Open Access Original Research Article

Fair Trade Minimum Price: A Comparative Analysis for the Arabica Coffee Market

Sérgio Pedini, Fabio Maria Santucci, Ana Lúcia Silvestre

Journal of Economics, Management and Trade, Page 1-15
DOI: 10.9734/BJEMT/2017/32662

Aims: This paper analyses the validity of the fixed Minimum Price approach used by Fair Trade Movement (FTM). It focuses on coffee, from the Brazilian state of Minas Gerais, where the majority of FTM Arabica coffee is produced. Two main organizations operate worldwide: Fairtrade Labeling Organizations (FLO) and World Fair Trade Organization (WFTO), but only the first one has a worldwide recognized certification process.

Preamble: The most important conditions are: i) a worldwide Minimum Price, fixed since 2011 at US$ 1.35/pound (Arabica natural and non-organic); ii) a premium of at least US$ 0.20/pound for the organization (1/5 for productivity and quality improvement, and 4/5 for community projects). Episodes of side selling have been reported and the validity of the Minimum Price approach is at risk.

Methodology and Duration of Study: This paper uses four sets of data: the local production costs in Reais (January 2012 to October 2016), the international price in US$, the FTM international price and the local price (April 2011 to October 2016). All data were converted into Reais, for one 60 kg bag.

Results: In April 2011 – October 2012 and August - October 2014, the FTM price was lower than the price paid by other buyers. The production cost was higher than the FTM price from February 2012 to October 2015. These two results partially justify the behavior of some farmers, who in these periods side sold their coffee, unless their organization used some reserves to cover the difference.

Conclusion: Two approaches are suggested: a) to educate better all FTM producers about the long term purposes of the system, b) to abandon the worldwide fixed price in US$ and apply a flexible formula incorporating the production cost in local currency. Further research, for the coffee in other areas and for other commodities is also suggested.

 

Open Access Original Research Article

The Internal Control Systems of GN Bank- Ghana

William Owusu-Boateng, Richard Amofa, Isaac Osei Owusu

Journal of Economics, Management and Trade, Page 1-17
DOI: 10.9734/BJEMT/2017/32261

GN Bank is one of the numerous universal banks in Ghana. A bank is considered a universal bank if it is licensed with a license ‘A’ by the Bank of Ghana. Some of the universal banks in Ghana are GCB Bank, HFC Bank, First Atlantic Bank, Cal Bank and others. A useful and well-organized internal control system is an essential element in managing a bank and a basis for banking institution’s operations to be secured. The main objective of this research was to identify the internal system of control used at GN Bank’s credit department. A census sampling technique was used by the researcher in getting a sample size of eighty five (85) who consisted primarily of managers and officers of GN Bank’s credit and risk departments in the south eastern zone through the administration of questionnaires. The data was analysed using the Scientific Package for Social Scientist (SPSS). The study found that there exists an internal system of control. GN Bank board of directors are ultimately responsible for ensuring that an adequate and effective system of internal controls are established and maintained. Together, both the board and senior management are responsible for promoting high ethical and integrity standards, and for establishing a culture within the organization. It was realised that GN Bank’s implementation of a strong internal control system was able to detect and prevent fraudulent acts and practices. Although respondents agreed to GN Bank providing adequate training for credit personnel on internal control procedures, some substantial disagreements were recorded for this particular question. It was recommended that the board of directors should have responsibility for approving and periodically reviewing the overall business strategies and significant policies of the bank; ensuring that senior management takes the steps necessary to identify, measure, monitor and control these risks; approving the organisational structure; and ensuring that senior management is monitoring the effectiveness of the internal control system.

 

Open Access Original Research Article

Working Capital Financing Policy and Profitability: Empirical Study on Bangladeshi Listed Firms

Oli Ahad Thakur, Dewan Muktadir-Al-Mukit

Journal of Economics, Management and Trade, Page 1-6
DOI: 10.9734/BJEMT/2017/32595

Aims: For any manufacturing organization, working capital management decision is considered to be one of the crucial managerial decisions. In the working capital management process, an aggressive financing policy uses higher levels of current liabilities and less long-term debt where a conservative financing policy uses more long-term debt and less current liabilities. Therefore, it is an important decisional issue in case of working capital financing policy, whether a manager should be aggressive and bear all the hassles of managing current liabilities or remain conservative and let the chance of minimizing cost of capital. This study attempts to solve this puzzle by examining the impact of working capital financing policy on firm profitability from the perspective of a developing country which is Bangladesh.

Methodology: The study took 80 Dhaka Stock Exchange (DSE) listed manufacturing companies over a sample period of 2009-2014 and employed fixed effect panel data regression technique.

Results: The study finds a negative impact of working capital financing policy on firm’s profitability measured by return on assets (ROA).

Conclusion and Recommendation: At the policy level for implementing working capital financing policy, the study suggests to be conservative by relying more on long-term financing alternatives rather short term ones.

 

Open Access Original Research Article

Implementation Problems of Activity Based Costing: A Study of Companies in Jordan

Abedalqader Hasan

Journal of Economics, Management and Trade, Page 1-9
DOI: 10.9734/BJEMT/2017/32855

The aim of this study is to know the implementation rate of activity based costing system in Jordanian Limited Liability Companies (LLC) and to know the most important problems which face the implementation process. Two data collection methods used in current study. Firstly, a quantitative method conducted by using a questionnaire survey to determine ABC adoption and implementation rate. This followed by a qualitative method, semi-structured interviews were utilized to find out the most important barriers and problems which face the implementation process of ABC implementation. The  results  of  this  study  showed  that  ABC  implementation  rate  in  Jordanian  Limited  Liability Companies (LLC) is approximately 3.5% measured according to the third criteria which combine between implementers and users. This criterion used before by [3] in 2012. Regarding the interviews analysis, the data analysis counted on within-company analysis to know the background of each company, the barriers and problems encountering the implementation of ABC. This analysis followed by cross-company analysis to know all barriers and problems identified by all companies. The research results suggested that Jordanian Economic Crisis caused by the wars around Jordan in Iraq and Syria led to stop all the new management accounting initiative such as ABC. ABC is too costly, spending too much time, not our priority also a barrier mentioned by the companies. These followed by a lack of top management support, difficulties of choosing of cost drivers, Activity-based costing software can be expensive and high cost consultants as the problem hindering the implementation of ABC, followed by difficulty in identifying activities, lack of local consultants, and changes required for company structure to fit activities selected.

 

Open Access Original Research Article

Modelling the Impact of Oil Price Volatility on Investment Decision Making in Marginal Fields’ Development in Nigeria

Ogunsola- Saliu Kehinde, Falode Olugbenga

Journal of Economics, Management and Trade, Page 1-16
DOI: 10.9734/BJEMT/2017/28175

This study investigated the impact of oil price volatility on investment decision making in Marginal fields’ development in Nigeria. The study also investigated the relationship between oil price volatility and marginal fields’ investment analysis in Nigeria. The marginal fields’ crude oil production was used as a proxy of investment analysis. Monthly data from October 2005 to April 2016 was used. The GARCH model, Johansen co- integration and Granger Causality tests were employed. Results showed a significant positive relationship between oil price volatility and crude oil production (P < 0.05). Moreover, Johansen’s co-integration analysis exhibits co-integration between oil price and oil production indicating long term equilibrium relationship. Finally, Pairwise Granger causality test reveals that oil price Granger causes the uncertainties in the oil production since the p-value is small (P<0.05) while there is an absence of an influence of oil production on the price mechanism in the market. This proves that the above cause and effect relationship is unidirectional and not bidirectional. The findings from this study show that the dip in global oil price reduces oil production from marginal fields’ in Nigeria. This is consistent with the law of supply which states that the lower the price, the lower the quantity supplied and vice versa. Hence, investment in marginal oil field development becomes unattractive. However, the need to diversify and utilise gas from these fields for industrial and domestic purposes instead of flaring becomes an imperative.