Government Finance Research Articles

EFFECT OF FOREIGN DEBT ON LITERACY RATE IN KENYA

<p>This paper investigated the effect of foreign debt on literacy rate in Kenya. In the fiscal year 2021/2022, public debt as a percentage of gross domestic product was 67 per cent, which was higher than the debt ceiling of 55 per cent of gross domestic product. External debt accounted for 52% of this total debt as of 2022, exhibiting a consistent increase since 2013, surpassing domestic debt. The burden of servicing foreign debt may subsequently pose a challenge to the government in fulfilling its commitments in the education sector. Consequently, lower literacy rates impede a nation's socio-economic progress as literacy is critical for promoting peace and adopting new technologies, both of which drive development. This study used the primary school completion rate as a proxy for literacy. Secondary data published in international and national organizations from 1990 to 2021 was employed for analysis. The study’s theoretical framework was pegged on a consumer utility maximization of a merit-good education constrained by the government's financing. The relevant time series and diagnostic tests were performed on the data series and models. Auto Regressive Distributed Lag model was used for estimation using ordinary least squares. The findings were that foreign debt hurt literacy rate in the long run and had a positive effect in the short run. The study recommends prudent management of foreign debt, so that it can facilitate improvements in the education sector.</p><p><strong>JEL:</strong> I25; H63; O55; C22</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0771/a.php" alt="Hit counter" /></p>

A literature review of MSME success: Acceptance and use of technology, financial access, and strategic cooperation

MSMEs require a variety of tools and resources to succeed. The most significant barriers to the success and long-term expansion of MSMEs are those that prevent them from employing information technology, accessing digital marketing, and getting outside investment. Validating business actors and studying literacy more deeply will produce data analysis and strategic recommendations for MSME growth. The adoption of technology and the application of information technology are proven to increase efficiency and expand the market reach of business actors. MSMEs gain access to resources (external knowledge and funding sources), which are important determinants of market success. Their success depends mainly on how they adapt and utilize technology, effective marketing strategies, and obtaining the proper support, especially regarding access to funding. Collaborative efforts between MSMEs and external parties (such as financial institutions and government) and industry experts must be improved to ensure that MSMEs can compete and succeed in an increasingly competitive digital era.

Factors affecting access to finance for small and medium-sized agricultural enterprises in Vietnam

This study explores the financial accessibility challenges faced by small and medium-sized enterprises (SMEs) in Vietnam's agricultural sector, a critical component of the national economy. This study reveals the various obstacles that hinder small and medium enterprises (SMEs) from accessing financial assistance. It highlights the need to have a thorough comprehension of how factors such as financial infrastructure, government laws, risk management, market connections, and financial literacy impact SMEs' ability to access finance. The research suggests that enhancing financial literacy, along with developing a solid financial infrastructure and supportive government policies, is crucial for SMEs. It highlights the importance of tailored banking services, strategic government actions, effective risk management, and integration into market linkages to improve SMEs' financial inclusion. The findings advocate for a holistic approach to address these challenges, offering insights for policymakers, financial institutions, and stakeholders in the SME ecosystem. The study offers practical guidance for enhancing the economic resilience of agricultural SMEs in Vietnam and other developing economies. It proposes strategies to strengthen financial infrastructure, support policies, and promote financial literacy. This study contributes valuable insights to both academic research and practical applications.

Incentive-compatible mechanism for manufacturing carbon emission supervision under carbon control policies in China.

Enhance performance in manufacturing carbon emission (MCE) reduction has become a widespread consensus and a necessary part, which cannot be achieved without the joint participation of manufacturing enterprises and supervisory departments. Accordingly, how to coordinate the interests of both sides and design a reasonable incentive-compatible mechanism becomes an urgent task at present. Considering the two subsidy funding channels of peer funds and government finance, this study applies the evolutionary game model to analyze feasible schemes for designing incentive-compatible mechanism of MCE supervision, discusses and simulates the realistic scenarios and influencing factors of incentive-compatible mechanism under the non-subsidized and subsidized schemes. The results show that MCE supervision is in an incentive-incompatible state under the non-subsidized incentive scheme, while in a constrained incentive-compatible state under the subsidized incentive scheme. With the increase of peer funds and penalty coefficient or the decrease of subsidy coefficient, the period of MCE supervision to reach an incentive-compatible state becomes shorter. However, a lower peer fund and penalty coefficient or a higher subsidy coefficient will contribute to a state of incentive-incompatible or a periodic cycle state of "incentive-compatible → incentive-incompatible →incentive-compatible→…" in the MCE supervision.

Exploring the Moderating Effect of Generational Status on the Link Between External Environment and Entrepreneurial Motivation of Indian Women Entrepreneurs

This study examines how external environmental factors affect the motivation of first- and second-generation women entrepreneurs in India, and how their generational status moderates this relationship. We used a survey design method to collect data from 459 women business owners in India, who were classified as first- or second-generation based on whether they were the first or second generation in their family to start a business. We employed the partial least-squares structural equation modelling method to test our hypotheses and evaluate our model. We found that external environmental factors, such as education and training, financial support, government policies and non-financial support, had positive effects on entrepreneurial motivation for both groups of women entrepreneurs. However, we also found that generational status had a significant moderating effect on the link between education and training and entrepreneurial motivation, but not on the other three external environmental factors. Specifically, we found that education and training influenced second-generation women entrepreneurs more strongly than first-generation women entrepreneurs. Our findings have important implications for management practice and policymaking, as well as for the literature on women entrepreneurship. We suggest that concerned authorities should develop differential strategies for first- and second-generation women entrepreneurs, taking into account their different responses to external environmental factors. We also suggest that future research should explore other internal and external environmental factors that might interact with generational status or other variables to shape women entrepreneurs’ motivation.

Islamic finance principles and performance of micro, small and medium enterprises (MSMEs) in Makindye Division Kampala District Central Uganda

PurposeMicro, small and medium-sized enterprises (MSMEs) are vital for economic growth in developing countries. Yet, little research has explored the link between Islamic principles and MSME performance, especially in Uganda. This study aims to investigate the relationship between Islamic financial principles and MSMEs’ performance in Makindye Division Kampala – Uganda.Design/methodology/approachThis study used a correlational research design involving 86 respondents from 30 MSMEs between January and May 2023. Data collected through questionnaires was analyzed with Statistical Package for Social Sciences, examining three independent variables: ethicality, Halal investment and prohibition of riba, in relation to MSME performance.FindingsThe results revealed significant relationships between these variables and MSME performance. Prohibition of riba (r = 0.296, n = 86, p = 0.006), Halal investments (r = 0.308, n = 86, p = 0.004) and ethical principles (r = 0.283, n = 86, p = 0.008) all exhibited a statistically significant relationship. Regression analysis with R = 0.405, R2 = 0.164 and adjusted R2 = 0.134 indicated that all hypothesized variables were significant predictors of MSME performance. Based on findings, this study rejected the null hypothesis, confirming a moderately positive and significant relationship between Islamic financial principles and MSME performance.Originality/valueThis study underscores the importance of active involvement from key stakeholders such as the Uganda Halal Bureau, Uganda Muslim Supreme Council, Islamic financial institutions and government agencies in integrating robust support mechanisms for MSMEs into their strategic frameworks. Such efforts could enhance Uganda’s economic landscape, aligning with the experiences of Malaysia and Indonesia in leveraging Islamic principles for economic growth.

A Study On: Taxation as a Major Source of Government Fundings - Special Reference to Implementation of GST

Taxation is the major source of funding for the government in India. The total revenue obtained by the government is used for the nation’s expenses such as railway, road construction, health and education etc. this research paper provides quantitative and qualitative analysis regarding whether taxation is the major source of government funding or not. It is worth noting that the government requires funding in order to conduct its operations in an efficient manner. This can be related to how a human requires money in order to fulfil their needs and desires. However, in this case the government will require the funds for its activities such as health care, transportation, defenses etc. tax is generally considered to be a reliable and viable source of finance for the Indian government. Additionally, this research paper provides a thorough understanding on the role the GDP plays in this context.

Nexus between small and medium-sized enterprise budgeting skills and loan repayment in South Africa

This 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.

Do higher government spending, financial development, and trade reduce income inequality in low‐income countries? A Bayesian perspective

AbstractWe employed the Bayesian method to investigate the impact of government spending, financial development (measured by bank credit), and trade on income inequality reduction in 66 low‐income countries (LICs) across Africa, Asia, America, and Europe from 2000 to 2018. Controlling inflation and unemployment, our results indicate that trade and inflation exacerbate income inequality in LICs, while financial development and government spending have no impact on reducing income inequality in these countries. Furthermore, the findings show that real GDP per capita reduces income inequality in LICs. To ensure the robustness of our results, we also conducted frequentist quantile regression, which yielded consistent findings that financial development, government spending, and trade do not reduce income inequality in LICs. We further discuss the potential channels through which trade, financial development, inflation, and government spending contribute to income inequality in LICs, and provide policy implications based on the empirical evidence.Related ArticlesAdegboye, Alex, Kofo Adegboye, Uwalomwa Uwuigbe, Stephen Ojeka, and Eyitemi Fasanu. 2023. “Taxation, Democracy, and Inequality in Sub‐Saharan Africa: Relevant Linkages for Sustainable Development Goals.” Politics & Policy 51(4): 696–722. https://doi.org/10.1111/polp.12547.Asongu, Simplice, and Nicholas M. Odhiambo. 2023. “The Effect of Inequality on Poverty and Severity of Poverty in Sub‐Saharan Africa: The Role of Financial Development Institutions.” Politics & Policy 51(5): 898–918. https://doi.org/10.1111/polp.12558.Polacko, Matthew. 2023. “Turning Off the Base: Social Democracy's Neoliberal Turn, Income Inequality, and Turnout.” Politics & Policy 51(4): 538–68. https://doi.org/10.1111/polp.12550.

Perceptions of Tobacco Price Policy among Students from Sapienza University of Rome: Can This Policy Mitigate Smoking Addiction and Its Health Impacts?

Tobacco use is one of the main risk factors for non-communicable diseases. Avoiding youth initiation and treating addiction are fundamental public health issues to ensure better health. Among tobacco control policies, increasing tobacco price is the single most effective intervention. It reduces tobacco consumption, especially among youths, while representing a government financing source. This study aimed to assess the agreement with the proposal of a one-euro increase in tobacco price earmarked to health issues among students at Sapienza University. Two convenience samples were surveyed, five years apart, on World No Tobacco Days. Smoking habits, agreement with the proposal and reasons for it were collected. Results from the 208 questionnaires (107 in 2014, 101 in 2019) showed 46.6% of agreement with the proposal (53.3% in 2014, 39.2% in 2019, p = 0.044). Main predictive factor for agreement was being a non-smoker (OR = 6.33 p < 0.001), main reason (64.8%) was it could trigger smokers to quit or reduce consumption. Several factors might have influenced this finding, including the introduction of novel tobacco products and their increased advertisement on social media. In 2024, European Union is planning to update the Tobacco Taxation Directive which could greatly contribute to the reduction of non-communicable diseases and premature deaths.

Fuel Subsidy Removal and Macroeconomic Performance in Nigeria

The government of Nigeria removed fuel subsidy on the premise that fuel subsidy is a drain on government finances, causes macroeconomic instability, and generates adverse social welfare in the country. The objective of this paper is to examine the effect of fuel subsidy removal on macroeconomic performance in Nigeria. The paper adopts a desk review method and obtains secondary data from the documents of reputable organizations such as the Central Bank of Nigeria, the National Bureau of Statistics, and the Nigerian National Petroleum Company Ltd. Descriptive statistics was employed for the analysis of data. The study found out that the removal of fuel subsidy resulted in the increase of premium motor spirit price across the country generating inflationary trend. It improved revenue generation for government expenditure, curtailed cross border smuggling and corruption inherent in the downstream sector of the petroleum sector. It was based on these findings that the paper recommends a proper coordination of the fiscal policies and the Central Bank of Nigeria to effectively manage the macroeconomic effect of the subsidy removal. It is also important for the government to develop an effective communication strategy to engage stakeholders on the necessity for the subsidy removal and put in place an effective palliative measure to alleviate the attendant adverse conditions that it generated.

Towards algorithm auditing: managing legal, ethical and technological risks of AI, ML and associated algorithms.

-Business reliance on algorithms is becoming ubiquitous, and companies are increasingly concerned about their algorithms causing major financial or reputational damage. High-profile cases include Google's AI algorithm for photo classification mistakenly labelling a black couple as gorillas in 2015 (Gebru 2020 In The Oxford handbook of ethics of AI, pp. 251-269), Microsoft's AI chatbot Tay that spread racist, sexist and antisemitic speech on Twitter (now X) (Wolf et al. 2017 ACM Sigcas Comput. Soc. 47, 54-64 (doi:10.1145/3144592.3144598)), and Amazon's AI recruiting tool being scrapped after showing bias against women. In response, governments are legislating and imposing bans, regulators fining companies and the judiciary discussing potentially making algorithms artificial 'persons' in law. As with financial audits, governments, business and society will require algorithm audits; formal assurance that algorithms are legal, ethical and safe. A new industry is envisaged: Auditing and Assurance of Algorithms (cf. data privacy), with the remit to professionalize and industrialize AI, ML and associated algorithms. The stakeholders range from those working on policy/regulation to industry practitioners and developers. We also anticipate the nature and scope of the auditing levels and framework presented will inform those interested in systems of governance and compliance with regulation/standards. Our goal in this article is to survey the key areas necessary to perform auditing and assurance and instigate the debate in this novel area of research and practice.

Credit risk contagion in complex companies network–Empirical research based on listed agricultural companies

This study investigates credit risk contagion among listed agricultural companies using data from China's A-share market from 2002 to 2021, examining credit risk contagion mechanisms in the supply chain, investment, and information networks. Furthermore, we examine the moderating effect of network structure on credit risk contagion within networks. The results show that credit risk in the supply chain network has the greatest contagion effect, followed by investment and information networks. Credit risk is mainly transmitted through the capital path, product path, and information path. The network structure plays a crucial role in facilitating the contagion process. State-owned companies and companies with high customer concentration have higher risk resistance capacity. Research also shows a one-year time effect, indicating that the impact of credit risk contagion decreases over time. Finally, this study proposes suggestions for financial institutions, companies, and governments to enhance the risk-resisting abilities of the agricultural industry.

Glocalizing sustainability: how accounting begins for sustainable development goals in city administration

PurposeThis study aims to investigate the adoption of the United Nations’ Sustainable Development Goals (SDGs) as the new performance perspective in cities. It also aims to understand how accounting for SDGs begins in city administrations by following Power’s (2015) fourfold development schema composed of policy object formation, object elaboration, activity orchestration and practice stabilization.Design/methodology/approachFocusing on a network of cities coordinated by the Finnish local government association, we analyzed the six largest cities in Finland employing a holistic multiple case study strategy. Our data consisted of Voluntary Local Reviews (VLRs), city strategies, budget plans, financial statements, as well as results of participant observations and semi-structured interviews with key individuals involved in accounting for SDGs.FindingsWe unveiled the SDG framework as an interpretive scheme through which cities glocalized sustainable development as a novel, simultaneously global and local, performance object. Integration of the new accounts in city management is necessary for these accounts to take life in steering the actions. By creating meaningful alignment and the ability to impact managerial practices, SDGs and VLRs have the potential to influence local actions. Our results indicate further institutionalization progress of sustainability as a performance object through SDG-focused work.Originality/valueWhile prior research has focused mainly on general factors influencing the integration of the sustainability agenda, this study provides a novel perspective by capturing the process and demonstrating empirically how new accounts on SDGs are introduced and deployed in the strategic planning and management of local governments.

Resilience of rural businesses in times of crisis: Firm survival during the COVID-19 pandemic in Finland

Little is known about the geography of firm survival during COVID-19. We investigated the effect heterogeneity of the pandemic itself and of business support funding by the Finnish government with respect to rural and urban business closures. To do so, we utilised regional data on firm survival, detailed business support funding data and a rural–urban typology for Finland. Results from panel regressions showed that the pandemic had an overall negative impact on businesses in terms of an increased closure rate of about 20–30% during the period 2020q2–2022q4, which was generally higher in urban than rural areas. While the bulk of business support funding from the Finnish government during the pandemic went to urban businesses, COVID-19 funding mitigated the effects of the pandemic on business closures equally across the different rural–urban categories. Counterfactual simulations show that the average closure rate would have been about 10–12% higher during the pandemic if no business support funding schemes would have been implemented.

Local Government Debt, Local Government Financing Platforms, and Green Development Efficiency

Local government debt (LGD), an important financing tool for local governments to achieve high-quality development, especially through the expansion of urban investment bonds led by local investment and financing platforms, has a significant impact on green development efficiency (GDE). This article starts from LGD, selects data from 30 provinces from 2010 to 2019, and uses a two-way fixed-effect model and mediation-effect model to empirically analyze the impact of LGD on GDE. The research results show that LGD has a significant inhibitory effect on GDE, and LGD can indirectly affect GDE through the degree of industrialization and the number of the urban population. This article suggests that the government should make even fuller use of LGD funds, optimize the use of relevant funds, standardize the operation of local government investment and financing platforms, reduce debt risks, promote industrial structure upgrading, promote urban population resettlement measures, and improve China’s GDE.

Factors affecting financing of communal sanitation facilities by the public sector in Informal Settlements: A case of Nyalenda informal settlement, Kisumu City.

To close the current sanitation gap, public funding for sanitation has become increasingly insufficient, particularly in Sub-Saharan Africa. What is concerning in Kenya is not the large number of people who lack access to safe sanitation facilities, but the slow rate at which households can gain access to improved sanitation facilities. A sustainable financing strategy is required, one that will increase resource allocations to the sector, improve the efficiency and effectiveness of existing resources wherever they are found, and tap the potential of alternative financing mechanism. A critical review of policy documents like the County Integrated Development Plan (CIDP) shows that there is hardly any documentation on County sanitation plans. Once sanitation lacks in the CIDP, the county can hardly plan for the sector hence making the residents suffer. The study objectives are to examine different sanitation financing options for communal sanitation facilities in Nyalenda informal settlement, to assess factors affecting financing of communal sanitation facilities by public sector in Nyalenda informal settlement and to establish challenges of financing communal sanitation facilities in Nyalenda informal settlement. The study is a descriptive cross-section design. The study used closed and open-ended questionnaires and key informants’ interview in collection of data where n=400. The study established that the dominant communal sanitation financing option in Nyalenda informal settlement was personal contribution (56.0%), followed by NGO financing (40.3%), while the last was County Government financing (0.5%). Public-private partnerships played a crucial role in facilitating sustainable onsite financing for sanitation facilities as evidenced by majority of the respondents agreeing (35.75%). The study recommended the need for diverse financing sources, awareness of available options, and supportive policies to overcome financial challenges.&#x0D; &#x0D;

Unlocking Business Success: The Role of Financial Literacy, Innovation Capability, and Government Support

Purpose: This study aims to analyse the effect of financial literacy and innovation capability on business performance with government support as a mediating variable. Theoretical framework: Government Support as a mediation was analyzed the effect of financial literacy and innovation capability on business performance. Method: A quantitative methods approach was used by distributing questionnaires to 110 Food &amp; Beverage MSME in Jakarta Area. The data collection process was carried out using google form, then analysed using path analysis processed using Smart-PLS. Result: This study found that financial literacy has positive impact on government support but innovation capability has not, then innovation capability and government support have the positive effect on MSME performance, but financial literacy has no impact on MSME performance. The mediation test found that government support mediates the effect of innovation capability and financial literacy on MSME performance. Research, Practical &amp; Social implications: This finding suggests that the government as a regulator should continue to increase its support for MSME actors so as to improve the performance of MSME businesses. This finding encourages MSME actors to have strong instincts in creating and implementing the latest innovations in their business to get government support in improving their business. Originality/value: This study uses 3 business performance indicators using primary data which are usually used in analysing the company's secondary data, with sufficient validity and reliability results, the use of these indicators is also suitable in analysing business performance in primary data.

Nexus between Inflation, Economic Growth and Government Expenditure of Nepal

In the context of Nepal, this study will explore the relationship between the rate of inflation, economic growth, and government spending. Government spending has been broken down in this analysis into three categories: government recurrent expenditure, government capital expenditure, and government financing expenditure. The time series data from 1974 to 2021 are used in the investigation. The econometrics tools used to analyze this link are the Granger-causality test, ARDL, Johansen co-integration, and the Augmented Dickey- Fuller (ADF) unit root test. The outcomes of using these econometric techniques reveal a long-term relationship between the rate of inflation, economic growth, and government spending, which indicates that public spending has beneficial externalities and links. In the short run, government spending has a greater impact on economic growth than the rate of inflation. The results of the causality test indicate that there is a one-way causal relationship between the rate of inflation and both economic growth and government spending.

Bad times keep us together: Policy priorities and economic shocks

AbstractObjectiveWe analyze how economic shocks affect the partisan nature of budgetary trade‐offs and use data from the U.S. Census Annual Survey of Government Finance to illustrate it.MethodsWe propose a compositional approach to model trade‐offs among 10 budgetary categories across both time and space in U.S. states.ResultsWe find support for the notion that partisanship drives the allocation of budgetary expenditures. However, during times of negative economic shocks, either within a state or in neighboring states, Democratic and Republican governors have a similar budgetary response.ConclusionsThe results show the effects of economic and political shifts, as well as the implications of spillovers from other states, on partisan decisions about trade‐offs in government budgets.