International Research Journal of Finance and Economics
 Issue 137
 July, 2015
An Analysis of Banking Industry with Special Reference to Porter’s Five Force Framework
Hemavathy Ramasubbian, A. Kalaiselvi and M. Vaanmalar

This study is much relevant in today’s context as banking industry plays a vital role in our economic growth. This research seek to address the central question in strategic management within the context of banking industry in Vellore district with special reference to Porters five force model. It examines the factors affecting banking industry such as degree of rivalry, threats of new entrants, threats of substitutes, bargaining power of customer and bargaining power of supplier. Using multiple regression model, the collected data were analyzed and find out the coefficient of variables. This study helps the banking sector to concentrate on the influencing variable which motivates the customer to open or access the bank account.
Keywords: Banking, Threats, Multiple Regression, Porters Model
Determinants of Household Food Poverty: Evidence from Nigeria
Uche M. Ozughalu and Fidelis O. Ogwumike

This study focuses on food expenditure as an indicator of welfare and analyses the determinants of food poverty in Nigeria, based on the 2004 Nigeria Living Standard Survey data obtained from the National Bureau of Statistics. Least-cost technique in the spirit of the Food-Energy-Intake(FEI) approach is used to compute zone-specific food poverty lines based on food baskets that are common to each geo-political zone. A logit model is estimated to determine factors affecting food poverty. The results show, among other things, that household size, proportion of children in the household, occupation in agriculture for household head and residing in the rural sector are positively related to food poverty; whereas ownership of agricultural land, educational level of household head, occupation in professional/technical group and in administration/clerical group for household head, access to credit and access to regular remittances tend to reduce food poverty. The results should adequately guide the government and policy makers.
Keywords: Food Poverty, Determinants, Zone-specific food poverty lines, Logit, Nigeria
JEL Classification: I32, O10, R20
Socio-Economic Impact of Housing Microfinance: Findings of a Field based Study in Kerala, India
Manoj P K

Housing Micro Finance (HMF) has got tremendous potential in addressing the housing problem of India as it can mitigate the ‘Real housing problem in India’ viz. housing problem of the poor. As high as 99.84 percent of the total housing shortage in India relates to the poor viz. those in the Economically Weaker Section (EWS) and Low Income Group (LIG) categories. In spite of the vast potential of HMF in addressing the real housing problem, it is yet to pick up momentum in India. In this context, this paper looks into the worth, scope and socio-economic impact of HMF taking the typical case of ‘Bhavanashree’ (BS) the HMF initiative of ‘Kudumbashree’ (KS) – the poverty alleviation programmeof the Government of Kerala. The paper makes suggestions, learning from the experience of BS, which is being taken over by the Government since June 2010.
Keywords:Real Housing Problem, Incremental Housing, Housing Micro Finance (HMF).
Reverse Stress Tests by Extreme Value Theorem for Clearinghouse
Narumon Saardchom

Both EMIR Article 60 and PFMI Principle 4 require a clearinghouse to conduct reverse stress tests to identify under which circumstances the combination of clearing margin, clearing fund and other financial resources may provide insufficient coverage of credit exposure and for which its liquid financial resources may not be sufficient. This paper proposes an alternative quantitative method based on extreme value theorem with “peak-over-the-threshold” method to identify a set of possible threshold given a range of dynamic available funds. Extreme value theorem is an appropriate choice because it can provide better accurate tail estimation where the default loss would hit beyond available fund. The threshold derived from extreme value theorem can uncover hidden vulnerabilities for the clearinghouse to design effective risk monitoring and risk management system.
Keywords: Reverse Stress Tests; Clearing Margin; Clearing Fund; Extreme Value Theorem.
JEL Codes:G23, G28, and C61
Effects of Corporate Excess Cash Holdings onthe Marginal Value of Cash Holdings
Min-Shik Shin, Soo-Eun Kim and Jae-Ik Lee

This study uses the panel data of firms listed on the Korea Exchange from 2000 to 2014 to examine the effects of corporate excess cash holdings (ECHs) on the marginal value of cash holdings. We find that corporate ECHsare likely to reduce the marginal value of cash holdings, there by decreasing share holder value. This finding suggests that the capital market punishes firms with ECHs. Moreover, it supports the argument that firms with ECHs face higher agency costs compared to firms without ECHs. Further, we find that persistent ECHs are more likely to reduce the marginal value of cash holdings than transient ECHs are. This finding suggests that the holding period of ECHs is more likely to cause agency problems compared to the level of ECHs. These findings partially complement the agency theory argument that managers tend to waste corporate resources by hoarding excess cash. Thus, firms can preserve their shareholder value by maintaining an appropriate amount of cash holdings.
Keywords:excess cash holdings, marginal value of cash holdings, agency theory, shareholder value, agency costs
JEL Classification Code:G30
The Prospect of a Ghana Diaspora Bond
Adjei Gyamfi Gyimah

This paper sought, among other things, to establish the rationale, feasibility, conditions, determinants and hindrances of a successful issuance of a diaspora bond by Ghana as a sovereign economic entity. The study also sought to assess the willingness of the Ghanaian diaspora to patronise a diaspora bond. A total of 12 financial institutions within Accra and 113 Ghanaians living in the diaspora were contacted using the purposive sampling method.
The study concluded that though internal weaknesses and external threats exist, Ghana stands a good chance for a successful diaspora bond issue with an anticipated high patronage by the Ghanaian diaspora.
The study introduced SWOT analysis as a tool in analysing the factors which will boost or mar the success and patronage of diaspora bond issuance; a significant contribution to development finance research. The study will feed into future research on diaspora bonds while introducing an alternative development finance option to policy makers.
Keywords: Prospect, Diaspora Bonds, Ghana
“Is there Interdependence between oil Price and Currency Value in Kazakhstan?”
Keun Jung Lee and Rinat Arslanov

This paper investigates the interdependence between oil prices and exchange rate between the US dollar and tenge. The purpose of this study is to examine whether change in oil price has any effect on exchange rate. It explains the relationship between the economic factors that could affect both oil price and exchange rate. Linear Regression was performed to find out the interdependence using a linear relationship. Granger Causality Methodology was used to check the direction of causes and the impact between oil price and exchange rate. The result found that significant causality from oil price to exchange rate with negative impact, but not the other way. The increase in oil price causes the decrease (i.e. tenge appreciation) in exchange rate and the decrease in oil price causes the increase (i.e. tenge depreciation) in exchange rate. There is no evidence that exchange rate affects the oil price changes in the future. The stock market index return impacts on both exchange rate and oil price in negative and positive ways, respectively. The market return (KASE Index return) which includes heavy weights of oil and natural resource may be forward-looking and able to forecast both exchange rate and oil price in the future.
Keywords: Oil Price, Foreign exchange rate, international Trade, Stock Market Return, CPI
JEL Classification code:F30, F31, E23, E20
Assessing the Long Run Relationship between Savings and Economic Growth in Nigeria
Eze, Onyekachi Richard and Owo, Bernadette

The implication of savings and investment on economic growth is mixed and controversial both theoretically and empirically. There is large empirical literature which examines the relationship between savings and economic growth in Nigeria. There is also a considerable literature which looks at the relationship between economic growth and investment. However, little attention has been given to examining the implications of savings and investment on economic growth in Nigeria. The aim of this paper is to evaluate the implications of savings and investment on economic growth in Nigeria using ordinary least square regression. Results for ADF and PP unit root tests show that all variables under consideration are I(1). The study also revealed that there is long run relationship between savings, investment and economic growth in Nigeria. The result of the regression indicates that change in gross domestic savings movements has negative and significant effect on the change in economic growth in Nigeria and that the change in gross domestic investment has positive and significant effect on the change in the Nigerian economic growth. We therefore recommend that government should set a sound and fertile environment in order to foster domestic saving that will help to increase the level of economic growth in Nigeria.
Keywords: Savings, Investment, Economic Growth, ADF, PP.
Identifying SIFI Determinants for Global Banks and Insurance Companies
Henry Penikas and Victor Petrov

Lately the role of financial institutions in the economy has risen significantly and now it is important to determine those that are systemically important.The bankruptcy of such institutions creates negative effects for the economy on the global scale. The aim of this research is to identify important financial coefficients that can be used in the methodology of identification of G-SIB (global systemically important banks) and G-SII (global systemically important insurers). G-SIFI (global systemically important financial institutions) are the object of this research. Models of a binary choice and models of an ordered choice are used in this research, several models are highly predictive. Eventually, this research has revealed several financial coefficients that can be used to forecast the SIFIs for the next year or to identify the domestic SIFIs in accordance with the international methodologies but using only data available in the public access.
Keywords: Systemic importance; Basel committee, probability of default, financial coefficients; models of ordered choice, models of binary choice, global systemically important banks (G-SIB), global systemically important insurers (G-SII).
JEL classification: C35; C51; C58; G21; G22.