The nexus between mobile phones diffusion, financial inclusion and economic growth: evidence on African countries.

Doctor of Philosophy in Finance. University of KwaZulu-Natal, Durban, 2018.The following thesis comprises three discrete empirical essays on the interplay among mobile phones diffusion, financial inclusion and economic growth in Africa. The first essay examines the condition of financial inclusion and its determinants in Africa. Using the World Development Indicators and the Principal Component Analysis to compute the financial inclusion index for 49 African countries over the period 2004 to 2016, the study finds low levels of financial inclusion in Africa compared to other regions. The region is also characterised by large financial inclusion gaps as shown by the minimum and maximum financial inclusion levels of 0 percent and 82 percent respectively. Since policymakers have over the past decade embraced both financial inclusion and economic growth as key policy initiatives, the second essay examines the interplay between financial inclusion and economic growth in terms of the transmission effect and nature of causality. To the best of the researcher’s knowledge, this is the first study to explore the transmission effect between financial inclusion and economic growth using a unique and robust Cointegrated Panel Structural Vector Autoregressive model. The study finds the existence of a cointegrating relationship between financial inclusion and economic growth. It also provides evidence that the relationship between financial inclusion and economic growth in Africa is growth-led supporting the demand following hypothesis. The increased internet-enabled phones adoption in Africa has also caused much optimism and speculation regarding its effects on financial inclusion. Policymakers, various studies and the media have all vaunted the potentials of mobile phones for financial inclusion. Therefore, this study examines the interplay between mobile phones and financial inclusion in Africa for the 2004-2016 period using pairwise Granger causality test and found that mobile phones Granger cause financial inclusion. The literature on financial inclusion has identified high-quality institutions and governance as the determinants of financial inclusion. Lack of deeper understanding of these issues results in ill-informed policy designs. Despite the cascading literature on issues impacting financial inclusion, the empirical literature on the impact of institutional quality and governance on financial inclusion are rare. Therefore, the third essay evaluates the impacts of institutional quality and governance on financial inclusion in Africa. Applying the two-step system generalised method of moments model, the study finds a positive relationship between institutional quality, governance and financial inclusion, indicating that good governance and economic freedom can lead to increases in financial inclusion. The study concluded that African countries have low levels of financial inclusion with a strong relationship between financial inclusion and other variables such as mobile phones diffusion, bank competition, financial stability, institutional quality and governance. The study recommended institutions to make the most out of the high concentration of the rural population to rollout high-volume transactions, rather than clustering in areas with the high-value transaction and to craft policies that remove restrictions to entrance in the banking sector thereby enhancing bank competition. Policymakers should also not just focus on enhancing financial inclusion, without corresponding improvements in institutional quality, governance, financial sector size, financial stability and financial sector development as they positively contribute to financial inclusion. The study also recommended the implementation of pro-growth policies and a review of existing banking sector policies to eradicate unnecessary barriers to financial inclusion

Financial Inclusion Condition of African Countries

The title This study assessed the financial inclusion environment and its determinants in Africa. We used the Financial Inclusion index computed through the Principal Component Analysis that is generally acknowledged as the best at estimating the financial inclusion level and the two-step system GMM approach with robust and orthogonal deviation option to study countries for the period 2004 to 2016. We found wide discrepancies in financial inclusion amongst the 49 African countries under study. Only two countries had an average financial inclusion index above 50 percent, and the majority are below 40 percent validating the argument that the African region need immediate intervention. Hence, we concluded that the African region has financial inclusion gaps and is contestable. As such, we recommend, among other things, that policy makers should device measures to ensure an ongoing financially inclusive environment while stimulating other variables which acts as barriers to financial inclusion.&nbsp

Financial Inclusion Condition in Africa and its determinants

This study assessed the financial inclusion condition in Africa and its determinants. We used the Financial Inclusion index computed through the Principal Component Analysis to study countries for the period 2004 to 2016. We found wide discrepancies in financial inclusion amongst the 49 African countries under study. Only two countries had an average financial inclusion index above 50 percent, and the majority are below 40 percent validating the argument that the African region need immediate intervention. Hence, we concluded that the African region has financial inclusion gaps and is contestable. We also found a significant positive relationship between financial inclusion and other variables such as its lagged value, financial development, income level,and availability of credit and a negative association with money supply, inflation and population size.As such, we recommended that policy makers should device measures to ensure an ongoing financially inclusive environment while stimulating other variables which acts as barriers to financial inclusion

Detection of Creative Accounting Related Frauds in the Zimbabwean Cotton Industry-The Internal Auditor’s Role: Evidence From One Large Cotton Company

Prompted by behavioural manifestations of massive creative accounting and fraud perpetration in the Zimbabwean cotton industry, particularly in the pre-dollarisation era, the research identifies the need to assess the value of the internal audit function in detecting creative accounting related frauds in this busy industry which is characterized by seed cotton procurement as a key activity. The study employed the quantitative research design, studying one large cotton company in Zimbabwe. Data was collected from ten out of twelve depots in one region and sampling was random. The study defined creative accounting related fraud as rule bending, falsification or manipulation of accounting information, loophole seeking, and systematic misrepresentation of the income and assets of the company. Statistical tests for relatedness between the internal audit function and fraud detection were done. Empirical evidence suggests that the more internal audit visits the more the reported frauds. Keywords: Internal audit; Creative accounting; Fraud detectio

Significance of Service Quality And Customer Satisfaction In Zimbambwe’s Banking Sector.

Customer satisfaction is essential for the success of service firms because it leads to repeated purchases and word-of-mouth recommendations(Salaar,A et al,2004) .This case study sought to investigate the extent to which banks in Zimbabwe attempt to achieve customer satisfaction in order to reduce customer churn and attrition. Customer retention is now an important element of banking strategy in the Zimbabwean competitive environment..Furthermore, the study explored customer satisfaction determinants. Descriptive survey was used to collect data. A purposive sample consisting of ten banks was targeted including institutions like Barclays, Standard Chartered  , ZIMBANK ,Commercial Bank of Zimbabwe, and CABS Building Society among others. Research respondents included bank employees and customers who completed questionnaires and interviews. It was discovered that uncertainty within banking fraternity about Zimbabwe Government’s indigenization and empowerment Laws and regulations were stifling financial institutions’ capability to invest in customer satisfaction projects and strategies. Furthermore, it was realized that majority of customers are delighted in transacting with institutions like CBZ which provide loans for long –term capital investment in the form of houses construction etc. There is phenomenal rate of customer defection and attrition from commercial banks like Barclays etc which are not providing loans.  The study recommended that, organizations should always strive to ensure that their customers are very satisfied. Banks should always assess key determinants of service quality from the customer’s perspective. Furthermore, such institutions should monitor customer satisfaction through conducting meaningful market research Key words: customer satisfaction, customer retention, retail banking, customer defectio

The Impact of Financial Crisis on MFIs Performance in Zimbabwe

Our study explores the impact financial crisis has on performance of microfinance institutions in Zimbabwe employing the Vector Autoregression using annual time series data from 1990 to 2018. The findings from our study revealed a positive impact of financial crisis on performance of Microfinance Institutions. We also found a positive effect of gross domestic product, money supply, the first lag of inflation and exchange rates on microfinance institutions performance while the second lag of inflation has a negative effect. Variance decomposition results reveal an increasing long run positive effect of financial crisis on performance is increasing. From impulse response analysis, one standard deviation shock to financial crisis causes microfinance institutions performance to significantly fluctuate up to period 10 where the graph of performance becomes negative. The study recommended policy makers to enforce clearness in all MFIs so as to uncover any form of disfigurement in the financial sector’s balance sheets. Tightening regulation of MFIs will also go a long way in ensuring their success. For MFIs to benefit from the positive impact of the exchange rate and inflation on their performance, the government needs to work on reviving the value of the Zimbabwean dollar and make it more competitive internationally

The Impact of Digital Financial Inclusion and Bank Competition on Bank Stability in Sub-Saharan Africa

The last few years have witnessed a rapid development in digital finance that may threaten the manner in which traditional financial services are being used. It opens up new opportunities for low-income groups and small businesses that have limited or no access to formal financial services. Thus, digital financial inclusion plays a vital role in boosting a country’s financial inclusion, fulfilling some sustainable development goals and achieving higher economic growth. This study builds on a new measure of digital financial inclusion to examine the impact of digital financial inclusion and bank competition on bank stability in Sub-Saharan Africa for the period 2014 to 2020 using the two-step System Generalised Method of Moments. An index of digital financial inclusion, z-score, Herfindahl–Hirschman Index (HHI), and non-performing loans were used as data variables. The study findings reveal that digital financial inclusion has a significant positive relationship with bank stability (z-score) and a negative relationship with non-performing loans. The study also found a significant negative effect of bank competition (HHI) on bank stability in line with the competition-fragility view. Policymakers should ensure digital financial literacy for all since it feeds into bank stability and also reduces bank insolvency. They should also find ways of enhancing bank competition which reduces non-performing loans and bank insolvency. On practical implications, the study calls for strategic measures to preserve bank stability, such as complementing digital financial inclusion with financial literacy and enhancing bank competition