Faculty of Accounting and Informatics
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Item Factors affecting non-performing loans in commercial banks of selected West African countries(LLC CPC Business Perspectives, 2022-01-19) Msomi, Thabiso SthembisoThis paper examines the macro-economic and bank-specific factors affecting non-performing loans in commercial banks. Using 47 listed commercial banks from six countries, namely 19 banks from Nigeria, 14 banks from Benin, 3 banks from Burkina Faso, 3 banks from Gambia, 3 banks from Guinea, and 5 banks from Liberia for the period 2008 to 2019, fixed and random effect model was used. The Hausman test favored the selection of fixed effect model, and it was found from the estimation that the liquidity ratio, capital adequacy ratio and inflation rate significantly affect non-performing loans. As a result, it is advised that banks depend not only on their ability to achieve the capital adequacy ratio, but also guarantee that loans are thoroughly scrutinized before being issued to beneficiaries. Bank managers should guarantee that banking staff is not simply awarding loans to secure their jobs by accumulating deposits from consumers at the price of the bank’s long-term stake. In addition, the economies of West Africa should keep their inflation rates low so that repayment of loans on time is cheap and realistic. Acknowledgment I would like to appreciate Fezile Nonjabulo Gcwabaza for love and support throughout this research project.Item Dynamic panel investigation of the determinants of South African commercial banks’ operational efficiency(LLC CPC Business Perspectives, 2022-11-02) Msomi, Thabiso Sthembiso; Olarewaju, Odunayo MagretLike any other business, commercial banks are greatly affected by the micro and macro-environment that operate in, no matter how large they are. Capital adequacy ratio, credit risk, money supply, inflation, the exchange rate, and the national gross domestic product have been noted to be the key determinants of bank operational efficiency. This research study looked at the operational efficiency of four large South African banks, namely, Standard Bank, Absa, Nedbank, and First National Bank. A quantitative, descriptive, correlation design was employed, and the System-Generalized Method of Moments (SYS-GMM) techniques were used and revealed that operational efficiency was positively correlated with capital adequacy ratio, credit risk, inflation, and exchange rate, and negatively correlated with profitability, money supply and GDP. SYS-GMM estimates show that capital adequacy ratio, credit risk, inflation and exchange rate positively influenced operational efficiency, while profitability, money supply (M3) and GDP had a negative influence. Thus, it is concluded that bank management should decrease administrative costs, evaluate customers’ creditworthiness before issuing loans, raise bank size as operational conditions require, boost intermediation, and anticipate inflation to operate more efficiently.Item Financial literacy and SME loan repayments in South Africa during the COVID-19 era(LLC CPC Business Perspectives, 2022-11-04) Msomi, Thabiso Sthembiso; Nzama, SmangeleSmall and medium-sized enterprises (SMEs) are the primary victims of the COVID-19 outbreak because they lack adequate resources and are poorly prepared for such interruptions. For SMEs to expand, they need financial assistance such as loans and advances from financial service providers. However, they struggle to repay these loans and advances because they are small in size and do not make large turnovers, and owners lack adequate financial literacy. This study aims to investigate the relationship between financial literacy and loan repayment of SMEs. The study followed a positivist paradigm, and a quantitative approach was employed. A total of 110 self-completed Likert questionnaires were distributed, only 107 were filled correctly and analyzed using SPSS. The results from Pearson’s correlation coefficient showed a strong and significant relationship between financial literacy and SME loan repayments at r = 0.324, P < 0.0005. Regression analysis showed a significant linear relationship between financial literacy and SME loans repayments, F (1.152) = 17.806; P < 0.0005. P < 0.0005 is less than the independent variable (SME loans repayments), B = 0.324, P < 0.0005. The results imply that if SME owners are well-versed in finance, they will be capable of repaying outstanding loans and advances timely.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 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 Nexus between small and medium-sized enterprise budgeting skills and loan repayment in South Africa(LLC CPC Business Perspectives, 2024-05-07) Msomi, Thabiso SthembisoThis study’s purpose is to assess the influence of small and medium-sized enterprises’ (SMEs) budgeting skills on loan repayment in South Africa. The quantitative research approach was selected as the appropriate methodology for this study, while the purposive sampling approach was selected as the appropriate way to select participants for this study. The primary data for this study came from respondents who were business owners of SMEs in the retail, hardware, construction, and manufacturing industries. SPSS was used to analyze the acquired data. A total of 380 research questionnaires were distributed, and there were 375 that were returned for analysis (which gives a response rate of 99%). Both a regression analysis and a correlation analysis using Pearson’s method were carried out. Pearson’s correlation coefficient revealed a positive and significant relationship between SMEs’ budgeting skills and loan repayment at the level of r =.250, p < 0.0005. These results were supported by the finding that there is a positive and significant association between these two factors. According to the findings of the study, it is recommended that financial providers educate their SMEs on how to prepare various types of budgets, how to follow up and compare their financial objectives to their performance, and that financial institutions and government organizations should assist SMEs with budgeting skills to decrease SME loan defaults.Item The impact of financial regulations on bank lending in emerging economies in Sub-Saharan Africa(LLC CPC Business Perspectives, 2024-08-30) Aliamutu, Kansilembo; Msomi, Thabiso SthembisoThe aim of this study is to investigate the impact of financial regulations on bank lending in emerging economies in Sub-Saharan Africa. The dynamic system-generalized method of measures (GMM) is used to address difficulties such as unexplained periods and nation-specific implications, besides the endogeneity of the variables in question. Spanning from 2012 to 2022, the research used data from 80 banks in 20 sub-Saharan African nations. The findings show that expansive financial regulation, which includes a boost in the amount of cash in circulation, induces bank lending. At the same time, restrictive financial regulations, with the value as an improvement in interest rates by central banks, lead to credit contractions, albeit with little impact because of the attainable poverty of banking sectors, organizational limitations, bank-focused attention, and additional system rigidity typical of developing nations, which compromises the efficiency of the system. Other characteristics that substantially impact bank lending routes include capital sufficiency ratios and the scale of economic activity. Sub-Saharan African countries may boost the efficiency of financial regulations propagation on bank lending by making better use of the transfer process of fluctuations in cash supplies and interest rates.Item Currency redenomination and firm value growth : lessons from a developing economy(LLC CPC Business Perspectives, 2021-03-12) Marimuthu, Ferina; Maama, HarunaThe redenomination of the Cedi with the new Ghana Cedi in 2007 was met with skepticism and outright opposition in certain sectors of the economy. Businesses feared that this would decrease their net worth. Despite the time that has elapsed since the redenomination exercise, it is yet to be proven whether the fears of individuals who predicted its negative impact on firms’ performance had been confirmed or the optimism of those that expected its positive impact on firms’ performance has prevailed. Therefore, the study examined the impact of the cedi redenomination on firms’ value growth in Ghana. The study used the financial records of listed firms in Ghana, five years before and five years after the redenomination of the currency. The firms’ value growth was measured based on the growth in Tobin’s Q and return on assets (ROA). A generalized method of moments (GMM) estimation technique was adopted for the regression analysis. The results indicated that the firms’ value increased, whilst profitability decreased in the same year. Moreover, the results showed sustained growth in the profitability of firms after the redenomination exercise. The study concludes that the currency redenomination improved the firms’ profitability, whilst their value was not improved. The significant implication of the results is that governments can use redenomination as a tool to influence micro-economic activities. This study is perhaps the first to use firm-level data to examine the impact of currency redenomination on firms’ value growth in an African country.