Stock Price Index and Exchange Rate Nexus in African Markets

This paper examines the relationship between stock price index and exchange rate in six African markets using monthly data for the period January 2007 to October 2015. A quantile regression approach is used. This methodology is shown to perform better than the ordinary least squares estimators, particularly when the conditional distribution is heterogeneous. Our empirical evidence reveals an interesting pattern in the association of these two financial markets in Africa, which shows that the negative relationship between stock and foreign exchange markets is more apparent when exchange rates are extremely low or high. The negative relationship between the two variables is in line with the portfolio balance effect.     

Remittance,Institutions and Investment Volatility Interactions: An Intercontinental Analysis

Generating massive investment for growth and development has been one of the main policy goals of most economies around the globe. Countries, most especially developing ones, are highly susceptible to investment volatility owing largely to the fragile nature of their economies as well as weaknesses in terms of dysfunctional institutions. Therefore, sound economic management suggests the need to better understand possible sources for mitigating the adverse effects of investment volatility. Remittances have been identified as important capital flows which do a good job of dousing macroeconomic volatilities. It is on this basis that the study sought to uncover the causal relationship between remittances and investment volatility via the intermediating role of institutions. Using a panel of 70 countries and the system Generalized Method of Moments (GMM) estimator, three insightful outcomes come to the fore. First, remittances played countercyclical roles across the estimated regressions. Second, institutional quality had no significant role in mitigating investment volatility and lastly, the interactive terms of both remittances and institutions significantly mitigated the negative impacts of investment volatility with the exception of the political component of the institutional architecture. Policy suggestions are drawn based on our results.     

The Beginnings of the New Supra Insus Rice Intensification Program: The Case of the North Coast of West Java and South Sulawesi 1

In 1987 the Indonesian government introduced a new rice intensification program, Supra Insus, because production was not keeping pace with demand growth. This paper examines the operation and effectiveness of Supra Insus in West Java and South Sulawesi, and identifies some constraints to the program's success. These include inadequate resources and heavy administrative workloads which hamper the efforts of agricultural extension personnel; consequent slow development of necessary skills among farmers; delays in implementing organisational improvements to the program; complex procedures for formulation and ratification of credit proposals; institutional and other barriers to the adoption of some technologies; and conflicts between program administrators and regional governments on credit policy. The practice in South Sulawesi of harnessing traditional forums to the purposes of the program may offer a model for other areas. Further research is needed to evaluate the program's economic performance.     

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

This paper re‐examines the government revenue and expenditure relationship in South Africa using Enders and Siklos' Threshold adjustment and Granger causality tests. The paper allows for structural breaks in the unit root and cointegration tests. The results indicate the absence of any asymmetries in both the threshold autoregression and momentum threshold autoregression specifications of adjustments in the South African's budgeting process. The estimated symmetric error‐correction models provide support for the fiscal synchronization hypothesis of government revenues and expenditures for long‐run and short‐run dynamic equilibrium. These findings indicate that the South African fiscal authorities should try to maintain or even improve the control of their fiscal policy instruments to sustain the prudent budgetary process.     

Can Africa's Saving Collapse Be Reversed?

Private saving in Sub-Saharan Africa declined from more than11 percent of disposable income in the 1970s to less than 8percent in the 1980s and only partially recovered (to less than9 percent) in the 1990s. This article analyzes the determinantsof private saving in Sub-Saharan Africa, seeking to explainthe region's dismal performance and identify policies that couldhelp to reverse the region's decline in saving. The analysisshows that in Sub-Saharan Africa causality runs from growthto investment (and perhaps to private saving), whereas a risein the saving rate Granger-causes an increase in investment.Foreign aid Granger-causes a reduction in both saving and investment,and investment also Granger-causes an increase in foreign aid.The empirical analysis of private saving in Sub-Saharan Africaand other regions over 1970–95 suggests that private savingin Africa can be explained by standard behavioral models. Accordingto these models private saving in Africa lags behind that inother regions (most notably, the high performing Asian economies)because of the region's lower per capita income, high young-agedependency ratio, and high dependence on aid. The combined effectsof these factors substantially outweigh Africa's advantage fromits lower public saving and higher government consumption. Finally,analysis of the experiences of Kenya, Zimbabwe, and Botswanaprovides further insight into the saving process in Sub-SaharanAfrica.     

Usury and Just Compensation: Religious and Financial Ethics in Historical Perspective

Usury is a concept often associated more with religiously based financial ethics, whether Christian or Islamic, than with the secular world of contemporary finance. The problem is compounded by a tendency to interpret riba, prohibited within Islam, as both usury and interest, without adequately distinguishing these concepts. This paper argues that in Christian tradition usury has always evoked the notion of money demanded in excess of what is owed on a loan, disrupting a relationship of equality between people, whereas interest was seen as referring to just compensation to the lender. Although it is often claimed that hostility towards ‘usury’ has been in retreat in the West since the protestant Reformation, we would argue that the crucial break came not with Calvin, but with Jeremy Bentham, whose critique of the arguments of Adam Smith, upholding the reasonableness of the laws against usury, led to the abolition of the usury laws in England in 1854. There has to be a role for law, whether Islamic or secular, in regulating financial relationships. We argue that by retrieving the necessary distinction between demanding usury as illegitimate predatory lending and interest as legitimate compensation, we can discover common ground behind the driving principles of financial ethics within both Islamic and Christian tradition that may still be of relevance today. By re-examining past ethical discussions of the distinction between usury and just compensation, we argue that the world’s religious traditions can make significant contributions to contemporary debate. Constant Mews is Director of the Centre for Studies in Religion and Theology at Monash University. He holds PhD and Masters degrees in medieval history, and pursues research in medieval religion, thought and ethics. Ibrahim Abraham is a PhD student in the School of Political and Social Inquiry, Monash University, with degrees in religion studies as well as law. His research interests include religion and culture, fair trade, and human rights.     

Board Members in the Service Industry: An Empirical Examination of the Relationship Between Corporate Social Responsibility Orientation and Directorial Type

One area of business performance of particular interest to both scholars and practitioners is corporate social responsibility. The notion that organizations should be attentive to the needs of constituents other than shareholders has been investigated and vigorously debated for over two decades. This has provoked an especially rich and diverse literature investigating the relationship between business and society. As a result, researchers have urged the study of the profiles and backgrounds of corporate upper echelons in order to better understand this relationship.There is ample evidence that corporations have in recent years increased the proportion of outside directors on their boards. This has been partly in reaction to increased interest in the corporate social responsiveness of business organizations and suggestions that the board of directors could play a unique role in this area. The expectation on the part of practitioners, researchers, and governmental regulators is that outside directors will advocate greater corporate responsiveness to society's needs by playing a more active role in overseeing managerial decisions.The purpose of this study is to partially fill a void in the literature by determining whether or not these expectations are justified, particularly in the service industry. Data were collected as part of a larger cross-national study of corporate social responsibility. A multivariate analysis of variance (MANOVA) of the results of a survey of 307 board members (198 outside and 109 inside directors) indicates that outside directors exhibit greater concern about the discretionary component of corporate responsibility and a weaker orientation toward economic performance. No significant differences between the two groups were observed with respect to the legal and ethical dimensions of corporate social responsibility. Some explanations as well as limited generalizations and implications are developed.     

The Effectiveness of Technical Trading for Arab Stocks

In this paper, we examine the profitability of technical analysis for a cross section of individual Arab stocks. Our analysis, undertaken from the perspective of an Islamic investor, reveals that technical trading rules do not yield economically or statistically significant returns. While our results uncover some scant statistical evidence of technical trading rule profitability, risk adjusting the returns weakens the evidence in favor of predictability. Furthermore, break-even transaction costs do not exceed estimated transaction costs or bid-ask spreads in the markets examined.     

The idiosyncratic risks of a Shariah compliant REIT investor

This paper investigates the impact of Shariah compliant investment principles on the idiosyncratic risks of a Shariah compliant REIT investor. The importance of idiosyncratic risks in explaining cross-sectional returns of a constructed Shariah compliant REIT investor’s portfolio is further examined in this paper. In all constructed portfolios examined, there is a positive and significant relationship between expected idiosyncratic volatility and expected REIT returns of the constructed Shariah compliant portfolio (GCC Shariah compliance standards). This result is consistent and persistent after robustness tests are carried out. As such, idiosyncratic risks are an important factor to consider in the pricing of Shariah compliant REIT stock returns. On further examination, the significant relationship as seen in the constructed Shariah compliant portfolio can be explained from the firm-specific risks of the residential REIT sector which is the most dominant sector during the period of investigation. The implications of these results also point to the importance of Shariah compliance standards and screening methods which is a significant feature associated with the understanding of the relationship of idiosyncratic risks on expected REIT returns of Shariah portfolios. Results show contrasting results between a less-restrictive and restrictive Shariah compliant portfolio. We find a significant relationship between expected returns and the idiosyncratic risks specifically in the restrictive Shariah compliant portfolio.     

Characteristics and practices of “Christian-based” companies

There is a sizeable group of self-described Christian companies which have declared their belief in the successful merging of biblical principles with business activities. As these companies have become more visible, an increasing number of anecdotal newspaper and magazine articles about these companies have appeared. Surprisingly, no rigorous research has been conducted prior to our recent study. This article provides national estimates of the size and predominant characteristics of self-identified Christian companies. In addition, the study investigated the types of relationships these companies maintained with their employees, customers, communities, and suppliers.Nabil Ibrahim is an Assistant Professor of Business Administration at Augusta College, Augusta, Georgia. He has published articles, case studies, and professional papers in the areas of business policy and strategy.Dr. Leslie W. Rue is Professor of Management in the College of Business Administration at Georgia State University. He is the author of over forty articles, cases, and papers that have appeared in academic and practitioner journals. He has coauthored eight textbooks in the field of management.Dr. Patricia P. McDougall is an Assistant Professor of Management at Georgia State University. Her research focuses primarily on new venture strategies and international entrepreneurship and has been published in several academic journals. Dr. G. Robert Grenne is an Associate Professor of Management at Old Dominion University, Norfolk, Virginia where he teaches strategic management and entrepreneurship. He is a Contributing Editor to Spiritual Fitness in Business and has published articles in various academic and practitioner journals.