Debt Management Strategy Research Articles

The economic implications of Nigeria’s foreign debt servicing and sustainability

Despite extensive literature examining the role foreign debt plays in the growth of the Nigerian economy, seldom do they simultaneously consider the effect of external debt servicing and sustainability. Accordingly, this study examined the impact of external debt servicing and sustainability on the economic growth of Nigeria for the period between 1980 and 2022. The auto-regressive distributed lag (ARDL) model was adopted to measure the effect of the explanatory variables on the dependent variable. Empirically, the study demonstrated that the impact of debt sustainability was insufficient on the economy; notwithstanding being positive in the long run. Thus, suggesting the presence of a sovereign Ponzi finance in Nigeria’s debt management. However, the effects of external debt servicing and foreign debt interest payment were significant and negative on the economy in the short and long run periods. Thus, showing that resources being used to service the debt of the nation, crowd-out funds that could have been used to spur growth of the economy. Generally, the study affirmed the applicability of the debt-overhang hypothesis for the country. Conversely, exchange rate significantly and positively impacted the economy, indicating that an improvement in the value of the Naira, will be indicative of an improvement in the economy. Hence, the study recommends amongst others that effective external debt management strategies such as the debt for equity swap programme should be adopted by fiscal authorities in the country.

DEBT POLICY OF UKRAINE IN THE CONDITIONS OF MODERNIZATION OF PUBLIC FINANCES

Since the full-scale invasion of Russian Federation, public finances (PF) have been operating under conditions of uncertainty and unprecedented security challenges, akin to those experienced by the entire economic system. The level of uncertainty is such that it overshadows the current financial crises and parity with the consequences of the Second World War. This became the core objective of the study, which consisted of substantiating conceptual approaches to the formation of debt policy, considering the peculiarities of the projection of martial law on the functioning of PF. The research employs a systematic approach to methodology, integrating methods of factual and situational analysis that are grounded in international standards for public debt assessment and theoretical generalisations. Furthermore, through a comparative analysis, the interrelationships and mutual influences between debt policy and budget strategy are monitored. Furthermore, the study assesses the potential of leveraging the frozen Russian assets to support Ukraine's post-war recovery through the PF system. The study revealed that the debt policy is an integral component of the PF system. Unlike other program documents, it demonstrated resilience to both endogenous and exogenous challenges and the capacity to implement corrective measures during economic crises. This has laid the foundation for a Marshall Plan-like strategy for Ukraine. The PF strategy, which was approved just before the outbreak of the Russian-Ukrainian conflict, prompted discussions on enhancing the predictability of budgetary policy and debt sustainability. This, together with the adoption of a medium-term public debt management strategy, became the basis for the actual establishment of the Debt Agency as a legal entity, which in the future will ensure, on the one hand, the privileging of grants among the financial mechanisms for covering the budget deficit, and, on the other hand, an additional level of budgetary strategy for generating a multiplier effect from the borrowed funds for post-war reconstruction. On the other hand, this approach will create conditions for the transition from external sources of financing the budget deficit to internal ones by expanding and diversifying the range of investors in government securities. It is proved that debt policy in both the short and medium term will serve as the basis for the implementation of the budgetary strategy of post-war reconstruction, and will create conditions for accelerating the process of forced reparations to compensate for the damage caused by the Russian Federation.

Managing High Debt Levels: Strategies, Causes, and Impacts on Economic Stability

In recent years, the exponential growth of debt in many economic sectors, including people, enterprises, and governments, has emerged as a major worldwide issue, jeopardising economic stability. The high debt levels may be attributed to many factors, including stagnant earnings, increasing living expenditures, aggressive business development goals, and fiscal deficits. The ramifications of this buildup of debt are extensive, including serious financial hardship, reduced competitiveness, and decelerated economic development. This study analyses the causes and consequences of high levels of debt, highlighting the need for implementing efficient debt management techniques. Central strategies include improving financial literacy, advocating for responsible borrowing, adopting cautious financial management practices in firms, and attaining fiscal consolidation and structural changes at the governmental level. Furthermore, the study emphasizes the need for cutting-edge debt management strategies, such as the use of technology, to guarantee sustained economic strength and stability in the long run. This research emphasizes the crucial need to tackle excessive debt to avoid financial crises and maintain economic development in the presence of global economic difficulties. Keywords: Debt Accumulation, Economic Stability, High Debt Levels, Financial Hardship, Competitiveness.

Towards Share Price Volatility: Does Capital Structure Choices Really Matter?

The study was conducted to assess the impact of capital structure on the share price volatility in Tanzania. The study utilized quantitative secondary data spanning a ten (10) year period from 2013 to 2022, sourced from the Dar es Salaam Stock Exchange (DSE) and annual reports of six (6) chosen manufacturing companies. The data was analysed using the random effect panel regression model. Findings revealed that all independent variables (Short term, long term and total debt) have a negative statistically significant effect on share price volatility. On the basis of the study’s findings, the research suggested that, listed companies should adopt effective debt management strategy to mitigate share price volatility. Also, Capital market and security authorities (CMSA) are advised to provide regulatory guidance and enforce transparent reporting requirements for listed companies. Furthermore, Investors are encouraged to adopt a strategic investment approach, considering companies with effective debt management in their decisions. Future researches should use Autoregressive Distributed Lag (ARDL) model to capture both short- and long-term impact of capital structure changes, and include additional debt related metrics and microeconomic factors for a more nuanced understanding of share price volatility.

STATE DEBT MANAGEMENT POLICY IMPROVEMENT PROSPECTS

This article describes the economic importance and necessity of public debt in developing the national economy. The scientific approaches of economists to the effective management of state internal and debt have been researched and conclusions have been drawn. In recent years, the trends of changes in public debt in the Republic of Uzbekistan have been analyzed. Findings on the implementation of the public debt management strategy and its main directions are based. A scientific proposal and practical recommendations on improving the mechanism of efficient management and distribution of state debts have been developed.

Debt management strategies in the countries of Centraland Eastern Europe – an instrument of debt managementor just increasing transparency of public finances?

The paper investigates the contents of public debt management strategies in Central and Eastern European countries.The fundamental research problem of the research is to determine the role that formal debt managementstrategies play in contemporary public financial processes. Do they – as their name suggests – constitute a realtool for strategic debt management, i.e. strategies that set specific measurable objectives and actions that are tolead to the achievement of these objective over a certain period of time, or – contrary to their name – are theymerely an instrument for informing about the structure of the debt portfolio and seeking legitimacy for past decisionsregarding this structure addressed primarily to rating agencies and secondarily to investors and the public.

The synergy of debt management, big data technology and corporate decision-making: A catalyst for enhanced financial performance through operational efficiency and sustainable business strategies

This research explores the impact of debt management and big data technology utilization in management decision-making on corporate financial performance with a focus on operational efficiency and sustainable business strategy effectiveness as intervening variables. It aims to delve into how a firm's debt management strategies and its incorporation of big data into decision-making processes influence its financial outcomes. This study scrutinizes the company's approach to managing its debt structure and levels while the use of big data technology in decision-making reflects the integration of advanced technology in strategic planning by examining debt management. The study further investigates how operational efficiency and the effectiveness of sustainable business strategies act as intermediaries in this relationship indicating the role of a firm's internal processes and corporate strategy in driving financial success. Moreover, the research considers mediating variables such as industry type and market competition level which could affect the relationship between the independent and dependent variables. This study aims to test these relationships providing insights into the influence of debt management and big data technology on financial performance using statistical data analysis. Expected outcomes include a deeper understanding of the strategic implications of these factors for achieving sustainable and improved financial performance in a complex business landscape. Emphasizing the importance of efficient debt management and the strategic application of big data technology, the study highlights the necessity for firms to adopt wise financial resource management and innovative decision-making approaches to navigate the challenges of the modern business environment effectively.

Analysis Of Financial Performance Of Muhammadiyah Aisyiyah Hospital In Jakarta Before And After The Covid-19 Pandemic

This study aims to analyze differences in the financial performance of the Muhammadiyah-Aisyiyah Hospital (RSMA) in Jakarta before and after the COVID-19 pandemic. Data was obtained from financial reports (2017Q1-2022Q4) which were analyzed using the ANOVA difference test. Based on the analysis and discussion, it was found that there was a significant difference in financial performance in the financial ratios of TATO and PBT, while the difference in DAR was not significant before and after the COVID-19 pandemic in the RSIJ Group. Apart from that, it was found that financial performance was better after the COVID-19 pandemic.This research provides practical insights for hospital managers and stakeholders in designing more effective policies for financial management during and after the pandemic. The increase in the Debt to Assets Ratio in several hospitals shows the need for better debt management strategies, while the decrease in the Total Assets Turnover Ratio emphasizes the importance of increasing the efficiency of assets use. The increase in Profit Before Tax in several hospitals indicates opportunities to increase profitability through appropriate management despite existing challenges. To improve the financial performance of Muhammadiyah private hospitals in DKI Jakarta, it is recommended to improve asset management to make it more effective, diversify income sources to reduce financial risks, improve revenue and operational expense management strategies, and invest in advanced health technology.

Debt and Online Loan Management Counseling for the Village Community of Dedeul, Taraju District, Tasikmalaya Regency

The use of online loans in West Java has increased in recent years, providing easy access to funds but also increasing the risk of unmanaged debt. This community service program aims to improve the financial literacy of villagers and provide education on debt management and the risks of online loans. The implementation of the service was carried out through counseling involving various elements of society. The results showed a significant increase in the understanding and awareness of residents regarding the importance of good financial management. Residents began to implement more effective debt management strategies and showed a decrease in interest in online loans. However, challenges in long-term implementation remain, indicating the need for ongoing follow-up and support from the government and local financial institutions. This service emphasizes the importance of collaboration between various parties to ensure that positive changes in the financial management of the Dedeul Village community can last and contribute to their welfare in the future

The Relationship Between Public Debt and Economic Growth in Tanzania

This study examines the dynamic relationship between public debt and economic growth in Tanzania, focusing on causal links between the two variables and exploring potential debt thresholds. Using quarterly time series data from March 2005 to June 2022, we employ individual unit root and Johansen’s cointegration tests to establish long-term relationships. We estimate the Vector Error Correction Model and conduct the Granger causality test. The Threshold Model explores the debt threshold. Our findings reveal a significant positive long-term relationship between the two variables, with the direction of causality running from economic growth to domestic debt. Notably, the positive impact of domestic debt is pronounced when the domestic debt-to-GDP ratio falls between 31.3% and 35.2%. Beyond this threshold, the established relationship becomes statistically insignificant. The paper advocates leveraging debt financing to support productive investments for long-term economic growth. This recommendation holds significance for Tanzania and other countries across sub-Saharan Africa. However, it is crucial to undertake tailored country analyses that account for the distinct socioeconomic and political landscapes of the region's economies. These tailored analyses give valuable insights for domestic economies and global financing institutions, facilitating the formulation of context-specific debt management strategies that contribute to sustainable economic growth.

Public Debt Management and Economic Growth in Sierra Leone (1973-2022)

Sierra Leone is a small developing country that continues to encounter enormous public debt challenges, principally as a result of inadequate Gross Domestic Product (GDP) and imprudent debt management. The country’s current debt-to-GDP ratio stands at 78.70%. The study investigates and analyses the impact of public debt on economic growth in Sierra Leone for the period 1973-2022. The study employs time series secondary data which were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt stock-to-GDP ratio and domestic debt stock-to-GDP ratio were specified in the models employed in this study. The variables were tested for stationarity using unit root tests before applying the Autoregressive Distributed Lag (ARDL) approach in running the regression with a view to ascertaining both short run and long run effects of public debt on economic growth in Sierra Leone. Various diagnostic tests were carried out to appraise the robustness of the estimated growth equations using appropriate econometric criteria. The study empirically reveals a negative impact of public debt (both domestic and external) on economic growth in Sierra Leone both in the short run and in the long run. Furthermore, the study reveals that in order to ensure effective public debt management in Sierra Leone, there must be effective management of capital projects financed by public debt and to ensure stable exchange rates to reduce cost of financing debt. The study, therefore, proffers strategic recommendations in line with the findings, including a review of Sierra Leone’s debt management strategy to ensure that public debt is directed towards productive capital projects.

Application of Vector Autoregressive (VAR) Model on the Interaction of Inflation Rates and Public Debt in Kenya from 2011 to 2021

This study examines the relationship between public debt and inflation rates in Kenya from 2011 to 2021 using the Vector Autoregressive (VAR) model. Despite the models likeAutoregressive Integrated Moving Average (ARIMA), Seasonal Autoregressive Integrated Moving Average (SARIMA), and Generalized Autoregressive Conditional Heteroscedasticity (GARCH) gaining popularity in time series analysis, the Vector Autoregressive model, being multivariate, is relevant in analyzing two or more time series variables simultaneously, benefiting from the bi-directional causality and providing a better outlook into the flow of the dynamic interaction between inflation and public debt. The main objectives are modelling the Vector Autoregressive model and forecasting future trends to provide insights for policymakers. Additionally, the methodological approach comprises descriptive statistics, stationarity tests, normality tests, and the Vector Autoregressive model. Descriptive statistics reveal significant variations, with public debt increasing from 1.35 trillion KES to a peak of 8.2 trillion KES, and inflation rates ranging from 3.2% to 19.72% for the period from 2011 to 2021. The Augmented Dickey-Fuller (ADF) test confirmed that both time series were stationary at their levels. The Vector Autoregressive model, chosen for its ability to analyze dynamic interactions, indicated a significant relationship between the variables, with inflation showing strong self-persistence (coefficient of 0.8731, <i>p</i> < 2 × 10<sup>−16</sup>), though public debt did not significantly impact inflation in the model (<i>p</i> = 0.5592). The models R-squared values, 95.82% for public debt and 84.74% for inflation, highlight its strong explanatory power. Moreover, findings indicate that while public debt does not directly affect inflation within the model lag structure, inflation exhibits a strong self-persistence. The model R-squared values are 95.82% for public debt and 84.74% for inflation, demonstrating high explanatory power. Recommendations include the implementation of a robust debt management strategy, emphasizing sustainable borrowing and enhancing revenue generation to mitigate inflationary pressures. Further research is recommended to explore the broader macroeconomic impacts of public debt on economic growth and employment in Kenya.

Strategi Inovatif Dalam Mengelola Keuangan Keluarga: Pengalaman Dari Program KKN di Desa Domas Kabupaten Mojokerto

Domas Village, located in Mojokerto Regency, faces challenges in family financial management that impact the community's welfare. The Community Service Program (KKN) of UPN "Veteran" East Java aims to provide innovative solutions through financial education for the PKK mothers in the village. The methods used include presentations, discussions, practical workshops, and household mentoring. Through presentations and discussions, participants are given basic knowledge about financial literacy, the importance of saving, and how to create a household budget. Practical workshops help participants practice budgeting and debt management strategies. Household mentoring ensures the implementation of the acquired knowledge. The results of this program show an increase in awareness and knowledge of financial management among PKK mothers, reflected in the increased number of families who start budgeting and saving regularly. Consequently, this program has successfully created sustainable social change in the lives of the local residents

Moderating effect of institutional quality on the influence of debt on investment in sub-Saharan Africa

The relationship between external debt and economic growth has been extensively studied by researchers and policymakers. However, the link between external debt and domestic investment remains an underexplored area of research. Therefore, this paper investigates the nexus between external debt and domestic investment, using institutional quality as a moderator. The sample consists of 47 sub-Saharan African countries with data spanning from 1996 to 2021. The empirical findings from conventional and robust estimators indicate that external debt negatively and significantly hampers domestic investment, while institutional quality plays a significant moderating role in this relationship. Additionally, the benefits of debt can only be realized by the SSA region when the average quality of institutions is above − 1.174 on the scale of − 2.5 to 2.5. The in-depth analysis offers insights that high-quality institutions (above a certain threshold) can help countries leverage debt for positive outcomes by promoting efficient resource allocation and attracting further investment. Thus, policymakers are advised to uphold debt management strategies and institutional reforms, such as reducing corruption, improving property rights, and strengthening the rule of law, to ensure transparency in debt use and maintain a sustainable debt burden. This will create a more attractive environment for both domestic and foreign investment. The results remain robust to alternative methodologies.

The rising cost of servicing public debt: challenges for fiscal policy in a crisis environment

The study is devoted to the challenges for the fiscal policies of Central and Eastern European (CEE) countries, resulting from the strong growth of public debt and its servicing costs under the conditions of the pandemic and war shocks. The purpose of the study is to answer the questions: i) what factors caused the sharp increase in sovereign debt yields? ii) is there a correlation between the degree of implementation of sound economic governance (SEG) principles and the cost of servicing sovereign debt? ii) how strong was the response of the sovereign deficit and debt to the shocks caused by the pandemic and war in Ukraine? iii) does the rising cost of servicing debt threaten the sustainability of public finances? v) do the adopted SEG principles remain relevant during periods of shocks? The study covered the 6 largest economies in this part of Europe, i.e. Poland, Romania, the Czech Republic, Greece, Hungary, and Slovakia, but its results apply indirectly to many other countries. The results were confronted with a plan for reforming the EU’s economic governance system in order to identify the fundamental challenges facing the countries studied in this context. On the basis of the study, recommendations were put forward for shaping the assumptions of the state debt management strategy and multi-year financial plans.

Regression Analysis of the Effects of Debt on Economic Performance in Kenya

This study investigates the impact of debt on economic performance in Kenya, focusing on both internal and external debt. Using regression analysis and correlation techniques, data from 2000 to 2021 was analyzed to understand the relationship between debt levels and economic growth indicators such as GDP. The findings reveal a nuanced relationship: while internal debt shows a positive association with economic growth, external debt demonstrates a negative association. Effective debt management strategies are crucial to mitigate adverse effects, including monitoring debt levels, negotiating favorable terms with creditors, and directing borrowing towards productive sectors. Promoting export-led growth, enhancing fiscal discipline, and continuous monitoring and evaluation are recommended policy actions. Despite limitations such as data constraints and external factors influencing economic performance, future research avenues include long-term analysis, sectoral studies, comparative analyses, and qualitative investigations into stakeholder perceptions. This study contributes to understanding the complexities of debt dynamics and informs policymakers in navigating sustainable economic development pathways.

Analysis of the Impact of Domestic Debt on the Nigerian Economy: 1980-2021

The study investigates the impact of domestic debt on the Nigerian economy from 1980 to 2021 to ascertain, among other things, the relative significance and impact of domestic debt on Nigeria's GDP growth. The study uses quantitative research with a secondary focus on CBN data. The Debt Management Office and Central Bank of Nigeria provided information on the stock of domestic debt, GDP, interest on domestic debt, and capital spending for Nigeria between 1980 and 2020. The gathered data were subjected to a linear regression model, and the model's effectiveness was evaluated using the E-view statistical program. The Unit Root Test and Ordinary Least Square Method were the techniques utilised in this study to assist in explaining the variation and other explanatory variables. The Autoregressive Distributed Lag model (ARDL)-Bound Test is used in the study to investigate and analyse cointegration. According to the findings, Nigeria's economy is negatively impacted by domestic wagers, interest rates on domestic debt and capital expenditures, budget deficits, and private-sector lending. The study suggests good domestic debt management and suitable debt-servicing strategies for the efficient expansion of the economy in light of this finding.

The Impact of High Government Debt on Economic Development in Somalia

This study focuses on the impact of high government debt on economic development in Somalia. The specific objectives of the study encompass: to examine the impact of high government debt on Somalia's economic development, to explore the strategies that can be used to mitigate the negative impact of high government debt on economic development in Somalia and to evaluate the role of international financial institutions in managing high government in Somalia. This study employed descriptive research design and quantitative research method to investigate the impact of heavily-indebted on rebuilding economic development in Somalia. The study employed purposive sampling technique to select the participants of the study. The sample size of the study was 80 participants. To collect data from the respondents which they entail: Government officials, Economic analysts, representatives from financial institutions, Business owners and entrepreneurs, representatives from Non-governmental organizations (NGOs) and Academics (researchers and scholars). The study adopted close-ended questionnaire instrument data collected from the respondents of the study was entered, coded, sorted, organized and analyzed using Statistical Package Software Science (SPSS) version 28. The key findings of the study on the impacts of high government debt on Somalia's economic development entail: limited access to credit, increased debt servicing costs, inflation and currency depreciation, reduced investor confidence, limited fiscal space, vulnerability to external shocks and social unrest. The strategies the can be used to mitigate the negative impact of high government debt on economic development in Somalia include: promotion of financial literacy, strengthening regulatory framework, encouragement of diversification of the economy, Improving infrastructure and access to financial services, implementation of debt management strategies, fostering a conducive business environment and seeking external assistance and debt relief. And the role of international financial institutions in managing high government debt in Somalia entail: providing financial assistance, negotiating debt relief, offering technical expertise and supporting capacity-building. The study recommended that the Federal Government of Somalia should improve fiscal management and should work with international financial institutions and creditor countries to negotiate debt relief and restructuring agreements to reduce the burden of debt payments and boost economic development.

WORKING CAPITAL MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF DAIRY PROCESSING FIRMS IN KENYA

The significance of the dairy sector in Kenya’s economy cannot be over emphasized. This is because the sector contributes 4% of the national gross domestic product and 19% of the agricultural gross domestic product for an economy that heavily relies on agriculture. Working capital plays a critical role in the success of commercial entities. This study sought to determine the effect of working capital management practices on the financial performance of dairy processing firms in Kenya. The general objective of the study was to determine the effect of working capital management practices on financial performance of dairy firms in Kenya. The specific objectives of the study were to establish the effect of inventory management practices, debtor’s management practices, creditors’ management practices and cash management practices on financial performance of dairy firms in Kenya. The theories that guided the study are; Keynesian liquidity preference theory, Cash Conversion Cycle theory, Stewardship theory, Risk return trade-off theory and Transaction Cost Economics Theory. The study population comprised the 221 dairy processing firms classified as major and mini processors by the Kenya Dairy Board. Stratified random sampling technique was used to select a sample size of 69 firms for the study. Self-administered structured questionnaire was used for data collection. A pilot study was conducted to test for the validity and reliability of data measuring instruments. Descriptive statistics namely mean, variance and standard deviation, and inferential statistics namely, correlation, simple and multiple regression was used for data analysis. The results of the analysis were presented using tables. The diagnostic tests to be performed in the study included Normality, Linearity and Multi - collinearity. A statistical package for social sciences software was used to aid the data analysis. Results indicated that inventory management was a key predictor of financial performance. Results indicated that debtor’s management practices were a key predictor of financial performance. Correlation outcomes of the results showed that credit management, and cash management had a positive and statistically significant relationship with the financial performance of dairy firms in Kenya. The regression results showed that cash management and creditors management have a direct positive effect on the financial performance of dairy firms in Kenya. The study recommended that Dairy Firms directors should develop a policy on credit collection detailing the policies and practices to be followed by the Dairy Firms. To enhance their accounts receivables and remove bad debts while boosting sales and inventory turnover, farm owners should rigorously follow up on debts, assess consumers before providing debts, give incentives for early debt payments, and build a solid debt management strategy. Dairy Firms may generally keep the standard payment interval longer than the average collection period to limit receivables payments for short-term needs, lowering finance expenses.

МОДЕЛІ ТА МЕТОДИ УПРАВЛІННЯ ЗАЛУЧЕНИМ КАПІТАЛОМ НА ПІДПРИЄМСТВІ

Raised capital is a part of the enterprise's capital, which is formed at the expense of external sources, such as loans, credits, issuance of securities, etc. Raised capital, such as loans, bonds, shares or investments, is an important part of financing a business. It is an important tool for financing the company's activities, but at the same time it is associated with certain risks. Achieving effective management of this capital helps to ensure sustainable operation and growth of the enterprise, ensure financial stability and the ability to pay interest or repay loans on time. A business must determine the optimal mix of financing that meets its needs and constraints. Effective management of capital employed can help a company to be more competitive in the market, as it helps to influence the cost of capital and overall financial profitability. Factors affecting the capital structure include the organizational and legal form of the enterprise, industry specifics of operational activity, the size of the enterprise, the cost of capital, the freedom to choose sources of financing, the state of the capital market and the level of income taxation. Regular determination of capital management efficiency indicators is important for monitoring the current state of its structure. The important issues related to the effective use of loans and other forms of borrowed capital to achieve the company's financial goals are considered in the article. Debt management strategies and tools, optimization of debt service costs, as well as risks associated with the use of borrowed capital were studied.