Open Access Data Article

Agency Cost and Credit Risk Management: Empirical Evidence from Listed Commercial Banks in Nigeria

Peter E. Ayunku, Akwarandu Uzochukwu

Asian Journal of Economics, Business and Accounting, Page 1-17
DOI: 10.9734/ajeba/2020/v17i230254

This study explores the relationship between agency cost and credit risk of quoted commercial banks in Nigeria. Five hypotheses were formulated following the dependent variable of credit risk which we proxy as non-performing loan. The independent variables employed for this study include agency cost, profitability, income diversification, corporate governance and firm leverage. This study is based on ex-post facto research design and made use of panel data set collected from twelve (12) quoted commercial banks within thirteen years of 2007 and 2019 financial year.  We analyzed the data set using a random effect regression analysis. The result showed that agency cost which is measured as managerial inefficiency is strongly and positively related to the non-performing loan of commercial banks in Nigeria during the period under investigation. However, in light of the obtained result, we recommend that bank managers in Nigeria should take a keen look at the activities that make up agency cost. Hence, they should consider new policies that will lower the size of its agency cost to reduce the level of nonperforming loans which will ultimately create room for greater profit.

Open Access Original Research Article

Duration of Unemployment and Salary in Cameroon

Paulin Joachim Wamba Tindo

Asian Journal of Economics, Business and Accounting, Page 18-32
DOI: 10.9734/ajeba/2020/v17i230255

The purpose of this study is to assess the effect of unemployment duration on the wages in Cameroon. In this light; the study used data from the Survey of Employment and Informal Sector (EESI 2). A control function approach is used to correct the endogeneity of the unemployment duration and selection in paid work is considered. The results indicate that an extra month of job search decreases hourly wage in Cameroon up to 4.1%. The highlighted wage penalty is higher in urban areas, varies by age group, and does not show significant gender disparity.

Open Access Original Research Article

Agriculture Sector Credit and Output Relationship in Nepal

Arjun Kumar Dahal, Khagendra Kumar Thapa

Asian Journal of Economics, Business and Accounting, Page 33-53
DOI: 10.9734/ajeba/2020/v17i230256

Purpose: The purpose of this study is to find out the condition of priority of commercial banks to provide loans to the agricultural sector and to find the relationship and impact of agricultural loans to the agricultural GDP of Nepal.

Objectives: This study aims to compare the condition of loan disbursements in agricultural and manufacturing sectors. It further aims to compare loan percent with growth and contribution to the GDP of the agricultural and industrial sectors and tries to show the impact of agricultural loans to the agricultural GDP of Nepal.

Methods: It was based on a descriptive and analytical research design. Statistical tools standard deviation, correlation, regression, etc. are used and Excel, and EViews software are used for the statistical calculations. Statistical calculations and graphs are simultaneously used to show and compare the condition of variables.

Results: Commercial banks give higher priority to the manufacturing sector for loans than the agricultural sector. The Johansen Co-integration test indicates no long-run relationship between loans of commercial banks and agricultural output in Nepal. However, the least-squares method, it indicates that a positive causal relationship between agricultural loans and agricultural growth.

Implications: The loans of commercial banks directly stimulate the growth of agriculture but the amount of growth is less noticeable. Thus, it is concluded that the commercial bank's loan alone cannot affect and control the growth of the agricultural sector of the Nepalese economy therefore the government should increase its expenditure on the agricultural sector.

Open Access Original Research Article

Dynamics of Local Government Finance in Cameroon: An Assessment of Local Councils in the Fako Division

Chenaa Abonwi Takwa, Fokwa Blaise Babila, Maclean N. Teno

Asian Journal of Economics, Business and Accounting, Page 54-72
DOI: 10.9734/ajeba/2020/v17i230257

Local councils in every part of Cameroon are playing an extremely significant role in the provision of essential public services. However, the local development authorities face tremendous challenges to adequately generate finances to meet community needs. The aim of this paper is to find out whether the councils in the Fako Division have access to all the sources of finance as stipulated by statute and to determine the difficulties they face in exploiting the sources to finance their developmental plans. The exploratory and descriptive designs were adopted for the study. 4 out of the 6 councils in the Fako Division were conveniently selected. The Finance and General Affaires Officers were purposely designated as the respondents for the study. Data were collected with the aid of semi-structured questionnaires and a checklist. The collected data were descriptively analysed with the use of tables and bar charts. Mean and the Relative Important index were used to rank in terms of importance the challenges faced by the councils in the revenue generation process and the options available to them to exploit. The findings reveal that the councils have access to internal sources such as; local taxes; fees, fines, and penalties; service charges, patents and business licenses; Gifts and donations. The external sources were mostly Intergovernmental transfers and Council Development Funds from FEICOM and PNDP. The study equally found out that the most exploited options of finance by the councils are INTERCOM (M =4.25, RII = 0.85, ranked 1st) and service charge adjustment (M = 4.13, RII = 0.82, ranked 2nd) while the least utilized options were tax adjustment (Mean = 1.00, RII = 0.02, ranked 10th) and the usage of saved up profit from investments and businesses (M = 1.75, RII = 0.35, ranked 9th). The study further uncovered that the challenges with the highest mean scores are infringement by the central government on means of internal revenue generation of the municipality (M = 3.85, SD = 1.214) and lack of power to make finance bi laws (M = 3.85, SD = 1.214), while inadequate sources of revenue (M = 3.42, SD = 1.306) and narrow local tax base (M = 3.42, SD = 1.306) had the least mean scores. The study recommends among others that the framework in place needs clarification to clear off conflicting and confusing goals. It should include legislative clarification of the responsibilities of each level of government and the identification of the appropriate funding resources. These will reduce vertical imbalances and increase fiscal responsibility. Also, a transfer system should be defined that encourages local governments to collect own revenue and manage their roles efficiently, while imposing strict budget constraints to foster fiscal discipline. This will minimize conflicting responsibilities and enable the local governments to discharge their functions.

Open Access Original Research Article

Studying Determinants of Foreign Direct Investment in Nigeria: An Empirical Investigation

Ibeinmo Friday Cookey, Francis Ariayefa Eniekezimene

Asian Journal of Economics, Business and Accounting, Page 73-84
DOI: 10.9734/ajeba/2020/v17i230258

This research paper investigated the determinants of foreign direct investment inflow into the Nigerian economy. This is because Nigeria at present is still characterized by low economic growth, which has created other macro-economic problems like inflation, low export, unemployment, unfavorable exchange rate, balance of payment disequilibrium, etc. The study adopted the Autoregressive Distributed Lag (ARDL/Bounds testing) econometric tool to examine the determinants of foreign direct investment (FDI) in the Nigerian economy. Data for the analysis are annual data covering the period 1981-2019, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin several issues. The study used inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and trade openness (TOPN) as independent variables. While foreign Direct Investment (FDI) was used as the dependent variable. The result indicates that exchange rate (EXR) and trade openness (TOPN) are all positive determinants of FDI in the Nigerian economy as their corresponding coefficients are positive. The result further shows that for the Nigerian economy to attract FDI significantly by one percent, exchange rate and trade openness will increase by 0.18 and 5.00 percent respectively. On the other hand, inflation rate (INFR), and interest rate (INTR) are negative determinants of foreign direct investment in Nigeria. Meaning that, an attempt to increase either of these variables would result to a decline in foreign direct investment in the country and vice versa. We therefore conclude that both EXR and TOPN had a positive and significant impact on the FDI inflow to the Nigerian economy, and are therefore adjudged positive determinants of FDI inflow into the Nigerian economy within the period 1981-2019. INFR and INTR on the other hand maintained their negative influence on FDI inflow to the Nigerian Economy, hence, are negative determinants of FDI inflow into the Nigerian economy within the period 1981-2019. Finally, we recommend that government should sustain its drive for import substitutions which will encourage export, expand its bilateral trade ties with developed economies so as to woo FDI inflows. Also, government through it monetary authorities should reduce inflation and interest rates. This will help to woo FDI inflow into the Nigerian economy.