African Journal of Economic and Management Studies最新文献

Purpose

Despite the government’s efforts to protect domestic industries from foreign competition through tariffs, the industrial sector’s contribution to GDP continued to decline in Nigeria. Based on the scenario, this study assessed the symmetric and asymmetric effects of tariffs on industrial performance in Nigeria for the period 1988–2021. Tariff was captured with a tariff rate applied to the weighted mean of all products, while industry value added as a percent of GDP was used as a proxy for industrial performance.

Design/methodology/approach

Linear and nonlinear ARDL techniques were used for the analysis.

Findings

The symmetric (linear ARDL) results revealed that tariffs have a significant positive effect on industrial performance in both the short and long term. The asymmetric (nonlinear ARDL) results showed that a long-term asymmetry exists between tariffs and industrial performance. It revealed positive effects on industrial performance for both positive and negative tariff changes, with the negative change having a greater impact.

Practical implications

Generally, the results showed that the use of tariffs to protect domestic industries in Nigeria promotes industrial performance. The implication is that the declining contribution of the industrial sector to GDP in Nigeria is not a result of the tariff policy. It shows that the government should look beyond tariff policy to enhance the industrial contribution to GDP.

Originality/value

Nigeria should exercise caution in using tariff policies to protect domestic industries to avoid retaliation from their trade partners that could reverse the positive impacts.

Purpose

This paper contributes to the literature on exchange rate exposure by assessing the extent to which exchange rate risk is priced in both African emerging and developed equity markets. It examines whether this risk leads to a premium or discount in market returns. The study uses the United States and South Africa as representatives for developed and emerging economies, respectively.

Design/methodology/approach

The paper employs two-factor and three-factor conditional CAPM approaches with a two-stage estimation process. In the first stage, time-varying risk exposures are derived using the ICAPM model estimated through rolling regression. In the second stage, the impact of these risk exposures, particularly exchange rate risk exposure, is assessed on stock market returns using Generalized Linear Model (GLM) regression.

Findings

Unlike previous studies that suggest exchange rate risk is not necessarily priced in the equity market due to hedging, this paper finds that exchange rate risk is indeed priced in both African and developed equity markets, albeit to different extents. The African equity market demands a higher premium compared to the developed equity market.

Practical implications

The findings of this paper have significant implications for policymakers, asset managers, and investors. They provide insights for making more informed decisions, implementing effective risk management strategies, and fostering a more stable and appealing investment environment.

Originality/value

To the best of our knowledge, this is the first study to evaluate the degree of exchange rate exposure in environments characterized by high currency volatility versus those with low volatility, all within the context of the conditional ICAPM model.

Purpose

The study examined the effect of fiscal policy on poverty in sub-Saharan Africa (SSA) while accounting asymmetric (captured by economic downturns) and spillover effects.

Design/methodology/approach

The study used a fixed effect (within regression) IV model to account for country-specific characteristics. The study also adopts a cross-sectional and spatial dependence-consistent model to account for the potential cross-sectional and temporal dependence in panel data modeling.

Findings

The study discovered that the effect of fiscal policy on poverty is dependent on the state of the economy. Specifically, we find that fiscal policy helps to reduce the level of poverty during an economic downturn, more than at any other time. More specifically, the findings indicate that the fiscal policy lowers the rate of poverty in SSA, following macroeconomic shocks (captured by the COVID-19 epidemic, the Global Financial Crisis, and the commodity terms of trade shocks). Our findings suggest that fiscal policy is an important policy tool to mitigate the effects of macroeconomic shocks in SSA. Further, the findings also demonstrate that there is a spillover effect of poverty in the region. This implies coordinated, constructive actions by the regional governments can help to lessen the detrimental effects of extreme poverty.

Originality/value

The study examined the effectiveness of fiscal policy to reduce poverty in the event of an economic downturn.

Purpose

The paper investigates the effect of ownership structure on the financial distress of firms listed in sub-Saharan Africa.

Design/methodology/approach

Using secondary data from 106 non-financial firms listed in 9 selected SSA countries from 2016 to 2021, the research using paired t-tests and conditional logistic regression model analysed a sample of 174 distressed observations matched with 174 non-distressed observations.

Findings

T-tests determined significant differences between distressed and non-distressed groups concerning institutional, foreign, and local ownership. Conditional logistic results established that institutional, foreign, and state ownership significantly reduce distress. However, managerial ownership does not influence financial distress while a significant positive relationship is observed between local ownership and financial distress.

Originality/value

This is the first study to investigate the influence of ownership structure, including local ownership, on financial distress in SSA, employing a unique methodology of matched design and conditional logistic regression analysis. Furthermore, the paper presents cross-country evidence from emerging frontier markets, highlighting the importance of governance frameworks in firms’ stability.

Purpose

Despite the importance of digital technology in mitigating the adverse effects of the COVID-19 pandemic and related containment measures, limited research attention has been devoted to the impact of movement restrictions on digital business transformation in North Africa. This paper investigates the impact of mobility restrictions on firms' decisions to adopt digital technologies across sectors, emphasizing the challenges associated with accessing both customers and suppliers.

Design/methodology/approach

The study uses the ERF COVID-19 MENA Monitor Enterprise survey (2021), covering 3,978 enterprises across three North African countries: Egypt, Tunisia and Morocco. The analysis employed the linear probability model (LPM) to account for observable and unobservable heterogeneity across countries and over time.

Findings

The results indicated that mobility restrictions have a positive impact on firms' decisions to adopt digital solutions during the COVID-19 pandemic across most industry sectors. Notably, firms operating in manufacturing, trade, retail and services demonstrated a higher likelihood to adopt technologies. However, the analysis revealed some variations in the impact of mobility restrictions across sectors and countries.

Originality/value

This study has several contributions. First, this study is unique in utilizing firm-level data gathered during the COVID-19 pandemic to investigate the impact of mobility restrictions on firms' decisions to adopt digital solutions. Second, the study examines the influence of mobility restrictions on digitalization across industry sectors, to the best of our knowledge, no empirical study has specifically focused on the digital business transformation across sectors.

Purpose

This study is aimed at interrogating the mediation role of public spending in domestic debt and economic growth nexus, drawing on debt overhang theory and the Keynesian view.

Design/methodology/approach

The study deployed a time series data (from 1981 to 2020) set drawn from the 2021 Central Bank of Nigeria (CBN) statistical bulletin. The mediation effect of public spending was tested by performing structural equation modeling after pre-estimation Augmented Dickey-Fuller unit root test.

Findings

Overall, the study outcomes indicate that domestic debt and public spending have significant positive effects on economic growth. Additionally, the study finds public spending to partially mediate domestic debt and economic growth nexus.

Practical implications

This study's outcomes provide insights that will enable fiscal policymakers to focus on internal borrowing, keep it under strict control to avert crowding out effects and improve public spending on productive projects to stimulate economic growth.

Originality/value

As the first study to question the mediation effect of public spending in domestic debt-economic growth relationship, it deepens and extends extant literature on domestic debt-economic growth nexus.

Purpose

The exchange rate is an important driver of a country’s economic growth, influencing trade, investment, inflation, and employment. This study’s main objective was to investigate the threshold effects of exchange rates on economic growth.

Design/methodology/approach

In this research, innovative endogenous threshold autoregressive (TAR) models introduced by Hansen (2000) are employed for estimation and inference. The dataset comprises secondary annual time series data from Ghana, covering thirty-one years from 1990 to 2021. Economic growth is represented by GDPPC, with the growth exchange rate serving as the crucial threshold variable.

Findings

The finding suggests a single exchange rate threshold for Ghana, indicating a nonlinear relationship with economic growth. However, above 8.97%, the exchange rate considerably slows growth, harming the economy. The exchange rate negatively influences growth in both low and high-exchange-rate regimes, but it is insignificant in the high regime. In addition, inflation has a significant negative influence on growth in the low regime but a positive impact on the high regime. In contrast, interest rates positively impact growth in both regimes, though not as significantly in the high regime.

Practical implications

The findings from this study offer valuable insights to the Ghanaian government and policymakers as they consider choosing an exchange rate target that helps minimise the negative impact of a high exchange rate to promote economic growth.

Originality/value

This paper is remarkable for being one of the few studies that have explored the relationship between exchange rates and economic growth, exploring the threshold effect.

Purpose

Many African countries struggle to sustain steady economic growth. Specific macro-economic factors can influence a country’s economic growth. We investigated the trend and influence of diaspora remittances, foreign direct investment (FDI) and imports on Kenya’s economic growth.

Design/methodology/approach

We used panel data from the World Bank Indicators database from 1973 to 2021. By utilising the autoregressive distributed lag (ARDL) model for econometric analysis and performing computations using R software, we provide valuable insights into both short-term and long-term dynamics.

Findings

In the short term, we establish a non-significant negative impact of FDI and imports on economic growth, contrasting with the positive influence of diaspora remittances. However, in the long term, all three variables – FDI, imports and remittances – emerge as significant determinants of economic growth.

Research limitations/implications

The availability and quality of data on diaspora remittances, FDI inflows, imports and economic indicators may vary, leading to potential data limitations, biases or gaps in the analysis. External factors such as global economic trends, political stability, COVID-19, regulatory changes and natural disasters may influence the study’s findings and should be considered when interpreting the results.

Practical implications

In the short term, the non-significant negative impact of FDI and imports on economic growth suggests that policies promoting FDI and imports may not yield immediate economic growth benefits. Policymakers might need to reassess the effectiveness of current strategies aimed at attracting FDI and managing imports in the short term. The positive influence of diaspora remittances on economic growth underscores the significance of these inflows in supporting economic development. Governments may need to focus on policies that encourage remittance inflows, such as facilitating remittance channels and providing incentives for diaspora investment in the home country. The shift in significance from non-significant in the short term to significant in the long term for FDI, imports and remittances highlights the importance of considering long-term effects in economic planning. Policymakers should adopt strategies that consider the cumulative impact of these factors over time.

Social implications

Diaspora remittances often play a crucial role in alleviating poverty and reducing inequality by providing direct financial support to families. Recognising the importance of remittances in improving living standards, policymakers should ensure that policies support the effective utilisation of remittance inflows to address poverty and inequality challenges.

Originality/value