper addresses these two questions with data from the rural ...banking industry in Ghana. Controlling for credit risk, liquidity risk, diversification in the business model, profitability, inflation, financial structure and gross domestic product, the results suggest that an increase in the size of a rural bank results in an increase in its stability. The results also show that funding risk positively impacts bank stability. The positive relationship between size and bank stability has important repercussions for the current debate on whether or not to constrain bank size to insulate the financial system from future crisis. The positive relationship between funding risk and bank stability also has important implications for the current debate on funding of retail banks.
What are the determinants of the technical efficiency of rural and community banks in Ghana? This paper addresses this question with data from 101 rural and community banks in Ghana. Data envelopment ...analysis based on the variable return to scale assumption and binary logistic regression technique has been used for analysis. The results show that only 20 rural and community banks are technically efficient. The binary logistic regression analysis provides evidence that size, profitability, and bank funding quality are significant determinants of technical efficiency in the rural banking industry in Ghana. Whereas an increase in the size and funding quality of a rural bank results in a decrease in its technical efficiency, an increase in the profitability of a rural bank improves its technical efficiency. It can be inferred from these results that the resource utilization of many rural and community banks in Ghana is weak and that the resource utilization performance of a rural bank can be assessed by considering its size, profitability, and funding quality.
This paper analyzes the profitability of 112 rural banks (special unit banks created to promote rural financial intermediation in Ghana). The results generally show that bank size, funding risk, ...diversification, liquidity risk, and bank stability are significant predictors of rural bank profitability. Whereas an improvement in the funding risk of a rural bank in a particular period portends a drop in its profitability in the future, an improvement in the size, diversification, liquidity risk, and stability of a rural bank signifies an improvement in the future profitability of the bank.
Does board gender diversity promote technical efficiency? Does the size of a microfinance institution (MFI) moderate the relation between board gender diversity and technical efficiency? This paper ...empirically addresses these two important questions with data (2010–2014) from 418 MFIs located in 64 countries. Contrary to the evidence from previous research, the paper demonstrates that board gender diversity hurts technical efficiency. The robustness of this finding is established by a number of techniques including endogeneity test. However, an interaction analysis establishes that board gender diversity interacts with the size of an MFI to positively drive technical efficiency.
There seems to be a cloud of scepticism hanging over the value of entrepreneurship to the growth processes of developing economies. This haze of scepticism is fuelled by the reverberating mantra by a ...section of the extant literature that replicative entrepreneurship (entrepreneurship which is generally considered not to be growth‐supporting) is pervasive in developing economies including Africa. We take motivation from this postulation to investigate whether entrepreneurship is of any relevance to the growth processes of 12 African countries. The results show that entrepreneurship positively explains the variations in the growth of the study countries. It is, thus, reasonable to contend that entrepreneurship in developing economies including Africa even if replicative is instrumental to economic growth.
This study provides quantitative evidence on the positive effect of spending on socially responsible causes on the long-term growth of U.S technology companies. Maximizing shareholder wealth remains ...the overarching principle driving organizational strategies, but this has always conflicted with other stakeholders’ interests. Because of these conflicting priorities, entrenching the principles of social responsibility has become imperative. We leverage content analysis, fixed-effects and pooled regression models to examine the effect of engaging in CSR on tech companies’ corporate financial performance in the U.S. The empirical study consists of panel data of the top 100 tech companies listed on the S&P 500 for the period 2017 and 2019. We examine the link between corporate financial performance and CSR proxies. The main results indicate that tech companies that spend more on CSR experience a corresponding increase in revenue and profitability. Contrary to previous studies, we observe insignificant evidence to support a relationship between CSR and Tobin’s Q.
•We investigate the effect of CSR on the corporate financial performance of U.S technology firms.•The model shows spending on CSR activities increases organizational growth.•Corporate governance moderates the impact of CSR spending on firm performance.
•This study investigates the effect of interest rate on the social performance of microfinance institutions.•It uses data from 555 microfinance institutions in 74 countries.•It finds that interest ...rate boosts the social performance of MFIs.•The outcome is robust to different estimation techniques.
The objective of this paper is to examine the effect of interest rate on the social performance of microfinance institutions (MFIs). This objective is pursued by employing data from 555 MFIs operating in 74 countries. The econometric techniques utilized in this paper have produced robust results suggesting that interest rate boosts the social performance (both the breadth and depth of outreach) of MFIs. The paper explains this outcome with no-alternative hypothesis. Clients of MFIs are mostly poor and, thus, lack access to alternative sources of funding. This compels them to access microcredit at any interest rates.
We investigate board and management gender diversity issues in the microfinance setting with data (2010–2014) drawn from 494 microfinance institutions across 76 countries. We find that board gender ...diversity positively predicts management gender diversity. On the effects of board and management gender diversity on the financial performance of microfinance institutions (MFIs), we find that whereas board gender diversity is negatively and significantly related to MFI financial performance, management gender diversity is negatively but insignificantly related to MFI financial performance. We show that 50% or higher diversity in either board or management is the threshold at which gender diversity is productive to MFIs. However, danger exists that an MFI that combines 50% or higher female representation on its board with 50% or higher female representation on its management team is likely to experience a tumble in its financial performance. The overall effect of these outcomes is that the push for more female representation on boards and management teams of MFIs should be done with a lot of tact and circumspection.
The exact effect of board size on financial performance has remained inconclusive in the empirical literature. We seek to contribute to this literature by assessing the impact of board size on the ...financial performance of 408 microfinance institutions (MFIs) for 2010 to 2018 financial years. Besides, we explore whether judicial efficiency exerts any significant effect on the board size-performance nexus. Using the System Generalized Method of Moments estimator as the main analytical technique, we observe that board size has a strong negative effect on the financial performance of MFIs in both the short and long run. In addition, the results show that MFIs that operate in an environment where the judicial system is efficient are likely to experience the positive impact of board size on their financial performance.
•We assess the impact of board size on the financial performance of MFIs.•We explore the role of judicial efficiency in the board size-performance nexus.•We observe that board size has a strong negative effect on the financial performance of MFIs in both the short and long run.•We use System Generalized Method of Moments as our main estimator.•We observe that MFIs that operate in an environment where the judicial system is efficient are likely to experience the positive impact of board size on their financial performance.
The finance–growth nexus: Does risk premium matter? Adusei, Michael
International journal of finance & economics/International journal of finance and economics,
January 2019, 2019-01-00, 20190101, Letnik:
24, Številka:
1
Journal Article
Recenzirano
Odprti dostop
The bounds testing approach to cointegration analysis is employed in this paper to examine whether the risk premium demanded by the banking sector moderates the finance–growth nexus with data ...(1970–2015) from South Africa. To the extent that the interaction between risk premium and financial development positively affects growth in the long run, we affirm that the risk premium demanded by the banking sector represents a significant channel through which financial development drives growth. The main policy implication of this finding is that financial liberalization that removes interest rates restrictions, allowing the banking sector to adequately price risk, is in the best interest of the South African economy.
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