Faculty of Accounting and Informatics
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Item Fraud mitigation practices and profitability of insurance companies in South Africa(2024-03-01) Msomi, Thabiso SthembisoThe objective of this study was to evaluate how measures taken to prevent fraud impact the profitability of insurance companies operating in South Africa. The study adopted a descriptive research approach and surveyed a sample of 70 licensed insurance companies in the country. Primary sources of data were obtained by engaging claims managers in each of the firms, and descriptive and inferential statistics were used to analyse the data. The results of the study revealed that fraud mitigation measures significantly affect the profitability of insurance companies in South Africa. The implementation of fraud prevention, detection, and response measures had a positive impact on the profitability of these firms. Based on the findings, the study recommends that the Insurance Regulatory Authority establish regulations that mandate all insurance providers to collect and report statistics on fraud. Insurance firms should provide their employees with comprehensive training on fraud management and implement strict penalties and disciplinary measures for employees involved in fraudulent activities, as they can undermine the effectiveness of the fraud mitigation process.Item Debtors’ management practices and resilience of small and medium enterprises in South Africa(International Journal of Social Science Research and Review, 2024-01-19) Msomi, Thabiso Sthembiso; Matemane, Reon; Zungu, Sphesihle Charles; Campbell, ThomasAim: This research aimed to assess the relationship between debtors’ management practices and the resilience of small and medium-sized enterprises in South Africa. Methods: Employing a quantitative research design, the study employed purposive sampling to select a cohort of 110 SME owners operating in Durban, South Africa. 94% response rate was achieved, yielding 103 valid responses. Results: The results of the analysis unveiled a statistically significant positive correlation between effective debt management and the resilience of SMEs. This empirical evidence signifies that proficient debtors' management plays a pivotal role in enhancing the resilience of SMEs operating in South Africa. Contribution: This study contributes to the growing body of knowledge by affirming the positive influence of debtors' management on the resilience of SMEs in South Africa. Drawing on the findings of this study, government agencies and industry associations should collaborate to develop supportive initiatives and policies that aid SMEs in optimizing their debt management strategies.Item Factors affecting small and medium-sized enterprises financial resilience post Covid-19 pandemic in South Africa(PT Keberlanjutan Strategis Indonesia, 2023-11) Msomi, Thabiso Sthembiso; Zungu, Sphesihle CharlesThis research paper aims to investigate the factors influencing the financial resilience of SMEs in South Africa in the aftermath of the COVID-19 pandemic. The study focuses on three primary factors: access to loans, the interest rates applied to these loans, and the structure of repayment plans. To achieve this purpose, a quantitative research methodology, guided by the positivism philosophical framework, was employed. The research selected 310 respondents who were SME owners representing various sectors. The data collection and analysis methods primarily involved multivariate regression analysis. The research revealed that access to loans, interest rates on loans, and the design of repayment plans exerted positive and statistically significant effects on the financial resilience of SMEs in the post-COVID-19 period. These factors displayed probability values of 0.005 and absolute values of 0.448, 0.456, and 0.432, respectively. These findings underscore the crucial role of these factors in determining the financial stability of SMEs. The study's implications are twofold. First, it suggests that financial institutions should streamline the process for SMEs to access financing, making it more accessible and accommodating. Furthermore, these institutions should tailor loan repayment options to better align with the unique needs of SMEs. Second, the research underscores the importance of offering financial education and support services to assist SMEs in enhancing their financial management skills and adaptability within the post-pandemic economic landscape.Item The relationship between macroeconomic factors and profitability of reinsurance companies in Africa : an application of system GMM-Model(PT Keberlanjutan Strategis Indonesia, 2023) Nzuza, Zwelihle Wiseman; Msomi, Thabiso SthembisoDespite the known strengths of the reinsurance companies to generate immense profits, evidence from existing literature indicates that the future of the reinsurance companies needs to be more robust to economic deficiencies leading to underperformance. There are many possible factors behind this. However, this study aimed to determine the relationship between macroeconomic factors and the profitability of African reinsurance companies with a Generalized Method of Moments (GMM) model. The study used 121 listed reinsurance companies from 48 African countries using secondary data from year 2008 to 2019. A 1452 observation panel data set was analyzed using conventional least squares and two-step System GMM estimators. The study revealed that GDP, interest rate, and the exchange rate positively impact profitability. In contrast, the inflation rate and money supply revealed a negative and negligible impact on profitability. The input of this research resides in providing new evidence on the macroeconomic factors influencing the profitability of listed reinsurance companies in Africa.Item Sustaining small and medium-sized enterprises through financial awareness, access to digital finance in South Africa(LLC CPC Business Perspectives, 2023-03-28) Msomi, Thabiso Sthembiso; Kandolo, Ka MuzomboSmall and medium-sized enterprises (SMEs) have several critical challenges that threaten their capacity to survive and thrive. However, access and awareness to digital platform is fundamental to moderate the financial costs and develop financial productivity and sustain SMEs financially. Considering this, the purpose of this study is to get empirical information on the level of management awareness and usage of digital platforms in SMEs in South Africa. The methodological framework included a quantitative research strategy and positivist paradigm. Purposive sampling was utilized to collect data from 321 out of 700 SMEs owners, and the Cochran formula was used to explain the sample size. There were 321 surveys sent out, and 304 were filled out and returned (95% response rate). Descriptive analysis, Pearson’s correlation, and regression analyses from the Statistical Package for Social Sciences were used. The results of Pearson’s correlation coefficient establish a statistically significant relationship between access to digital finances and SME Sustainability (r = 0.334), as well as a statistically significant relationship between financial awareness and SME Sustainability (r = 0.549). The findings alert SMEs managers of the need to improve their digital platforms awareness in order to meet current financial demands and make better informed financial choices to improve company success. The results explain the advantages of trading using many digital platforms available in the country to improve the performance of their enterprises.Item Analyzing firm-specific factors affecting the financial performance of insurance companies in South Africa(LLC CPC Business Perspectives, 2023-04-05) Msomi, Thabiso Sthembiso; Nzama, SmangeleThis study aims to investigate the effect that firm-specific factors have on the financial performance of South African insurance companies. This paper looked at the performance of 36 insurers that are publicly traded and have quantifiable markets from 2008 to 2019. The return on assets (ROA) was calculated as a function of the financial performance in this study. While the firm size, leverage ratio, premium growth rate, liquidity ratio, and tangibility of assets were examined as dependent factors using the panel data regression technique, the premium growth rate, liquidity ratio, and tangibility of assets were explored as independent variables. According to the findings of the regression analysis, other firm-specific factors, with the exception of leverage and liquidity ratios, do not have a statistically significant influence on the financial performance of South African insurance companies. A negative and insignificant association was discovered between premium growth rate and ROA at –0.0023 and tangibility of assets and ROA at –0.0113. There was a strong positive and significant relationship between liquidity ratio and ROA at 0.0927, while the size had a positive but insignificant relationship with ROA at 0.0039. Leverage ratio and ROA had a negative but significant relationship at –0.1512. This study suggests that the use of automated systems and insured techs will be advantageous in cutting costs associated with policyholder enrollment, claims agreement, and even easily achieved tailor-made policy initiatives.Item The effect of interest rates on credit access for small and medium-sized enterprises : a South African perspective(LLC CPC Business Perspectives, 2023-11-15) Msomi, Thabiso SthembisoThis study investigates the effect of interest rates on credit access for small and medium-sized enterprises (SMEs) in South Africa. The study employs a quantitative research design, using data collected from 200 SMEs in South Africa. The data was analyzed using descriptive statistics, Pearson’s correlation coefficient analysis, and multiple regression analysis. An inverse relationship between interest rate and credit accessibility was found using the Pearson correlation coefficient (r = –.199, p < 0.05). The results show that interest rates have a significant negative effect on credit access for SMEs in South Africa. Moreover, the study finds that SMEs experience considerable obstacles in obtaining affordable credit, and that interest rates play a crucial role in this. The study recommends that policymakers in South Africa should consider reducing interest rates and relaxing collateral requirements to improve credit access in SMEs. Furthermore, the study suggests that SMEs should focus on building a good credit history to improve their creditworthiness and increase their chances of accessing credit. Overall, the findings of this study contribute to the existing literature on the effect of interest rates on credit access for SMEs and provide insights for policymakers and SME owners in South Africa.Item Macroeconomic and firm-specific determinants of financial performance : evidence from non-life insurance companies in Africa(Informa UK Limited, 2023-12-31) Msomi, Thabiso SthembisoThis study aimed to examine the macroeconomic and firm-specific determinants of financial performance using 121 listed non-life insurance companies from 48 African countries for the period 2008–2019. Panel data of 1452 observations were examined using both ordinary least squares and two-step System Generalised Method of Moments estimators. The findings of this study show that lagged return on assets, equity capital, operational efficiency and leverage, investment capability and gross domestic product are the statistically significant determinants of financial performance in African non-life insurance companies even though equity capital, operational efficiency and leverage are inversely significant. It is concluded that insurance industries, policymakers, government and investors should take into consideration these significant factors in taking decision and improving their performance. Also, it is recommended that the capital structures of the sector should be restructured to maintain a favourable balance in the equity and debt of the companies. Also, mechanisms such as automated systems that can reduce operational cost should be adopted such that financial performance can be enhanced.Item Environmental, social and governance and financial performance nexus in South African listed firms(AOSIS, 2024-01-01) Matemane, Reon; Msomi, Thabiso Sthembiso; Ngundu, MarvellousBackground: Environmental, social and governance (ESG) factors have become topical in recent years because of climate change existential threat to humanity. There is, however, a limited understanding of how the firm’s ESG efforts affect firm outcomes. Aim: The aim of this study was to investigate the relationship between firm’s ESG indicators and the financial performance. Setting: The sample is drawn from Johannesburg Stock Exchange (JSE) listed companies based on data availability. South Africa is not only plagued by social ills and governance failures, but it is also one of the world’s largest emitters of greenhouse gases, making it an ideal laboratory for studying the ESG and firm performance nexus. Method: We utilized a dataset spanning the years 2012–2022, covering 67 JSE-listed firms. These panel data were analyzed using the two-step system generalised method of moments (GMM). Results: We found that the disaggregated ESG indexes have a positive, albeit insignificant impact on the financial performance. These findings hold even when financial and non-financial firms are examined separately. Conclusion: Policymakers, including standard setters and regulators, should encourage firms to be sincere on ESG efforts and avoid greenwashing. Contribution: The study employs a relatively robust estimation technique (two-step system GMM) over a relatively long period (2012–2012). Furthermore, the sectoral analysis of financial and non-financial firms adds to the body of literature and policy development.Item Nexus between accounting and information systems and SMEs`operational efficiency in South Africa(LLC CPC Business Perspectives, 2023-06-13) Msomi, Thabiso Sthembiso; Vilakazi, Sanele PhumlaniAccounting information systems are critical to any business but especially important to small and medium-sized enterprises (SMEs). Such systems are vital to their performance and success. Unfortunately, SMEs make poor decisions, leading to a shortage of accounting information. Hence, this study aims to investigate the impact of accounting information systems on SME operational efficiency in South Africa. Using purposive sampling, data were collected from 109 out of 150 retail SME owners or other appropriate representatives. A quantitative research design that falls under the positivist paradigm was used. The Statistical Package for Social Sciences (SPPS) software version 20.0 was utilized to analyze the collected data, specifically through descriptive and regression analysis. The study found a significant positive correlation between accounting information systems and SME operational efficiency (r-value = 0.579), which had a p-value of 0.0005, according to the intensity of the association with r-value. The study recommends that SME management implement excellent accounting principles into their operations. Furthermore, because SMEs may be unable to afford complicated accounting systems, SMEs functioning in the same region should implement a resource-sharing strategy to reduce expenses.