Jul'20
Welcome to The IUP Journal of Accounting Research and Audit Practices
Focus
Most of the financial decisions taken in organizations reflect the most prominent proposition by Modigliani Miller for maintaining an optimal capital structure to maximize the value of the firm. Taking this as the base, the latest data of 10 companies of the Ghana Club 100 has been retested for the effect of capital structure on firm's performance by Eric Boachie Yiadom, John Kweku Mensah Mawutor, Richard Fosu Amankwa and Stephen Yalley, in the first paper, "The Effect of Capital Structure on Organizational Performance of Listed Ghana Club 100 Companies". The authors have employed a fixed effect panel regression model to test the size, profitability and growth in the light of capital structure adequacy using interactions of firm's performance with the different measures of debt, i.e., short-term, long-term and total debt. The authors have found that the different measures of debt to total capital reduce the firm's performance and attribute it to the high debt burden of the firms.
Microfinance being one of the many sources for the borrowing household, over-indebtedness of the borrower need not always be caused by the microfinance institution alone. Microfinance participation is a possible driver of the repayment crisis, where it pushes the borrower into a state of over-indebtedness. Sunil Puliyakot, the author of the second paper, "Does Microfinance Participation Lead to Over-Indebtedness? Evidence from India", examines the magnitude of program participation by the borrowing household where the causal analysis is done using the three-factor model of Schicks and Rosenberg. The author has tested the significant influence of microfinance participation on the level of over-indebtedness of the borrowing household and found that other factors like low household income, borrowing from non-MFI sources, number of credit arrangements and environmental factors are the key drivers of over-indebtedness. The author has suggested the need for prioritizing policy intervention and regulating MFIs and the informal sector.
Covid-19 is disrupting lifesaving immunization services around the world, putting millions of people of both rich and poor countries alike at risk. It has infected over 38.5 million people worldwide and has been declared a pandemic due to the widespread scale of its outbreak. Against this backdrop, Asha Sharma, author of the third paper, "A Measurement Model for Exploring the Factors Affecting Covid-19 at Global Level", builds a measurement model for finding the factors affecting Covid-19. The author has considered social, economic, environmental and geographical factors for testing their impact. Using discriminant analysis, the author has found that the most affecting factors are: the number of tourists, temperature, lockdown-period for social distancing, BCG vaccination and continent-wise percentage of population.
Eman Abdel-Wanis, author of the last paper, "The Impact of Regulatory Capital and Bank Characteristics on the Relationship Between Bank Competition and Risk Taking in the Banking System", explores the association between bank competition, regulatory capital and bank risk in Egyptian banks. The author has examined the interaction between bank competition and regulatory capital and its impact on bank risk taking in Egypt. Through a sample of 27 Egyptian-listed banks, the author has used OLS regression and found that bank competition has negative impact on bank risk taking, and that an increase in regulatory capital plays a vertical role in enhancing the association between competition and bank risk taking. The author concludes that there is no supporting evidence that bank type, leverage and profitability would impact the relationship between bank competition and risk taking.
Consulting Editor
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| Article | Price (₹) | Buy | |||
| The Effect of Capital Structure on Organizational Performance of Listed Ghana Club 100 Companies |
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| Does Microfinance Participation Lead to Over-Indebtedness? Evidence from India |
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| A Measurement Model for Exploring the Factors Affecting Covid-19 at Global Level |
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| The Impact of Regulatory Capital and Bank Characteristics on the Relationship Between Bank Competition and Risk Taking in the Banking System |
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The Effect of Capital Structure on Organizational Performance of Listed Ghana Club 100 Companies
The paper examines the effect of capital structure on the organizational performance of listed Ghana Club 100 companies on the Ghana Stock Exchange during a 10-year period from 2007 to 2016. The study focuses on Ghana Club 100 companies because these companies are touted as the role model for their peers. The Ghana Club 100 companies are the top 100 companies in Ghana that are ranked annually in order of excellent performance by the Ghana Investment Promotion Center. The three key ranking criteria used by the GIPC are size, profitability and growth. The study employs a Fixed Effect Panel Regression Model to test these variables in the light of capital structure adequacy and performance. The results showed a negative relationship between capital structure and organizational performance. Specifically, the different measures of debt to total capital reduce firms' performance. The study is robust to the use of different measures of capital structure. The study proposes that the high gearing levels among GC 100 firms are not profit enhancing.
Does Microfinance Participation Lead to Over-Indebtedness? Evidence from India
Borrower over-indebtedness is considered to be a serious risk faced by the microfinance industry globally (CSFI, 2012). The purpose of this paper is to examine whether microfinance participation causes over-indebtedness. Over-indebtedness is identified using the World Bank (WB) estimated poverty line of $1.90 per day. The study uses quantitative methodology using survey design covering 210 borrowing households located in two districts in the state of Tamil Nadu in southern India. It is observed that about 29% of the sample respondents are over-indebted. The results of binomial logistic regression show that microfinance participation does not cause over-indebtedness, and at less than 10% significance level, it brings down the odds of a borrowing household being over-indebted. The key drivers of over-indebtedness are non-MFI borrowing and low household income. The study points to the need to implement income generation schemes before credit distribution schemes as instruments of social policy. From a borrower protection point of view, it also points to the need for regulating informal credit sources.
A Measurement Model for Exploring the Factors Affecting Covid-19 at Global Level
COVID-19 is a dangerous disease. It has spread very quickly at the global level and has become a pandemic. So, for knowing the factors affecting COVID-19 at global level, global segregation is considered based on seven continents, i.e., Asia, Europe, Africa, North America, South America, Oceania and Australia. Independent factors are divided into four groups, viz., social, economic, environment, and geographical factors. Social distancing (lockdown) and vaccination (BCG) are considered under social factors, physician's ratio per 10,000 people and number of tourists are taken as economic factors, temperature and climate due to COVID-19 are taken as environmental factors, and percentage of the population (continent-wise) and the density of the population are taken as geographical factors. Using discriminant analysis, it can be said that the most affecting factors are the number of tourists in the continent, number of tourists, then temperature, followed by social distancing-lockperiod, BCG vaccination and finally continent-wise percentage of population. To verify the result and check the fitness of the model, an artificial neural network technique is used.
The Impact of Regulatory Capital and Bank Characteristics on the Relationship Between Bank Competition and Risk Taking in the Banking System
This paper explores the association between bank competition, regulatory capital, and bank risk in Egyptian banks and also examines the interaction between bank competition and regulatory capital and their impact on bank risk taking in developing countries like Egypt. The paper also investigates the effect of bank characteristics on the relationship between bank competition and bank risk taking through a sample of 27 Egyptian-listed banks during the period 2012-2018 using OLS regression. The results indicate that there is a negative impact of bank competition on bank risk taking and a positive effect of regulatory capital on bank risk taking in the Egyptian-listed banks. The results also show that increase in regulatory capital plays a vertical role in enhancing the association between competition and bank risk taking, and also there is a positive impact of bank characteristics like bank size and diversification on bank risk taking in Egyptian banks. The results indicate that there is no effect of bank type, leverage and profitability to support the relationship between bank competition and risk taking.