Interaction of formal and informal financial markets in quasi-emerging market economies

Ngalawa, Harold; Viegi, Nicola

doi:10.1016/j.econmod.2013.01.005

Cited by 26 publications

(18 citation statements)

References 19 publications

(18 reference statements)

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“…The implication is that increase in the cost of borrowed funds and earning assets financed by paying liabilities will negatively affects the return on asset of banks. The result is consistent with the findings of (Aruwa & Musa, 2014;Ngalawa et al, 2013) who found a negative significant relationship. Also, the asset interest yield has a positive significant impact on ROA of Nigerian banks, implying that a 1% improvement in asset interest yield, the return on asset will increase by 29%, ceteris paribus.…”

Section: Empirical Results With Roa As the Dependent Variablesupporting

confidence: 93%

Exploring Liquidity Risk and Interest-Rate Risk: Implications for Profitability and Firm Value in Nigerian Banks

Ebenezer¹,

Islam²,

Yusoff³

et al. 2018

J. Rev. Global Econ.

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The purpose of this paper is to examine the effects of liquidity risk and interest rate risk on profitability and firm value, current studies are typically limited in emerging markets. This study employs a panel data estimation technique and a sample of 16 banks operating in Nigeria over the period from 2009 to 2017 making up to 144 observations. The findings of the study reveal that liquidity risk (loan to deposit ratio and liquid asset ratio) have a significant negative effect on firm value, the net interest margin and GDP have a negative significant impact on firm value for Nigerian banks. The loan to deposit ratio have a negative significant effect on firm value while the liquid asset ratio have a positive effect on firm value. The net interest margin have a negative significant effect on firm value while the asset interest margin have a positive significant impact on firm value. The GDP and inflation both have a positive significant relationship with firm value. The liquidity risk (loan to deposit ratio and liquid asset ratio) have a significant negative impact on return on equity of Nigerian banks. The GDP growth rate have a positive significant effect on the value of firm. Hence, this empirical study emphasizes and contributes to the dynamic role of liquidity risk and interest-rate risk and it's implication on profitability and firm value of banks in Nigeria and suggest that further study can explore a comparative study between Nigeria and financial firms in developed economy.

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Section: Empirical Results With Roa As the Dependent Variablesupporting

confidence: 93%

Exploring Liquidity Risk and Interest-Rate Risk: Implications for Profitability and Firm Value in Nigerian Banks

Ebenezer¹,

Islam²,

Yusoff³

et al. 2018

J. Rev. Global Econ.

View full text Add to dashboard Cite

show abstract

“…The opposing view in the literature argues that formal finance is superior to informal finance, as argued by Yang (2008), Ayyagari et al (2008), Reynolds (2011), Ngalawa and Viegi (2013), and Thai and Turkina (2013), for the following reasons:…”

Section: Discussionmentioning

confidence: 99%

A Comparative Study between Informal and Formal Finance: A Literature Review

Abdelzaher

2019

AFR

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The informal credit system is a prevailing form of economic exchange in emerging countries. It is the predominant form of credit in rural communities because it is based on a culture of reciprocity (Family participation-relatives-Loyalty-friends-Neighbour). Informal finance contributes significantly to the growth of small and medium-sized enterprises (SMEs). The present study justifies the wide application of informal finance. We find that these projects suffer from the problem of asymmetrical information. They also offer few guarantees. Informal financiers have an advantage over formal financial organizations, in gathering information on lenders in SMEs. The aim of our study was to explore formal and informal credit systems and to explain the prevalence of informal systems in developing countries. The study concluded that credit from informal sources is superior to credit from formal sources because it results in low rates of default on loans. The study also showed that informal finance and commercial credit have a positive impact on the performance of private companies, measured using the rate of return on assets.

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“…And, it is meaningful to explore the correlation of participants' attentions in the whole private lending market in China. Recent research on the private lending market system mainly includes (1) the related research on the P2P lending market, such as borrowing success rate and default rate [14][15][16][17][18], investor behavior [19][20][21][22], and credit evaluation and market mechanism [23][24][25][26][27][28]; (2) the relationship between the informal credit market and the formal credit market [6,[29][30][31][32]; and (3) the research on offline loan [33][34][35]. erefore, this paper expands the research scope of the existing literature by investigating the extent of interdependence across time to clarify whether participants' attentions to P2P lending and offline loan are segmented or becoming more integrated.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Cross‐Correlations between Participants’ Attentions to P2P Lending and Offline Loan in the Private Lending Market

2019

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In this paper, we examine the dynamic cross-correlations between participants' attentions to the P2P lending and o ine loan (lending) with the method of multifractal detrended cross-correlation analysis (MF-DCCA). e empirical result mainly shows that (1) the power-law cross-correlation exists between participants' attentions to the P2P lending and o ine loan and is persistent, (2) the cross-correlation is more stable in the short term, and (3) the relation subjected to a small uctuation is more cross-correlated than that under larger ones. Furthermore, we carry out the robustness test to verify the result. e Granger causality test indicates that participants' attentions to P2P lending and o ine loan Granger cause each other in the short term.

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Interaction of formal and informal financial markets in quasi-emerging market economies

Cited by 26 publications

References 19 publications

Exploring Liquidity Risk and Interest-Rate Risk: Implications for Profitability and Firm Value in Nigerian Banks

Exploring Liquidity Risk and Interest-Rate Risk: Implications for Profitability and Firm Value in Nigerian Banks

A Comparative Study between Informal and Formal Finance: A Literature Review

Dynamic Cross‐Correlations between Participants’ Attentions to P2P Lending and Offline Loan in the Private Lending Market

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