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Browsing CMAP by Subject "ARDL"

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    DETERMINANTS OF NON-PERFORMING LOANS IN UGANDA’S COMMERCIAL BANKING INDUSTRY 2002:1 – 2017:2
    (MAKERERE UNIVERSITY, 2018-12-01) NATHAN, Sunday
    Over the past decade, non-performing loans in Uganda’s commercial banking industry have continued to show a positive trend. The continued increase in NPLs has not only affected credit growth, but has also resulted in the collapse and closure of some commercial banks such as Crane Bank (in 2017), Global Trust Bank (in 2014). It’s against this background, that the study examined the determinants of NPLs in Uganda’s commercial banking industry. The study used secondary data on quarterly basis for the period 2002 quarter one to 2017 quarter two. Data on bank-specific factors was obtained from bank of Uganda while that for macroeconomic factors was obtained from IMF and World Development Indicators (World Bank) Secondary data Empirical analysis was carried out on both bank specific and macroeconomic factors using bounds test and ARDL technique. The findings of the study suggest that non-performing loans increase with increase in lending rates, real effective exchange rate and unemployment rate. Whereas increase in returns on assets and GDP growth are associated with a decreasing effect on non-performing loans. Based on the findings, the study recommends that commercial banks should consider the international competitiveness of the domestic economy before extending loans so as to minimize the effect of real exchange rate appreciation. Efforts to lower lending rates (for example, by reducing operating costs of the banks and increasing liquidity of the banks) are of paramount importance in this regard. Furthermore, there is need to promote GDP growth for example, by creating a conducive business atmosphere and promoting high productivity industries. There is also need to reduce unemployment rate by developing labour market information system and supporting labour intensive industries. Promoting stock markets would also enable banks diversify their portfolio and therefore spread their risk.
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    THE EFFECTS OF FINANCIAL INNOVATIONS ON DEMAND FOR MONEY IN BOTSWANA
    (University Of Bostwana, 2019-12-21) MOTSEWAKGOSI, RELETILE PHOMOLO
    The study investigates the effects of financial innovation on demand for money in Botswana using annual data series for the period 1982-2017. The study uses the ARDL bounds testing approach to find the effects of financial innovation on demand for real narrow money and real broad money in Botswana. The ARDL approach integrates both the short run relationship and long run relationship. The study also estimates the demand for money function excluding the financial innovation proxy. The study also analyses the indirect effects through interactions of explanatory variables (GDP, exchange rate, inflation and interest rate with the financial innovation proxy). The results of co-integration showed that there existed a long run relationship between the demand for real narrow money and explanatory variables but no long run relationship when including financial innovation proxy. When including financial innovation proxy to the demand for real broad money model, there was co-integration of real broad money and explanatory variables. The results also showed that the financial innovation affect the real narrow money positively only in the short-run but not in the long run. Even though a long run relationship existed in real broad money when financial innovation proxy was included, the financial innovation affected the demand for real broad money negatively in the short run only. The overall net effects of financial innovation on demand for real money balances is negative. The results obtained support the theoretical and empirical studies that financial innovations do affect real money balances negatively. The interaction terms of financial innovation and macroeconomic variables showed that the effect of financial innovation depends on GDP, inflation, exchange rate and interest rate on real money balances. The marginal effect depicts a negative relationship between the financial innovation and demand for money. The study recommends that policy makers should always be thorough when estimating the demand for money. Especially that since financial innovation is an ongoing process, the unpredictable changes and uncertainties of it, could lead to misspecification of demand for money