Financial Economics


Recent Submissions

Now showing 1 - 5 of 19
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    (University of Cape Coast, 2014-10-12) APIO, ALFRED TUNYIRE
    This study empirically examines the relationship between stock market performance and economic growth in Ghana using quarterly time series data from 1991 to 2012 for four stock market performance indicators, namely; stock market capitalization ratio, stock market turnover ratio, total value traded ratio and the Ghana Stock Exchange market index with three other control variables. The study employed the Johansen and Juselius (1990) multivariate cointegration technique and vector error correction model to investigate the long and short-run relationships amongst the variables. The standard Granger causality test is performed to establish the direction of causality. The impulse response functions (IRFs) and forecast error variance decomposition (FEVD) are used to assess shocks and the relative importance of each variable in the system. The results indicate a positive and significant relationship between stock market performance and economic growth. The Granger causality results suggest a unidirectional causality in general from stock market performance to economic growth. This substantiates the supply leading finance hypothesis. The IRFs and the FEVD results reinforce the positive link between stock market performance and economic growth. The study concludes that to tap into the growth enhancing capacity of the Ghana Stock Exchange, the government should initiate policies to promote the supply (tax incentives to companies to list on the GSE) of and demand (using the GSE as a source of finance for all government projects) of securities. This would ensure continuous and sustained economic growth in Ghana.
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    (University of Ghana , Legon, 2012-07-10) DOKU, ISAAC
    The Pecking Order Theory (POT) suggests that firms prefer internal over external sources of financing investment. For external sources of finance, firms prefer the use of debt before equity to finance investment. However, the POT did not show how the capital structure decision of firms influences their dividend decision. POT can be combined with Lintner’s dividend model to generate some predictions for financial leverage. This leads to the conclusion that when firms are faced with earnings shortage, firms will borrow to pay dividend at the expense of profitable investment. This means there will be a positive interaction between financial leverage and dividend payout ratio, and a negative interaction between financial leverage and investment. The theory further predicts that as firms make more profit, they would demand less debt representing a reduction in financial leverage. The predictions of the POT where made based on data from developing countries. However, due to differences in accounting and auditing practices between developed and developing countries, these predictions might not hold in developing economies. A cross sectional analysis was implemented on 33 out of the 34 listed firms on the GSE for the period 2004-2009, employing both the 3SLS and OLS technique to test the predictions in Ghana. The findings indicate that there is a positive significant interaction between financial leverage and dividend payout ratio among listed firms in Ghana. The results further indicate that profitability has the predicted negative influence on financial leverage, indicating that the POT explains dividend payout ratio in Ghana. The results did not show any significant interrelationship between financial leverage and investment, and between investment and dividend payout ratio among listed Ghanaian firms. The results also show that dividend payout ratio in Ghana is very low, therefore, policymakers should strengthen and enforce laws on dividend payment in Ghana
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    (University of Ghana, Legon, 2011-06-22) AMAKYE, KWAKU
    Access to external sources of financing for firms has been and continues to be an obstacle to the operations and growth of firms. Firms have used diverse means to finance their operations, especially internally generated funds. The purpose of the study was to investigate the determinants of the key external sources of financing working capital and new fixed investments by firms in Ghana. The main source of data for this study is the World Bank Enterprise Survey on Ghana; a firm level survey conducted in the year 2007. The Tobit estimation technique was used to investigate the determinants of the external sources of financing whiles analysis of variance was used to determine the variability in sources of finance according to firm size. The results of the study show that access to finance is perceived by firms as the second most serious obstacle to their operations. Secondly firms tend to rely more on internal sources of financing than external sources of financing. In the use of external sources of financing working capital, trade credit is more important than bank financing. However, firms finance a higher proportion of their new fixed investments from banks as compared to other sources of financing. The factors which influence the use of external sources of financing are firm size, audited financial statements, sector, educational level of the manager, ownership and location. The study recommends that firms, especially small firms, keep quality financial information on their operations. As firms put in place measures to improve on the needed financial information to external finance providers, financial intermediaries should also be encouraged to introduce more relationship lending products, if they are to meet the financing needs of Small and Medium Enterprises.
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    (University Of Bostwana, 2017-05-10) TS’EPISO, CHRISTINA KHALECHANE
    This study examined the determinants of savings in Lesotho during the period 1982-2014. Though similar studies have been done in other countries, few have been done in Lesotho. The objectives of the study were to estimate the short-run and long-run determinants of savings in Lesotho and to propose policies to guide future decision making of government. To achieve these objectives, the study adopted the Auto Regressive Distributed Lag bounds approach in analysing the determinants of savings in Lesotho. The empirical results indicate that in the long run, Budget deficit, money supply and terms of trade were found to have a significant positive effect on national savings in Lesotho. On the other hand, deposit rate and GDP per capita income had a significant negative effect on national savings in the long run. The results for short run indicate that budget deficit, deposit rate and GDP per capita income have a positive effect on national savings. On the other hand, terms of trade was found to have a negative effect on national savings in short run. Policy implications emerging from the empirical results were that the government should expand their fiscal policy, reduce unemployment rate by proving new opportunities for employment, resort to diversification and also it should align its policies to those of South Africa since Lesotho’s economy is influenced mostly by South African economy
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    Analysis of Firm Capital Structure Decisions: The Case of Non-Banking Firms in Botswana
    (University Of Bostwana, 2019-09-02) Ntongana, Epiphany Linden
    This study seeks to bridge the knowledge gap by analyzing capital structure decisions of non-banking firms in Botswana. The study also investigates the effects of macroeconomic conditions on firms’ investment behavior as measured through their capital structure decisions, with a specific focus on Botswana non-banking firms. This study’s focus on non-banking sectors is based on the difficulty in comparing firms in banking sector and those who are not, mainly due to the regulations firms face regarding capital structure. Moreover, since Botswana’s diversification efforts are targeted at expanding the economy’s productive sectors in order to reduce dependence on the mining sector, the study seeks to focus on the capital structure of the firms in these other sectors. As a consequence, the study looks at the banking sector as part of the sources of capital structure which they provide to firms in the country, hence the exclusion of the commercial banks and the Botswana Stock Exchange as firms in the study. The capital structure decisions of non-banking firms in Botswana are examined using a Two-step Generalized Method of Moments (GMM) which takes into account simultaneity issues in the dataset, as well as through Quantile regression in order to examine the sectors in depth."