Bank Lending and Business Cycles: South African Evidence

Abstract: The paper provides empirical analysis on the linkage between the behavior of bank lending and business cycles in South Africa. Consistent with theory, overall evidence suggesting pro‐cyclicality of bank lending is uncovered both at macro and micro levels. At macro level, bank lending and lending rates have moved in tandem with business cycles. Real borrowing by government was counter‐cyclical to business cycles as would be expected if the role of government was to fine‐tune the economy during booms and recessions. At micro level, bank lending to households and firms was generally pro‐cyclical. Even the growth of provisioning by banks has been largely pro‐cyclical to business cycles, though exceptions were recorded. First, new mortgage lending exhibited counter‐cyclical behavior before 1993. We attributed this behavior to the political and economic climate prevailing then which created uncertainties that made ownership of property a good hedge against economic and political risks. Secondly, the growth of real credit for investment and of foreign trade finance does not appear to have been related to business cycles.     

Customized Assessment Group Initiative: A Complementary Approach to Students' Learning

Abstract

This study, conducted in a US setting, examines the importance of group dynamics that emphasize cooperative team building through the proposed grouping strategy called Customized Assessment Group Initiative (CAGI). CAGI is a student grouping strategy designed to operationalize the mutual accountability concept central to the definition of teams by Katzenbach and Smith [(1993). The wisdom of teams: Creating the high performance. Boston, MA: Harvard Business Press]. Spanning two semesters and using a sample of sophomore students in the Introductory/Principles of Accounting class, I implement CAGI in a five-stage process to show students’ performance differences between the conventional grouping technique and the CAGI grouping strategy, thereby highlighting the potential pedagogical value of CAGI in the classroom. The findings demonstrate that CAGI has the heightened capacity to enhance substantially and improve concretely students’ performances. I strongly believe that CAGI could be promising to accounting and other business school students at a university where emphasis is placed on ‘teamship’ and not just group membership.     

The sign value of accounting: IMF structural adjustment programs and African banking reform

This paper examines an IMF structural adjustment program and the role of accounting technologies and agents within that program. Focusing on banking sector reform in Nigeria, the paper shows how IMF attempts to remake economic life come up against formidable contextual challenges, and how accounting may or may not be taken up to confront those challenges. Specifically, it shows that even where accounting numbers are ‘managed’, the potential disciplinary power of accounting's system of signs remains, though again that power may not be exploited if those who are responsible for governing lack the necessary desire. The study's findings challenge two sets of understandings: that which sees the economy as somehow separate or distinct from the wider socio-political field, and that which sees crises such as occurred in Nigeria as simply resulting from inadequate or insufficient accounting regulations and controls.     

Technical Efficiency Change in Kenyan Agriculture and the Poor: A Computable General Equilibrium Analysis.

Abstract: A computable general equilibrium model is used to analyze the allocative as well as distributional impact of fifty percent input specific and ten percent general technical efficiency change in Kenyan agriculture. Two alternative specifications of the labour market are adopted to assess the sensitivity of model result to particular conditions prevailing in the labour market. The Kenyan Social Accounting Matrix is used in the model, though this has been aggregated and dis-aggregated in the light of other evidence and arranged to follow the transaction value (TV) approach. Technical efficiency change does not appear to be significantly affected by the different specifications. Input specific technical efficiency change results in a small improvement in agricultural production, income and the GDP. The impact, though small, is mixed on labour employment. General efficiency improvement on the other hand, results in a significant boost to agricultural production and a modest improvement in GDP; it also results in a boost to household income and real consumption. Résumé: On a utilisé un modèle informatisé d'équilibre général pour analyser l'impact de l'affectation et de la distribution de cinquante pour cent du changement de l'efficacité technique liéà des facteurs spécfiques, et de dix pour cent du changement général de l'efficacité technique, sur l'agriculture kényane. On a adopté deux caractéristiques interchangeables du marché du travail pour évaluer la sensibilityé du résultat du modèle vis-à-vis des conditions particulières qui prévalent sur le marché du travail. La matrice de comptabilité sociale du Kenya a été utilisée dans le modèle, bien que celuici ait été globalisé puis venulé en fonction d'autres données, et aménagé pour tenir compte de la méthode de la valeur de transaction. Le changement de l'efficacité technique ne semble pas être affecté de manière significative par les différents caractéristiques. Le changement de l'efficacité technique dûà des facteurs spécifiques provoque une petite amélioration de la production agricole, du revenu et du PIB. Et l'impact, quoique minime, est tout de même varié en ce qui concerne l'utilisation de la main-d'œuvre. Par contre, l'amélioration de l'efficacité généerale donne une grande impulsion à la production agricole et génère une légère amélioration du PIB; il stimule également le revenu et la consommation réelle des ménages.     

Interest rate reforms,financial deepening and economic growth in Cameroon: an empirical investigation

The impact of interest rate reforms on financial deepening and growth in Cameroon is examined. We employ five proxies of financial deepening against deposit rate, a proxy for interest rate reforms. The impact of interest rate reforms on financial deepening is sensitive to the proxy used for financial deepening. The impact is almost negative and significant for all the indicators, except for the ratio of broad money to Gross Domestic Product, where it is positive and significant in the first lag. This means that financial repression helps improve broad money and hinders the development of the other indicators of financial development in Cameroon.     

The relationship between budget deficit and interest rates in South Africa: some econometric results

This article investigates the budget deficit–interest rate relationships in South Africa, using two econometric methods: the London School and the Granger‐causality methods. The results suggest that budget deficits have no effect on interest rates in South Africa. The causality results reinforce this finding by indicating that budget deficit and interest rates in this country are independent.     

Estimating profit efficiency among South African retail firms using stochastic frontier approach

This paper analyses profit efficiency of selected retail firms in South Africa over the 2005–2006 period. A stochastic frontier analysis method is used. The 24 retail firms covered are ranked in terms of their efficiency performance over this period. Their efficiencies have also been tracked over time. Approximately 50% of the firms are estimated to have profit efficiency estimates higher than the average estimated for the sampled firms. The top 10 firms are performing significantly better than the average profit efficiency of 0.39. The profit efficiency of the top three firms is more than double the observed average profit efficiency performance of the sampled retail firms. However, the bottom 50% of the retail firms has performed poorly.     

Econometric analysis of bank lending and business cycles in South Africa

This article examines econometric relationships between bank lending and business cycle in South Africa. Two long-run economic relationships are hypothesized between total credit and the variables, namely, coincidental indicators, spread between lending and borrowing rates, money supply, stock price index, inflation and banking sector specific factors included in the model. Of these variables, only coincident indicators, changes in money supply as well as capital, and reserve are found to exert some influence on short-run total credit availability.