Sumerianz Journal of Economics and Finance

    
Online ISSN: 2617-6947
Print ISSN: 2617-7641

Quarterly Published (4 Issues Per Year)

Journal Website: https://www.sumerianz.com/?ic=journal-home&journal=26

Archive

Volume 4 Issue 1 (2021)

Analysis of Critical Determinants of Commercial Banks Profitability: Evidence from Nigeria

Authors : Ibe Sunny Obilor ; Egbujor Kelechi Jude ; Nathaniel Osuagwu
DOI : doi.org/10.47752/sjef.41.52.63
Abstract:
This study investigated the critical determinants of commercial bank profitability in Nigeria. The objective was to develop empirical models for predicting commercial bank profitability. The study adopted a combination of ex-post facto and survey research design in data collection and analysis, while quantitative and qualitative tools were employed in data analysis. The CAMELS performance basket provided the framework that guided the investigation. Two industry drivers (bank size and market share) and one macroeconomic driver (cyclic output growth rate of the economy) were included into the CAMELS basket.  The quantitative approach made use of descriptive statistics and set of econometric tools in the analysis. The result of econometric analysis identified assets quality, liquidity and earnings as the significant determinants of commercial bank profitability in Nigeria. The result of the qualitative analysis based on expert opinion equally identified asset quality, earnings and liquidity as three top determinants of commercial bank profitability. This also validates the result of quantitative analysis. The study concludes that irrespective of whatever is the industry and macroeconomic state of the economy, commercial banks’ ability to remain profitable, strictly dependent on the capacity of internal management to invest the banks resources into quality assets that affords the bank the opportunity to maintain optimal liquidity and generate earnings sufficient to offset all associated cost of doing business as well as create positive margin adequate to reward shareholders. Based on the above conclusion, the study recommends for increased capacity building (technical and managerial) of internal managers of commercial banks in Nigeria for enhanced strategic, tactical and operational planning and management of banks.

Pages: 52-63

Inflationary Impact of Funding Options for Budget Deficits in Nigeria

Authors : Ogiji Patricks ; Apinran Martins ;  Laniyan Chioma ; Usman Nuruddeen
DOI : doi.org/10.47752/sjef.41.41.51
Abstract:
This paper investigates the inflationary impact of the various financing options for the federal government budget deficit which has accumulated overtime. Using Auto Regressive Distributed Lag (ARDL) methodology and quarterly data over the period 2000Q1 to 2017Q2, the study found significant relationship between inflation and the current financing options of the Government. Overall, the result of our ARDL model affirm that the impact of fiscal spending in Nigeria on inflation is captured more in the short-run since none of the variables is significant in the long-run. In addition, the use of Banking System Financing to fund government deficits has better potentials as the optimal choice because its impact on inflation is insignificant.  Federal Government Bonds as a tool for financing budget deficits is also considered an optimal choice because though it causes inflation to rise by the second quarter, but its impact on inflation is expected to fizzle out in the long-run. Ways and Means Advances on the other hand, was shown to have the highest inflationary impact and as such, its use as a tool for financing government deficit should be discouraged. We, therefore, recommend a couple of appropriate policy options for financing budget deficits in Nigeria namely monetary financing and the issuance of federal government bonds. On the policy side, more efficient public expenditure management. Capital market, co-financing arrangements with pension funds and issuance of project-tied bonds, would be beneficial.

Pages: 41-51

Economic Growth and Labour Market Dynamics in Nigeria: Further Evidence from ARDL Bound Testing

Authors : Mukhtar Shuaibu ; Shafiu Ibrahim Abdullahi ; Muhammad Muazu Yusuf ; Mustapha Yusufu
DOI : doi.org/10.47752/sjef.41.35.40
Abstract:
Recently the phenomenon of jobless growth has become common, defying the famous Okun law which predicted increase in job with increase in economic growth. Many factors have been advanced as explanations for this, most prominent of which are changes in the labour market and lopsidedness in economic growth. This paper is an attempt to measure labour market dynamics in Nigeria focusing on the relationship between economic growth and unemployment. The paper used data from 1991 to 2020 and employed GMM and ARDL models to analyze the data. Unlike the Okun law which prophesies negative relationship between unemployment and economic growth, the result from this analysis show that there is positive relationship between unemployment and economic growth, confirming the existence of the phenomenon of jobless growth in Nigeria. The paper recommended structural changes in the economy and the labour market.

Pages: 35-40

The Relationship between Bank Lending to Agricultural Sector and Agricultural Earnings in Nigeria

Authors : Lyndon M. Etale ; Amaka, P. T. Bailey
DOI : doi.org/10.47752/sjef.41.25.34
Abstract:
This study examined the relationship between bank lending to agricultural sector and agricultural earnings in Nigeria using secondary data obtained from various editions of the Central Bank of Nigeria Statistical Bulletins. Secondary data collected for the selected study variables covered ten years period from 2009 to 2018. The study adopted bank loans and advances to agriculture, interest rate, and inflation as independent variables, while agricultural earnings representing gross national agricultural output was used as dependent variable. The study employed descriptive statistics and multiple regression analysis based on the OLS technique assisted by the E-view 10 computer software as the statistical tools for data analysis. The results revealed that all the independent variables had positive relationship with agricultural earnings. Specifically, bank loans and advances to agriculture had statistically significant effect on agricultural earnings. The regression results also showed that the coefficient of determination (R-squared) value of 0.86 indicates that 86% of changes in the dependent variable (AGE) were explained by the combined effect of changes in the independent variables. The study concluded that bank lending to the agricultural sector has a significant positive relationship with agricultural earnings in Nigeria. The study recommended among others that the CBN should step-up policy making, execution and monitoring of bank lending to agriculture; and that the Federal Government through the Federal Ministry of Agriculture should declare a state of emergency on agriculture and make the sector more attractive and viable for investment.

Pages: 25-34

Impact of Artificial Intelligence on Accounting

Authors : Dr. Pradip Kumar Das
DOI : doi.org/10.47752/sjef.41.17.24
Abstract:
Artificial intelligence bears many pragmatism for accountants to improve their effectuality, provide more sapience and bear more value to business. The system elevates utilitarianism for much more iconoclastic reformation as it perceptibly takes over core functions currently done by humans because of cost savings and operational efficiencies. Of late, artificial intelligence has made dramatical development especially in accounting profession which have changed its focus from paper and pencil entry to computer. But the most alarming of artificial intelligence is that people conclude too early that they understand it. This comprehensive research study endeavors to examine the impact of artificial intelligence on the performance of accounting operations with the aid of secondary data. The paper accentuates that the application of artificial intelligence cockily impresses the performance of accounting functions quality. The researcher recommends that in the essence of artificial intelligence, accountants should thrivingly develop its own demeanor of dexterity and become omnibus expertise thereby eliminating certain accounting cost. This will be true if the accounting professionals, auditing professionals and the AI experts do not collaborate and work together to secure the continuance of profession.

Pages: 17-24

Bivariate Modelling of the Influence of Trade on Aggregate and Disaggregate Energy Use in Ghana

Authors : Samuel Asuamah Yeboah
DOI : doi.org/10.47752/sjef.41.1.16
Abstract:
The current research has explored the trade-energy nexus for Ghana using annual data within 1970-2011, using the Autoregressive distributed lag model (ARDL) and the Granger predictive causality test in bivariate modelling. The research findings provide evidence of a cointegration association between trade liberalisation (proxied by trade openness) and energy resources (proxied by aggregate energy use, electricity energy use, and fossil fuel energy use). However, there is an insignificant positive long-run effect of trade on energy use for all the energy resources under investigation. In the short-term, there is a positive significant effect of trade on electricity energy use and fossil fuel energy use, but an insignificant positive effect of trade on aggregate energy use. Concerning aggregate energy use, the research findings show that for aggregate energy use, there is causality from trade to aggregate energy use without feedback. However, in the case of electricity use and fossil fuel energy use, trade predicts energy use with feedback. For policy, energy conservation (fossil fuel energy use, and electricity energy use) may not have a deleterious effect on trade in Ghana. Future research may focus on how structural breaks and panel analysis improves the current study, controlling for the effect of other variables that influence energy use.

Pages: 1-16