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Economic Growth and Carbon Dioxide Emissions in East African Countries: A Pooled Mean Group Approach
Ghirmai Tesfamariam Teame,
Amine Teclay Habte
Issue:
Volume 9, Issue 4, August 2020
Pages:
160-169
Received:
8 May 2020
Accepted:
25 May 2020
Published:
3 June 2020
Abstract: In recent years, due to factors such as increases in greenhouse gas (GHG) and carbon dioxide (CO2) emissions, global warming and climate changes has become a major threat for all countries. However, contrary to the deep-seated belief that human impact on the environment is negative and progressive, recent empirical research shows that certain types of pollutants follow an inverted-U shape or Environmental Kuznets curve (EKC), as income grows. The EKC hypothesis postulates that environmental degradation (pollution) increases up to a certain level, as income goes up; after that, it decreases. Thus, using the EKC hypothesis as a theoretical framework and applying Pooled Mean Group (PMG) approach, this paper examines the nexus between CO2 emissions, economic growth, Foreign Direct Investment (FDI) and total population. The study uses panel data of 12 East African countries over the period 1981–2016. Our empirical result shows that there exists a monotonically increasing relationship between CO2 emissions and economic growth both in the short-run and long-run, contrary to what is claimed by the EKC hypothesis. Moreover, per capita CO2 emissions increase positively with respect to FDI and total population in the long-run. The result of the study also reports the existence of unidirectional causalities running from per capita GDP, FDI and total population to per capita CO2 emissions in the long-run, while unidirectional short-run causalities was observed from GDP and FDI to CO2 emissions, without any feedback effects. Therefore, these unidirectional causalities imply that CO2 emission reduction or abatement measures can be implemented without having any adverse effect on the real output growth or economic growth, in East Africa.
Abstract: In recent years, due to factors such as increases in greenhouse gas (GHG) and carbon dioxide (CO2) emissions, global warming and climate changes has become a major threat for all countries. However, contrary to the deep-seated belief that human impact on the environment is negative and progressive, recent empirical research shows that certain types...
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The Impact of Tax Collection and Incentives on Economic Growth: Evidence from Nigeria
Issue:
Volume 9, Issue 4, August 2020
Pages:
170-175
Received:
23 November 2019
Accepted:
2 January 2020
Published:
4 June 2020
Abstract: The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2018 was collected from the Central Bank of Nigeria and Federal Inland Revenue Service. A multiple regression model was used, tax revenue was proxied by actual total tax collected, tax incentives was proxied by foreign direct investment equity and foreign direct investment other capital as independent variables. While economic growth was proxied by real gross domestic product (GDP) as the dependent variable. The data was tested for heteroscedasticity, multicollinearity and serial correlation to examine the robustness of the model. The findings revealed that there is a negative but insignificant relationship between tax revenue and economic growth. The findings also revealed that there is negative but insignificant relationship between and foreign direct investment equity and economic growth. While empirical results confirm that there is a negative and significant relationship between foreign direct investment other capital and economic growth. Given these findings, the study recommends the government to improve on the mechanisms for the collection of taxes to stimulate economic growth. Also, government should grant more incentives to sectors that drive growth, monitor such incentives gather relevant data of the actual amount of incentives relative to the economic growth in other evaluate the efficiency of tax incentives.
Abstract: The debate on the effectiveness of taxation as an instrument for promoting economic growth remains inconclusive, as several studies have indicated mixed effect of taxation on economic growth. Against this background this study investigated the impact of tax collection and incentives on economic growth in Nigeria. Yearly data for the period 2010 – 2...
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The Level of Competition Among the Deposit Money Banks (DMBs) in Nigeria
Bosede Olanike Awoyemi,
Josephine Onyinyechi Ihesiaba
Issue:
Volume 9, Issue 4, August 2020
Pages:
176-182
Received:
14 April 2020
Accepted:
3 May 2020
Published:
17 June 2020
Abstract: The level of competition in view of the financial performance of Deposit Money Banks (DMBs) between the periods of 2009 to 2018 was investigated. To measure competition, a four-firm Concentration ratio (CR4) and Herfindal-Hirschman Index (HHI) were used. To denote the percentage of market share that the individual bank has relative to the market size, the HHI and CR4 were computed from the individual bank’s return on assets relative to the total assets of all the Deposit Money Banks in Nigeria. Simple arithmetic from excel workbook was done to estimate the competition indices (HHI and CR4). Data were obtained from the annual financial statement of the selected 15 deposit money banks in Nigeria. Descriptive statistics were used to show the trends of the top four (4) Concentration ratio (CR4) and Herfindal-Hirschman Index (HHI). It was also used to identify the characteristics of the Herfindal Hirschman Index (HHI) and Concentration Ratio CR of the Deposit Money Banks (DMBs). The descriptive statistics provide the summary statistics such as average value (mean), minimum and maximum values, median and standard deviation. The results indicated a high level of competition among the deposit money banks, and the banking industry was found to be highly competitive between the period of year 2009 and 2018.
Abstract: The level of competition in view of the financial performance of Deposit Money Banks (DMBs) between the periods of 2009 to 2018 was investigated. To measure competition, a four-firm Concentration ratio (CR4) and Herfindal-Hirschman Index (HHI) were used. To denote the percentage of market share that the individual bank has relative to the market si...
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Public Governance and Economic Growth of Non-Oil-Exporting Arab Countries
Elham Mohammad Alhaj Yousef
Issue:
Volume 9, Issue 4, August 2020
Pages:
183-191
Received:
26 April 2020
Accepted:
1 June 2020
Published:
17 June 2020
Abstract: This paper aims at investigating the impact of public governance on the economic growth in Non-Oil-Exporting Arab countries (NOEAC). The study used panel data for six NOEAC over the period from 1998 to 2017. Some study variables were not stationary at level but they became stationary after taking the first difference for them. The result of applying Kao panel cointegration test revealed that the study model was cointegrated. Therefore, Fully Modified Ordinary Least Squares (FMOLS) model was applied for estimation showing that governance factors have the greatest significant positive effects on the economic growth in such countries. Gross fixed capital formation, labor force growth rate, trade openness, economic freedom, rule of law, regulatory quality, control of corruption, and voice and accountability have statistically significant positive impact on their economic growth during the study period, while the Global Financial Crisis of 2008 (GFC) with its slow recovery has a significant negative impact on their economic growth. Political stability and government effectiveness have insignificant effects. The main conclusion derived from this paper is that political and institutional aspects can play an important role in the economic progress, and they are responsible for major contribution to economic growth and development. Therefore, attracting domestic and foreign direct investments, increasing labor and capital productivities, strengthening governance, improving public administration and eradication of corruption have the first priorities in NOEAC.
Abstract: This paper aims at investigating the impact of public governance on the economic growth in Non-Oil-Exporting Arab countries (NOEAC). The study used panel data for six NOEAC over the period from 1998 to 2017. Some study variables were not stationary at level but they became stationary after taking the first difference for them. The result of applyin...
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Lessons from the Experiences of Currency Crisis, Focused on the Cases of Korea, Argentina, Mexico and Greece
Yongshik Choe,
Hyun-jung Kim
Issue:
Volume 9, Issue 4, August 2020
Pages:
192-201
Received:
31 May 2020
Accepted:
15 June 2020
Published:
28 June 2020
Abstract: The currency crisis has happened intermittently in many countries around the world despite numerous studies about it. It might be its reason that the root cause of currency crisis is not clarified clearly yet. The causes well-known are not the root but the phenomena appeared in its developing process. If the root is clarified, the crisis would be prevented in advance. Above all, its resulting economic performance varies greatly from country to country and from time to time, of which reason is due to the differences in economic policies responding to the currency crisis. It is very important to overcome the currency crisis as well to prevent its occurrence because it damages any national economy very much causing economic hardships of its people. In order to prevent and overcome it, it is necessary to investigate its root cause and developing process. And the empirical experiences of the crisis are useful to clarify them. This paper investigates its root cause, economic principle and policy measures to overcome it through case study. In short, the currency crisis has been caused by the economic overheat, leading to a huge deficit of international payment, which has resulted in the soar of exchange rate, causing the depletion of international reserve because of the exchange rate loss which led the capital outflows. And some representative cases of currency crisis are helpful to establish and enact the policy measures to overcome it. If this principle and some cases of the crisis is understood well, it would be possible for any countries, especially for developing countries, to prevent in advance and overcome successfully it. This paper would contribute to the stable growths of developing countries because the root cause of currency crisis, its economic principle, and the policy measures to overcome it are clarified enough.
Abstract: The currency crisis has happened intermittently in many countries around the world despite numerous studies about it. It might be its reason that the root cause of currency crisis is not clarified clearly yet. The causes well-known are not the root but the phenomena appeared in its developing process. If the root is clarified, the crisis would be p...
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Determinants of Rural Household Food Insecurity Status and Coping Strategies in Case of Konso Woreda, Segen Area People’s Zone of Southern Ethiopia
Aynalem Moges,
Mada Melkamu
Issue:
Volume 9, Issue 4, August 2020
Pages:
202-206
Received:
22 May 2020
Accepted:
15 June 2020
Published:
29 June 2020
Abstract: The aim of this study was to identify determinant factors and status of household food insecurity in Konso district. The study employed primary data collected from 203 households selected by using simple random sampling method. Binary logistic models and household calorie acquisition methods were employed to identify factors and categorize households into food secured and insecure. The survey result shows that in Konso district, about 80% households were found to be food insecure and majority households were mildly food insecure. The result of the binary logistic analysis showed that, of the twelve explanatory variables expected to determine household’s food insecurity in Konso district, only eight variables significantly determine household’s food insecurity situations both positively and negatively at 1%, 5% and 10% significance level. In the study area, farmland size, education level, off-farm income, livestock number and agro-ecology determine negatively and significantly household food insecurity. On the other hand, family size, dependency ratio and distance from market determine positively and significantly household food insecurity. To solve the food insecurity problem in a rural area like Konso, focus should be given to increase education level, off-farm income, livestock and equal focus is also important to reduce family size through a core rural development strategy.
Abstract: The aim of this study was to identify determinant factors and status of household food insecurity in Konso district. The study employed primary data collected from 203 households selected by using simple random sampling method. Binary logistic models and household calorie acquisition methods were employed to identify factors and categorize househol...
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Evaluation the Impact of Capital Adequacy on the Return on Equity of Islamic Banks in Gulf Cooperation Council
Khaled Naser Al-khawaldah,
Alaaeddin Awad Al-tarawneh,
Ghazi-alassaf
Issue:
Volume 9, Issue 4, August 2020
Pages:
207-210
Received:
1 May 2020
Accepted:
8 June 2020
Published:
4 July 2020
Abstract: The purpose of this study examines the effect of the capital adequacy on the return on equity for the largest 16 Islamic banks in gulf cooperation council in terms of market value, using panel data analysis during the Period (2010-2014) and the effect the size, inflation, and GDP as a control variables, Also to explain how Islamic banks comply with international solvency standards (Basel), and the extent to which those standards with special nature of the Islamic banks and their impact on earnings of these banks. The study data collected from published annual reports for banks The capital adequacy is the main tool to measure the bank’s ability to meet its obligation and liabilities It is a one of the risk exposure scales of banks, such as credit risk, market risk, and operational risk. Islamic banks have special standards issued by the accounting and auditing organization for Islamic financial institutions (AAOIFI) and the council of Islamic financial services board (IFSB). The study found that there is a significant relationship between capital adequacy and return on equity in the absence and in the presence of control variables and the relationship was negative, size has a statistically significant positive effect on the return on equity, inflation has a statistically significant negative effect on the return on equity, GDP has a statistically significant positive effect on the return on equity.
Abstract: The purpose of this study examines the effect of the capital adequacy on the return on equity for the largest 16 Islamic banks in gulf cooperation council in terms of market value, using panel data analysis during the Period (2010-2014) and the effect the size, inflation, and GDP as a control variables, Also to explain how Islamic banks comply with...
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Liberalization and Nationalization in South America: A Comparative Analysis of Economics Impact Through Telecommunications and Electricity Sectors
Arturo Davalos Yoshida,
Richard-Jesus Gil-Herrera
Issue:
Volume 9, Issue 4, August 2020
Pages:
211-227
Received:
24 May 2020
Accepted:
17 June 2020
Published:
4 July 2020
Abstract: To achieve better levels of development, the "infrastructure for development" of the countries must be strengthened, particularly in strategic sectors such as telecommunications and electricity. By the other hand, the universal access to electricity and telecommunications, are considered nowadays as basic factors of welfare and social equality. With this argumentation, the structural reforms about the 1980s promoted the resizing of State scope and encouraging private-enterprise participation. Over time, the most important criticisms of the economic model adopted during the eighties were its results, which, far from promoting equality, would have caused greater inequity. Then, some countries under populist governments, gone back to active state intervention in the economy, including sectors of public services among others the electrical and telecommunications. This phenomenon, during the last of 90 decade and beginnings of this century led to existence of two groups of countries in South America: by one side, countries with neo-populist governments (Argentina, Bolivia, Brazil, Ecuador, and Venezuela) and, on the other hand, countries that persisted with the reforms adopted during the eighties for to adopt market oriented economies (Chile, Colombia, Paraguay, Peru, and Uruguay), disparagingly named neo liberals by the early. The electrical and telecommunications sectors are considered pillars of the development and basic human right. Taking this on mind, one would expect that in the neo-populist governments, since its speech is based in a strong defense of poor population, should achieve higher levels of welfare than the liberal States, particularly in the infrastructure sectors named above. To prove this, in the present work, by comparing the general economic performance and particularly in both mentioned sectors between 2000 to 2015, through analysis of selected indicators it has been found quantitative evidence that those South American countries that are operating under the market model, have reached a better performance than the other ones. Furthermore, in both sectors under analysis, particularly in the telecommunications, it has been established that the first group countries (with neo-populist governments), the cost of access to services turns out to be more onerous than in those of the second group.
Abstract: To achieve better levels of development, the "infrastructure for development" of the countries must be strengthened, particularly in strategic sectors such as telecommunications and electricity. By the other hand, the universal access to electricity and telecommunications, are considered nowadays as basic factors of welfare and social equality. Wit...
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The Impact of Jordan Free Trade Agreements on Trade Flows
Taleb Awad-Warrad,
Murad Ahmad Al Tarawneh
Issue:
Volume 9, Issue 4, August 2020
Pages:
228-233
Received:
1 June 2020
Accepted:
15 June 2020
Published:
4 July 2020
Abstract: This study aimed to evaluate the impact of Jordan Free Trade Agreements (FTAs) with 17 Arab countries (Greater Arab Free Trade Area (GAFTA)), United States of America (USA) and European Union (EU) on Jordan trade flows. A Gravity model is used to estimate the impact of FTAs in term of trade creation and trade diversion. The study utilizes a panel data sample coving 125 selected countries trading with Jordan for the period 1997-2017. The study used Feasible Generalized Least Squares (FGLS) to estimate the Gravity model. The study results showed a significant impact of Jordan Gross Domestic Product (GDP), trade partners GDP, Jordan GDP Per Capita (GDPC), trade partners GDPC, distance, common language and border variables on Jordan trade. Further, the differences between Jordan and trade parents GDPs showed an insignificant impact on Jordan trade which implies that most of Jordan trade is among trade partners whom have significant different size of GDP. Furthermore, Jordan – EU agreement showed a significant imports trade creation and exports trade diversion. Jordan – USA agreement showed an imports trade diversion and extra regional exports expansion. Finally, Jordan – GAFTA agreement has a significant import and exports trade creation.
Abstract: This study aimed to evaluate the impact of Jordan Free Trade Agreements (FTAs) with 17 Arab countries (Greater Arab Free Trade Area (GAFTA)), United States of America (USA) and European Union (EU) on Jordan trade flows. A Gravity model is used to estimate the impact of FTAs in term of trade creation and trade diversion. The study utilizes a panel d...
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Anticipating the Difficulties of Microfinance Institutions: An Early Warning Model Applied to the Togolese Context
Maïpa Pakidame,
Komivi Ogbone,
Yao Messah Kounetsron
Issue:
Volume 9, Issue 4, August 2020
Pages:
234-240
Received:
30 March 2020
Accepted:
22 June 2020
Published:
22 July 2020
Abstract: The Decentralized financial system (DFS) is a sector in growth in developing countries. It offers financial services to actors rejected by formal banks because of their risk. therefore, a strict monitoring of this sector is needed to anticipate and avoid the bankruptcies of DFSs. In this context, an early warning model is a feasible solution. The aim of this paper is to develop a model of alert capable of predicting the difficulties of microfinance institutions. Data processed from 49 DFSs over 5 years led to a model explaining up to 80% of the likelihood of bankruptcy. Statistically positive results show that any increase in the portfolio at risk, the provisions on outstanding loans and the provisions on total assets leads to an increase in the probability of difficulty for the DFSs, thus increasing its insolvency risk while any increase in the equity risk coverage ratio, the operating income on owner’s equity, the loan coverage by deposits ratio, the profit margin and the outstanding deposits on total assets leads to a decrease in the probability of default for the DFSs.
Abstract: The Decentralized financial system (DFS) is a sector in growth in developing countries. It offers financial services to actors rejected by formal banks because of their risk. therefore, a strict monitoring of this sector is needed to anticipate and avoid the bankruptcies of DFSs. In this context, an early warning model is a feasible solution. The a...
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Microfinance and Public Local Infrastructure Development in Local Councils in Cameroon: The Social Innovation Prospective Approach
Issue:
Volume 9, Issue 4, August 2020
Pages:
241-253
Received:
4 May 2020
Accepted:
22 June 2020
Published:
22 July 2020
Abstract: Local development is an alternative to central government at the local level. Unlike the case with the central government, local development is directed towards local territories usually with the goal of developing their local resources one of which is local infrastructure. This infrastructure is usually financed by public and private sector capitals. The main objective of this study was therefore to prospect the contributions of microfinance social innovations to public local infrastructure development in local councils in the South, Far North, South West, and North West regions of Cameroon. Government’s periodicals and literature on microfinance were used for data collection. The data were analyzed according to contributions, determinants, and challenges of microfinance social innovations in the context of public local infrastructure development in local councils in the regions studied. The findings revealed that the North West and South West regions which retain a higher number of Microfinance Institutions are amenable to more microfinance social innovations which are likely to increase public local infrastructure development in their local councils. This is not the case for the South and Far North regions. Meanwhile, the core challenge faced by municipal authorities in creating public local infrastructure is the lack of mastery and non-respect of both non-financial and financial regulations. We suggest based on the findings above that local councils studied should increase stakeholders’ cooperation and participation in public local infrastructure development in their localities, if they hope to boost public local infrastructure development in their municipalities.
Abstract: Local development is an alternative to central government at the local level. Unlike the case with the central government, local development is directed towards local territories usually with the goal of developing their local resources one of which is local infrastructure. This infrastructure is usually financed by public and private sector capita...
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The Impact of Domestic and External Public Debt on the Economic Growth of Jordan
Eman Abdel Khalek Fseifes,
Talib Mohammad Warrad
Issue:
Volume 9, Issue 4, August 2020
Pages:
254-262
Received:
16 July 2020
Accepted:
29 July 2020
Published:
10 August 2020
Abstract: Since the beginning of the new millennium several developing countries have been making greater use of domestic bond markets, with a corresponding decline in gross and net foreign debt-to-GDP ratios. Jordan was not an exception; the structure of the public debt in Jordan has exhibited a similar shift towards the domestic borrowings after the year 2000. In order to assess the economic consequences of this change in the public debt structure, this study investigates the impact of the structure of the public debt and other determinants of growth on the economic growth in Jordan over the period 1980 – 2018. The analysis of the long-run relationship between the domestic and external public debt and the economic growth is reliant on the theoretical assumptions and the empirical concerns and it is conducted by applying the Fully Modified Ordinary Least Squares (FMOLS) method; the results indicate that the external and domestic public borrowings are negatively associated with economic growth with a greater magnitude of the domestic debt in the long-run; the greater magnitude of the negative implication of domestic debt on economic growth is attributed to the increased trend of domestic debt that has been increasing in excess of the external debt since 2008. On the other hand, investment, labor force growth, and openness of trade are found to be positively associated with economic growth in the long-run. Accordingly, this study recommends the need to reduce the public debt and budget deficit to moderate levels in the long-run through implementing austerity measures and fiscal discipline that are carefully planned to minimize the potential negative effect on economic growth, where they should be implemented along with fiscal reforms intended for increasing employment and boosting Jordan’s growth potential. It is also recommended that the government should thoroughly revise the debt management strategy, so as to avoid the deterring effects of the increased stock of domestic debt on capital accumulation and economic growth in the long-run.
Abstract: Since the beginning of the new millennium several developing countries have been making greater use of domestic bond markets, with a corresponding decline in gross and net foreign debt-to-GDP ratios. Jordan was not an exception; the structure of the public debt in Jordan has exhibited a similar shift towards the domestic borrowings after the year 2...
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The Effect of Convenience and Trust to Purchase Decision and Its Impact to Customer Satisfaction
Ismulyana Djan,
Siti Rubbiah Adawiyyah
Issue:
Volume 9, Issue 4, August 2020
Pages:
263-269
Received:
25 July 2020
Accepted:
5 August 2020
Published:
19 August 2020
Abstract: The research objective is to determine the purchase decisions and customer satisfaction that are directly affected by onvenience and Trust, Customer Satisfaction that is directly affected by Purchase Decisions, and Customer Satisfaction that is indirectly affected by Convenience and Trust through Purchase Decisions. This research uses quantitative approach by collecting data through questionnaires. Population in this research are Shopee users in Bogor. Retrieval sample uses purposive sampling method with criteria of at least has purchased one time of something in Shopee Marketplace. Starting with the samples of 203 respondents and using SEM (Structural Equation Modeling) with outlier test, normality test, construct reliability test, multi collinearity test, singularity test and discriminant validity test. The results of all tests that have been done get results in accordance with the conditions set in this study. Research indicates that there is a direct positive influence of Convenience toward the purchase decisions (γ11= 0,743), Trust toward the customer satisfaction (γ22= 0,317), and purchase decisions toward customer satisfaction (β21= 0,554). There is indirect positive influence of Convenience toward Customer Satisfaction through Purchase Decisions (β21+ γ11=0,412). Moreover there is not any effect of Trust to the purchase decisions, Convenience to the customer satisfaction, and Trust to Customer Satisfaction through purchase decisions.
Abstract: The research objective is to determine the purchase decisions and customer satisfaction that are directly affected by onvenience and Trust, Customer Satisfaction that is directly affected by Purchase Decisions, and Customer Satisfaction that is indirectly affected by Convenience and Trust through Purchase Decisions. This research uses quantitative ...
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Provider and Consumer Perceptions on Mobile Money and Microfinance Integrations in Ghana: A Financial Inclusion Approach
Judith Aboagye,
Sophia Anong
Issue:
Volume 9, Issue 4, August 2020
Pages:
270-281
Received:
27 February 2020
Accepted:
29 April 2020
Published:
19 August 2020
Abstract: This study examines the use and impact of mobile money and microfinance services in Ghana. It explores the perspectives of mobile money and microfinance service providers and consumers to identify the nature and extent of use, and their separate and complementary impact on financial inclusion. Qualitative data collected through interviews with service providers, agents, and consumer focus groups were used to draw parallels and contrasts between provider and consumer perceptions on impacts and challenges of the systems. The study addressed four specific objectives identified as provider perceptions on mobile money and microfinance integrations and financial inclusion; consumer perceptions on mobile money and microfinance integrations and financial inclusion; impacts of mobile money and microfinance integrations on the financial inclusion ecosystem; and challenges of mobile money and microfinance integrations for financial inclusion in Ghana. The results showed that provider perceptions primarily focus on consumer access, product range, convenience, and regulatory climate. Consumer perceptions also focus on network capacity, fraud and security, and complex user designs. The impacts of mobile money integrations appear to be additive for most users but also transformative for users who were previously excluded from the formal financial sector. However, there are eminent challenges related to system failures, fraud and security concerns, and consumer protection to be addressed to help facilitate the efficiency and sustainability of the mobile money ecosystem.
Abstract: This study examines the use and impact of mobile money and microfinance services in Ghana. It explores the perspectives of mobile money and microfinance service providers and consumers to identify the nature and extent of use, and their separate and complementary impact on financial inclusion. Qualitative data collected through interviews with serv...
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The Impact of Voting Trust System on Corporate World and Its Significance for China & Its Economy
Ali Raza Ansari,
Alexandra Jane Davis,
Kashif Imran Zadi
Issue:
Volume 9, Issue 4, August 2020
Pages:
282-287
Received:
18 July 2020
Accepted:
12 August 2020
Published:
19 August 2020
Abstract: Shareholder voting trusts have had a huge impact on the world as an important device for the protection of shareholders and corporations alike. However, this instrument is missing in the corporate sector of China – one of the world’s leading economies. In Part 1, this paper looks at the history of voting trust systems and the path toward legality. Historically, voting trusts were challenged by corporations and majority shareholders before the Court realized the public benefits of shareholder trust agreements. Part 2 uses examples of voting trust systems in other countries to demonstrate its necessity for the well-being of China’s corporate system. On the one hand, voting trusts are required for the protection and faith of shareholders and their participation in the market. One of the biggest threats to public participation in investment is lack of protection for minority shareholders. On the other hand, as a corporate safeguard, voting trusts provide an avenue for minority shareholder voices to be heard and prevent corporate dissolution resulting from majority shareholder activism or hostile takeover. Consequently, for China to reach its ultimate goal of becoming the world’s largest economy and “Made in China 2025,” establishment of a voting trust system within the Chinese corporate sector is essential.
Abstract: Shareholder voting trusts have had a huge impact on the world as an important device for the protection of shareholders and corporations alike. However, this instrument is missing in the corporate sector of China – one of the world’s leading economies. In Part 1, this paper looks at the history of voting trust systems and the path toward legality. ...
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