Credit rationing, interest rates and capital accumulation

A simple endogenous growth model is developed to characterize credit rationing through the capital accumulation process. The model shows that credit rationing on investment loans decreases as capital accumulates and the enforcement cost decreases. We find that the evolution of the interest rate factor (lending interest rate/depositing interest rate) has a similar pattern to the credit rationing probability. However, simulations show that the evolution of the interest rate spread through the capital accumulation process depends on the degree of the enforcement cost. In the empirical part of the paper, we consider fifty-two countries, at different stages of development, over the period 1995–2005. We confirm the theoretical findings relative to the evolution of the interest rate spread and interest rate factor with capital accumulation. These results suggest that, for economies endowed with costly contract enforcement, the interest rate factor could be a better proxy of credit rationing than the interest rate spread.     

Intervention analysis of the safety effects of a legislation targeting excessive speeding in Canada

Excessive speeding is a major traffic safety concern consequently, numerous countermeasures have been considered to mitigate this problem. Excessive speeding, street racing and stunt driving activities subject all road users to extreme risk. To address this problem, three Canadian provinces introduced severe sanctions against drivers who exceed speed limits by high margins. Under the laws offenders were subject to immediate license suspension and vehicle impoundment. In this paper, intervention analysis of the collision data from the three provinces was conducted to identify the safety effects of the legislation. The analysis aims to identify changes in the time series behaviour of collision data after the adoption of the law. The changes were assessed for statistical significance, and the magnitude of the change was quantified. In general, the paper showed that the legislative changes were associated with drops in province-wide fatal collisions substantiating the safety benefits of introducing such legislation against excessive speeders.     

Endogenous Restrictions for Least Developed Economies

The paper explores appropriate trade restrictions for least developed countries facing external terms-of-trade disturbances in terms of minimizing variations in the real sphere of the economy. Two alternative models are explored: export-subsidy versus import-tariff endogeneity. The theoretical model indicates that the tariff regime is a more appropriate policy. Empirical evidence from Sudan (1950– 1991) suggests that, although there is some discernable evidence that Sudan followed the tariff regime, the country did not apply the policy correctly, adjusting the tariff mainly in response to foreign import prices rather than foreign export prices, which are more unstable.     

Food and stabilization in developing Africa

This paper tests the hypothesis that inadequate food production, in developing Africa, is associated with inflation, balance-of-payments difficulties and stagnation. Econometric models are specified and derived to test the hypothesis. The empirical results are analyzed to clarify the impact of food imports on a number of issues relating to the general problem of economic growth.     

EQUITY CAPITAL, PROFIT SHARING CONTRACTS, AND INVESTMENT: THEORY AND EVIDENCE

The potential effect of financial variables on the level of investment is among the key issues in contemporary financial economics. Some researchers have claimed that there is an inherent risk in the Islamic profit-and-loss sharing scheme that replaces the western fixed-interest rate system. This paper argues that such concerns are baseless. In an Islamic framework, equity capital (i.e., strong financial position) and the profit-sharing ratio are primary determinants of investment. It is shown that both factors could enhance the firm's business reputation and its investment activities. The paper, in so doing, constructs a two-period equilibrium model of profit-sharing contracts. An optimal solution for the investment function is derived for the banking firm. Besides equity capital and the profit-sharing ratio, other relevant determinants of investment are also considered, including depreciation and expected inflation. Moreover, unlike most previous research in this area, the resultant investment (and profitsharing ratio) functions are subjected to empirical testing using data from a representative Islamic bank.     

Commitment and turnover intention in the UAE oil industry

This paper aims to explore the links between two components of commitment – affective and continuance – and employees' intention to stay/quit in the oil industry. A self-administered questionnaire was used in order to collect study data from 600 employees representing three levels of management. Eight hypotheses were developed such as there is no significant relationship between affective commitment and intention to quit the organization, there is no significant relationship between affective commitment and intention to stay with the organization, there is no significant relationship between personal variables and organizational commitment and its dimensions, and there is no significant relationship between job-related variables and organizational commitment and its dimensions. These hypotheses were examined using various tests drawn from the SPSS program, for example, correlations, factor analysis and multiple regressions. Findings confirmed the multidimensionality nature of commitment. A significant negative relationship between organizational commitment and intention to quit was also reported. The results related to demographic factors and commitment show some evidences that support these links. The implications of the findings for both practitioners and researchers are discussed in the paper with some guidelines for future research in this field.     

Innovation and weak labour disposability: some theoretical and empirical evidence

This paper envisages theoretically and empirically the weak labour disposability and the ability of labour to innovate in a poor-capital, surplus-labour economy. Therefore, a production function where the marginal product can become zero or even negative has been derived and estimated using data from Suden over the period 1968–88, with quarterly interpolation. Thus, unlike neoclassical specifications of endogenous growth theory, labour withdrawal may have minimal effect on output. The results indicate the presence of weak disposability of labour. The existence of a discernibly low capital–saving technical relationship between labour and capital has been verified using cointegration techniques.     

The Impact of Trade Liberalization on Revenue Mobilization and Stability in Sudan

Abstract: This paper attempts to examine key aspects of the Sudanese tax system, paying particular attention to the impact of the recent trade liberalization on government revenues. An eclectic method of analysis is utilized. The results show that the Sudanese tax system as a whole is not buoyant or elastic; the same applies for its major handles. The liberalization reform did not appear to have enhanced revenue productivity and stability in the country. This result indicates the presence of substantial slacks in tax collection and tax evasion. The analysis also shows that tax evasion is the main problem facing tax administration; on average, it stands at about 53 per cent of actual tax yield and 33 per cent of the potential tax yield inclusive of the underground economy's gross domestic product (GDP). Assessment of the determinants of trade revenue suggests that the yield of trade tax has improved due to liberalization; however, the marginal benefit of tax evasion is still considerable. The findings imply that a committed tax reform is crucial for augmenting tax revenue yield as well as for fiscal consolidation and macroeconomic stability.