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The Debt Overhang Hypothesis: Evidence from Pakistan

Abstract

This study investigates the debt overhang hypothesis for Pakistan in the period 1960-2007. The study examines empirically the dynamic behaviour of GDP, debt services, the employed labour force and investment using the time series concepts of unit roots, cointegration, error correlation and causality. Our findings suggest that debt-servicing has a negative impact on the productivity of both labour and capital, and that in turn has adversely affected economic growth. By severely constraining the ability of the country to service debt, this lends support to the debt-overhang hypothesis in Pakistan. The long run relation between debt services and economic growth implies that future increases in output will drain away in form of high debt service payments to lender country as external debt acts like a tax on output. More specifically, foreign creditors will benefit more from the rise in productivity than will domestic producers and labour. This suggests that domestic labour and capital are the ultimate losers from this heavy debt burden.

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Electricity Consumption in Botswana:the Role of Financial Development, Industrialisation and Urbanization

Abstract

Botswana’s electricity supply is overwhelmed by the growing energy demands with the peak electric power deficits being met through imports. This study seeks to understand the key drivers of this increasing electricity demand. Using the Autoregressive Distributed Lag (ARDL) bounds testing and Error Correction Model (ECM), it examines the role played by financial development, industrialisation and urbanization in Botswana’s energy (or more specifically electricity)-growth nexus between 1981 and 2011. The findings reveal that economic growth, financial development and industrialization positively affect electricity consumption in the short-run and long-run. However, urbanization increases electricity consumption only in the long-term. These finding not only support conservation hypothesis but also imply that policy-makers should take into account the increase in electricity demand arising from financial development, urbanization and industrialisation in energy (electricity) consumption planning in the economy to avoid energy crisis. In addition, policy-makers should search and invests in renewable energy sources such as solar to increase access to cheap energy source.

Open access
Supply Chain Management and Customer Satisfaction in Small to Medium Enterprises

Journal of Management, 16, 331-349. Chow, C.K.W. (2014) Customer satisfaction and service quality in the Chinese airline, Journal of Air Transport Management, 35, 102-107. Choy, K.L., Chow, H.K.H., Tan, K.H., Chan, C.K., Mok, E.C.M., Wang, Q. (2008) Leveraging the supply chain flexibility of third party logistics: Hybrid knowledge-based system approach, Expert Systems with Application, 35, 1998-2016. Coyle, J.J., Bardi, E.J., Langley C.J. (2003) The Management of Business Logistics: A supply chain perspective, 7th ed. Canada: Thomson Learning

Open access