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Vol. 16, Number 1, 2021

 
PRIVATE COST OF CAPITAL AND INCREMENTAL BUSINESSVALUE OF MID-MARKET FIRMS
1Daibi W. Dagogo & 2Saheed K. Ajadi
1Department of Banking & Finance, Rivers State University, Nigeria
2Zartech Ltd. Nigeria
1Corresponding author: dagogo.daibi@ust.edu.ng 
 
 
Abstract | Text
 
This study examined the implications of private cost of capital on the incremental business value (IBV) of middle market firms in Nigeria.  Specifically, three costs were identified as follows: private cost of debt (PCD), private cost of equity (PCE), and overall private cost of capital (PCOC).  The purpose was to investigate the extent to which private cost of capital, which is calculated differently from weighted average cost of capital for large enterprises, could contribute to incremental business value of middle market (mid-market) firms. Two panel data regression models were specified with one dependent variable (incremental business value). The first model has private cost of equity and private cost of debt as independent variables, while the second has private cost of capital as the independent variable. The panel comprised 10 middle market enterprises registered as members of the Nigerian Association of Stock Dealers (NASD). Middle market enterprises are operators in the private sector whose total assets (excluding land and building) are above one hundred and fifty thousand USD but not more than one million five hundred thousand USD. The study adopted the fixed effect model as the best linear estimator after a model validation with the aid of the Hausman test. We found that private cost of debt, private cost of equity, and overall private cost of capital have negative and significant effects on the incremental business value of middle market firms.  We concluded that incremental business value is more elastic to changes in private cost of equity than private cost of debt, and that this is as a result of two phenomena: firstly, higher explicit private cost of equity than debt, and secondly, greater proportion of private equity than private debt in the capital structure of middle market firms in Nigeria.
 
Keywords:  Private cost of capital, private cost of equity, private cost of debt, incremental business value, capital market, middle markets, financial dualism, and capital access point.
 
JEL Classification: G30
 

 
SELECTIVITY AND MARKET TIMING ABILITY OF MUTUAL FUND HOUSES IN EMERGING COUNTRIES
1Anas Ahmad Bani Atta & 2Ainulashikin Marzuki
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Malaysia
2Corresponding author: ainulashikin@usim.edu.my
baniata_anas@hotmail.com
 
 
Abstract | Text
 
The paper investigates the selectivity and market timing ability of fund houses in emerging countries. The study uses comprehensive performance models on fund houses from four emerging countries. Data span is from 2007 to 2018. Findings indicate that fund managers benefit from the common facilities provided by the fund houses like market research, diversification and investment opportunity. Fund houses showed good selectivity skills but poor market timing ability. The possible reason is that fund houses manage large and different types of funds. This resulted in more complex management processes and thus reduced the ability to track the fluctuations in the market. The findings are important for investors as they are able to allocate their resources more effectively to funds that are best managed by fund houses while for managers, they are able to position themselves relative to their competing peers.
 
Keywords: Mutual fund, fund house, selectivity ability, market timing ability, emerging countries.
 
JEL Classification: G11, G14, G17, G20, G40
 

 
INVESTMENT DECISION MAKING TOWARDS INVESTING IN ISLAMIC UNIT TRUSTS AMONGST WOMEN
1Nor Izzati Mohd Aziz & 2Salina Kassim
IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur
2Corresponding author: ksalina@iium.edu.my 
 
 
Abstract Text
 
The differences in skill expectations and knowledge are amongst factors that contribute to the variances when men and women choose financial products. Women are claimed to be risk averse, somewhat insecure, lacking self-confidence and interest in financial investment products. Nevertheless, the evolving working and educational environment has changed this stereotype, wherein women are increasingly more educated, knowledgeable, and are more exposed to investments. Gender equality between men and women in terms of the volume of investments has turned into a requirement that boosts economic growth with people being the most important factor to contribute through investing habit. This cannot be realised if only men are involved in investment. Financial institutions aim certain figures of targeted investment volume each year. As such, this study identified the factors of women investments, particularly in Islamic unit trusts.A total of 201 respondents were selected via the convenience sampling technique. The Likert scale questionnaires were analysed using SMART PLS software. As a result, several investment behaviours, including investment objectives, return expectations, awareness, and risk attitude, emerged as factors that influenced women investors to choose unit trusts. The study outcomes are beneficial in devising effective strategies that may attract women to invest in Islamic unit trust. Besides, certain agencies should conduct campaigns or seminars on financial literacy for this potential sector, so as to enhance their knowledge in investing in Islamic unit trusts.      
 
Keywords: Gender equality, financial investment, risk tolerance, Islamic unit trusts.
 
JEL ClassificationG11, G14, G17, G20, G40
 

 
BANK PROFITABILITY DETERMINANTS: COMPARING THE UNITED STATES, NIGERIA AND SOUTH AFRICA 
Peterson K. Ozili
Central Bank of Nigeria, Abuja, Nigeria 
Corresponding author: petersonkitakogelu@yahoo.com 
 
 
Abstract Text
 
This study investigates the determinants of banking sector profitability in South Africa, Nigeria and the United States. The findings reveal that cost efficiency, the size of non-performing loans and overhead cost to total asset are significant determinants of the banking sector profitability. In the comparative analysis, the findings from South Africa show that the cost efficiency ratio, overhead cost to total asset ratio and non-performing loans are significant determinants of the banking sector profitability. In the United States, capital adequacy ratio and the size of non-performing loans are significant determinants of its banking sector profitability. In Nigeria, the overhead cost to total asset ratio and cost efficiency ratio are significant determinants of the banking sector profitability. The descriptive analysis reveal that bank net interest margin and return on asset are higher in Nigeria and lowest in the United States which suggests that the Nigerian banking sector is more profitable than the US banking sector. Return on equity is higher in South Africa and lowest in the United States.
 
Keywords: Banks, profitability, non-performing loans, efficiency, Nigeria, South Africa, United States.
 
JEL Classification: G21, G28
 

 
FOSSIL FUEL PRICE, CARBON DIOXIDE EMISSION, AND RENEWABLE ENERGY CAPACITY: EVIDENCE FROM ASIAN DEVELOPING COUNTRIES 
1Toh Jia Ni & 2Karren Lee-Hwei Khaw
Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya
Corresponding author: karren@um.edu.my 
 
 
Abstract Text
 
This paper examined the impact of fossil fuel price and carbon dioxide (CO2) emission on renewable energy, using a sample of 14 Asian developing countries from the years 2000 to 2018. Fossil fuel prices, mainly those of crude oil and coal, are positively related to renewable energy capacity. CO2 emission is also a positive driver, indicating the significance of environmental concern. The results were consistent for both the upper-middle-income and lower-middle-income countries. Between fossil fuels and CO2 emission, the positive impact of CO2 emission outweighed that of fossil fuels. From a policy perspective, this paper concurs the need to shift huge subsidies away from fossil fuels to renewable energy and to enforce a heavy tax on CO2 emission for a sustainable environment. 
 
Keywords: Renewable energy, fossil fuel, CO2 emission, Asian developing countries.
 
JEL Classification: P28, Q30, Q42
 
 

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