Buffer capital, loan portfolio quality and the performance of microfinance institutions: A global analysis

© 2019 Elsevier B.V. Using a sample of 625 microfinance institutions (MFI) across 40 countries from 2010 to 2015, we empirically examine the effect of buffer capital on the performance of MFIs and how this effect varies with loan portfolio quality. We find a negative relationship between buffer capital and MFIs’ performance. We further document that loan portfolio quality positively moderates the buffer capital-MFI performance relationship. We demonstrate that the buffer capital-loan portfolio quality relationship does not vary for deposit-taking, profit-making, and regulated MFIs. Our findings shed new light on the value relevance of capital in microfinance institutions. We use a novel approach to evaluate our results in light of the effects of omitted variable bias

Managing group work: the impact of peer assessment on student engagement

This study investigates the impact of peer assessment on students’ engagement in their learning in a group work context. The study used regression analysis and was complemented by qualitative responses from a survey of 165 first-year undergraduates in a UK university. Findings suggest that students’ perception of their contribution to group work fosters engagement and enhances their learning in a group. Also, that students’ perception and the overall experience of rating their peers’ work impact their engagement within a group. The study contributes to the literature by focusing on the assessment of the entire learning journey within a group rather than the final group output. In particular, the study highlights the significant contributions of peer assessment in managing student engagement in modules and/or assessments for large cohorts

Information Technology and Gender Economic Inclusion in Sub-Saharan Africa

This study investigates how ICT affects gender economic inclusion via gender parity education channels. We examine the issue using data from 49 countries in sub-Saharan Africafor the period 2004-2018 divided into: (i) 42 countries for the period 2004-2014; and (ii) 49 countries for the period 2008-2018. Given the overwhelming evidence of negative net effects in the first sample, an extended analysis is used to establish thresholds of ICT penetration that nullify the established net negative effects. We found that in order to enhance female labor force participation, the following ICT thresholds are worthwhile for the secondary education channel: 165 mobile phone penetration per 100 people, 21.471 internet penetration per 100 people and 3.475 fixed broadband subscriptions per 100 people. For the same outcome of inducing a positive effect on female labor force participation, a 31.966 internet penetration per 100 people threshold, is required for the mechanism of tertiary school education. These computed thresholds have economic meaning and policy relevance because they are within the established ICT policy ranges. In the second sample, a mobile phone penetration threshold of 122.20 per 100 people is needed for the tertiary education channel to positively affect female labor force participation

Buffer Capital, Loan Portfolio Quality and the Performance of Microfinance Institutions: A Global Analysis

Using a sample of 625 microfinance institutions (MFI) across 40 countries from 2010-2015, we empirically examine the effect of buffer capital on the performance of MFIs and how this effect varies with loan portfolio quality. We find a negative relationship between buffer capital and MFIs’ performance. We further document that loan portfolio quality positively moderates the buffer capital-MFI performance relationship. We demonstrate that the buffer capital-loan portfolio quality relationship does not vary for deposit-taking, profit-making, and regulated MFIs. Our findings shed new light on the value relevance of capital in microfinance institutions. We use a novel approach to evaluate our results in light of the effects of omitted variable bias

National Culture and Women Managers: Evidence From Microfinance Institutions Around the World

© The Author(s) 2019. We investigate the effect of national culture on women manager appointments. We argue that culture influences women manager appointments through their effects on managerial decision-making. Using firm-level data on 2,456 microfinance institutions (MFIs) across 61 countries, we document that fewer women managers are appointed in societies high on individualism and uncertainty avoidance. On the contrary, high power distance societies are positively associated with the appointment of women managers. We demonstrate that a greater number of women nonmanagers reduces (increases) the appointment of women managers in high individualistic (uncertainty avoidance) cultures. Our findings challenge the “one-size-fit-all” approach adopted by policy makers around the world to increase women manager appointments. Our results are robust to endogeneity

The effect of time orientation in languages on the recognition of goodwill impairment losses

The research problem In this study, we investigate the relationship between the future-time reference (FTR) in languages and goodwill impairment. Motivation Previous studies on goodwill have focused mainly on firms’ economic and reporting incentives in single country settings using economic theories. Therefore, there have been recent calls for more research on goodwill accounting across countries (d’Arcy and Tarca, 2018), and greater use of behavioural theories in goodwill accounting studies (Amel-Zadeh et al., 2021). In response, we apply the linguistic relativity hypothesis to a new and highly significant area of future-oriented behavior (impairment decision) to explain cross-country variations in goodwill impairment reporting. The test hypotheses We hypothesize: Firms in countries that use weak FTR languages have higher levels of (and greater quality) goodwill impairment than those in countries that use strong FTR languages. Target population We used a sample of 15,179 firm-year observations taken from firms reporting under IFRS across 21 countries for the fiscal years 2005 to 2018. Adopted methodology Tobit regressions, logit regressions, mixed-effects modelling, and propensity score matching analyses for robustness. Analyses We tested the relationship between FTR in languages and (a) goodwill impairment decision, (b) goodwill impairment amounts, and (c) abnormal goodwill impairments. We repeated our main analyses using several sub-samples, different measures of FTR, and alternative regression specifications. Findings In line with the linguistic relativity hypothesis, our findings indicate that managers who speak weak FTR languages are more willing to bear the costs of their impairment decisions in the present and are less motivated to shift current impairment into future accounting periods. In contrast, speakers of strong FTR languages tend to delay the recognition of current impairments to future periods to reduce their anxiety about the negative effects of current impairment decisions. Findings from further analysis indicate that firms in countries that use weak FTR languages report lower abnormal goodwill impairment, thereby bringing impairment levels closer to their normal optimal levels. Our inferences are robust to alternative samples, different measures of FTR, and alternative model specifications

Stochastic frontier modelling of working capital efficiency across Europe

This paper adopts the stochastic frontier analysis (SFA) to model working capital efficiency (WCE) on a sample of 6170 European firms from 2009 to 2018. We find: (i) larger firms are more efficient with their working capital management (WCM) than smaller firms, (ii) higher cash holding contributes to WCE, (iii) high competition is less conducive to WCE than low competition, (iv) export and sales growth potential decrease WCE and (v) WCE increases with access to bank credit. In the analysis, a distinction is made between the “old” EU countries and the “new” EU countries. The results are sensitive to the year of admission into the EU. The results are robust to omitted variable bias, using a more novel approach

The effect of time orientation in languages on the recognition of goodwill impairment losses

The research problem: in this study, we investigate the relationship between the future-time reference (FTR) in languages and goodwill impairment.Motivation: previous studies on goodwill have focused mainly on firms’ economic and reporting incentives in single country settings using economic theories. Therefore, there have been recent calls for more research on goodwill accounting across countries (d’Arcy and Tarca, 2018), and greater use of behavioural theories in goodwill accounting studies (Amel-Zadeh et al., 2021). In response, we apply the linguistic relativity hypothesis to a new and highly significant area of future-oriented behavior (impairment decision) to explain cross-country variations in goodwill impairment reporting.The test hypotheses: we hypothesize: Firms in countries that use weak FTR languages have higher levels of (and greater quality) goodwill impairment than those in countries that use strong FTR languages.Target population: we used a sample of 15,179 firm-year observations taken from firms reporting under IFRS across 21 countries for the fiscal years 2005 to 2018.Adopted methodology: tobit regressions, logit regressions, mixed-effects modelling, and propensity score matching analyses for robustness.Analyses: we tested the relationship between FTR in languages and (a) goodwill impairment decision, (b) goodwill impairment amounts, and (c) abnormal goodwill impairments. We repeated our main analyses using several sub-samples, different measures of FTR, and alternative regression specifications.Findings: in line with the linguistic relativity hypothesis, our findings indicate that managers who speak weak FTR languages are more willing to bear the costs of their impairment decisions in the present and are less motivated to shift current impairment into future accounting periods. In contrast, speakers of strong FTR languages tend to delay the recognition of current impairments to future periods to reduce their anxiety about the negative effects of current impairment decisions. Findings from further analysis indicate that firms in countries that use weak FTR languages report lower abnormal goodwill impairment, thereby bringing impairment levels closer to their normal optimal levels. Our inferences are robust to alternative samples, different measures of FTR, and alternative model specifications.<br/

Trade credit and corporate growth

While the underlying causal linkage between trade credit and corporate growth has mainly been explored, the primary factors that channel the relationship are limited. This article hypothesises a nonlinear relationship between trade credit and corporate growth due to the existing theoretical arguments on the benefit and cost of using suppliers' credit by corporations to enhance growth. Based on a panel of 23,023 non-financial companies from the United Kingdom over a 10-year period, evidence from this study reveals a non-linear (concave) relation between trade credit and corporate growth: positive for low trade credit received and negative for high credit received. We also find trade credit to be sensitive to financial crisis, financial constraints and growth strategy. The predictability is stronger during a financial crisis, among financially constrained corporations and corporations pursuing an aggressive growth strategy. We also find growth to be higher in firms that move closer to achieving an optimal credit level. This relationship holds for both the above-and below-optimal deviations. These findings have implications for a more balanced and nuanced view of trade credit management