Empirical Link between Macroeconomic Policy Variables and the Performance of Quoted Agro-Based Firms in Nigeria

Bassey, Nsikan Edet; Okeke, Chinyere Charity; Edet, Mfon Efiong

doi:10.12735/as.v3i1p21

Cited by 4 publications

(5 citation statements)

References 7 publications

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“…This is expected because a rise in price of foreign currency would reduce productivity of domestic goods in the industrial product sector. This finding is consistent with Bassey et al (2015) where the performances of firms in Nigeria are impacted by foreign exchange movements.…”

Section: Resultssupporting

confidence: 89%

“…Exchange rate also significantly affects Shariah-compliant firms’ performance where exchange rate depreciation improves the competitiveness of the export market. This is in line with Bassey et al (2015) where a rise in foreign exchange rate results in a rise in non-Shariah-compliant firms’ profitability. Depreciating domestic currency also helps to boost the firms export through relatively cheaper foreign price also confirmed by Simiyu and Ngile (2015).…”

Section: Discussionsupporting

confidence: 85%

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External and internal determinants of performances of Shariah and non-Shariah compliant firms

Mohd-Raff

2019

IMEFM

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Purpose This study aims to provide comprehensive models that investigate the combination of both external fundamentals and internal characteristics on firm performance and if there is any difference between Shariah and non-Shariah compliant firms. The objective of this paper therefore is to analyze the significant relation between external fundamentals, internal characteristics and firm performance. Design/methodology/approach Panel data regression analyses are applied to determine significant results. It helps to control for unobserved factors of firm heterogeneity, which may result in spurious regression. Findings Most internal firm characteristics are found to be significant, but the same cannot be said for external fundamentals. Firm size is found to be very significant in driving both sets of firm performances. Financial distress in term of higher level of leverage is found to be a negative driver of non-Shariah-compliant firms’ performance in terms of return on asset but not for Shariah firms consistent with Islamic finance understanding. Shariah-compliant firms with higher liquidity tend to perform much better than less liquid firms, but the same is not found for non-Shariah-compliant ones. Research limitations/implications This study is limited to the industrial production sector and compares both Shariah and non-Shariah compliant firms. Practical implications This study adds new findings to clarify the roles of external macroeconomic fundamentals and internal characteristics determinants on firm performance. Findings from this study combine relevant information on different sets of determinants on firm performance and produce empirical evidence beneficial to both sets of Shariah and non-Shariah compliant firms in the industry. Originality/value This paper fulfills the need for firms to understand the external and internal environment for continuous survival and performance. It is therefore important for firms to recognize the possible factors which may influence their performance and mechanisms to sustain their performance for long-term survival.

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Section: Resultssupporting

confidence: 89%

Section: Discussionsupporting

confidence: 85%

External and internal determinants of performances of Shariah and non-Shariah compliant firms

Mohd-Raff

2019

IMEFM

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“…Return on asset responds the most to macroeconomic shocks. Bassey et al [27] agree with Kelilume [28] in reporting that exchange rate has a negative impact on quoted agro-based firms, while energy consumption per capita, installed capacity utilisation rate, and total commercial bank credit to small-scale industries impact their performance positively. Nanda and Panda [15] reported that the nominal exchange rate better explains profitability and emphasises the difference in the effect of nominal and real exchange rates.…”

Section: Literature Reviewmentioning

confidence: 86%

Corporate Performance in Nigeria: Insights from Economic-Specific Shocks

Omoregie,

Olofin

2024

J. Econ. Manage. Trade.

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Aims: This study investigated the impact and contributions of macroeconomic factors to corporate performance by considering the contributions of three key market segments in the economy: international, money, and goods markets. Methodology: This study concentrated on Nigeria, and the time series data span from January 1995 to December 2022. Given the mixed order of integration among the variables of interest, the analysis was based on the SVAR/HD estimations, which investigate shocks based on theoretical restrictions and generate each variable's contributions to corporate performance. Inferences are based on the impulse response, variance decomposition and historical decomposition. Results: Based on Structural One S.D. Innovations ± 2 S.E, the study's results underscore the vulnerability of Nigerian businesses to exogenous shocks and speculative markets (44.63%), with the international market exerting the most significant influence on corporate performance through exchange rate movements (32% of 44.63%), followed by the money market. Notably, the variables under consideration demonstrate varying relationships over different time periods. In the short-term, oil prices, government deficits, and inflation positively impact corporate performance, but this effect reverses to negative in the medium to long term. Conversely, the exchange rate initially has a negative effect but shows a positive long-term impact. Surprisingly, the impact of money supply and economic growth on corporate performance is found to be negligible. The study further reveals that firm-level endogenous shocks exert more influence on corporate performance development (55.37%) than exogenous macroeconomic factors (44.63%). Conclusion: This study provides actionable insights for decision-makers. The research suggests that corporate managers can enhance firm performance by adopting strategic hedging strategies against adverse exogenous international market and money market factors while focusing more on endogenous factors and choices within their direct control, which accounts more for corporate performance outcomes than non-controllable exogenous factors. Policymakers should pursue policies that enhance the macroeconomic climate within which businesses operate, especially in the areas of stable exchange rate, interest rate and inflation targeting policies.

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“…CBN (2017) also classified Nigeria among one of those countries where entrepreneurial development is grossly bewildered by credit constraint. Other studies carried out on agro based firms' performances by Bassey, Arene and Okpukpra, (2014), Bassey, Okeke and Edet, (2015) and Bassey, Asinya and Amba, (2014) have attributed the poor performance of agro-based firms in Nigeria to insufficient funding and lack of formal credit access. Consequently, agro-processors are left at the mercy of informal lenders that do not only charge outrageous interest rates but also loan in small volumes and in short durations that deters investment in modern long term processing technologies.…”

Section: Analysis Of Credit Access and Utilization Among Oil Palm Fru...mentioning

confidence: 99%

“…In addition to employment creation and income generation, they are also sources of food for the teeming population as well as raw materials for our industries. As a result of their enormous contribution to the growth and development of several world economies, they are aptly referred to as 'the engine of growth and catalyst of socioeconomic transformation of any country'' (Onuwere, 2008 in Bassey, Okeke andEdet (2015). This justifies the numerous efforts of successive governments of Nigeria in providing credit to this subsector.…”

Section: Analysis Of Credit Access and Utilization Among Oil Palm Fru...mentioning

confidence: 99%

Analysis of Credit access and utilization among oil Palm Fruits processors in Abak Agricultural Zone, Akwa Ibom State, Nigeria

Bassey

2023

AKSUJAEERD

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The study estimated the determinants of credit access and utilization by oil palm fruit processors in Abak Agricultural Zone, Akwa Ibom State, Nigeria. Data was collected using questionnaire from 140 palm oil processors that were randomly selected through a multi-stage procedure and analyzed using descriptive statistics and the Heckman’s two stage selection model. Findings revealed that of a total sum of N 11,256,500 accessed as credit by oil palm processors N 7, 156, 500 (63.6%) and N 4,100,000 (36.4%) were accessed from informal and formal sources respectively. Also, of the total amount of N 11,256,500 that was accessed, N 4, 165,000 (37%) was ploughed back into oil palm processing, N 6,120,354 (54.4%) was used to solve domestic problems such as hospital bills, school fees, burial, marriage etc. while 971,146, (8.6%) was invested in other ventures outsides oil palm fruit processing. Result of the determinants of credit access showed that while household size (p>0.05) and government payment (p>0.1) negatively and significantly reduced credit access, educational level of respondents (p>0.05), processing equipment ownership (p>0.01) and membership of cooperative (p>0.05) were positive and significantly influence credit access. Findings further revealed that while primary occupation (p>0.05), processing equipment ownership (p>0.05) and government payment (p>0.1) impacted positively on the amount of credit invested in oil processing, household size (p>0.01) had a significant negative influence on amount of credit and income invested in oil palm processing. Hence policies that will boost formal credit access, ensure proper monitoring of loan beneficiaries by supervisors, sensitize respondents on the need to embrace family planning as well as granting tax exemptions and giving subsidies in the form of basic production inputs are recommended among others.

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Empirical Link between Macroeconomic Policy Variables and the Performance of Quoted Agro-Based Firms in Nigeria

Cited by 4 publications

References 7 publications

External and internal determinants of performances of Shariah and non-Shariah compliant firms

External and internal determinants of performances of Shariah and non-Shariah compliant firms

Corporate Performance in Nigeria: Insights from Economic-Specific Shocks

Analysis of Credit access and utilization among oil Palm Fruits processors in Abak Agricultural Zone, Akwa Ibom State, Nigeria

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