Open Access Original Research Article

Tax Revenue, Tax Reform and Government Expenditure: The Case of Nigerian Economy (1994 – 2017)

Chinedu Jonathan Ndubuisi, Onyekachi Louis Ezeokwelume, Ruth Onyinyechi Maduka

Asian Journal of Economics, Business and Accounting, Page 1-12
DOI: 10.9734/ajeba/2020/v18i330283

The objective of this study is to empirically investigate the effect of tax revenue and years tax reforms on government expenditure in Nigerian. Tax revenue were explained using custom and excise duties, company income tax, value-added tax and tax reforms explained by the years in which reforms took place measured by dummy variables as proxies. In conducting this research, an annual time series data from central bank statistical bulletins and Federal Inland revenue Service of Nigeria spanning from 1994-2017 were employed. The data were tested for stationarity using the Augmented Dicker-Fuller Unit Root Test and found stationary at first difference. The Johansen co-integration test was also conducted and showed that the variables are co-integrated at the 5% level, which implied that there is a long-run relationship between the variables in the model. The presence of co-integration spurred the use of vector error correction model and VEC granger causality to determine the effects and decision for the study objective. Findings revealed that Customs and Excise Duties has positive (3.96) and significant (-8.38) impact on government expenditure at 5% level of significance (t=8.38>1.96), Company Income Tax has negative (-1.25) and significant (2.98) impact on government expenditure at 5% level of significance (t=2.98>1.96), Value added tax has positive (8.54) and significant (3.90) impact on government expenditure at 5% level of significance (t=3.90>1.96) and Tax reforms periods has negative(-3.52E+12) and significant (8.39) impact on government expenditure at 5% level of significance (t=8.39>1.96). The study thus concluded that tax revenue and tax reforms significantly affect the Nigerian economy with the direction of causation running from government revenue to government expenditure, supporting the revenue-spend or tax-spend hypothesis.  It was recommended while seeking to increase its revenue base via tax should also increase their expenditure profile to create a balance with the tax revenue and every other tax reform should be geared towards this balance.

Open Access Original Research Article

The Effect of Profitability, Sales Growth and Dividend Policy on Stock Prices

Sri Purwaningsih

Asian Journal of Economics, Business and Accounting, Page 13-21
DOI: 10.9734/ajeba/2020/v18i330284

Aims: This study aims to analyze the effect of profitability, sales growth and dividend policy on stock prices.

Study Design: The research method used is quantitative research.

Place and Duration of Study: This research sample is a manufacturing industry sub-sector manufacturing companies listed on the Indonesia Stock Exchange (BEI) in 2016 - 2018.

Methodology: The analytical method used is the multiple regression test using SPSS.22 analysis tools, namely with a descriptive test, a classic assumption test, a model suitability test, and a regression test.

Results: The results showed that ROA and Dividen Policy had significant positive effect on Stock Prices, But Sales Growth had no effect on Stock Prices.

Conclusion: This shows the interest of investors to invest in shares issued by companies that have good performance. Therefore, companies need to maintain company performance so that their shares remain attractive to investors.

Open Access Original Research Article

Unsystematic Risk Factors and Mortgage Non- Performing Loans in Kenya: Evidence from Commercial Banks

Loice Koskei

Asian Journal of Economics, Business and Accounting, Page 22-31
DOI: 10.9734/ajeba/2020/v18i330285

Commercial banks face severe challenges relating to their processes due to variations in the financial system. Identifying methods for reducing mortgage defaults and reducing the level of nonperforming loans is very important. Mortgage defaults occur because of complex factors. The amounts of mortgage non-performing loans depend on unsystematic risk factors which have an effect on mortgage loans of commercial banks. The stronger the effect of such factors, the less useful is diversification across a large number of borrowers and the stronger are the fluctuations in portfolio losses over time. The study looked at unsystematic factors and mortgage non-performing loans in Kenya’s commercial banks. Annual panel secondary data spanning from 2014 to 2019 was obtained from the Central bank of Kenya, Banking Supervision report and Kenya National Bureau of Statistics. The six year period was chosen because of availability of Mortgage secondary data. A panel fixed effects regression model was employed to address the objective of this study. The fixed effects panel regression model results indicated that capital asset ratio and lending rate had negative and statistically insignificant effect on Mortgage non-performing. Loans to deposit ratio and bank size results indicated a positive and statistically significant effect on mortgage non-performing loans implying that loans to deposit ratio and bank size affects mortgage non-performing loans in Kenya’s commercial banks. ROA results indicated a negative but statistically significant effect on mortgage non-performing loans. The study recommended enactment of internal policies by banks in regard to unsystematic factors in order to minimize the surge in mortgage non-performing loans especially in Kenya.

Open Access Original Research Article

Economic Effects of Malaria Infection on Farmers’ Income in Kogi Eastern Agricultural Zones

F. O. Oyibo, S. I. Audu, Y. E. Ajibade, A. J. Odiba

Asian Journal of Economics, Business and Accounting, Page 32-41
DOI: 10.9734/ajeba/2020/v18i330286

The study assessed the effect of malaria infection on farm households in the eastern Agricultural zones of Kogi State. Specifically, the study described the socioeconomic characteristics of the farmers, determined the relationship between farmer’s output and malaria factors and compared the output valued in naira of the infected and non-infected farmers in the area. Using proportionate and random sampling techniques, 120 infected and 120 non-infected farmers were selected for the study. Structured questionnaire was used to collect the required information. Data obtained were analyzed using descriptive, Ordinary Least Square (OLS) and z-test statistics. Result from the study showed that 69.9% of the respondents were male with an average age of 40 years, married with a mean household size of 7 persons. Farmers in the area had a mean farming experience of 18 years and operated on an average farm size of 1.6 hectares. The mean output valued in naira was N53, 334 and N66, 250 for the infected and non-infected farmers, respectively. Result of the OLS analysis showed that age (β=0.176), household size (β=0.463), transport cost (β=-0.236), days of incapacitation (β=-0.455), and treatment cost (β=-0.126), showed significant relationship with the value of farmer’s output at 1%, 1%, 1%, 1% and 5% levels of risk respectively. In addition, z-test statistics indicated a significant difference (N12, 916) at 5% level of risk between the output of the infected and non-infected farmers. Hence, the study showed that malaria affected farmers and their families because of loss of man days and the expenditure that it inflicted on them which resulted in a substantial output loss in last cropping season. The study recommends establishment of hospital and clinics in many settlements to reduce the distance travelled for medication, treatment subsidy and free drugs should be made available for poor people in the society.

Open Access Original Research Article

On the Determinants of Economic Openness in Nigeria

Charles Okechukwu Aronu, Lucky Oghenechovwe Arhovwon, John Obatarhe Emunefe, Godspower Onyekachukwu Ekwueme, Nkechi Udochukwu Otty

Asian Journal of Economics, Business and Accounting, Page 42-53
DOI: 10.9734/ajeba/2020/v18i330287

Aims: Economic openness has been identified as a tool that provides countries with an avenue to explore advances on technology, creation of exchanges through the reallocation of resources especially from less efficient to efficient producer, and economic growth. This study examined the short-run and long-run impact of economic determinants such as foreign direct investment, unemployment rate and percentage of the urban population on economic openness in Nigeria. 

Place and Duration of Study: The study employed a secondary source of data collection obtained from the Central Bank of Nigeria (CBN), Statistical Bulletin and National Bureau of Statistics (NBS) Annual Publication. The data comprises of variables such as economic openness which is proxy by trade openness, foreign direct investment, unemployment rate and percentage of the urban population from 2006 - 2019.

Methodology: The impacts of the economic determinants considered in this study were examined using the Autoregressive Distributed Lag (ARDL) co-integration technique and the error correction parameterization of the ARDL model. The R-3.6.3 programming package was used to perform the analysis.

Results: The outcome of the study revealed that the appropriate ARDL model for estimating economic openness was the ARDL (1,1,1,1) selected based on the Schwarz Bayesian Criterion. Also, the error correction model identified the sizable speed of adjustment by 30.0% of disequilibrium correction yearly for reaching the long-run equilibrium steady-state position. It was found that the lag of the Unemployment Rate (UNER) and the percentage of the urban population have a significant short-term effect on economic openness. Also, the distribution of economic openness was found to be stable over the observed period. Also, it was found that the relationship amongst the variables was independent except for the relationship between the percentage of the Urban Population (PUP) and Foreign Direct Investment (FDI) which was found to be is unidirectional.

Conclusion: The outcome of this study suggested the urgent need for policymakers to implement policies such as the "ease of doing business"  of the federal government of Nigeria which is anticipated to make foreign direct investment more attractive and in turn is expected to boost economic growth and thereby impact positively on urbanization in Nigeria.