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- ItemLending Technologies, Firm Characteristics and Small Business Efficiency in South Africa(Economies, 2022-11-18) Mbedzi, E.; Simatele, M.Internal factors of Small, Micro and Medium Enterprises (SMMEs) determine their technical efficiency, while external funding characteristics improve the quality of internal factors. Since the type of lending institutions and lending technologies primarily influence the lending decisions of financial institutions, firms’ technical efficiency may be linked to such external factors. Literature on determinants of the technical efficiency of SMMEs mainly focuses on internal factors excluding the financial access paradigm which stifles the effectiveness of internal factors on technical efficiency. Based on a sample of 321 randomly selected SMMEs from Eastern Cape Province in South Africa, the study measures technical efficiency using Data Enveloping Analysis and differentiates technical efficiency among firms using Post Hoc Test Pairwise Comparisons derived from factorial ANOVA. Both main and interaction effects were captured in the analysis. Our results, which pinpoint four main findings, show technical efficiency paths followed by firms vary significantly as a result of both internal and external factors. In particular, the effects of other factors are amplified by race. As a consequence, three main contributions emerge from the study.
- ItemOUTREACH AND FINANCIAL SUSTAINABILITY: A DEPOSITORY MICROFINANCE PERSPECTIVE: Evidence from Low Income Sub-Saharan Africa(Journal of Applied Economics and Business, 2022-09) Moyo, Z.; Mukorera, S.; Nyatanga, P.This article examined the relationship between outreach and financial sustainability of 64 Deposit-taking Microfinance Institutions sampled across 18 Low Income Sub-Saharan African countries. The System Generalized Method of Moments was employed utilising 2006-2017 panel data that was obtained from the Microfinance Information Exchange. The estimated results revealed that there is no significant relationship between financial sustainability and outreach depth but financial sustainability is negative and significantly related to outreach breadth. The study concluded that there is neither mission drift nor a trade-off in outreach depth but a trade-off exists in outreach breadth in depository microfinance. The practical implication is that Deposit-taking Microfinance Institutions should develop appropriate deposit products for each market segment identified and also leverage on cost-efficient deposit-taking methods such as the use of agents and mobile phone banking technology. The policy recommendation is that mobile phone use should be followed by reduction of the transaction costs through subsidisation.
- ItemDeposits and financial sustainability of deposit-taking microfinance institutions: evidence from low income Sub-Saharan Africa(Afro-Asian Journal of Finance and Accounting, 2024) Moyo, Z.; Mukorera, S.; Nyatanga, P.This study examined the relationship between deposits and financial sustainability of Deposit-taking Microfinance Institutions (DTMFIs) due to a number of such institutions having collapsed previously in Africa. Panel data spanning 2006 to 2017 from the Microfinance Information Exchange of 64 DTMFIs sampled across 18 Low Income Sub-Saharan Africa (LISSA) countries was utilised. Through probit regression, the study found that the likelihood of attaining financial sustainability by the LISSA DTMFIs is negatively affected by small scale deposits, unfavourable loan loss provisions, deteriorating loan portfolio quality and costly branch coverage. The study recommends low cost, large scale deposit operations, efficiency in managing operating expenses, credit enhancements and restrictive deposit-taking licencing.
- ItemImpact of tangible book value and operating earnings on firm value variants in South Africa(AOSIS, 2021-01-29) Sixpence, A.; Adeyeye, O.P.; Rajaram, R.Orientation: Empirical knowledge regarding which financial statement variables are linked to firm value is critical for profitable equity investment. Research purpose: The study examines the impact of earnings before interest and taxes from continuing operations (EBITCOs) and tangible book value (TBV) on firm value variants (enterprise value and market capitalisation) in South Africa. Motivation for the study: The need to determine the impact of book value and operating income on firm value post-global financial crisis motivated this study. Furthermore, conflicting empirical results motivated this investigation to determine if value relevance depends on the measure of firm value used by employing two variants of firm value. Research approach/design and method: A dynamic panel of 50 firms was used, employing an autoregressive distributed lag model in two-step system generalised method of moments (GMM). Main findings: Results showed that EBITCO is value relevant regardless of the firm value variant used. Tangible book value lacks value relevance irrespective of the firm value measure used. Practical/managerial implications: During a takeover bid, investors should use EBITCO in valuing target firms and disregard TBV. New owners in an acquisition are guaranteed value for their money because of the link between EBITCO and enterprise value. Accounting standards setters should maintain the requirement that mandates companies to produce comprehensive financial statements. Company executives should implement strategies that boost EBITCO as a way of maximising shareholder value. Contribution/value-add: Conservative measures of variables were adopted, something rarely done by scholars. Thus, the study contributes to the scant body of knowledge on value relevance that utilises conservative financial statement variable measures.
- ItemFinancing Structure and Financial Sustainability of Selected SADC Microfinance Institutions (MFIs)(2018) Bayai, I.; Ikhide, S.This study analyses selected Southern Africa Development Community (SADC) Microfinance Institutions (MFIs) in delineating how commercialized financing structure relates to financial sustainability given the need to control poverty through financially sustainable MFIs. The study takes from a recent SADC microfinance survey which recommended financial rescue packages for ailing MFIs to proffer financial sustainability. This survey failed to specify the form of financing which supports financial sustainability in addition to the inconclusive and little evidence in this regard. We note that though the financing structure and the level of financial sustainability varies with countries, MFIs are generally financially unsustainable. A robust probit model framework affirms the role of financing structure on financial sustainability. Portfolio at risk, cost efficiency and costs linked to deposit attraction explain financial sustainability. We suggest the availing of more donations, upgrading risk management and improving cost efficiency to induce financial sustainability.