Capital Budgeting Practices In Emerging Market Economies: Evidence From Listed Ghanaian Firms

This study investigates into the application of capital budgeting practices by listed firms on the Ghana Stock Exchange. A sample of listed firms from banking, brewery, manufacturing, distribution and insurance were selected. The key findings from the study show that firms listed on the Ghana Stock Exchange adopt text book capital budgeting techniques in practice. Most of them use NPV, PBP, DPBP and IRR. Though this demonstrates a clear reduction in the theory practice gap, the modified internal rate of return (MIRR), and the Accounting rate of return (ARR) have not attracted much attention compared to the NPV. This study thus confirms the popularity and usage of DCF capital budgeting methods (NPV and IRR) due to their simplicity. The study also finds that most of the firms use weighted average cost of capital (WACC) as the cost of capital in appraising investment projects. Key words: Capital budgeting techniques, investment decision, listed firms, Ghan

Banking Sector Developments in Emerging Markets: A Review of Recent Developments in Africa

Key to the economic transformation of developing economies is the banking sector developments. The banking sector in Africa has witnessed a steady growth in its core functional areas over the recent decades. This growth has implications on access to finance and stability in the financial system. This study reviews banking sector performance, competition, access to finance and stability in the context of sub-regional and comparator regional analysis with the view to informing and shaping policy directions. The North African economies recorded high levels of financial deepening than the rest of the regions.  With the same economic conditions like South Asia, East Asia Pacific and Latin America and Caribbean regions, African’s banking sector depth lags behind these regions.  Access to financial institutions is high in Southern African region than the rest of the sub-regions. Again, Africa records very low level of banking sector accessibility compared to its comparator regions. Moreover, the banking system in Africa is characterized by high costs, inefficiency and high margins. The banking system also exhibit high concentration and market power and relative stability than comparator regions. The North African economies exhibit low presence of foreign banks than sub-regional groupings. Keywords: Banking Sector, Efficiency, Performance, Stability, Financial Accessibility, Afric

The Consequences of the Covid-19 Pandemic on the Ghanaian Financial Markets and the Effectiveness of Government Policy Responses

This study analysed the consequences of COVID-19 on Ghanaian financial markets and further profiled and assessed the effectiveness of government policy interventions to contain its incidence. Using a qualitative documentary analytic approach combined with available time series data from financial market regulators between 2015 and 2021, empirical evidence shows that key profitability (ROA and ROE) measures of banks, gross insurance premium and capital market indicators were negatively affected. The containment and stringency of government policies in the wake of the pandemic do not match in equal potency with the rise in occurrences. Policy recommendations were provided

Corporate Governance Characteristics and Financing Decisions of Listed Firms in Ghana

This study examined the relationship between corporate governance attributes, firm-specific characteristics, and financing decisions of listed firms in Ghana using panel data for a nine-year time frame spanning 2011 to 2019. The study adopted multivariate regression analysis using Prais-Winsten regression, correlated panels corrected standard errors (PCSEs). The findings show that corporate board structures in Ghana play a significant role in influencing the financing decisions of listed firms on the Ghana Stock Exchange. Specifically, corporate boards with bigger sizes and more female representation prefer more debt financing of their assets. Also, the findings provide support for the Pecking Order Theory and identifiable firm-specific determinants of financing decision of listed firms. The evidence provided by this study is robust to alternative estimators. The outcome of this study further provides strong policy support for enforcing proper corporate governance features and gender diversity dimensions for corporations in Ghana

Loan syndication and cocoa production: Evidence from Ghana

The syndication of loans is an innovative financing model that has emerged in the financial landscape to help lenders spread risk and share opportunities. This study examines the relationship between syndicated loans and cocoa production in Ghana, using annual time-series data spanning from 1993 to 2020, as well as the autoregressive distributed lag model (ARDL). The study found a positive and significant short-run and long-run relationship between syndicated loans and cocoa production. Specifically, a 1% increase in the amount of syndicated loans increases cocoa production by 0.25% in the long run. The Ghana Cocoa Board should ensure efficient utilisation of syndicated loans by investing in productivity-enhancing programmes to boost cocoa production

Herding Behavior of Ghana Stock Market Participants: A Daily Analysis

This study investigates the herding behavior of Ghana stock market participants and its impact on stock returns. Using panel data of 38 equities listed on the Ghana stock market, the data spans from 2011 to 2019. Fixed effect model was used for all estimations. Overall, the study results failed to indicate evidence of herding behavior in the Ghana stock market. This result further indicates that at low levels, the market participants herd but at higher levels, there is the absence of herding behavior. In bull market conditions, market participants act in unison only at high levels. The result validates the assumption of the rational asset pricing model