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Evaluating the Model of Demand for Money in Nigeria

Pages: 1-13
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Evaluating the Model of Demand for Money in Nigeria

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DOI: 10.18488/journal.89.2020.61.1.13

Fasipe, Temidayo B. , Wasiu A. Yusuf

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Fasipe, Temidayo B. , Wasiu A. Yusuf (2020). Evaluating the Model of Demand for Money in Nigeria. Financial Risk and Management Reviews, 6(1): 1-13. DOI: 10.18488/journal.89.2020.61.1.13
In Nigeria, demand for money is frequently affected by factors that regularly experience shocks in the economy. Therefore, regular adjustment and reforms are done to monetary policy which creates a lot of uncertainties in the market. This paper therefore examined the demand for money (narrow money, M1) in Nigeria, using quarterly time series data from 2006 to 2018, the study attempted multiple OLS regression analysis and ARDL. The result found out that money demand function cannot be appropriately estimated by OLS estimation technique due to the presence of the lagged value of both the dependent and independent variables. Although, the no long run relationship among the variables but the result indicates that M1 is largely influenced by inflation, exchange rate, MPR (Monetary Policy Rate), and savings as well as real GDP to some extent; particularly in the short run. It was observed from the analysis that economic units in Nigeria are shedding more of cash assets (Naira) as inflation increases while stocking up on foreign cash and assets (dollar and foreign denominated assets) as shown by the positive-related exchange rate.
Contribution/ Originality
This study contributes to the existing literature by examining the demand for money (narrow money, M1) in Nigeria and using quarterly time series data from 2006 to 2018, the study attempted multiple OLS regression analysis and ARDL.

Evaluating the Effectiveness of CAPM and APT for Risk Measuring and Assets Pricing

Pages: 14-21
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Evaluating the Effectiveness of CAPM and APT for Risk Measuring and Assets Pricing

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DOI: 10.18488/journal.89.2020.61.14.21

Fahim Afzal , Pan Haiying

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Fahim Afzal , Pan Haiying (2020). Evaluating the Effectiveness of CAPM and APT for Risk Measuring and Assets Pricing. Financial Risk and Management Reviews, 6(1): 14-21. DOI: 10.18488/journal.89.2020.61.14.21
Persistent with the problem of quantifying the risk associated with securities, this study examines the applicability and validity of Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) while evaluating the stock prices and returns of listed companies in the Pakistan stock exchange. While examining the applicability of CAPM and APT, this study considers the stock return of top ten sectors listed in stock exchange from the period of 2014 to 2019. The result shows that the application of APT for risk estimations may not be showing satisfactory results from the observed data. On average, the p-value is more than 30% for all factors which should be less than 5%. Therefore, in order to compare the application of methods and find out the stock risk, it can be concluded that CAPM approach is more reliable than APT. Thus, it is suggested to adopt the CAPM approach to estimate the realistic stock returns. Additionally, the investor can also consider different indigenous and exogenous economic factors according for calculating market risk and maximizing the return.
Contribution/ Originality
This study contributes in the existing literature in a way to show that CAPM is still a valid tool to estimate the return in Pakistani capital market, which implies that the market risk can better be estimated by the companies. Investors must consider the market index performance for realistic stock return rather to follow other economic indicators.

The Relationship between Creative Accounting Risks and Auditing Risks from the Perspective of External Auditors in Saudi Arabia

Pages: 22-39
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The Relationship between Creative Accounting Risks and Auditing Risks from the Perspective of External Auditors in Saudi Arabia

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DOI: 10.18488/journal.89.2020.61.22.39

Wejdan Hassan M. Ghamri

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Wejdan Hassan M. Ghamri (2020). The Relationship between Creative Accounting Risks and Auditing Risks from the Perspective of External Auditors in Saudi Arabia. Financial Risk and Management Reviews, 6(1): 22-39. DOI: 10.18488/journal.89.2020.61.22.39
The present study aimed to identify the relationship between creative accounting risks and auditing risks from the perspective of external auditors in Saudi Arabia. The sample comprised licensed auditors who serve in Saudi statutory audit offices. The outcomes showed that external auditors were aware of creative accounting risks. In addition, their professional technical factors, such as professionalism, commitment to training programs and continuing education, mentorship, considering professional standards in auditing, good planning for external auditing, their supervision of auditing teamwork, and auditing fees, enormously helped identify creative auditing practices. There were no statistically significant differences in the external auditors' estimates of the effect of creative accounting risk on auditing risks according to the variables of (academic qualification, professional qualification, occupation, and experience). No statistically significant differences were found in the external auditors' estimates of the external auditor's responsibility to detect creative accounting practices according to these variables. The research recommends giving concern to the concept of creative accounting risks, and set the standards and procedures that the auditor must follow to address these practices because of their negative effects on the reliability of the financial statements.
Contribution/ Originality
This study was the first in Saudi Arabia to identify the external auditors' views on the impact of creative accounting risks on auditing. The findings will encourage statutory audit offices to consider detecting creative accounting practices, and thus confidence in financial reports is promoted.