Sustainable Financial Inclusion in Nigeria: A Need to Go Beyond Access to Impact

Purpose: This paper (1) evaluates the processes and strategies of Nigerian banks towards achieving financial inclusion; and (2) offers recommendations for policies that can lead to effective and sustainable financial inclusion.Design/Methodology/Approach: This paper conducts semi-structured interviews with senior executives of Nigerian banks to investigate their financial inclusion policies and practices.Findings: The paper highlighted Nigerian banks’ views on dimensions that measure financial inclusion and found that (1) they recognise that they play a pivotal role in providing access to formal financial services; however their efforts to promote financial inclusion are provider-focused rather than customer-focused; (2) they are keen to promote financial services usage; however, very little attention is paid to customer outcomes; (3) financial inclusion is viewed as synonymous with access and innovations are not aiming for impact; and (4) the sector is plagued with infrastructural challenges that breach service quality.Originality: The paper reports on the practices of Nigerian banks towards financial inclusion and provides recommendations for rethinking sustainable financial inclusion. To date, this issue has not been investigated in the substantive literature. Nigeria is an ideal research site for examining financial inclusion. In recent years, the banking sector has made rapid strides in implementing policies to promote the adoption and usage of formal financial services. However, over half of the country’s adult population remains outside the formal financial system

Sustainable Financial Inclusion in Nigeria: A Need to Go Beyond Access to Impact

Purpose: This paper (1) evaluates the processes and strategies of Nigerian banks towards achieving financial inclusion; and (2) offers recommendations for policies that can lead to effective and sustainable financial inclusion.Design/Methodology/Approach: This paper conducts semi-structured interviews with senior executives of Nigerian banks to investigate their financial inclusion policies and practices.Findings: The paper highlighted Nigerian banks’ views on dimensions that measure financial inclusion and found that (1) they recognise that they play a pivotal role in providing access to formal financial services; however their efforts to promote financial inclusion are provider-focused rather than customer-focused; (2) they are keen to promote financial services usage; however, very little attention is paid to customer outcomes; (3) financial inclusion is viewed as synonymous with access and innovations are not aiming for impact; and (4) the sector is plagued with infrastructural challenges that breach service quality.Originality: The paper reports on the practices of Nigerian banks towards financial inclusion and provides recommendations for rethinking sustainable financial inclusion. To date, this issue has not been investigated in the substantive literature. Nigeria is an ideal research site for examining financial inclusion. In recent years, the banking sector has made rapid strides in implementing policies to promote the adoption and usage of formal financial services. However, over half of the country’s adult population remains outside the formal financial system

The rare event risk in African emerging stock markets

Purpose – The purpose of this paper is to investigate the asymptotic distribution of the extreme daily stock returns in African stock markets over the period 1996‐2007 and examine the implications for downside risk measurement. Design/methodology/approach – Extreme value theory methods are used to model adequately the extreme minimum daily returns in a number of African emerging stock markets. Findings – The empirical results indicate that the generalised logistic distribution best fitted the empirical data over the period of study. Practical implications – Using the generalised extreme value and normal distributions for risk assessment could lead to an underestimation of the likelihood of extreme share price declines which could potentially lead to inadequate protection against catastrophic losses. Originality/value – To the best of the author's knowledge, this is the first study to examine the lower tail distribution of daily returns for African emerging stock markets

The Impact of Directors’ Attributes on IFRS Fair Value Disclosure:An Institutional Perspective

Purpose: The current study investigates the impact of directors' attributes on the extent of compliance with International Financial Reporting Standards (IFRS) fair value disclosure requirements. The attributes investigated include directors' human capital (accounting qualification) and social capital (political association), directors' share ownership and the power distance between the chief executive officer (CEO) and the rest of the board members. Design/methodology/approach: The study uses disclosure analysis to measure the extent of compliance with the fair value disclosure requirements of IFRS. Ordinary least squares (OLS) regression is used to test the relationship between the disclosure score and directors' attributes. Data were collected from the annual reports and websites of the sample companies. Findings: Contrary to conventional belief, this study's findings suggest that directors' social capital and the power distance between the CEO and the rest of the board act as more powerful factors than directors' human capital in explaining corporate mandatory disclosure. Specifically, the results indicate that powerful actors form a dominant coalition and co-opt influential constituents from the institutional domain to neutralize the effect of legal coercion and the accounting expertise of board members and Big Four audit firms on the extent of compliance with institutional (fair value) rules. Research limitations/implications: This study utilizes Oliver's (1991) framework of strategic response to institutional processes in the Bangladeshi context. Although the study provides new insights into corporate disclosure practices, findings are not generalizable due to different institutional settings in different countries. Therefore, future studies could replicate the approach in different institutional settings. Practical implications: The findings of this study will be of interest to the International Accounting Standards Board (IASB) as it focuses on a developing country that has adopted IFRS 13 and other fair value-related standards relatively recently. Originality/value: The disclosure analysis contained in this study represents the first comprehensive analysis of the extent of compliance with the fair value disclosure requirements of IFRS. Furthermore, this study considers the impact of directors' social capital and finds that it is a more powerful determinant of the extent of compliance with IFRS as compared to human capital.</p

The stock market reaction to stock dividends in Nigeria and their information content

Purpose - The purpose of this paper is to examine whether stock dividend announcements create value for companies traded on the Nigerian stock market and to ascertain the nature of the information such announcements convey. Design/methodology/approach - A standard event study methodology, employing the market model, is applied to determine the abnormal returns both on and surrounding the stock dividend announcement date. A sample is broken down based on the timing of announcements and on the frequency with which the announcing companies' shares are traded. The authors also examine the information content of stock dividends by applying the x 2 technique to test the level of association between earnings, cash dividends and stock dividends. Findings - The findings suggest that companies that choose their own announcement date outside the Nigerian stock exchange announcement window experience positive abnormal returns if their stock is more frequently traded and negative abnormal returns if their stock is less frequently traded. In addition, support is found for both the cash substitution hypothesis and the signalling hypothesis as explanations for the information stock dividends convey to shareholders. Research limitations/implications - The small number of companies in the "early announcement" group may not permit a definitive view to be established about the stock market reaction to early stock dividend announcements for this group of companies. Practical implications - The findings are of practical relevance to researchers, practitioners and investors interested in companies listed on the Nigerian stock market as they reveal the extent to which the shares reflect fundamental information from corporate announcements. Originality/value - This paper adds to the very limited academic research on the stock market reaction to stock dividend announcements in Nigeria

Interaction between Investor Sentiment, Limits to Arbitrage and the Returns of Stock Market Anomalies:Evidence from the UK Stock Market

This study investigates the role of two prominent concepts in finance: limits to arbitrage and investor sentiment in stock prices. The study examines how changes in market-wide investor sentiment and limits to arbitrage can affect the performance of nine UK stock market anomalies. The extant literature relating to investor sentiment focuses mainly on the US stock market, whilst research on the UK market typically examines aggregated index-level data. In addition, previous studies have focused on examining investor sentiment and limits to arbitrage separately. Using data from UK-listed companies over the period January 1997 to December 2019, the study finds that five stock market anomalies were related to changes in UK investor sentiment and produced significantly higher returns following periods of high investor sentiment, while the effect of limits to arbitrage was mostly limited. However, the interaction analysis provided support to the limits to arbitrage theory and demonstrated that the effect of high investor sentiment on stock market anomalies was more pronounced when combined with high limits to arbitrage and had less effect during periods characterised by low limits to arbitrage

An Investigation of the Weak Form of the Efficient Markets Hypothesis for the Kuwait Stock Exchange

This article investigates the weak form of the efficient market hypothesis (EMH) for the Kuwait Stock Exchange (KSE). In particular, it tests whether share returns on the KSE exhibit patterns which may be used to predict future share price changes. Ten filter rules are tested on weekly data for 42 firms over the period 1998–2011. The results suggest that the KSE was not weak-form efficient because patterns and trends were present in security prices. In addition, the results are consistent with the substantive literature which has argued that emerging stock markets are informationally inefficient, such as Fifield, Power and Sinclair (2005, 2008) and Xu (2010) and particularly those early studies of Al-Shamali (1989) and Al-Loughani and Moosa (1999) that looked at trading rules for the KSE. </jats:p

The Impact of the COVID 19 Pandemic on Stock Market Volatility: Evidence from a Selection of Developed and Emerging Stock Markets

This study examines the impact of the COVID 19 pandemic on the stock markets of China, India, Pakistan, the UK and the US using Generalised Autoregressive Conditional Heteroscedasticity (GARCH) and Threshold GARCH models with COVID 19 as an exogenous dummy variable in the variance equation. The sample period of 2016 – 2021 is divided into two sub-periods: the pre-COVID 19 period and the COVID 19 period. The results of the study indicate that the COVID 19 pandemic had a significant impact on the stock market volatility of the sample markets. Results from both the GARCH and Threshold GARCH models further confirm that there was persistent volatility in these markets and that this volatility increased as a result of the pandemic. In addition, the Threshold GARCH results indicate that the asymmetric term was significant in all markets indicating that bad news, such as the pandemic, had a stronger impact on the conditional variance of the returns as compared to good news. In addition, the results further confirm that the US market had no significant impact on the volatility of the Chinese market during the pandemic. The results have important implications for (i) international investors regarding portfolio management and investment risk minimisation in situations like the COVID 19 pandemic; and (ii) policymakers in terms of how they respond to any future pandemic