Jornal of Management, Economics and Industrial Organization

Number 3.1., 2019

1-17.
An Empirical Analysis of Effects of Foreign Direct Investment, Exchange Rate and Energy Infrastructure on Domestic Investment

Authors: Ahmed O. Adekunle, Bello I. Abdullahi, Adedeji D. Gbadebo, Segun K. Fakunmoju

Abstract

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Number of views: 531

Domestic investment is a significant component of economic activities affecting Nigerian economy for decades. Sequel to this, this paper examines the effect of Foreign Direct Investment (FDI), exchange rate and energy infrastructure on domestic investment in Nigeria. Time series data obtained from Central Bank of Nigeria (CBN) Statistical Bulletin and World Development Indicator were employed using Autoregressive Distributive Lag (ARDL) Model. Empirical findings show that FDI has positive and significant effect on domestic investment while exchange rate and energy infrastructure have a positive effect on domestic investment but non significant. The policy implications of this finding is that government should adopt more stringent supervision on exchange rate, and policy to regulate execution of energy infrastructure project; and more funds needed to emancipate energy infrastructure in order to obtain desired level of domestic investment in Nigeria.

18-24.
Current Practice of Coal Discharging Operation in Malaysian Port

Authors: Amli Mohamed Amin, Syuhaida Ismail, Khairul Zahreen Mohd Arof

Abstract

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Number of views: 308

Operation delay causes a financial impact to port operation in overall since is a chain process activity. The losses of time during operation was translated to penalty to port operator team. Therefore, this paper comes out with an objective to investigate current practice of coal discharging operation in Malaysian port. This to ensure that any factors led to delay can be detected to avoid subsequent problem especially industrial sectors and Malaysian economics in general. A systematic literature review (SLR) has been conducted to identified the current practice of port from previous research. Data collected from this SLR used in the development of questionnaire. A set of Questionnaire than been distributed to all port handling coal discharge activities in Malaysia. This study managed to collect 82 respondents randomly working in coal discharge team. Based on the SLR and data analysis, this paper found that, focus in coal discharge activities should be on: (1) the good owner, receiving from and delivering good to port; (2) good transmission between ship and coast vice versa; (3) transporting good to port and transmission of good from port; and (4) other criteria. To sum up, the current practice of coal discharging operation in Malaysian port experiencing delay which is not serious yet still affects the cost of operation in overall.

25-50.
Assessing the Optimal Capital Structure: A Case Study of Afren Public Limited Company - A Small Exploration and Production Oil and Gas Company

Authors: Tokunbo S. Osinubi, Lloyd Amaghionyeodiwe, Chikaodili C. Okoye

Abstract

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Number of views: 372

This study assessed the optimal financing mix for Afren Public Limited Company based on the trade-off theory and evaluated the cost to the firm from deviating from that position. In doing this, we derived a firm-specific optimal capital structure using the cost of capital approach, which involved the use spreadsheet modelling through an iterative process to determine series of discount rates based on different combinations of debt and equity under the assumption of constant earnings to the firm. The base result shows that as the debt intensity increases, the equity Beta has a multiplier effect such that the cost of equity increases more than proportionately to the increase in leverage. As more debt is introduced, the risk of loan default increases, thus increasing the credit spread over the riskless rate and effectively the pre-tax cost of debt. The result from the firm’s weighted average cost of capital (WACC) and value as a function of leverage, implied optimal debt ratio is 40% and yields a WACC of 8.63% which is effectively the minimum cost of capital that maximizes the value of the firm. Between 40% and 45% leverage, the debt servicing capacity of the firm measured by the interest coverage ratio drops significantly from 4.6 to 1.4 due to high interest burden. This increased credit risk has a direct impact on the firm’s credit quality rating.

51-62.
Threshold Effects of Inflation on Economic Growth: Evidence from Dynamic Panel Threshold Regression Analysis for 18 Developed Economies

Authors: Jenq Fei Chu, Siok Kun Sek, Mohd Tahir Ismail

Abstract

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Number of views: 787

Inflation and growth nexus still a main focus in many studies as the existence of trade-off issue in inflation-growth relationship. The objective of this study is to estimate inflation threshold and its impact on inflation-growth relationship. This panel data study involves 18 developed countries over the period 1980–2016 with Consumer price index (CPI) and Gross domestic product (GDP) as variables associated with other determinants such as producer price, exchange rate, trade-openness, interest rate and population growth rate. Dynamic Panel Threshold Regression (DPTR) model that suggested by Kremer et al. (2013) is employed to estimate the threshold of inflation and its effects on economic growth. Our study extended the non-dynamic panel threshold model of Hansen (1999). Our results confirmed that the targeted inflation rate 2% by many central banks is a wise decision if compare to 4% as the impact of inflation on growth in lower inflation regimes is positive and statistically significant at the 5% level. For higher inflation regime, we estimate that inflation rates exceeding 1.44% are associated with lower economic growth, inflation and growth is negatively correlated and statistically significant at 1%. Trade-off relationship only exists at lower regime. By using GMM and Pooled OLS estimation, DPTR model results are proven robust where there is a U-shaped exist.

63-81.
Money Supply, Inflation and Exchange Rate Movement: The Case of Cambodia by Bayesian VAR Approach

Authors: Monorith Sean, Pathairat Pastpipatkul, Petchaluck Boonyakunakorn

Abstract

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Number of views: 1384

This research paper aims to investigate the relationship among money supply, inflation and exchange rate in Cambodia by using Bayesian Vector Autoregressive (B-VAR) approach. This study employs the monthly data in the period of October-2009 and April-2018. This research paper applies the Money-in-Utility Function (MIU) that describes the relationship between money growth and price level. Moreover, this paper also employs the Purchasing Power Parity (PPP) which shows the relationship between exchange rate and inflation. The empirical results reveal that money supply in Cambodia, depends on its previous variable. Moreover, money supply also induces the depreciation of exchange rate of Khmer Riel against US Dollar and leads to increase in inflation. Money supply induces 8% of shock to exchange rate and 0.13% to inflation based on variance decomposition while exchange rate can cause 0.024% to inflation in Cambodia. The relative low shocks from money supply to inflation and exchange rate results in supplying money with cautious manner from National Bank of Cambodia. The empirical results are found to be consistent with the theories and some empirical studied of this related fields.