COVID 19 and Bank Profitability in Low Income Countries: The Case of Uganda

This study investigates the impact of the COVID-19 pandemic on banking sector profitability in Uganda for the period spanning Q1 2000 to Q1 2021, using the autoregressive distributed lag (ARDL Bound) testing approach to co-integration while controlling for bank specific and macroeconomic determinants of bank profitability. Bank profitability is proxied by return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study finds that the COVID 19 pandemic has a significant negative effect on bank profitability only in the long run. Generally, the explanatory variables used in the study have short run and long run effects on bank profitability, although the impact is not uniform across the different measures of bank profitability. In the short run, bank profitability is generally negatively and significantly affected by the non-performing loans ratio, liquidity ratio, and market sensitivity risk, while the Treasury Bill interest rate and lending rate have a significant positive effect on bank profitability. In addition, the study finds that bank profitability has a tendency to persist in the short run, although persistence is only moderate, suggesting that the Ugandan banking sector may not have large deviations from a perfectly competitive market structure. In the long run, bank profitability is broadly positively and significantly affected by the non-performing loan ratio;, real GDP, lending rate and Treasury Bill interest rate while market sensitivity risk and the exchange rate significantly and negatively affect bank profitability. Surprisingly, the study finds inflation does not significantly affect bank profitability over both the short- and long-term.

Factors driving IPO variability: evidence from Pakistan stock exchange

PurposeThe objectives of this study are twofold. First, it intends to investigate the symmetric link between initial public offering (IPO) variability and the determinants of the stock market index, treasury bill rate, inflation, GDP growth rate and foreign direct investment. Second, this study intends to examine the asymmetric link between IPO variability and the aforementioned determinants, namely the stock market index, treasury bill rate, inflation, GDP growth rate and foreign direct investment.Design/methodology/approachData from 1992 to 2018 were gathered from the country of Pakistan in order to achieve the above objectives. Augmented Dickey–Fuller (ADF) and Phillips Perron (PP) unit root tests were employed to determine the data's stationarity properties. The Auto Regressive Distributive Lags (ARDL) model was utilized to examine the symmetric links, and the Non-Linear Auto Regressive Distributive Lag Model (NARDL) was employed to determine the asymmetric links. While the long-run co-integration was examined using the ARDL bound test, the short-run dynamics were tested using the error correction method (ECM).FindingsThe macroeconomic variables of the stock market index, treasury bill rate, inflation, GDP growth rate and foreign direct investment are found to pose significant short-run and long-run symmetric and asymmetric effects on IPO variability. These results indicate the significance of the aforementioned variables in enhancing IPO variability. The findings also demonstrate the typical reactions of inflation, GDP and FDI towards negative and positive shocks in IPO variability and inflation. This evidence implies that Pakistan's poor capital market development is reflected in the country's weak macroeconomic factors. At the same time, the reduced IPO variability in the country also reflects the lack of confidence among prospective issuers and investors due to Pakistan's weak macroeconomic indicators.Originality/valueThis is the first study of its kind to properly investigate the symmetric and asymmetric effects of the macroeconomic variables on Pakistan's IPO variability.

Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach

This paper examines the nonlinear effect of monetary policy decisions on the performance of the Nigerian Stock Exchange market, by employing the Smooth Transition Autoregressive (STAR) model on monthly data from 2013 M4 to 2019 M12 for All Share Index and monetary policy instrument. This study considers the two regimes characterizing the stock market, which are the lower regime (the bear market) and the upper regime (the bull market). The results show evidence of nonlinear effect of monetary policy on the stock exchange market. Monetary policy rate, money supply, lagged monetary policy rate and lagged treasury bill rate are found to have significant positive effects on the stock exchange market in the lower regime while current treasury bill rate shows a negative effect. In the upper regime, money supply and lagged treasury bill rate have significant negative effect on the stock market. The current treasury bill rate is found to have a positive effect on the stock exchange market. It is recommended that the Central Bank of Nigeria should maintain a stable money supply growth that is consistent with increased activities in the Nigerian stock market.

A mixture autoregressive model based on Gaussian and Student’s t-distributions

We introduce a new mixture autoregressive model which combines Gaussian and Student’s t mixture components. The model has very attractive properties analogous to the Gaussian and Student’s t mixture autoregressive models, but it is more flexible as it enables to model series which consist of both conditionally homoscedastic Gaussian regimes and conditionally heteroscedastic Student’s t regimes. The usefulness of our model is demonstrated in an empirical application to the monthly U.S. interest rate spread between the 3-month Treasury bill rate and the effective federal funds rate.

Impact of Money Market Instruments on Economic Growth in Nigeria

Money market instruments play a crucial role in the growth and development of the Nigerian economy. Still, it is not yet vibrant and constrained by the absence of sub-markets and availability of adequate credit instruments required for the smooth operations of the market. The study examine the impact of money market instruments (Treasury bill, Treasury certificates, Certificate of Deposits, Banker’s Acceptances, Development Stock and Commercial Papers) on Economic growth based on secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National Bureau of Statistics (NBS) publications for 30 years. The study employed statistical techniques such as ADF, Unit Root Test, OLS, multiple-regression and Granger Causality Test to analysis data collected for the study covering the period 1990-2020. The study observed that Bank acceptance and Commercial paper granger cause Gross Domestic Product (GDP). Treasury bill, Treasury certificate and commercial papers have a positive relationship with GDP, but its effect is insignificant in the long run. But banker’s acceptance and certificate of deposits has a positive and significant effect on GDP in the long run. In contrast, development stock has no significant effect on GDP in the short and the long run with no granger causal relationship with GDP. The study therefore recommends that Nigerian money market should be reformed in line with the current globalization trend and internationalization of the money market to allow a flow of foreign investment into the economy and also increase the number of tradable instruments in the market.

MONETARY POLICY AND INFLATION CONTROL: THE CASE OF NIGERIA

Inflation is a major problem facing Nigeria as a country today. The Central Bank of Nigeria (CBN), however, has made efforts to fight it using different policy measures, of which monetary policy is one of them. Thus, this study focuses on the impact of monetary policy on inflation control in Nigeria. The study is based on time series data from 1980 to 2019. The Augmented Dickey Fuller test, Johansen’s co-integration test, the Error Correction model (ECM) estimation was employed in the analysis. The variables include – exchange rate, inflation rate, money supply (% GDP), Treasury bill rate and monetary policy rate. The research findings showed that monetary policy has no significant impact on inflation control in Nigeria both in the short – run and long – run. Money supply has negative and insignificant impact on inflation control in Nigeria both in the short – run and long – run. Again, exchange rate has negative and insignificant effect on inflation control in Nigeria both in the short – run and long – run. The Treasury bill rate has negative but significant effect on inflation control in Nigeria in the short – run, while in the long – run it has positive but insignificant effect on inflation control in Nigeria. The study, therefore, recommends that, Government should provide monetary policies that will preferred efficient provider of favourable environment in terms of the implementation of the appropriate monetary policy rate, exchange rate etc in order to attract both domestic and foreign investment which will create employment opportunities for the Nigerian populace and in turn lead to the expansion of the industries in the country. JEL: E42; E52; E31

Monetary Policy in Nigeria: Investigating the Role of Private Sector Credit

This study examines the interest rate channel of monetary policy rates through private sector credits to prices. It applies an approach that is not common in monetary policy transmission mechanism in literature as many studies on transmission mechanism of monetary policy only examine statistical relationship between policy variables and target variables which may not be able to explain the pathway through which the monetary policies are transmitted. This paper uses mediation approach to assess the significance of causal path of interest rate through the bank lending channel. This paper dwelt on the transmission paths- from maximum interest rate, inter-bank call rate, treasury bill rate to prices through the private sector credits. The findings of this study lay credence to effective and significant transmission effects of interest rates (maximum lending rate, interbank lending rate and treasury bill rate) through private sector credit to prices. The paper concludes that maximum lending rate path has the highest significant transmission effect to prices. This is followed by the treasury bill rate and the inter-bank call rate respectively. The findings in this study is new in the case of Nigeria as no previous studies have applied mediation approach to the study of transmission mechanism of bank lending channel in Nigeria. Central banks should explore ways to effectively make policy towards effectively directing the monetary policy through maximum lending rate and treasury bill rates as they have the most significant paths through which the monetary policy rate is transmitted to prices.

A STUDY ON PERFORMANCE EVALUATION OF SELECTED MUTUAL FUNDS IN INDIA

In the Indian Capital market various platforms for the investor to take a position their money for getting more return. Among equity share, bond, Treasury bill, bond, open-end fund then many, but within the Indian capital market, an open-end fund is one among the foremost favorable platforms for an investor to increase their wealth. That is why here we are conducting a study on selected mutual funds in India, the sample of the study is 7 mutual funds The Financial ratio analysis is employed for performance evaluation of fund, therein taking NAV (Net assets value) and return of the three years from 17th July 2017 to 2019. Finding Sharpe ratio, Variance, BETA, and Jenson's alpha on the bases of three-year data. In this study found market sentiment affect more in aggressive hybrid open-end fund compare to conservative.

EFFECT OF MACROECONOMIC FACTORS ON TRADING VOLUMES OF MANUFACTURING AND ALLIED COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE

Purpose: The purpose of this study was to establish the effect of inflation, lending rate, exchange rates and Treasury bill interest rate on trading volumes of manufacturing and allied companies listed in the Nairobi Stock Exchange. Materials and Methods: The research adopted a quantitative descriptive design that focuses on nine manufacturing and allied companies listed in NSE and make up in the list of 25-share index companies. The nine manufacturing and allied companies were selected through purposive sampling techniques, where samples were selected based specific factors. The data used in the research was collected from Central Bank of Kenya, Nairobi Security Exchange and Kenya Bureau of Statistics. This research employed a panel data analysis using STATA software. Treasury bill rate was dropped from the model due to multicollinearity. Results: The analysis found that there was a negative relationship between inflation on trading volume, exchange rate had a negative correlation with stock trading, lending rate had a negative correlation with stock trading volume of manufacturing and allied companies listed in the Nairobi Stock Exchange. Unique contribution to theory, practice and policy: The study recommends the government should initiate policies that will lower the lending rate in Kenya as lower lending rate may translate to higher stock trading volumes. Further studies should research on other factors affecting stock trade volume which may include the value of the stocks and the information size in the market.