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Open access

Garikai Makuyana and Nicholas M. Odhiambo

Abstract

This paper provides new evidence to contribute to the current debate on the relative impact of public and private investment on economic growth and the crowding effect between the two components of investment in South Africa. Using annual data from 1970 to 2017, the study applies the recently developed Autoregressive Distributed Lag (ARDL)-bounds testing approach to cointegration. The study finds that private investment has a positive impact on economic growth both in the long run and short run, while public investment has a negative effect on economic growth in the long run. Further, in the long run, gross public investment is found to crowd out private investment, while its infrastructural component is found to crowd in private investment. The results of the study also reveal that both gross public investment and non-infrastructural public investment crowd out private investment in the short run. Overall, the study finds private investment to be more important than public investment in the South African economic growth process and that the importance of infrastructural public investment in stimulating private investment in the long run cannot be over-emphasized.

Open access

Akinola Morakinyo, Colette Muller and Mabutho Sibanda

Abstract

The study builds on previous studies of the consequences of non-performing loans on an economy. Using a seven-by-seven matrix in the impulse response function (IRF) of the structural autoregressive model, we find a long-run impact of an impulse to non-performing loans on the banking system and the macroeconomy in Nigeria. Conversely, non-performing loans also respond to the innovation of all macro-banking variables aside from the exchange rate and the growth rate to GDP. Also, the level of non-performing loans grows in influence in relation to the changes to the exchange rate using the variance decomposition tool of Structural VAR. Hence, a prominent role is assigned to the level of NPLs in linking the friction in the credit market to the susceptibility of both the banking system and the macroeconomy. This study passes the serial correlation tests and the three tests of normality.

Open access

Karl Farmer and Stefan Kuplen

Abstract

Even more than eight decades since the publication of Keynes’ “General Theory of Employment, Interest, and Money” modern macroeconomists disagree on the notion of “underemployment equilibrium” with so-called “involuntary unemployment”. While the majority of macro theorists trace involuntary unemployment back to frictions and rigidities in the adaptation of wages and output prices to market imbalances, a minority position holds that even under perfectly flexible output prices and wage rates involuntary unemployment might occur. Morishima in “Walras’ Economics” and more recently Magnani presume that contrary to the majority view aggregate investment is not perfectly flexible but governed by “animal spirits” of investors. The aim of the present paper is to integrate the Morishima-Magnani approach into a Diamond-type overlapping generations’ (OLG) model with internal public debt subsequently extended by human capital accumulation. It turns out that in spite of perfectly flexible real wage and interest rate involuntary unemployment occurs in intertemporal general equilibrium when aggregate investor sentiments are too pessimistic regarding the rentability of investment in real capital. In the model extended by human capital a higher public debt to output ratio decreases unambiguously involuntary unemployment, if initially the endogenous output growth rate is higher than the real interest rate.

Open access

Susana Costa e Silva, Adriana Monteiro and Paulo Duarte

Abstract

Shoes are probably one of the most difficult products to sell online due to the high need-for-touch (NFT) displayed: people need to experiment the product before buying it, more than in any other item. On another hand, women are more prone than men to buy fashion and apparel products through the web channel. This paper investigates the factors driving women consumers to shop footwear products online. A qualitative research method was used grounded on semi-structured, in-depth interviews that were conducted to corroborate the constructs defined in the proposed conceptual model namely: convenience, recreation, NFT and social e-shopping. The interviews were focused on the demand side to understand the female consumers’ perspective and on the top managers of women’s shoes companies representing the suppliers’ viewpoint. The results show that women highly appreciate the convenience that shopping shoes online provides as well as its recreational nature. The NFT also stands out in the shoe market context mainly due to the particularities related to shoe size. Additionally, social e-shopping was found not be as important for women as anticipated as they see social networks more as a communication platform for brands, and less as a factor that influences their predisposition to shop shoes online. On the suppliers’ side, the interviews revealed that managers believe in bloggers and social media influence and its consideration as part of the overall marketing strategy.

Open access

Mduduzi Biyase and September Rooderick

Abstract

We empirically investigates the factors that affect Foreign Direct Investment (FDI) inflows in five BRICS countries for the period 1990–2015. We address the selection bias and unobserved heterogeneity by estimating a panel Heckman selection method and attempts to account for both selection and endogeneity within the new two-stage method. After addressing the above mentioned econometric issues, the infrastructure and GDP per capita variables under the new two-stage method remain positive and significantly similar to the coefficient of infrastructure and GDP per capita under the panel Heckman selection model. In addition, the inverse Mills ratio maintain its level of statistical significance, confirming the presence of both sample selection bias and endogeneity.

Open access

Tuul Purevdorj and Susana Costa e Silva

Abstract

The present study attempts to understand the use of three information processing mechanisms – cognitive, affective, and normative – to assess the quality of cashmere products made in Mongolia. For attaining the above aims, semi-structured interviews were conducted to test a framework that resulted from literature reviewed on country of origin (COO) effect and information processing mechanisms. Results demonstrate that for Business-to-Business (B2B) clients, the COO is an extremely relevant cue to evaluate the quality of cashmere. Conversely, most of the consumers do not seem to include the COO effect on their information processing and base their evaluation on four distinct product-related attributes: quality, brand, social status, and price. Results are relevant for the Mongolian cashmere industry, as well as for marketers interested in understanding what drives consumers of cashmere in their buying decisions. We also understand these findings to assist in improving the image of Mongolia as one of the world’s best manufacturers of cashmere.

Open access

Ebenezer Toyin Megbowon

Abstract

The study profiled and compared household multidimensional poverty status and its determinants among urban and rural households in the Eastern Cape Province of South Africa, using information from a sample population of 3033 households interviewed from the Province during the General Household Survey conducted by the Statistics South Africa in 2014. Analytical techniques utilized include the recent multidimensional poverty index (MPI), descriptive statistics and Tobit regression. Findings reveal that multiple deprivations are found mostly in the rural area of the province; the multidimensional headcount is highest in the rural area, though the intensity of multidimensional poverty is almost similar in both geographical locations. The standard of living dimension is also the largest contribution to MPI in both locations. MPI has significant links with education attainment of household head, access to electricity and asset stock in both geographical locations, but is influenced by the gender of head, agriculture engagement and household monthly income in rural areas only. In order to improve households’ multidimensional poverty status in both urban and rural locations, there is the need to take into account some significant variables such as education of head, increase electricity subsidy coverage during winter period, asset accumulation and increase in households’ participation in agricultural activities, especially those residing in rural areas.

Open access

Anita Todea

Abstract

This paper examines the impact of financial literacy on stock price informativeness in a sample of firms from 20 countries. Using four measures of stock price informativeness, we find a significant relationship between higher financial literacy and higher stock price informativeness. The individual investors’ contribution regarding the incorporation of specific information into stock prices includes private information also and not mere specific information in the general sense. Financial knowledge is the key element that helps individual investors to incorporate specific information into stock prices.

Open access

Odunayo Magret Olarewaju, Stephen Oseko Migiro and Mabutho Sibanda

Abstract

Dividend policy remains one of the top ten unresolved issues in corporate finance including in the banking sector. Hence, this study explores data from 250 commercial banks in 30 Sub-Saharan African countries to establish the causal relationship between the use of two major dividend policies in the sector and financial performance for the period 2006 to 2015. The empirical results of the vector error correction block exogeneity Wald test and Pairwise Granger causality test reveal that only retention policies Granger cause performance (ROA), even though both major policies posit a positive relationship with performance (ROA) in the Vector Error Correction Model estimate. Therefore, commercial banks in Sub Saharan Africa and also in the entire world should use their free cash flows wisely by exploring all available viable investment opportunities. By doing this, not only owners’ profit but wealth is fully maximised such that their survival, value creation, and future growth is fully justified.

Open access

Aleksandar Erceg, Predrag Dotlić and Monika Mikuš

Abstract

Increased organizational efficiency should be one of the main strategic goals of every business. Ways of achieving it differ and one of the many choices is to improve business operations using available tools such as the “20 keys methodology”. This methodology is used to achieve strategic goals through the enhanced speed of learning and innovation. The aim of this paper is to look at the potential of 20 keys methodology for the improvement of company’s organizational efficiency in today’s global market. This integrated set of different tools is intended to increase the company’s efficiency and level of quality with synchronized cost reduction. 20 keys tend to eliminate various “wastes” in production processes to improve buyer’s satisfaction and motivate employees to act towards achieving company’s goals. Eventually, the methodology application should ensure a sustainable development, profitability, and integrated approach to competitiveness and long-term success of the company. The paper examines the implementation of the 20 keys methodology in Croatia and presents one case of a local production company using the methodology aiming to increase the organizational efficiency. Further research proposals are brought to confirm the potential influence of methodology on organizational efficiency.