Private equity capital in a less developed economy: Evidence, issues and perspectives

This study investigates the structure of the private equity industry and issues that impact on its development and growth in Zimbabwe, using document analysis and exlaratory approach. The study finds that the venture capital industry in Zimbabwe mimics similar industries in other countries except that it is constraint by market liquidity. Lack of regulation and viable business sectors coupled with excessive risks in the political economy narrows the scope of private equity operations. Several issues impacting on the development of the private equity industry are identified and evaluated. This study provides new evidence on the operations of the private equity industry in a liquidity constrained and less developed economy. The study has policy implications that could assist in the development of the private equity industry.&nbsp

Impact of Analytics in Financial Decision Making: Evidence from a Case Study Approach

Objectives: This study seeks to investigate the impact of analytics in financial decision making in organizations. Prior work: Analytics has emerged as a critical business enabler in today’s competitive market place. Its application has provided businesses with the opportunity to gain a competitive advantage by leveraging the vast amount of data they have available. Analytics is not limited to a particular tool or method however; it encompasses a range of combinations and it is this element that has made analytics such a success factor. Approach: This study uses a case study approach to identify critical areas of business where analytics have played a vital role in financial decision making. Results: Application of analytics in financial decision making is shown to streamline information resulting in making decisions more efficiently and effectively. Implications: This study provides insights in financial decision making using statistical backing which has a vast number of applications in finance functions. As such, areas such as such detecting fraud, budgeting and forecasting, risk management and customer insights need to actively apply analytical tools to better manage and enhance the information gained from these areas. Value: This study integrates the use of information technology tools and packages with financial management with the view of enhancing financial decision flow in organizations

Financial Capability of Accounting Students in South African Universities

This study surveyed 1582 students studying Accounting degrees at universities in South Africa to assess their financial capability levels and intra-component drivers of financial capability. The study utilised statistical methods such as structural equation modelling technique was used to determine drivers of financial capability; regression analysis was further done to examine relationships between the students’ mean percentage scores and their socio-demographic factors. The findings of the study suggest that accounting students are highly financially capable. It was further found that financial capability is driven by financial attitude; financial behaviour, and numeracy skills of the accounting students. In addition, the study found education, level of study, and race as statistically significant and socio-demographic influences of financial capability. This study suggests that financial capability can be further improved via improvements in financial attitude, financial behaviour, numeracy skills and education among racial groups in South Africa

Institutional Investors And The Finance-Growth Nexus: Evidence From South Africa

Since the 1990s assets of institutional investors have remained elevated in comparison to those of deposit-taking financial institutions in South Africa. This paradigm shift in the financial markets has provoked the ongoing theoretical and empirical debate, which, on the one hand, pits institutional investors as causing financial ‘disintermediation’ against, on the other hand, deposit-taking financial institutions in promoting economic development. These and other conflicting views on financial intermediation have promoted the ‘finance-growth nexus’ hypothesis, which draws lessons from the Patrick (1966) ‘demand-following’ and ‘supply-leading’ propositions (Patrick, 1966). The study uses the Johansen (1991) co-integration tests, the vector error correction and the Granger causality approaches to establish the role played by institutional investors in the finance-growth nexus in South Africa based on quarterly data spanning 1994 to 2009. Findings suggest that a ‘demand-following’ phenomenon exists in South Africa in which the growth in the institutional investors’ industry is dependent upon the level of economic development and banking sector development

Stock market returns and exchange rate movements in a multiple currency economy: the case of Zimbabwe

This study seeks to provide new evidence on the stock market and exchange rate relationship in Zimbabwe, a country that does not have its own sovereign currency. The bivariate vector autoregressive approach is used to establish the relationship between the stock market and exchange rates. The results show that no relationship exists between the stock market and the proxy exchange rate. The findings contradict the expectation that exchange rate movements would influence domestic stock market prices. This finding is especially interesting given the fact that Zimbabwe uses a basket of currencies for transacting purposes, albeit with the United States dollar as a major currency for reporting and stock market pricing purposes. The findings provide new evidence of a disconnect between the stock market and exchange rate movements. This has implications for international portfolio diversification and the use of foreign currency as an asset class in an economy using a multiple currency system

The Determinants of Non-Performing Loans in the MINT Economies

This paper investigates the major determinants of non-performing loans in the MINT (Mexico, Indonesia, Nigeria and Turkey) economies. Identifying major determinants of non-performing loans, which are observed to be growing in these countries in recent time, will also guide policy and forecasting future levels that will be useful for pre-emptive policies and actions. It uses static panel data and dynamic panel model analyses. Evidence suggests that in the four economies, capital adequacy ratio, liquidity ratio, total bank credit andreturn on assets are significant bank-specific determinants of non-performing loans. Also, while the return on assets, liquidity ratio and capital adequacy ratioshow a negative and significant relationship with non-performing loans, nominal exchange rate, money supply growth rate, total bank credit and lending rate show positive and very significant relationships with non-performing loans. Finally, corruption, an institutional variable, shows a very strong positive relationship with non-performing loans