Institutional quality, macroeconomic uncertainty and efficiency of financial institutions in Sub-Saharan Africa

Abaidoo, Rexford; Agyapong, Elvis Kwame

doi:10.1108/jfrc-01-2022-0003

Cited by 9 publications

(14 citation statements)

References 57 publications

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“…Meanwhile, studies have shown that best practice in corporate governance requires constant monitoring of external business environment to remain competitive (Dupire & M'Zali, 2018). Relatedly, environmental uncertainty has no significant impact on SAP, suggesting that manufacturing companies in Nigeria do not attach much importance to external information on environmental and social sustainability practice as to constantly monitor the competitive business environment (Abaidoo & Agyapong, 2022). In sum, the insignificant influence of the two external governance factors (i.e., intensity of competition and perceived environmental uncertainty) on SAP (Tables 4 and 5) provides additional evidence that external pressure on companies to implement sustainability initiatives is weak.…”

Section: Discussionmentioning

confidence: 99%

“…Greater level of uncertainty in the environment causes higher importance to be attached to external, non-financial information (Abaidoo & Agyapong, 2022), and this may be associated with high usage of integrated performance measurement system. Conversely, when PEU is low, predictions about the market may be relatively accurate, thus diminishing the need for external and ex-ante information (Gul & Chia, 1994;Naidenova, 2022), and lower usage of SAP.…”

Section: Perceived Environmental Uncertaintymentioning

confidence: 99%

“…Organisations operating in highly uncertain environment have a greater impetus to extensively implement SATs (such as competitor accounting, customer accounting and lifecycle costing, among others) to survive uncertainty. Greater level of uncertainty in the environment causes higher importance to be attached to external, non-financial information (Abaidoo and Agyapong, 2022), and this may be associated with high usage of integrated performance measurement system. Conversely, when PEU is low, predictions about the market may be relatively accurate, thus diminishing the need for external and ex-ante information (Gul and Chia, 1994;Naidenova, 2022), and lower usage of SAP.…”

Section: Intensity Of Competitionmentioning

confidence: 99%

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Drivers of environmental and social sustainability accounting practices in Nigeria: a corporate governance perspective

Oyewo

Tawiah

Hussain

2022

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Purpose This study aims to investigate corporate governance mechanisms affecting environmental and social sustainability accounting practice (SAP). Four internal (quality of information technology [QIT], market orientation, business strategy and structure of accounting department) and two external (environmental uncertainty and market competition) governance mechanisms were examined. Design/methodology/approach The population of the study is comprised of 56 publicly listed manufacturing companies on the Mainboard of the Nigerian Stock Exchange. Data were collected using a questionnaire which was completed by senior finance personnel in each company in the sample. Structural equation modelling, logistic regression and quantile regression analysis were used to analyse data. Findings The results show that the extent to which Nigerian companies have implemented SAP is moderate. The authors find that the level of SAP implementation is significantly associated with market orientation and business strategy, but not with the QIT and structure of accounting department. The results also show that both external corporate governance mechanisms (i.e. environmental uncertainty and intensity of competition) have no significant effect on SAP. Practical implications The insignificant influence of external corporate governance mechanisms on SAP corroborates the contention that external pressure on companies to implement sustainability initiatives in developing countries is weak. Originality/value This study contributes to the literature on sustainability in developing countries and incrementally adds to knowledge on the corporate governance mechanisms driving SAP in jurisdictions characterised by lax regulatory framework and weak institutional apparatus on sustainability.

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Section: Discussionmentioning

confidence: 99%

Section: Perceived Environmental Uncertaintymentioning

confidence: 99%

Section: Intensity Of Competitionmentioning

confidence: 99%

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Drivers of environmental and social sustainability accounting practices in Nigeria: a corporate governance perspective

Oyewo

Tawiah

Hussain

2022

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“…The approach adopted in this study differs significantly from that in related studies. For instance, Abaidoo and Agyapong (2022a, b) verified conditions or factors influencing the efficiency of financial institutions, with a specific focus on institutional quality dynamics and macroeconomic uncertainty. However, the approach adopted in this study is significantly different from that of Abaidoo and Agyapong (2022a, b) in terms of the proxies for the key variables examined, model specification procedures and estimation methodology.…”

Section: Introductionmentioning

confidence: 99%

“…For instance, Abaidoo and Agyapong (2022a, b) verified conditions or factors influencing the efficiency of financial institutions, with a specific focus on institutional quality dynamics and macroeconomic uncertainty. However, the approach adopted in this study is significantly different from that of Abaidoo and Agyapong (2022a, b) in terms of the proxies for the key variables examined, model specification procedures and estimation methodology. Again, while Abaidoo and Agyapong (2022a, b) focused mainly on the effect of institutional quality, the current study predominantly examines the impact of macroeconomic instability (risk) on the efficiency of financial institutions.…”

Section: Introductionmentioning

confidence: 99%

Inflation uncertainty, macroeconomic instability and the efficiency of financial institutions

Abaidoo

Agyapong

2023

JED

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PurposeThe study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions among economies in sub-Saharan Africa (SSA).Design/methodology/approachData for the empirical inquiry were compiled from 35 SSA economies from 1996 to 2019. The empirical estimates were carried out using pooled ordinary least squares (POLS) with Driscoll and Kraay’s (1998) standard errors.FindingsReported empirical estimates show that macroeconomic risk and exchange rate volatility constrain the efficiency of financial institutions. Further results suggest that inflation uncertainty has a significant influence on the efficiency of financial institutions among economies in the subregion. Additionally, reviewed empirical estimates show that institutional quality positively moderates the nexus between inflation uncertainty and financial institution efficiency. At the same time, political instability is found to worsen the adverse effect of macroeconomic risk on the efficiency of financial institutions.Practical implicationsFor policymakers and governments, improved institutional structures are recommended to ensure the operational efficiency of financial institutions, especially during an inflationary period. For decision-makers among financial institutions, the study recommends policies that have the potential to make their institutions less vulnerable to macroeconomic risk and exchange rate fluctuations.Originality/valueThe approach adopted in this study differs significantly from related studies in that the study examines and reviews interactions and relationships not readily found in the reviewed literature.

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Do institutional quality and its threshold matter in the sensitivity of the renewable energy transition to financial development? New empirical perspectives

Olaniyi,

Al‐Faryan,

Ogbaro

2023

Int. J Fin Econ

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The transition to renewable energy is critical for environmental sustainability, consistent with sustainable development goals (SDGs) 7, 8, 11, 12, and 13 of the United Nations Development Programme (UNDP). Scholars have identified financial development and institutional quality as significant factors determining the renewable energy transition in developing countries. This study opines that the efficiency of the financial system in supporting and providing the substantial financial implications that a switch to renewable energy necessitates depends on the quality of the institutional framework. Weak institutions in developing countries produce loopholes and inherent flaws in the financial system that facilitate corruption and opportunism, ultimately promoting dirty energy usage and technology at the expense of renewable energy. This process suggests that the interaction between financial development and institutions can either accelerate or impede the transition to renewable energy, depending on an economy's institutional architecture. Considering Africa's enormous renewable energy resources, previous research has overlooked the implications of the interplay between institutional quality and financial development in spurring Africa's transition to renewable energy. Thus, this study looks at the role of institutions in moderating the relationship between financial development and renewable energy in Africa from 1990 to 2019, using first‐ and second‐generation estimators to capture econometrics' pitfalls such as endogeneity, cross‐sectional dependence, and heterogeneity inherent in the panel dataset. This study departs from previous research in that it uses a dynamic panel threshold to determine the threshold of institutions beyond which financial development is stimulated to spur Africa's transition to renewable energy. The findings show that institutions create loopholes that allow rent‐seeking, opportunism, and sharp practices in the African financial system. These inherent flaws divert financial resources to support dirty energy and undermine the financial sector's ability to support a renewable energy transition on the continent. Also, the findings from the threshold of institutions affirm that African countries operate predominantly below the threshold of institutions, over which institutions enable financial development to expedite the continent's transition to renewable energy. The study suggests that institutional quality is essential in the relationship between financial development and Africa's shift to renewable energy. The findings' policy implications are discussed and outlined.

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Institutional quality, macroeconomic uncertainty and efficiency of financial institutions in Sub-Saharan Africa

Cited by 9 publications

References 57 publications

Drivers of environmental and social sustainability accounting practices in Nigeria: a corporate governance perspective

Drivers of environmental and social sustainability accounting practices in Nigeria: a corporate governance perspective

Inflation uncertainty, macroeconomic instability and the efficiency of financial institutions

Do institutional quality and its threshold matter in the sensitivity of the renewable energy transition to financial development? New empirical perspectives

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