Theoretical Arguments and Debates on Public Enterprises Privatization: Ethiopian Focus

Purpose: To critically review the theoretical arguments and debates on privatization, challenges, and prospects in the Ethiopian context, and the various countries experience on privatization with especial focus on sub-Saharan countries and come up with valuable directions to undertake the privatization process successfully. Design/Methodology/Approach: The entire review basis the theoretical end empirical literature published in various national and international reputable journals. Findings: Privatization is not a recent phenomenon globally; different economies practiced it via arguing and debating in terms of its economic and political benefits. Currently, the government of Ethiopia is practicing economic reforms to get ready for the country to join middle-income countries by 2025. In filling this gap, inter alia, the government has taken new initiative to privatize the existing wholly state-owned enterprises, both for local and foreign owners, with the primary objectives of limiting government's participation in the manufacturing and service sectors, and thereby realizing economic efficiency and competition, boosting foreign exchange, rising tax revenues, simplifying problems associated with costs of living through controlling inflation, reducing unemployment and alleviating the problem of good governance. Practical Implications: Finally, it tried to forward sequential steps that the government of Ethiopia should follow at least to mitigate the common mistakes and to undertake the privatization process successfully by alleviating the fear of the citizens that those SOEs would be concerted in the hands of some oligarchies. Originality/Value: the inferences made as a result of this review will offer new insights through which countries like Ethiopia, who are suffering from political unrest and enormous amount of unemployment, can justly distribute the wealth of public enterprises especially to the local citizens and thereby mitigate the unbalanced concentration of resources in the hands of some oligarchies. Keywords: privatization; a state-owned enterprise; privatization debates; Ethiopia DOI: 10.7176/JESD/11-11-06 Publication date:June 30th 202

Determinants of Commercial Banks’ Liquidity Risk: Evidence from Ethiopia

This paper empirically examine the determinants of liquidity risk in Ethiopian banking industry spanning the period 2005 to 2014—a period characterized by increasing the bank’s growth in different aspects. The fixed effect unbalanced panel data estimation technique was used to estimate the results without compromising the classical linear regression assumptions. The results of the analysis revealed that capital adequacy ratio, total loan to total asset ratio and total deposit to total asset ratio affects the liquidity risk of commercial banks negatively and highly statistically significantly at 0.01% significant level. These variables are found to be the most important bank specific factors that determine the liquidity position of banks. The results of the study confirms the existence of the crowding-out of deposit hypothesis in Ethiopian banking industry that could be assured by the negative and significant effect of capital adequacy.  In addition, both the share of loans and deposits in total assets and total liabilities respectively indicates mismatch of obtained funds and assets operations. All in all, the management of each bank should emphasize the importance to consider the liquidity mismatch of assets and liabilities to evaluate the liquidity profile of banks. Moreover, focusing on deposit funding leads to ignore some widely used alternative sources of funding through the issue of commercial paper enter alia, as per the recommendations of international practices. Keywords: Determinants, liquidity risk, fixed effect, Ethiopia

META ANALYSIS ON THE DETERMINANTS OF COMMERCIAL BANK’S PROFITABILITY: (A CONCEPTUAL FRAME WORK AND MODELLING)

The purpose of this paper is to review the determinants of commercial banks’ profitability and to compare or combine results across sets of similar studies and contrasting the significant deviations in those findings by different scholars and to suggest a comprehensive model that incorporates macroeconomic, industry-specific and bank-specific determinants of commercial banks profitability. To achieve these objectives the paper has been designed to gleaned data from various national and international journal articles together with the basic theories relating to the determinants of commercial bank’s profitability irrespective of countries or economic level in which the banks are operating. Most of the research works so far, either in developed or developing counties, regarding the determinants of commercial banks profitability, comes across divergent results with the application of different models (i.e. pooled ordinary least square is mostly commonly applied by scholars in those countries). However, in finance the distribution of the data is often heavy-tailed and skewed with numerous large outliers, which violate the assumptions of classical linear regression. The variables investigated across studies have got uncommon concern by scholars. Most of the scholars used the traditional accounting measures for analysis towards determinants of banks’ profitability; ROA and ROE using multiple linear regression models. Economic measures of profitability are not used due to the lack of data and because the disclosed parameters are subject to internal policies and assessments which cannot be generalized or validated. I recommend the mixed research approach and panel data with the GMM model estimator and the inclusion of all banks specific, industry/sector specific and macro economic factors to better understand the determinants of the variations in the performance of commercial banks irrespective of the level of economic development

META ANALYSIS ON THE DETERMINANTS OF COMMERCIAL BANK’S PROFITABILITY: (A CONCEPTUAL FRAME WORK AND MODELLING)

The purpose of this paper is to review the determinants of commercial banks’ profitability and to compare or combine results across sets of similar studies and contrasting the significant deviations in those findings by different scholars and to suggest a comprehensive model that incorporates macroeconomic, industry-specific and bank-specific determinants of commercial banks profitability. To achieve these objectives the paper has been designed to gleaned data from various national and international journal articles together with the basic theories relating to the determinants of commercial bank’s profitability irrespective of countries or economic level in which the banks are operating. Most of the research works so far, either in developed or developing counties, regarding the determinants of commercial banks profitability, comes across divergent results with the application of different models (i.e. pooled ordinary least square is mostly commonly applied by scholars in those countries). However, in finance the distribution of the data is often heavy-tailed and skewed with numerous large outliers, which violate the assumptions of classical linear regression. The variables investigated across studies have got uncommon concern by scholars. Most of the scholars used the traditional accounting measures for analysis towards determinants of banks’ profitability; ROA and ROE using multiple linear regression models. Economic measures of profitability are not used due to the lack of data and because the disclosed parameters are subject to internal policies and assessments which cannot be generalized or validated. I recommend the mixed research approach and panel data with the GMM model estimator and the inclusion of all banks specific, industry/sector specific and macro economic factors to better understand the determinants of the variations in the performance of commercial banks irrespective of the level of economic development

Insurance market development, financial service export and economic growth : evidence from east African countries

Purpose: This article examines the long-run causal relationship between both insurance development and insurance and financial service export, and economic growth in 8 East African countries over the period of 2000-2018. Design/Approach/Methodology: Using the panel auto-regressive distributed lag (ARDL) and fixed effect (FE) estimation techniques, it finds a robust evidence for this relationship. Furthermore, this article tests and finds the complementarity relationship between both insurance and banking sector development, and insurance and human capital investment, especially for economies having well developed financial sector in relative terms. Findings: The research evidence raises questions regarding the impact that both, the faster growth of insurance activity and financial service export would have a positive effect on economic growth. Practical Implications: Insurance contributes to the economic growth in terms of promoting financial stability and reducing anxiety, substituting government security programs, facilitating trade and commerce, mobilizing savings, enabling efficient risk management, mitigating losses, fostering a more efficient capital allocation. Besides, insurance and financial service export, though buried in domestic real exports, is becoming a relevant issue of concern in the empirical research as to its contribution towards economic growth. Originality/Value: There is no such a detailed study in the field in the region under study. The conclusions are different for countries with a stock exchange and without a stock exchange market.peer-reviewe

Tax Revenue Potential and Effort in Ethiopia: Evidence from Stochastic Frontier Analysis

This study aims to estimate the actual tax effort and tax revenue potential of the country, measuring the gap between realized performance and the stochastic tax frontier, as well as between income and consumption using utility maximization function. The results from the stochastic tax frontier model have been compared with the utility maximization function as a robustness check. Very close values for tax effort, tax potential, and tax gap are recorded under each model. The estimated tax potential, effort, and gap from the two methods are found to be 22.89 percent, 23.69 percent, 36 percent, 34 percent 14.37 percent, and 15.58 percent, respectively. The empirical results revealed that Ethiopia is characterized by a huge tax gap and low tax effort, mainly resulting from the country’s policy choice and enforcement mechanisms

IFRS adoption and foreign direct investment in Sub-Saharan African countries: Does the levels of Adoption Matter?

AbstractThis study makes an effort to determine how international financial reporting standards (IFRS) adoption levels affect net FDI inflows to sub-Saharan African (SSA) countries using a panel data spans from 2005 to 2020. The results of the two-step system’s generalized methods of moments (GMM) estimation reveal that while both partial and full adoption is found to be insignificant, the sign is negative for full IFRS adoption. However, a statistically significant and positive effect of the interaction between institutional attributes and full IFRS adoption has been discovered. Among other factors controlled, the most significant influencing FDI flows to Africa are found to be infrastructure, trade openness, and human capital. The empirical result is used to derive some policy implications

Menstrual hygiene practices among high school girls in urban areas in Northeastern Ethiopia: A neglected issue in water, sanitation, and hygiene research.

BackgroundPoor menstrual hygiene practices influence school girls' dignity, well-being and health, school-absenteeism, academic performance, and school dropout in developing countries. Despite this, menstrual hygienic practices are not well understood and have not received proper attention by school WASH programs. Therefore, this study examined the extent of good menstrual hygiene practices and associated factors among high school girls in Dessie City, Amhara Region, northeastern Ethiopia.MethodsA school-based cross-sectional study was employed to examine 546 randomly selected high school students in Dessie City, northeastern Ethiopia. Pretested interviewer-administered questionnaires and a school observational checklist were used for data collection. EpiData Version 4.6 and the Statistical Package for the Social Sciences Version 25.0 were used for data entry and analysis, respectively. Bivariate and multivariable logistics regression analyses were employed to identify factors associated with good menstrual hygiene practices. During bivariable analysis, variables with P-values less than 0.25 were retained for multivariable analysis. In the multivariable analysis, variables with a P-value less than 0.05 were declared to be significantly associated with good menstrual hygiene practices.ResultsOf the respondents, 53.9% (95% CI [49.6, 58.2]) reported good menstrual hygiene practices. The following factors were found to be significantly associated with good menstrual hygiene practices: age range 16-19 years (AOR = 1.93, 95% CI: [1.22-3.06]); school grade level 10 (AOR = 1.90, 95% CI: [1.18-3.07]); maternal education (primary) (AOR = 3.72, 95% CI: [1.81-7.63]), maternal education (secondary) (AOR = 8.54, 95% CI: [4.18-17.44]), maternal education (college) (AOR = 6.78, 95% CI: [3.28-14.02]) respectively]; having regular menses [AOR = 1.85, 95% CI: (1.03-3.32); good knowledge regarding menstruation (AOR = 2.02, 95% CI: [1.32-3.09]); discussing menstrual hygiene with friends (AOR = 1.79, 95% CI: [1.12-2.86]), and obtaining money for pads from the family (AOR = 2.08, 95% CI: [1.15-3.78]).ConclusionWe found that more than half of high school girls had good menstrual hygiene practices. Factors significantly associated with good menstrual hygiene practices include high school girls age 16-18 years, girls grade level 10, maternal education being completed primary, secondary and college level, having regular menses, good knowledge regarding menstruation, discussing menstrual hygiene with friends and obtaining money for pads from the family. Therefore, educating of high school student mothers about MHP should be a priority intervention area to eliminate the problem of menstrual hygiene among daughters. Furthermore, in order to improve the MHP among high school girls, further attention is needed to improving knowledge regarding menstruation among high school girls, encouraging high school girls' families to support their daughters by buying sanitary pads and promoting discussions among friends about menstrual hygiene. Schools need to focus on making the school environment conducive to managing menstrual hygiene by increasing awareness of safe MHP and providing adequate water/sanitation facilities