International Journal of Economics and Financial Research
Online ISSN: 2411-9407
Print ISSN: 2413-8533
Print ISSN: 2413-8533
Volume 3 Number 11 November 2017
An Empirical Evaluation of Hedging Effectiveness of Crude Palm Oil Futures Market in Malaysia
Authors: Mohd Aminul Islam
This paper evaluates the hedging effectiveness of the Malaysian crude palm oil futures market using daily settlement prices over the periods from January 4, 2010 to August 30, 2017. Hedge ratios and the hedging effectiveness are determined by employing four competing econometric models namely: the standard ordinary least square (OLS) regression model, vector error correction model (VECM) and two variations of the multivariate generalized autoregressive conditional heteroscedasticity (MGARCH) models namely; diagonal-VECH and diagonal-BEKK GARCH models. The first two models estimate constant hedge ratios while the other two models estimate time varying hedge ratios. Hedging performance is evaluated and compared in terms of in-sample (Jan 2010 – Dec 2016) and out-of sample periods (Jan 2017 – Aug 2017) of the four hedge ratio models. The empirical results show that the MGARCH models particularly diagonal-BEKK GARCH model performs better than the other three models indicating that this model fits better in designing hedging strategy. The empirical finding suggests that the investors in crude palm oil markets in Malaysia can use CPO futures contract as an effective instrument to minimize the risk.
Risk Management and Performance of Islamic Banks: Using the Income of Mudharaba and Musharaka as a Moderator
Authors: Vatimetou Mokhtar Maouloud ; Ghazi Zouari ; Anwar Hassan Abdullah Othman
Risk management in banks is a crucial issue mainly in Islamic banks. This study seeks to examine the impact of the incomes of mudharaba and musharaka on the relationship between risk and performance, which is measured by ROAA. This study employs unbalanced panel data regression analysis of Ordinary Least Squares method, from 16 Islamic banks from different countries over the period 2012 to 2015, which was processed by the software stata13. The results show that the income of Sharing of Losses and Profits (PLS) products (mudharaba and musharaka) has a moderating effect particularly on the relationships between performance and liquidity risk, and operational risk. However, it has no moderating effect on the relationship between performance and market risk. This study helps to enrich the literature with new models that can help bankers and Islamic finance students to get ideas and make relevant decisions in terms of investment.
Fair Value Accounting and Earnings Predictability of Listed Deposit Money Banks in Nigeria
Authors: Joel Ubaka Uyanna ; Tesleem Adeyemi ; Ibrahim Yusuf
The study examined the effect of fair value accounting on predictive power of earnings of listed Deposit Money banks (DMBs) in Nigeria. Fair value accounting has been a subject of serious concern in corporate finance and accounting literature following the adoption of International Financial Reporting standards. Data were collected from all the fifteen DMBs listed on the Nigerian stock exchange between 1st January 2011 and 31st December 2015. In analyzing the collected data, the study adopted descriptive statistics, correlation analysis and a panel multiple regression analysis to identify the possible effects of fair value accounting on predictive power of earnings. The results revealed that fair value accounting significantly enhances earnings predictability. The results further established that where as fair value hierarchy level one does not significantly enhance earnings predictability of listed DMBs in Nigeria, level two and three was found to be negatively and significantly influencing earnings predictability. This implies that level two and three significantly reduces earnings predictability of listed DMBs in Nigeria. Therefore, it is recommended that Financial Reporting Council of Nigeria should develop valuation guidelines that must be followed enhance reliability of fair value measurement in Nigeria.
The Impact of Exchange Rate Volatility on Hospitality Industry – A Study in Lusaka Province of Zambia
Authors: Syed Ali ; Christopher Nsenje
The purpose of this study was to find out the impact of exchange rate volatility on hospitality industry in the Lusaka Province of Zambia. This research aimed to find out the impact of exchange rate volatility on profitability, capacity utilization and the impact of GDP and inflation on profitability of hospitality industry. The study used quarterly secondary data from 2005 to 2015 with respect to three big hotels which had international branding and received over fifty percent revenue in forex. The multiple regression model was used to measure the impact of independent variables on the dependent variable. The study revealed that volatility in exchange rate had significant effect on profitability. But inflation had negative effect on profitability. The GDP growth rate had positive effect on the capacity utilization. The study concluded that the Central Bank of Zambia should take necessary steps to increase the value of domestic currency, i.e., Kwacha, and stop fluctuations in it to safeguard the profitability in the hospitality industry. The study also concluded that through appropriate monetary policy, i.e., increasing the bank rate and reserve ratio and selling the bonds in the market, the inflation could be reduced by controlling money supply.
Prudent Macroeconomic Management for Poverty Reduction and Sustainable Development in Nigeria
Authors: John N.N. Ugoani
The high levels of corruption, unemployment and abysmal development reflect a situation of poor macroeconomic management in Nigeria. Sound macroeconomic policies and management contribute in many ways to high quality growth that has positive correlation with poverty reduction. Increased and more efficient public spending in the areas of public education, healthcare, and employment remain the catalysts for poverty reduction and sustainable development. It is believed that efficient use of resources is central to economic growth and sustainable development. Descriptive research design was used for the study. Data generated were triangulated, analyzed and it was found that prudent macroeconomic management has positive association with poverty reduction and sustainable development.
Willingness of Local Rice Producers to Supply and Participate in the Ghana School Feeding Programme Market: A Case Study of Selected Districts in Northern Ghana
Authors: Chiaraah Anthony ; Mahama Inusah
The government of Ghana is not an exception with regards to putting in place measures that aim to improve the lives and livelihoods of its citizenry including the welfare of school children. In the context of the New Partnership for Africa Development (NEPAD’s) Comprehensive African Development Programme (CADP), the Government of Ghana (GoG) set-up the Ghana School Feeding Programme (GSFP). Its concept of home grown school feeding addresses one of the United Nation’s (UN’s) three pillars to fight hunger (United Nations, 2005). ‘The government of Ghana was of the view that the if the School Feeding Programme was properly funded and implemented, the hunger, education and the food security and poverty landscape in Ghana will change for good (Government of Ghana, 2006). The study investigates the factors determining GSFP caterer’s choice to buy local rice from farmers and farmers’ factors influencing rice farmers to supply to the caterers. Purposive sampling was mainly used to select 120 respondents from GSFP beneficiary communities. The respondents were made of up 80 farmers and 40 GSFP caterers from the four selected districts. The study revealed that 46% % of rice farmers have access to the market created by the Ghana school Feeding Programme and about 48% of this group are able to sell their rice produce to the caterers of GSFP. However majority of the rice farmers are aware of the existence of the programme without any proper rules of engagement except that less than half of the farmers have been linked up with programme with the support of World Food Programme and the Netherlands Development Organisation (SNV), operating in the Northern Region. The major problem associated with rice farmers accessibility to the GSFP is caterers’ unwillingness to buy from them even though majority of the farmers are aware of the programme and its basic of objective of providing free meals to pupils in basic schools. Farmers indicated they would be willing to sell to the caterers if the prices offered by caterers are good or if they are able to produce enough to meet the demand of caterers on termly basis or the caterer is more willing to pay them in cash when they purchase their rice or other farm produce or better still be willing to pay on time for a period not more than one month when they buy on credit. The probit model was used to analyse the factors influencing rice farmers to supply to the programme on one hand and the factors affecting caterer’s decision to purchase rice from the rice farmers on the other.
History of Look-To-The-East Idea: South Korea Interests in the Socio-Economic Development of Malaysia
Authors: Uqbah Iqbal
The present economic development of Malaysia is inherited from the previous three levels, beginning with the rapid growth and rapid development of the natural resources industry from the mid-19th century until 1914, followed by a period of volatility or instability of the natural resources industry between the First and Second World War and finally The level of unification and rationalization of the natural resources industry along with economic diversification after 1945. Although Malaysia was a former British colony, South Korea’s economic interests had contributed to the change of foreign policy from the Pro-West Policy during colonial and post-colonial times to the East View Policy During the administration of Tun Dr. Mahathir Mohamad. Hence the principal problem in this study is to unravel the existence of the Look-To-The-East in Malaysia which focuses on South Korea before it becomes the main policy formed by Tun Dr. Mahathir Mohamad. In terms of methodology used, the initial stage of the research is to identify and collect primary and secondary sources from libraries, archives and reports from various government organizations. Recognizing the importance of South Korea to the Malaysian economy, the Look-To-The-East Idea is still maintained during the Tunku Abdul Rahman, Tun Abdul Razak and Tun Hussein Onn era. The continuity of the Look-To-The-East Idea which was continued by the three Prime Minister figures saw South Korea emerging as an inspiration in Malaysia’s trade relations when Tun Dr. Mahathir Mohamad took over the leadership of the country.
Asymmetric Impact of Exchange Rate Changes on Stock Prices: Empirical Evidence from Germany
Authors: Nadia Anjum ; Niaz Hussain Ghumro ; Bisharat Husain
This study examines whether shifts in exchange rate has symmetric or asymmetric impact on stock prices in Germany. Linear and nonlinear autoregressive distribution lag models are applied by using monthly data from the period January 1993 till April 2017. Findings suggest that only currency devaluation affects stock prices which implies asymmetric impact of changes in exchange rate on stock prices. The empirical results from this study would be useful for policymaking as well as for forecasting the impact of exchange rate changes on stock prices.