Open Access Original Research Article

Bank Lending Channel Effectiveness and Loan Sales in the US

Michael R. Jonas, Sharmila K. King

Journal of Economics, Management and Trade, Page 16-34
DOI: 10.9734/BJEMT/2014/6255

This paper examines whether banks that sell loans in the secondary market respond differently to a monetary policy innovation from those that do not engage in loan sales. We answer this question by measuring the policy response while controlling for loan sales activities. Using a simple theoretical model and U.S. bank-level Call Report longitudinal data for the period 1991Q1-2008 Q4, we conduct a dynamic panel regression analysis. We find that the long-run response to a typical policy shock is three times greater for mid-size banks engaging in loan sales. Given the increase in proportion of banks engaging in loan sales, this finding has strong implications for policy makers and bank industry volatility.

Open Access Original Research Article

Determinants of Economic Growth in Laos

Hatthachan Phimphanthavong

Journal of Economics, Management and Trade, Page 35-49
DOI: 10.9734/BJEMT//2014/3822

This paper identifies the key determinants of economic growth in Laos, using annual time-series data from 1980 to 2010. To avoid the problems of non-stationary associated with time series analysis, the Dickey-Fuller unit roots statistic is checked in order to ascertain whether the variables are stationary. This prevents problems of spurious results in the regressions by transforming the dependent and independent variables in the first different operator form. This paper contributes on the on-going research issue whether foreign aid and trade liberalization help developing countries to foster their growth. The findings show that trade openness and foreign aid contribute to economic growth in Laos. Furthermore, foreign direct investment, domestic investment, government expenditure, labour force and being a member of ASEAN also found to have positive effects on the performance of the economy, whereas the population growth has a negative impact. This is in line with the argument that a large population is related to the capacity of government expenditure to provide the people with social services efficiently, thereby negatively impact development. To sustain a high rate of growth, this paper suggests improving the trade policy orientation, based on value-added products for exporting, together with investment policy adoption and tourism promotion based on the potential resources of the country. The foreign aid allocation should be focused on specific areas, such as (1) promoting economic growth and (2) direct intervention for the poor, and ensured the positive effectiveness with accountability and transparency methods for aid allocation.

Open Access Original Research Article

The Role of Multinational Companies in Sustainable Socioeconomic Development: The Case of Palestine

Yousef Ibrahim, Mustafa Sayim

Journal of Economics, Management and Trade, Page 50-71
DOI: 10.9734/BJEMT/2014/4753

Aims: Our study investigates different aspects of the Strategic Success Paradigm [1] and examined the relationships among MNCs’ environmental turbulence, MNC strategy aggressiveness, MNC capability responsiveness, and MNC corporate social responsibility (CSR) posture in Palestine.

Study Design:  The target population for this research included multinational corporations (MNCs) and domestic Small and Medium Enterprises (SMEs) that had operations in or were contemplating undertaking foreign direct investment (FDI) in Palestine. An online survey data used and the results by using Spearman’s rho, there are statistically significant relationship between MNC CSR posture and MNC financial performance; between MNC CSR posture and MNC social performance and   between MNC financial performance and MNC social performance in Palestine.

Methodology: The methodology for this research study was based on the Strategic Success Paradigm presented [2]. This methodology was operationalized in this study through the relationship between MNC environmental turbulence (ET), MNC strategy aggressiveness (SA), and MNC capability responsiveness (CR). Specifically, the study hypothesized that organizational performance was improved when MNC strategy aggressiveness, MNC capability responsiveness, and MNC CSR strategic posture were aligned with MNC issue turbulence.  As part of the MNC’s strategy, CSR was considered an integral part of the overall core business strategy to optimize economic and social performance for companies operating in Palestine.

Results: This study provides practical implication to researchers and professionals with tools for aligning the business environment with the political environment and for maximizing stakeholder legitimacy strategy and CSR for optimal financial and social performance.

Conclusion: Our study findings contributes to the field of strategic management by empirically testing and validating hypotheses regarding the relationships between environmental turbulence, MNC strategy aggressiveness, and MNC capability responsiveness for MNCs operating in a conflict-prone zone such as Palestine.

Open Access Original Research Article

Portfolio Management to Reduce the Risk of Stockholders in the Bangladesh Stock Market

Harun-Or-Rashid Howlader

Journal of Economics, Management and Trade, Page 72-84
DOI: 10.9734/BJEMT/2014/5958

This paper deals with reducing the risk of stockholders investment by implementing portfolio management in Bangladesh’s stock market. The Markowitz portfolio model derives the expected rate of return for a portfolio of stocks and a measurement of the expected risk, which is the standard deviation of the expected rate of return. The model showed that the expected rate of return of a portfolio is the weighted average of the expected return for the individual investments in the portfolio. The standard deviation of a portfolio is a function not only for a standard deviation for the individual investment but also the covariance between the rates of the return for all the pair of stocks in the portfolio. In a large portfolio, this covariance is an important factor. In this paper, seven years data of eight companies are used as a sample which are randomly collected the daily closing prices of their stocks from January 1, 2006 to June 25, 2012. These data are gathered from the Chittagong Stock Exchange (CSE), Bangladesh. Then these data are analyzed through the calculating expected return of the standard deviation or risk, covariance, correlation, and standard deviation of individual stocks, two stocks portfolio and also four stocks portfolio. Different analyses have shown that the combination of investment can reduce the risk of the investment.

Open Access Original Research Article

Does Real Effective Exchange Rate Matters for Agricultural Output in Nigeria? A Cointegration Approach

Victor E. Oriavwote, Dickson O. Oyovwi

Journal of Economics, Management and Trade, Page 85-96
DOI: 10.9734/BJEMT/2014/5914

Aims: The paper empirically investigated the Real Effective Exchange Rate and agricultural productivity in Nigeria.

Study Design: Case study.

Methodology: The cointegration technique with its implied ECM was applied to estimate the data which covered the period between 1980 and 2011.

Results: The result shows that the Real Effective Exchange Rate has significant impact on the level of agricultural output in Nigeria. The result shows that the prices of exports and real agricultural exports have positive and significant impact on agricultural output. The result also showed a satisfactory speed of adjustment.

Conclusion: The study shows that the Real Effective Exchange Rate matters for agricultural output in Nigeria.  The result thus recommends policy to stabilize the Real Effective Exchange Rate to facilitate improvement in agricultural output.

Open Access Original Research Article

Generalized Nash Equilibria of Nonmonetized Noncooperative Games on Lattices

Jinlu Li, Sehie Park

Journal of Economics, Management and Trade, Page 97-110
DOI: 10.9734/BJEMT/2014/4618

In this paper, we examine noncooperative games with both of the collection of strategies and the ranges of the utilities for the players are lattices, which are said to be nonmonetized. Then we extend the concept of Nash equilibria of noncooperative games to generalized Nash equilibria of nonmonetized noncooperative games.  By applying some fixed point theorems in posets and by using the order preserving property of mappings, we prove an existence theorem of generalized Nash equilibria for nonmonetized noncooperative games. 

Open Access Original Research Article

Export Trade Incentives and Export Growth Nexus: Evidence from Ethiopia

Ashenafi Beyene Fanta, Getaneh Benalfew Teshale

Journal of Economics, Management and Trade, Page 111-128
DOI: 10.9734/BJEMT/2014/5124

Aims: Export trade is often considered as an engine of economic growth, and this led to attempts by governments in many countries towards promoting the export sector. The Ethiopian government has been taking measures to promote the export sector by introducing comprehensive financial and fiscal incentive schemes since 2002. Hence, this paper attempts to examine the type and trend of export incentive schemes and their effect on export growth in Ethiopia.

Study Design: This is an explanatory study trying to shed light on whether and to what extent financial and fiscal incentives provided by the government have led to export growth in the country using time series data on financial incentives, fiscal incentives, export volume, export value, export diversification, GDP growth rate, and real effective exchange rate covering the period 2003 to 2011.

Methodology: The data were collected from Ethiopian Revenue and Customs Authority (ERCA), Ministry of Finance and Economic Development (MoFED), National Development Research Institute (NDRI) and National bank of Ethiopia (NBE). Three stage analysis has been conducted including graphical analysis of trends of export incentive schemes and export growth, examination of correlation among variables in the data set, and finally, a time series econometric analysis.

Results: The study revealed that there are improvements in the export sector in terms of export value, destination and diversification despite that the share of manufactured exports is still marginal. The study also revealed that while the incentives are positively correlated with export value and export volume, they are negatively correlated with export concentration. In addition, the time series econometric analysis reveals that financial and fiscal incentives have a statistically significant impact on export growth both in the short run and long run.

Conclusion: Incentives to the export sector have robustly improved export value and volume. However, it has been noted that manufactured export is still insignificant which implies that the incentives have played only a partial role in boosting export earnings of the country.

Open Access Original Research Article

An Empirical Determination of Lagos Mainland Customers’ Perception of the Advertising Slogan –“New” or “New Improved” As Used by Low Risk Brand Marketers

Patrick K. A. Ladipo, Kennedy Ogbonna Nwagwu

Journal of Economics, Management and Trade, Page 129-145
DOI: 10.9734/BJEMT/2014/6297

Aims: The copy claim- “new” or “new improved” has enjoyed generous usage by low risk product marketers in advertising this range of products.  The prevalence of this slogan has made it necessary to understand what it stands for, the purpose it is intended to achieve and buyers’ perception and use of the slogan. Consequently, this study sought to ascertain whether consumers identify with the advertiser’s objective and perceive the slogan as really communicating product revision/improvement based on their collective experience.

Study Design: A descriptive and cross-sectional research design was used in carrying out the study.

Place and Duration of Study: The respondents for this study were drawn from consumers in mainland area of Lagos State of Nigeria, who are very much active in the low risk market dominated by such products like dental creams, toilet soaps, detergents, etc. A closed-ended structured questionnaire which served as the study instrument was physically administered to the selected respondents in their offices, schools and residencies during the late part of April, 2013.

Methodology:  Convenient sampling technique was used in drawing the respondents for the study. 363 out of 400 respondents successfully completed copies of the questionnaire.  One sample t-test was used to test the null hypotheses while generated data were analyzed through SPSS (version 19).

Results: The results obtained were statistically significant with all the null hypotheses having (P<0.000), hence were all rejected

Conclusion: Consumers are significantly aware of these advertising slogans and interpret products with these slogans to be either reformulated or redesigned. Consumers find these slogans believable, arousing, convincing and influential as they are able to recall and put these slogans to use when making product/brand choice.

 

Open Access Original Research Article

The Relationship between Working Capital Management and Profitability: Evidence from Saudi Cement Companies

Ahmad Aref Almazari

Journal of Economics, Management and Trade, Page 146-157
DOI: 10.9734/BJEMT/2014/5427

Aims: This paper investigated the relationship between the working capital management (WCM) and the firms’ profitability for the Saudi cement manufacturing companies.

Methodology: There are 13 Saudi cement manufacturing companies operating in the market. Only eight companies were included which are listed in the Saudi stock exchange market (Tadawul) and were established before the year 2005, and the rest were excluded for the period of 5 years from 2008-2012.

Results: The study results showed that, Saudi cement industry current ratio is the most important liquidity measure which effected profitability, therefore, the cement firms must set a trade-off between these two objectives so that, neither the liquidity nor profitability suffers. It was also found, as the size of a firm increases, profitability increased. Besides, when the debt financing increased, profitability declined. Linear regression tests confirmed a high degree of association between the working capital management and profitability.

Conclusion: The Saudi cement firms could strengthened their working capital in more efficient ways by adopting more advanced financial devices which will help them to manage cash, accounts receivables and inventories, and will ultimately increase their profitability. There is much to be done about working capital in Saudi Arabia in future.

Open Access Review Article

Brokers in the Credit Market: An Examination of the Vertical Scope

Enzo Scannella

Journal of Economics, Management and Trade, Page 1-15
DOI: 10.9734/BJEMT/2014/6226

This paper analyzes the vertical disintegration of the bank loan origination value chain. The main aim is to identify the relevant drivers which cause the emergence of brokers in the credit market which lead to vertical disintegration of the credit origination value chain. Transaction cost economics is the typical perspective of analysis of the vertical scope of banking value chains. This paper argues that in order to capture the drivers underlying the dynamic evolution of the vertical scope of bank loan origination business models, the above perspectives must be combined and further integrated with a capabilities and resource based view and with a modularity perspective.