Theses and Dissertations (Finance, Risk Management and Banking)
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Item Chief Executive Officer (CEO) power, board independence and bank risk in Uganda(2023-12-07) Kajumbula, Richard; Makoni, Patricia LindelwaThe study's main aim was to establish the moderating role of board independence in the relationship between CEO power and bank risk. Although risk management has dominated bank management literature and discourse, policy and practice, previous studies on how CEO power affects risk-taking have produced mixed results. Some studies show that CEO power reduces risk, while others indicate that it increases the risk. This lack of conclusive findings is due to the failure to include moderator variables such as board independence that influence that relationship. Failure to include the role of board independence in regulating the extent to which CEO power affects bank risk in the annual reports of commercial banks and the absence of the same in policy documents could also be responsible for bank failures in Uganda over the last 15 years. This study was therefore conducted with four objectives: examining the relationship between CEO power and bank risk, assessing the moderating effect of board independence on the relationship between CEO power and bank risk, analysing the cointegrating relationship between CEO power and bank risk and analysing the causality relationship between CEO power and bank risk. This explanatory panel research used secondary data from a sample of 14 commercial banks in Uganda from 2010 to 2020. The study used secondary data collected through extraction from reports and documents. System General Method of Moments (GMM) was used to establish the relationship between variables and to test the moderating effect of board independence on the relationship between CEO power and bank risk. Diagnostic tests were also carried out to check the suitability of the GMM estimator. Autoregressive Distributed Lag (ARDL) approach was used to infer causality and to analyse the short and long-run linkages between CEO power and bank risk or cointegration. The speed of adjustment of the model in the long run was established using the Error Correction Term (ECT). The findings revealed an inverse relationship between CEO power and bank risk. Commercial banks that have powerful CEOs seemingly have lower risk. Such powerful CEOs have prestige power, are internally hired, have ownership, and have served for more years; hence, they possess expert power. The relationship between current and previous bank risk is positive and significant, confirming a long-run positive relationship between previous and current bank risk. The moderating effect of board independence in iii the relationship between CEO power and bank risk is significant for prestige power and the CEO being internally hired. This means that commercial banks in Uganda should appoint CEOs with outside connections and serve for more years since experienced CEOs reduce bank risk in Uganda. Furthermore, the relationship between their power and bank risk is positively affected by board independence. The findings all confirmed cointegration between CEO power and Z-score in the panel dataset, and that if the model is destabilised and moves away from equilibrium or has short-run disequilibrium, it will correct its previous period’s disequilibrium at a speed of approximately 2.58% annually to get back to the steady state. Lastly, it was determined that there is a causal relationship between CEO power and bank risk. In case there is a need to reduce bank risk in Uganda, adjusting CEO power will help to attain this. It is thus recommended that commercial banks’ annual reports should include the extent to which board independence affected the relationship between CEO power and bank risk. Banks should also encourage CEOs to stay in office for more than four years, to a maximum of seven years. CEOs and bank staff must find new products that will attract people in the informal sector, speed up the readjustment of operations to equilibrium, and reduce risk. CEOs, bank managers, employees and policymakers should not expect immediate results regarding expected changes in bank risk. The results of actions taken in the current year to improve a bank's risk profile can only be seen in the following year. Therefore, there is a need for persistent adjustment and observation of decisions and policy actions if bank risk is to be minimised.Item Access to finance as a challenge for Burgersfort small and medium-sized enterprises in tourism(2023-12-20) Ngoma, Moreblessing R.; Makina, Daniel; Molefe, Seabelo S.The objective of the study was to assess financial access as a challenge to SMEs in tourism and in rural areas. The focus was on the relationships between financial access and its determinants, such as, information asymmetry, perceived risk, company size, performance and service quality. The research also looked at these determinants from a government support side. The theoretical framework was on government support and rural tourism development, with the focus on theories of motivation in developing rural tourism. These theories explained the development of destinations in quest of what the tourists expect or are to expect from a destination. The research employed a mixed methodology in data collection, analysis and presentation. The study findings show that a positive relationship exists between the variable, service quality, and access to finance as validated by the Pearson Correlation Test. The Regression Model showed that there was a relationship between accesses to finance, size of the business and service quality (using quality of financial statements as a measure for service quality), however, the study did not statistically substantiate the relationship. Further, the study findings failed to prove the direction of the relationship in existence between the variables of perceived risk and access to finance.Item Macro and micro-economic determinants of the mining companies’ share returns(2023-11-08) Moyana, Simbarashe; Marozva, G.; Magwedere, M.R.The study examined the macro and micro-economic determinants of the mining companies’ share returns. The system-driven generalised methods of moments was employed to analyse panel data comprising ten listed mining companies on Johannesburg Securities Exchange (JSE) covering the period from 2013 to 2021. The empirical findings using ROA as a performance measure depicts a positive and significant correlation between share price (SP) and the independent variables which include ROA, gross domestic product growth (GDPG) and interest (INT). On the same note, SP have a negative and significant correlation with lagged share price (LSP), return on market (RM) and current ratio (CR). Also, the findings review that RM, debt to equity (DTE) and inflation (INFL) were found to have a positive and significant correlation with return (R). The results also show that there is a negative and significant correlation between R, GDPG and INT. The results also show that DTE and INFL have a positive and significant correlation with total returns (TR) while GDPG, RM and INT have a negative and significant correlation with TR. When ROE was used as a performance measure result show that SP has a positive and significant correlation with ROE, GDPG and INT. It was further noted that there is a negative and significant correlation between SP and the variables which include RM and price to earnings (PE). It was further found that R has a positive and significant correlation with RM, DTE, PE, and INFL. Also, the results show that there is a negative and significant relationship between R and INT. The results showed that TR has a negative and significant correlation with CR and INFL while it is a positively and significantly related with GDPG and INT. Future studies must investigate other macro and micro-economic determinants of the mining companies’ stock returns.Item Exploring employee perceptions of the psychological contract, employee motivation and retention in the South African motor industry(2024-02-27) Nara, Sailesh; Rudolph, Elizabeth; Furtak, A.The historical roots of the employment relationship date back to early civilisations, marked by individuals seeking expertise in exchange for rewards. Unspoken expectations between parties often shape the dynamics of this relationship, influencing individual motivation and organisational retention strategies. This study delves into these three pivotal aspects: the psychological contract, employee motivation and retention. This research employs a qualitative methodology, and in-depth virtual interviews with eight employees from diverse regions, race groups, and genders within the South African motor industry. It aims to fill an existing knowledge gap in the South African context by exploring the perceptions of both managerial and non-managerial employees, focusing on the interconnectedness of the psychological contract, employee motivation, and retention in one study, which currently does not exist. Given the industry's size and the dearth of research on this topic, this study enhances understanding of the employment relationship, which can be critical knowledge for dealer principals and HR practitioners in order to improve HR practices. The study also demonstrates that employee motivation and retention are intricately linked to the psychological contract thus supporting the existing research in this area.Item Exploring the relationships between foreign direct investment, foreign aid and economic growth : evidence from Africa(2021-11-08) Wehncke, Francois Cornelius; Makoni, Patricia Lindelwa; Marozva, GodfreyFocusing on African economic panel data from 1990-2018, this study set out to analyse the relationships between foreign direct investment (FDI), official development assistance (ODA) and economic growth. Specifically, the study sought to evaluate the deterministic relationships between FDI, ODA and economic growth in African countries; to examine the long-run cointegrating relationships between FDI, foreign aid and economic growth in Africa; and to determine causality between FDI, foreign aid and economic growth in Africa, and the robustness thereof. By using the dynamic two-step system Generalised Method of Moments approach to panel data, the study confirmed that a significant positive deterministic relationship exists between FDI and economic growth. In addition, the results of the ARDL (Pooled Mean Group) bounds test approach towards cointegration on the panel data showed that there were significant positive long-run relationships between ODA and economic growth; between economic growth and FDI, and a significant negative long-run cointegrating relationship between FDI and ODA. Furthermore, by using the ARDL and Error Correction Model (ECM) estimators, the study inferred causality between the key variables of economic growth, FDI and ODA, and the robustness thereof. The study concluded that there is uni-directional long-run causality between economic growth and FDI, between FDI and ODA, and between ODA and economic growth. Also, the only uni-directional short-run causality was established between economic growth and FDI, implying that economic growth causes an increase in FDI in the long, as well as in the short run. The causality findings confirm the initial doubt, that FDI and ODA are not necessarily complementary forms of economic growth funding, but rather that ODA in the long run causes economic growth, and economic growth, in turn, causes an increase in FDI in both the long and short run in the selection of African countries in the study. The findings of the study lead to various scholarly and policy implications and recommendations for academics, researchers, African countries’ governments, donors and investors alike. Indicating the need for African countries to align their national strategies to their foreign and domestic policies for sustainable development.