African Development Finance Journal

Does Capital Structure mediate the relationship between Corporate Governance and Firm Value? Evidence from Kenyan Listed Firms

2024-04-18T12:33:30+00:00

Whereas capital structure decisions are critical for a firm's financial well-being, enhancing corporate governance practices could more directly influence the value and performance of the firm. Thus, this study investigated the impact of capital structure on the relationship between corporate governance and firm value using longitudinal data from 30 Nairobi Securities Exchange-listed firms. A census survey in Kenya from 2012-2021, involving 30 firms, found a random effects model most suitable for investigating nonfinancial firms, with panel specification tests confirming this. The hypothesis testing revealed that capital structure significantly influences FV, but the four-step mediation analysis revealed that capital structure does not mediate the relationship. The absence of capital structure as a mediator suggests that governance effects are not influenced by how companies fund investments and operations. Thus, corporate governance's effect on firm value is neither impacted nor determined by a company's capital structure. It is apparent that good corporate governance standards and judicious leverage separately play crucial roles in establishing a firm's value.

Keywords: Corporate governance, capital structure, firm value, panel random effects model

Impact of the Government Electronic Payment Gateway (GePG) on Revenue enhancement in Higher Education Institutions: A case of Arusha and Moshi Higher Learning academic institutions

2024-04-18T12:37:33+00:00

The digital revolution has profoundly impacted various sectors globally, including Higher Education institutions. This research, seeks to assess the impact of GePG on revenue enhancement in Higher Education institutions in Tanzania, with a specific focus on Arusha and Moshi Higher Learning Academic Institutions. This study employed a mixed-methods approach, combining quantitative and qualitative research techniques. Findings revealed a significant increase in revenue in post-GePG implementation, attributing this to enhanced financial transparency and more predictable revenue streams. However, variations in the degree of change suggested differing levels of GePG integration. The study also identified comprehensive staff training and strong leadership support as key in GePG adoption, though the extent of strategic integration varied, indicating diverse execution levels across institutions. GePG's impact on revenue collection was positive, with most institutions reporting increased revenue and improved payment compliance, but disparities were noted in administrative cost savings and revenue collection frequency. The GePG has improved financial management in higher education institutions, leading to consistent revenue streams. Successful strategies with GePG include effective staff training and integrating the system with existing institutional processes. We recommend to enhance GePG utilization tailored by individual institutional needs, optimizing GePG strategies through a center of excellence, strengthening staff training programs, and standardizing the adoption of digital financial strategies.

Keywords: Government Electronic Payment Gateway, Revenue Enhancement, Higher Learning Academic Institutions

Leverage Effect and Market Efficiency in selected African Stock Markets

2024-04-18T12:41:08+00:00

This study aimed at estimating African stock markets’ efficiency, using Augmented Dickey Fuller as well as investigating their leverage effects, applying the EGARCH model. Monthly All Share Indices of five selected African stock markets from 1st January, 2018 to 31st December, 2022 form the data deployed. Findings showed that all but the Casablanca Stock Exchange manifested leverage effect while all the countries’ markets were weak form efficient. However, an aggregate (African) estimation of leverage effect manifested volatility clustering and asymmetry while was also in weak form of efficiency. These findings show that African stock markets lagged behind in term of maturity and capacity for competing with stock markets in developed economies.

Keywords: Leverage, Efficiency, Volatility, Market Returns

Does industrial sector performance influence Gross Domestic Product in Tanzania

2024-04-25T11:46:31+00:00

Tanzania's sustainable growth is strongly reliant on the relationship between industrial sector performance and GDP. The study looked at annual data from 2000 to 2019. The secondary data was analyzed using both descriptive and vector autoregressive approaches. The descriptive techniques used frequency tables, whilst the regression techniques included the stationary Augmented Dickey Fuller (ADF) evaluation, the Johansen Co-integration Test, and the Error Correction Model. The study also employed the Granger causality test to determine the direction of causality among the model variables. The ADF results show that while the variables are not stationary at the individual level, they are stationary at the first difference. The results of the Johansen co-integration reveal that there is a long-term relationship between industrial productivity indices (industrial exports, industrial value added, and production volume) and the GDP. In contrast, the VECM results reveal that the industrial productivity indicators (industrial value added, industrial exports, and production volume) have a long-term but minor impact on Tanzania's GDP. To summarize, Tanzania has completed significant growth in infrastructure rebuilding and the application of supportive strategies to stimulate the industrial sector, providing that the attractiveness of the industrial sector is regarded as a critical necessity for economic development because it causes creative economic development. Nevertheless, in order to attain long-term economic development, the study suggests that the industrial sector's institutional, legal, and fiscal climate be strengthened to boost its competitiveness.

Keywords: Industrial sector; Gross Domestic Product; Tanzania

Influence of Information Symmetry Management on Loan Portfolio Quality for Savings and Credit Cooperative Societies in Tanzania

2024-04-25T11:52:03+00:00

The study aimed to analyze the effect of information symmetry management on loan portfolio quality for Tanzania savings and credits cooperative societies (SACCOS). The specifically the study established the role the information policies, guideline and procedures, borrowers’ information verification and MIS usage on the loan portfolio quality of SACCOS. Data were collected randomly from 145 SACCOS using a structured questionnaire. An ordinary least square multiple regression analysed the data. The findings indicated that the information policies, guideline and procedures, the borrowers’ information verification and MIS usage influenced positively and significantly the loan portfolio quality of SACCOS in Tanzania. Based on the findings, SACCOS in Tanzania should prioritize developing and implementing robust information policies, guidelines, and procedures. Additionally, enhancing borrowers' information verification processes and maximizing the utilization of Management Information Systems (MIS) are crucial for improving SACCOS loan portfolio quality and overall financial performance. The study's findings contribute to agency theory by highlighting how effective information management practices, including policies, guidelines, and borrower verification, and MIS utilization, can mitigate information asymmetry and align incentives between lenders and borrowers. The practice is vital for promoting SACCOS' loan portfolio quality in Tanzania.

Keywords: Information symmetry management, loan portfolio quality, savings and credits cooperative societies (SACCOS), Tanzania

Investment Decisions and Financial Statements Analysis Tools in Tanzania’s Commercial Banks

2024-04-25T11:54:54+00:00

The paper examined Financial Statement Analysis tools (FSTs) and its effect on potential investors’ investment decision in banking industry country wide. Specifically, it established the influence of horizontal analysis, ratio analysis and vertical analysis on investment decision. In this study descriptive research design was adopted and employed to draw subject matter conclusion. Data (Secondary) were collected from five listed {Dar es salaam Stock Exchange (DSE)} commercial banks in the country from 2012 to 2021. Data analysis was computed via Statistical Package for the Social Science (SPSS) 25. Positive and significant relationship was found to exist in this study between ratio analysis, horizontal analysis, vertical analysis and the Investment decision. Since financial statement analysis have a huge impact on investment decision the study recommends timely and adequately provision of financial statement by banks and a continuous training on financial statement analysis by investors in order to reduce risks associated with investment.

Keywords: Investment Decisions, Financial Statements Analysis Tools