The Economics and Finance Letters

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Online ISSN: 2312-430X
Print ISSN: 2312-6310
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No. 2

Creative Marketing and Innovative Branding: An Effective Way to Attract Customers

Pages: 308-319
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Creative Marketing and Innovative Branding: An Effective Way to Attract Customers

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DOI: 10.18488/journal.29.2020.72.308.319

Mofasser Rahman , Sajeeb Saha , Sauda Afrin Anny , Sharmin Afrin , Tanjina Afrin , Iqramul Haq

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Mofasser Rahman , Sajeeb Saha , Sauda Afrin Anny , Sharmin Afrin , Tanjina Afrin , Iqramul Haq (2020). Creative Marketing and Innovative Branding: An Effective Way to Attract Customers. The Economics and Finance Letters, 7(2): 308-319. DOI: 10.18488/journal.29.2020.72.308.319
Recently, the demand and application of creative marketing and innovative branding have been increased surprisingly because of its ability to grab the attention of customers more quickly than any other media. The objective of this study is to investigate the dimension of effectiveness in creative marketing and innovative branding to attract customer in the tourism and hospitality industry of Bangladesh. Purposive sampling was applied to take a sample of 150 including 117 customers and 33 service providers of the tourism and hospitality industry of Bangladesh. Descriptive analysis, chi-square goodness of fit, chi-square test of independence, and binary logistic regression were performed to obtain the purpose of the study. In the bivariate test (chi-square test of independence) all of creative marketing and innovative branding strategies and tools were found significantly effective to attract customers in that specific industry. But binary logistic regression analysis identified only launching mobile apps and promoting Bangladesh’s tourism is significant for customer attraction in the tourism and hospitality industry of Bangladesh among different creative marketing and innovative branding strategies and tools. Bangladesh tourism and hospitality industry should practice creative marketing and innovative branding tools and strategies to attract more customers.
Contribution/ Originality
The paper`s primary contribution is to investigate the dimension of effectiveness in creative marketing and innovative branding to attract customer in the tourism and hospitality industry. The findings of the study will provide some useful marketing and branding strategies and tools for the tourism and hospitality industry of Bangladesh.

Contribution of Ready-Made Garments Industry on the Economic Development of Bangladesh: An Empirical Analysis

Pages: 295-307
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Contribution of Ready-Made Garments Industry on the Economic Development of Bangladesh: An Empirical Analysis

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DOI: 10.18488/journal.29.2020.72.295.307

Shapan Chandra Majumder , Jannatul Ferdaus

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Shapan Chandra Majumder , Jannatul Ferdaus (2020). Contribution of Ready-Made Garments Industry on the Economic Development of Bangladesh: An Empirical Analysis. The Economics and Finance Letters, 7(2): 295-307. DOI: 10.18488/journal.29.2020.72.295.307
The Ready-Made Garments (RMG) industry holds a strong position in boosting Bangladesh’s economy through earning external currencies, contributing in Gross Domestic Product (GDP) and generating employment most notably. Secondary data based this study intended to draw the overall scenario and the growth trend of this industry, mainly to empirically analyze the contribution of ready-made garments industry on the economic development of Bangladesh. The results obtained from the Fully Modified Ordinary Least Squares (FMOLS) model reveal that, ready-made garments export significantly increases gross domestic product growth of Bangladesh. Results of Granger causality test affirmed the appearance of bidirectional causal association between gross domestic product growth and ready-made garments export. Though tremendous growth is achieved in last few decades, but some severe problems are prevailing in this sector those are highly responsible for the declining trend of the contribution of ready-made garments export to Bangladesh’s gross domestic product for last five years. Therefore, it is highly recommended to take initiatives for attracting foreign direct investments, making investment friendly monetary and fiscal policies, minimizing dependency on foreign countries for technical and financial support and most importantly for ensuring the safety of workplace.
Contribution/ Originality
The paper’s primary contribution is finding that export of RMG has a significant positive impact on the economic development of Bangladesh employing FMOLS technique and this finding may be beneficial for the RMG industry to initiate imperative steps to produce international quality standard products for more export earnings.

Analysis of Demographic Factors on Perceptions of Inventory Managers towards Healthcare Performance

Pages: 289-294
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Analysis of Demographic Factors on Perceptions of Inventory Managers towards Healthcare Performance

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DOI: 10.18488/journal.29.2020.72.289.294

Aamir Rashid , Noor Aina Amirah , Yusnita Yusof , Adnan Tawfiq Mohd

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Aamir Rashid , Noor Aina Amirah , Yusnita Yusof , Adnan Tawfiq Mohd (2020). Analysis of Demographic Factors on Perceptions of Inventory Managers towards Healthcare Performance. The Economics and Finance Letters, 7(2): 289-294. DOI: 10.18488/journal.29.2020.72.289.294
The healthcare sector has proven as one of the most crucial sectors, especially during a situation like COVID-19 pandemic. Further, healthcare is an area of concern that significantly influences economic growth. Higher rates of mortalities have contributed to the issue of whether inventory managers are paying adequate attention to the ongoing pharmacy and other inventory-related operations in striving for productivity optimization. This paper aimed to determine whether there is a substantial difference between individual factors regarding the perceptions of inventory managers on healthcare performance. This research applied the quantitative method through IBM-SPSS statistics, and 200 inventory managers employed at different public healthcare facilities of Punjab, Pakistan were randomly selected for the research survey. The research found that any difference in the attributes of demography does not affect the perceptions of inventory managers towards healthcare performance and is equally essential regardless of their demographic attributes. This research is useful to the department of health, to the body of knowledge, public and private healthcare facilities. Further research could examine the mediation of demographic attributes in back-log inventories and healthcare performance.
Contribution/ Originality
This study is one of very few investigating the dimensions of disruptive factors and inventory control. The study contributes, identifying the dimensions within the constructs, to the existing literature as well as the reliability of those constructs and their relevant dimensions.

What Explains the Overwhelmingly Positive Perception towards Microfinance Institutions? Application of Firth’s Logistic Regression in a Small Sample

Pages: 276-288
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What Explains the Overwhelmingly Positive Perception towards Microfinance Institutions? Application of Firth’s Logistic Regression in a Small Sample

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DOI: 10.18488/journal.29.2020.72.276.288

Shankar Ghimire , Anna Valeva , Rong Zheng

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Shankar Ghimire , Anna Valeva , Rong Zheng (2020). What Explains the Overwhelmingly Positive Perception towards Microfinance Institutions? Application of Firth’s Logistic Regression in a Small Sample. The Economics and Finance Letters, 7(2): 276-288. DOI: 10.18488/journal.29.2020.72.276.288
This paper focuses on analyzing small-sample business survey data. We survey 129 businesses in Nepal, where a majority of businesses express an overwhelmingly positive perception towards microfinance institutions (MFIs). The survey focuses mainly on how businesses perceive the services provided by local MFIs. In order to address the bias in maximum likelihood estimation in the context of small sample size, we utilize Firth’s adjusted maximum likelihood estimation procedure in the application of logistic regression. The results show that it is the borrowing of a loan from an MFI, not the actual business performance, which influences a business owner’s perception towards the role of MFIs in various aspects of rural development. While there is no strong evidence of the MFI loans helping with the actual business performance, and thereby influencing the perceptions, we discuss the potential benefits of owning a business that may be contributing to the positive perceptions towards the institutions with which they are associated. These findings have important implications from the managerial perspective of both MFIs and governing institutions in developing countries.
Contribution/ Originality
This study documents how businesses express positive perception towards MFIs because of their membership, not necessarily because they have more favorable business outcomes. Methodologically, the paper uses Firth’s logistic regression to address the bias present in maximum likelihood estimates computed from a small sample, something common in microfinance studies.

Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan

Pages: 268-275
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Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan

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DOI: 10.18488/journal.29.2020.72.268.275

Shiza Bashir

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Shiza Bashir (2020). Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan. The Economics and Finance Letters, 7(2): 268-275. DOI: 10.18488/journal.29.2020.72.268.275
This research mainly focuses on the impacts and implications of foreign remittances and how they affect the growth and poverty reduction in an economy. It further highlights the importance that remittances have on the improvement of the living conditions and standards in Pakistani. In order to achieve this target, we retrieved time-series data from the WDI, from the year 1980 till 2017. The econometric technique ARDL is applied which shows that there is a favorable relation among the variables. Our empirical findings suggest that the recipient country shows a positive trend in economic growth as an aftermath of increased remittances. Moreover, it proves that remittances have a notable influence on the reduction of poverty and boosting living standards in Pakistan economy. This ultimately leads to improving the socio-economic condition of the country in question. Results and findings, if used efficiently, have great potential policy implications for policymakers in the field of remittances.
Contribution/ Originality
The fundamental objective of our research is to find the impact of remittances on poverty, growth, and development. The positive trends and inflows of remittances help improve the economic conditions of the country by lessening poverty and increasing positive growth levels.

An Empirical Investigation of the Impact of FDI, Export and Gross Domestic Savings on the Economic Growth in Bangladesh

Pages: 255-267
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An Empirical Investigation of the Impact of FDI, Export and Gross Domestic Savings on the Economic Growth in Bangladesh

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DOI: 10.18488/journal.29.2020.72.255.267

Md. Mamun Miah , Shapan Chandra Majumder

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Md. Mamun Miah , Shapan Chandra Majumder (2020). An Empirical Investigation of the Impact of FDI, Export and Gross Domestic Savings on the Economic Growth in Bangladesh. The Economics and Finance Letters, 7(2): 255-267. DOI: 10.18488/journal.29.2020.72.255.267
Bangladesh is a developing country with a huge population. So it is necessary to ensure better economic performance of Bangladesh. The purpose of the paper is to empirically investigate the impact of FDI, export, and gross domestic savings on the economic growth of Bangladesh and also tries to show the impact of inflation, industry value-added, and population growth on economic growth. We conduct the research with data covering the year from 1972 to 2017. Autoregressive Distributed Lag Bound Testing (ARDL BT) and Error Correction Model (ECM) are applied. The result of the ARDL model shows that the coefficient of FDI is 0.05 indicating that if FDI rises 1% then growth of the GDP will rise 0.05%. The coefficient of one year lag FDI is negative but insignificant. Again 1% rise in exports leads 0.03% rise in growth. Gross domestic savings positively affect GDP growth but statistically not significant. Inflation negatively affects the economic growth of Bangladesh. If inflation decreases by 1% then GDP growth will increase by 0.04%. Industry value added has positive effects on growth, a 1% increase in Industry value-added leads to a significant increasing in growth by 8.68%. Population growth negatively impacts economic growth. If the growth of the population decreases by 1% then 1.88% will increase the growth. Long run relation of the variables is ensured by the bound test and ECM-1 is significantly negative and indicating that adjustment is corrected by 145%. Hypotheses testing ensure except export other variables are short-run determinants of growth.
Contribution/ Originality
This study contributes to the existing literature by showing the empirical contribution of Export, FDI, Gross Domestic Savings, inflation, industry value-added, and population growth on the Economic Growth in Bangladesh using ARDL ECM approach and also be beneficial for policymakers to take necessary steps.

Exploring the Dimensions Using Exploratory Factor Analysis of Disruptive Factors and Inventory Control

Pages: 247-254
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Exploring the Dimensions Using Exploratory Factor Analysis of Disruptive Factors and Inventory Control

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DOI: 10.18488/journal.29.2020.72.247.254

Aamir Rashid Hashmi , Noor Aina Amirah , Yusnita Yusof , Tengku Noor Zaliha

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Aamir Rashid Hashmi , Noor Aina Amirah , Yusnita Yusof , Tengku Noor Zaliha (2020). Exploring the Dimensions Using Exploratory Factor Analysis of Disruptive Factors and Inventory Control. The Economics and Finance Letters, 7(2): 247-254. DOI: 10.18488/journal.29.2020.72.247.254
Healthcare industry is directly linked with human lives and face plaguing problems. Therefore, healthcare facilities minimize risks associated with deficiency of medicines or equipment. This study was carried out to find the dimensions of disruptive factors affecting inventory control at public healthcare facilities. From different healthcare facilities of District Sahiwal and Pakpattan 100 respondents were selected by utilizing random sampling. Then, Exploratory Factor Analysis was done in accordance to congregate the study objectives with a structured questionnaire. The results of this study determined two dimensions for each construct. Lastly, a test of reliability was conducted to find the acceptance level. This study broadens the scope of inventory control to healthcare. However, the study was geographically limited and thus, should be extended to other regions as well. Further, for sustainable performance, the study results should act as an enlightening figure for government and especially the healthcare facilitators in the identification of problems.
Contribution/ Originality
This study is one of very few investigating the dimensions of disruptive factors and inventory control. The study contributes, identifying the dimensions within the constructs, to the existing literature as well as the reliability of those constructs and their relevant dimensions.

Factors Affecting Profitability of General Insurance Companies in Indonesia

Pages: 236-246
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Factors Affecting Profitability of General Insurance Companies in Indonesia

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DOI: 10.18488/journal.29.2020.72.236.246

Denny Maulana , Bambang Mulyana

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Denny Maulana , Bambang Mulyana (2020). Factors Affecting Profitability of General Insurance Companies in Indonesia. The Economics and Finance Letters, 7(2): 236-246. DOI: 10.18488/journal.29.2020.72.236.246
This research work shows the impact on profitability by Return on Assets (ROA) on capital adequacy measured by Risk Based Capital (RBC), Return on Investment (ROI) and Solvency by Debt Equity Rate (DER) measured). Then prove the RBC and ROI effect on DER, then demonstrate the RBC 's influence on ROA through DER, demonstrate the ROA impact on the general insurers reported upon on Indonesian Stok Exchange 2015-2018. The design of the research was causal research. Technical sampling using a deliberate method of sampling. During the four-year observation period, eight companies were obtained using this method that met the criteria of 14 companies. 32 samples in total. Study of linear regression model and path analysis is utilized in data analysis process. ROI has a positive and significant ROA effect, and DER has an adverse effect and important to ROA; The report's result shown that RBC has no significant ROA impact. Then RBC has an impact on DER, but ROI has a positive and important effect on DER. RBC via DER then has no significant impact on ROA, whereas ROI via DER has a positive and substantial impact on ROA. RBC has a significant negative effect on DER, and ROI has a significant and positive effect on DER. Then RBC by DER does not have a significant ROA effect, while ROI by DER has a positive and significant ROA impact. RBC then has a significant negative impact on DER, while ROI has a positive and important impact on DER.
Contribution/ Originality
This research is one of the first empirical studies to examine the profitability factors of general insurance policyholders in Indonesia. The study findings reveal these factors and their importance in terms of profitability for insurance companies.

Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis

Pages: 218-235
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Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis

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DOI: 10.18488/journal.29.2020.72.218.235

Ejiro U. Osiobe

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Ejiro U. Osiobe (2020). Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis. The Economics and Finance Letters, 7(2): 218-235. DOI: 10.18488/journal.29.2020.72.218.235
This paper investigates the causal relationship between government spending on education and economic growth in eight selected Latin American countries by using panel unit root test and panel cointegration analysis for the period 2000-2014. A three-variable model was formulated with trade volume as the second independent variable. The findings conclude that government spending on education and economic growth in the selected countries is positively and significantly associated, in the long and short-run, with evidence of a bidirectional Granger causal relationship between the dependent and the variable of interest, a unidirectional Granger causal relationship between trade volume and economic growth. The implication of our results shows that government secondary school spending on education has a positive impact on the selected countries, and our analysis can be replicated with other countries.
Contribution/ Originality
The paper's main contribution to the existing literature by investigating the cointegration and Granger causal relationship between human capital and economic growth for eight selected Latin American countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, and El Salvador. The study is one of the few studies which have examined this relationship, which makes it unique and of great value to the field of economics and economic development.

The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies

Pages: 200-217
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The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies

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DOI: 10.18488/journal.29.2020.72.200.217

Simon Rafaqat , Sahil Rafaqat

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Simon Rafaqat , Sahil Rafaqat (2020). The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies. The Economics and Finance Letters, 7(2): 200-217. DOI: 10.18488/journal.29.2020.72.200.217
Merger and acquisition is a management strategy for corporate restructuring in which consolidation of companies can result in rapid business growth. The paper aims to analyze the impact of merger and acquisition on the financial performance of the business organizations in the technology sector. Therefore, the nine NASDAQ listed technology companies have been selected for this study. The financial data has been collected from the SEC, NASDAQ, and annual reports of the companies. The total study period comprises of twenty-two years ranging from 1996 to 2017. The statistical tool, Independent sample t-test, is applied on the fourteen financial ratios for four years before the merger and four years after the merger. The results of the paper show, that there is an improvement in liquidity, efficiency, and profitability, whereas the leverage ratio has deteriorated during post-acquisition. The study further examines that the profitability ratios are found to be accompanied by a more significant increase than a significant decrease in profitability ratios, and liquidity ratios found to decrease significantly more than significantly increased liquidity ratios. The cash flow has only increased significantly, whereas the leverage ratio has decreased significantly. However, the significant increase and decrease has remained equal in efficiency ratios during the post-acquisition period. In conclusion, the merger and acquisition has improved the overall financial performance. However, profitability and cash flow significantly increased, and leverage and liquidity ratios significantly declined.
Contribution/ Originality
This study is one of the very few studies which have investigated the significant effect of the implementation of merger and acquisition strategy on the financial performance of the listed technology firms in NASDAQ over the period from 1996 to 2017.

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Pages: 189-199
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Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

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DOI: 10.18488/journal.29.2020.72.189.199

Mohammad Sahabuddin , Sabreena Khan Synthia

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Mohammad Sahabuddin , Sabreena Khan Synthia (2020). Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry. The Economics and Finance Letters, 7(2): 189-199. DOI: 10.18488/journal.29.2020.72.189.199
This study aims to investigate the factors which have impact on profitability of the manufacturing firms of Bangladesh. The determinants are divided into three categories i.e. firm-specific, industry-specific and macroeconomic factors and the profitability of the firms is defined with return on assets (ROA). To investigate this relationship, the study has taken into consideration of 508 sample observations from 113 Bangladeshi listed manufacturing firms covering the year from 2014 to 2018. The model this study used, includes the dynamic aspect of profitability and thus a dynamic panel estimator i.e. the General Method of Moments (G.M.M.) was applied. The result of this study shows that firm-specific factors (age, labor cost), industry-specific factor (concentration) and macroeconomic factors (G.D.P. growth rate, inflation) have significant influence on manufacturing firm’s profitability.
Contribution/ Originality
This study examined the Panel data by using General Method of Moments (G.M.M.) to investigate the determinants of profitability which contributes to the existing literature in manufacturing industry of Bangladesh by introducing variables from three different categories; firm-specific, industry-specific and especially macroeconomic factors for the very first time.

Factors Influencing Audit Expense and Quality in an Emerging Economy: A Study on Bangladesh

Pages: 179-188
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Factors Influencing Audit Expense and Quality in an Emerging Economy: A Study on Bangladesh

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DOI: 10.18488/journal.29.2020.72.179.188

Tanvir Ahmed , Shehrly Mahboob Hera , Tasmima Jannat Rimi , Tanvir Hassan

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Tanvir Ahmed , Shehrly Mahboob Hera , Tasmima Jannat Rimi , Tanvir Hassan (2020). Factors Influencing Audit Expense and Quality in an Emerging Economy: A Study on Bangladesh. The Economics and Finance Letters, 7(2): 179-188. DOI: 10.18488/journal.29.2020.72.179.188
This determination of this study to find the association between audit expense, and the significance of the relationship in an emerging economy. Whereas, audit quality is associated with audit expense of a company. The regression model used here taken from (Simunic, 1980). This study is based on five different hypothesis. Descriptive statistics, multiple linear regression, correlation analyses are used for describing the results. For reflecting the proper findings, 23 companies from IT, cement and ceramic sectors are chosen here as sample. Some companies are taken from miscellaneous companies from Dhaka Stock Exchange (DSE). The findings imitates that audit expense is highly dependent on the company size, accounting firm’s type, equity-debt ratio. Company size and accounting firm’s type are positively significant where equity-debt ratio is negatively significant. Whereas, audit expense also depends on the date of report making. Therefore, big companies need to be concerned about their audit quality, as audit quality could be hampered because of overgenerous compensation. Practical. This outcome will help the stakeholders of the company to judge about the reason of fluctuating audit expense, and probable recommendation as well. Value-The originality of this study to define the fluctuations of audit expense in diverse ways, and find the probable reason of the fluctuations. This paper will help stakeholders to find the probable causes of fluctuating audit quality.
Contribution/ Originality
This study is one of the very few studies, which have investigated the effect of corporate governance and profitability variables on audit expense and quality. This paper contributes the first logical analysis for stakeholders to understand, elucidate and control the audit quality by the practical recommendations of this paper.

Does Corruption Grease or Sand the Wheels of Economic Growth in Ghana? An ARDL Bounds Test

Pages: 162-178
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Does Corruption Grease or Sand the Wheels of Economic Growth in Ghana? An ARDL Bounds Test

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DOI: 10.18488/journal.29.2020.72.162.178

Antwi, Stephen Kwadwo , Kong, Yusheng , Mohammed, Musah , Donkor, Mary , Kasim, Hamza

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Antwi, Stephen Kwadwo , Kong, Yusheng , Mohammed, Musah , Donkor, Mary , Kasim, Hamza (2020). Does Corruption Grease or Sand the Wheels of Economic Growth in Ghana? An ARDL Bounds Test. The Economics and Finance Letters, 7(2): 162-178. DOI: 10.18488/journal.29.2020.72.162.178
This paper seeks to ascertain the relationship between corruption and economic growth in Ghana using time-series secondary data for the period 1984–2016. We employ auto-regressive distributed lags (ARDL) model to estimate the long-term relationship between corruption and economic growth in Ghana. Corruption is estimated to have a significant negative effect on per capita growth both in the short-term and long-term. While trade openness shows a positive effect on growth, inflation and capital formation show a significant negative influence on growth. We find the variables to be cointegrated and both the long-run and short-run parameters provide evidence of a negative relationship between corruption and economic growth. While capital formation and inflation also show negative effect on growth, trade openness shows a positive effect. The government should endeavour to effectively combat the destructive phenomena of corrupt practices that weaken the institutional quality through the adoption of functional regulatory measures. Transparency of governmental functions should be enhanced through the active involvement of citizens in governance as well as minimizing the discretion at the disposal of bureaucrats.
Contribution/ Originality
This paper contributes to the existing literature by introducing corruption in an endogenous growth model in the context of Ghana. The paper is the first attempt to employ unique Ghanaian data to estimate the long-term effects of corruption on economic growth, a focused evaluation than has been previously done.

Drivers Behind the Financial Insolvency: An Empirical Study on the Textile Industry in Bangladesh

Pages: 148-161
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Drivers Behind the Financial Insolvency: An Empirical Study on the Textile Industry in Bangladesh

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DOI: 10.18488/journal.29.2020.72.148.161

Sonia Rezina , Md. Shahnawaz Mostofa

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Sonia Rezina , Md. Shahnawaz Mostofa (2020). Drivers Behind the Financial Insolvency: An Empirical Study on the Textile Industry in Bangladesh. The Economics and Finance Letters, 7(2): 148-161. DOI: 10.18488/journal.29.2020.72.148.161
The main purpose of the research study is to assess the financial soundness of the textile industry in Bangladesh. The effects of financial ratios have also been examined. The research has been designed based on published quantitative data in the stock market. 35 listed companies that consist of A-Category, B-Category and Z-category companies were analyzed. In this research study, five financial ratios have been analyzed and tested using the Altman Z-score model. Statistical correlation among the financial ratio was examined to depict the picture of financial distress among the different categories of companies in Textile industries in Bangladesh. Most of the A category companies are in Safe Zone or financially sound, B category companies are into Grey Zone and Z category companies are in distress zone. The outcome of the study can be valuable for the financial managers to take important managerial as well as financial decisions, the shareholders to take appropriate investment decisions and bankers to evaluate the prospective borrowers’ credit risk and renew loans of the concerned textile manufacturers of the country.
Contribution/ Originality
This study is one of the very few studies which have examined the direct relationship of financial ratios with Z-score values regarding different categories of listed textile companies in the stock exchange by using panel data analysis.

Impact of Savings on Economic Growth in Africa

Pages: 136-147
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Impact of Savings on Economic Growth in Africa

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DOI: 10.18488/journal.29.2020.72.136.147

Matthew O. Gidigbi , Manu Donga

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Matthew O. Gidigbi , Manu Donga (2020). Impact of Savings on Economic Growth in Africa. The Economics and Finance Letters, 7(2): 136-147. DOI: 10.18488/journal.29.2020.72.136.147
This paper investigates the impact of savings on economic growth in Africa. Annual data covering thirty African countries based on data availability for the period of thirty-five years starting from 1980 were used. The study was found to be imperative because extant studies in this line were of mixed results. Panel Estimated Generalised Least Squares (EGLS) with pooled, fixed and random effects estimations were carried out, but Pooled Panel EGLS with cross-section Seemingly Unrelated Regression (SUR) weight estimation was explained. The study revealed that savings contribute 3.96 per cent to economic outputs when increased by a percentage. Meanwhile, a per cent increment in each of the foreign direct investment (FDI) and current account balance will positively impact economic growth by 18.7 and 4.6 per cent respectively. Also, there is no causality between domestic saving and economic growth. But bidirectional causality exists between foreign direct investment and domestic saving. The study concluded that saving is relevant to economic growth in Africa, though, its contribution is very low when compared to FDI’s impact but very important. The current account balance is very relevant to foreign direct investment and domestic saving. It is recommended that policies favouring savings should be encouraged such as universal coverage pension and grass-roots oriented saving schemes. Also, a surplus current account balance should be maintained in the continent to attract more foreign direct investment and improve domestic savings.
Contribution/ Originality
This study reinforces the hypothesis of no causality between saving and economic growth especially in Africa refutes both Solow and Keynes precedence hypothesis as absence of causality nullifies the hypothesis. Although, saving is positively link to growth, but Current Account Balance is of essence in driving Savings and FDI.

Non-Linear Effects of Intellectual Property Rights on Technological Innovation: Evidence from Emerging and Developing Countries

Pages: 122-135
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Non-Linear Effects of Intellectual Property Rights on Technological Innovation: Evidence from Emerging and Developing Countries

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DOI: 10.18488/journal.29.2020.72.122.135

Kamilia Loukil

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Kamilia Loukil (2020). Non-Linear Effects of Intellectual Property Rights on Technological Innovation: Evidence from Emerging and Developing Countries. The Economics and Finance Letters, 7(2): 122-135. DOI: 10.18488/journal.29.2020.72.122.135
The protection of Intellectual Property Rights (IPR) is a key determinant of innovation. Following the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), all member states of the World Trade Organization are called upon to introduce high intellectual property rights standards. Hence the importance of the issue relative to IPR. Recent studies suggest that IPR protection stimulates innovation only under certain conditions. In this study, we suppose that IPR have a positive impact on technological innovation only in countries with high levels of economic development. The objective of this study is to examine the relationship between intellectual property rights, economic development and technological innovation in the context of emerging and developing countries. To measure innovation, we use patent applications filed by residents of a given country with the United States Patent and Trademark Office. IPR is measured by the Ginarte and Park index. Panel Threshold Regression is applied to data of 55 emerging and developing countries for the period 1980-2009. The estimation results provide evidence for the existence of nonlinear relationship depending on economic development level. We conclude that « one size does not fit all ».
Contribution/ Originality
This study is one of very few studies which have investigated the threshold effects in the relationship between intellectual property rights and technological innovation in emerging and developing countries.

Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach

Pages: 112-121
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Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach

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DOI: 10.18488/journal.29.2020.72.112.121

Mohammed, I.D. , Sule, Abubakar

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Mohammed, I.D. , Sule, Abubakar (2020). Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach. The Economics and Finance Letters, 7(2): 112-121. DOI: 10.18488/journal.29.2020.72.112.121
This study examine deficit financing asymmetry and Nigeria’s economic growth using time series quarterly data covering the period of 2000 to 2019. The study is hinged on Keynesian, Monetary Neo-Liberal theoretical postulations to ascertain the asymmetry and significance relationship between deficits financing and Nigerian economy. The study applied Non-Linear Autoregressive Distributed Lag (NARDL) technique. The estimated NARDL model reveals that both positive and negative deficits financing innovation reduces economy growth; however, the impact of negative deficit financing innovation is greater than the positive innovation. In addition, the Nigerian economy is also driven by weak institutions and low level of savings culture, which is evidence in negative signs of both coefficients of savings and quality institution. This study therefore lend support for fiscal governance through review of laws that made the existing institutions and further strengthen in line with global best practice to guide and monitor the implementation of deficit financing in investment-oriented projects that can translates to better standard of living of the citizenry.
Contribution/ Originality
This study examined deficit financing asymmetry and Nigeria’s economic growth using time series quarterly data covering the period of 2000 to 2019. This study uses NARDL model against other techniques in the reviewed empirical works and the findings reveals that both positive and negative deficits financing innovation reduces economy growth. In addition, the Nigerian economy is also driven by weak institutions and low level of savings culture, which is evidence in negative signs of both coefficients of savings and quality institution.

Infrastructure Development, Capacity Utilization and Manufacturing Value Added in Nigeria

Pages: 104-111
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Infrastructure Development, Capacity Utilization and Manufacturing Value Added in Nigeria

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DOI: 10.18488/journal.29.2020.72.104.111

Richardson Kojo Edeme , Johnson Nchege , Idiota Dorathy

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Richardson Kojo Edeme , Johnson Nchege , Idiota Dorathy (2020). Infrastructure Development, Capacity Utilization and Manufacturing Value Added in Nigeria. The Economics and Finance Letters, 7(2): 104-111. DOI: 10.18488/journal.29.2020.72.104.111
One of the greatest challenges being grappled with by most developing countries is to boost manufacturing sector performance. In achieving this however, emphasis has been laid on the role of infrastructural development coupled with utilization of capacity in the manufacturing sector. Previous studies have focused on the effect of infrastructure on manufacturing productivity. This study differs from the rest by examining the impact of infrastructure development and capacity utilization on manufacturing value added, using Nigeria data from 1980-2019. Our framework of analysis employed electricity, average capacity utilization, government capital expenditure and manufacturing value added annual percentage growth as variables of analytical relevance. Finding indicates that electricity had negative and insignificant effect on manufacturing value added while manufacturing capacity utilization and capital expenditure had positive and significant effect on manufacturing value added. The result reiterates that capital expenditure on social and economic infrastructure has the capacity to improve manufacturing value added.
Contribution/ Originality
This study is one of the few studies which have investigated infrastructure development, capacity utilization and manufacturing value added in Nigeria.

Export- Led Growth Hypothesis for Ghana: A TVAR & TVECM Analysis

Pages: 92-103
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Export- Led Growth Hypothesis for Ghana: A TVAR & TVECM Analysis

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DOI: 10.18488/journal.29.2020.72.92.103

Shuffield Seyram Asafo

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Shuffield Seyram Asafo (2020). Export- Led Growth Hypothesis for Ghana: A TVAR & TVECM Analysis. The Economics and Finance Letters, 7(2): 92-103. DOI: 10.18488/journal.29.2020.72.92.103
This study employs threshold models to examine the export-led growth hypothesis (ELG) for Ghana from 1970-2018. The analysis commences as follows. Firstly, using real GDP as threshold variable, the study conducts a non-linearity test for the threshold vector autoregressive (TVAR) model as against the linear vector autoregressive (VAR) model. Secondly, the study evaluates whether the ELG hypothesis is best explained with linear co-integration models or threshold co-integration models. The empirical results indicate that, the ELG hypothesis is supported by the two-threshold vector autoregressive model (threshold values of 2.35 and 2.46) and a two-threshold vector error correction model (threshold values -0.50 and -0.20). The error correction term of the TVECM is negative and statistically different from zero, signifying speed of long run convergence. In terms of threshold co-integration, real GDP versus real exports and real GDP vs real imports are threshold co-integrated. In contrast, the null hypothesis of linear co-integration is not rejected for real export versus real import.
Contribution/ Originality
This study uses new estimation methodology to evaluate the export – output growth nexus for Ghana for the period spanning from 1970-2018.

Testing the Validity of Gibrats Law in the Context of Profitability and Leverage

Pages: 85-91
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Testing the Validity of Gibrats Law in the Context of Profitability and Leverage

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DOI: 10.18488/journal.29.2020.72.85.91

Ibrahim Nandom Yakubu

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Ibrahim Nandom Yakubu (2020). Testing the Validity of Gibrats Law in the Context of Profitability and Leverage. The Economics and Finance Letters, 7(2): 85-91. DOI: 10.18488/journal.29.2020.72.85.91
This study seeks to test the validity of Gibrat’s Law of Proportionate Effect for listed firms in Ghana over the period 2008-2017. The study also investigates whether firms’ profitability and leverage affect the validity of Gibrat’s Law. Employing the fixed effects regression technique, the results show that Gibrat’s Law does not hold for all firms when the effect of firm size on growth is directly examined. In the presence of profitability, Gibrat’s Law is valid for both financial and non-financial firms. The findings further observe that, while Gibrat’s Law holds for non-financial firms in the presence of leverage, it is rejected for financial firms. Given the direct and significant impact of size on firm growth, the study concludes that Gibrat’s proposition that the growth rate of a given firm is independent of its size does not hold for listed firms in Ghana. The study discusses relevant recommendations based on the findings.
Contribution/ Originality
This study seeks to test the validity of Gibrat’s Law of Proportionate Effect for listed firms in Ghana over the period 2008-2017.