Income Diversification Strategies Research Articles

Productivity and profitability of small-scale aquaculture in Malawi

ABSTRACT Small-scale aquaculture in Malawi contributes to nutrition and food security, and serves as a rural income diversification strategy. Nevertheless, its adoption is low. Drawing on a recent survey of 732 small-scale fish farms across the country, this study assesses the production, yield, profit, and profit per square metre of small-scale fish farms and explores their determinants using regression analysis. Most fish farms are owned and managed by individual farm-households, though communally owned farms are also present. Small-scale aquaculture is found to be profitable, though the gross margins are slim. Regression results reveal that production and profit are positively associated with the use of farms for both fingerling and grow-out production and the number of years the farm has existed, while yield and profit/m2 are positively associated with the use of high-quality inputs such as commercial feed and inorganic fertilisers. These results suggest that small-scale fish farmers in Malawi and other similar settings should adopt improved technologies and follow best on-farm management practices to increase production and profits. This study contributes to the discourse on the pathway through which aquaculture in Malawi can best contribute to the country’s development.

A Time Series Analysis of Noninterest to Interest-Earning Dynamics Between 1984 to 2023 in the US Commercial Banking Sector

Both interest and noninterest earnings form the two critical components of the income stream of commercial banks. While interest earnings are tied to the lending volume and prevailing interest rates primarily dictated by the monetary policy and central bank interventions, noninterest earnings can come from diversified sources like income from fiduciary activities, trading revenue, service charges on deposit accounts, fee income, etc. Noninterest earnings can be unrelated to lending volume and prevailing interest rates and possibly uncorrelated with the monetary policies. Noninterest earnings may be a more robust source of income, especially during the low-interest rate regimes. Managing the noninterest to interest earnings is a critical component of income smoothing used by the banks. Noninterest earnings have become a significant component of banks’ overall earnings in the last four decades, and the ratio of noninterest to interest earnings has also grown significantly, raising questions about the primary role of the banking sector in financial intermediation as defined by the collection and disbursement of loanable funds throughout the economy. The rise in noninterest earnings also raises questions about the potential conflict of interest especially if banks earn significant consulting income from the same entities that borrow heavily from the banks. In this paper, I look at the time series dynamics of the ratio of noninterest-to-interest earnings spanning nearly four decades from 1984:Q1 to 2023:Q3 for the USA’s FDIC-insured commercial banking sector. Although the ratio has fluctuated over the period and risen from the baseline, it does not exhibit any non-stationarity. The presence of unit root cannot be found during the time period studied. In other words, the ratio of noninterest-to-interest earnings in the US commercial banking sector does not show any explosive and unstainable growth. In a nutshell, the rise in the ratio seems to be an outcome of the broader income diversification strategy used by the banks and not necessarily a dramatic change in the business model of US commercial banking industry.

Impact of Income Diversification on Capital Market Investment Decision: A Study on Indian Public Sector Banks

Income diversification strategy is one of the useful tools of risk management technique. Banks have identified different sources of income apart from their traditional source of income. Capital market is one of such source of income identified by the banks today. Every year banks invest a large volume of fund in capital market. In this study it is attempted to observe the impact of income diversification on the capital market investment decision of the public sector banks in India. For this purpose data are collected from 12 public sector banks for 5 years period from 2017 to 2021. Variants of panel data regression analysis are applied in this study. The result revealed that there is a significant impact of income diversification on the capital market investment of Indian public sector banks.

Impact of income diversification on multidimensional poverty: Household level evidence from tea estates in Bangladesh

Policy advocates commonly use income diversification strategies worldwide to address economic disturbances such as poverty. Realizing the importance of poverty reduction and the raging debate on whether the household should specialize or diversify their income, this study attempts to investigate the poverty and income diversification nexus in a tea estate of Bangladesh. A multistage sampling procedure was applied to select 1 tea estate and 382 households. Primary data was collected through interview schedule. The Simpson diversification index and Alkire-Foster multidimensional poverty index were used to measure income diversification and multidimensional poverty respectively. Additionally, this paper used the propensity score matching method to assess the causal impact of income diversification on multidimensional poverty. The findings revealed that the research area has a 35% household level income diversity, a 43% household level multidimensional poverty rate, and income diversification has a positive impact on multidimensional poverty reduction. The multidimensional poverty was reduced by 0.095% on average for income diversified households. Therefore, from a policy perspective, income diversification can be a good solution for reducing household-level multidimensional poverty. Government and other stakeholders should redesign working guidelines for tea workers regarding working hour, days and wage in such a way that they can engage in several income-generating activities apart from tea production-related activities in the tea estates.

Factors Driving Solid Waste Management Payments in African Markets: Understanding Determinants and Overcoming Challenges

Waste management has become an issue of interest across global today due to its impact on the public health and efforts to achieve the global sustainable development goals. Despite the influence and necessity of the waste management practices yet there is little understanding in the factors influencing households’ willingness to comply and hence pay for such services mostly in developing countries including Tanzania. Therefore, the current study explores determinants of solid waste management in Arusha region by studying behaviors of the vendors in three markets places of Kilomebro, Tengeru, and Samunge using cross-sectional research design of which as sample of 150 vendors were included in the study. The results of the study reveal that socioeconomic factors such as age (p<0.01), working experience (p<0.01), and income (p<0.01) are significant determinants enhancing vendors’ decision to pay for the waste management. On the other hand, amount of waste generated by vendors, and their awareness on the waste management practices also influence vendors willingness and decision to pay for the waste management across all three markets in Arusha region at 0.013 (p<0.01) and 1.894 (p<0.01) . Additionally, quality of waste management services offered are also important component affecting vendors decision to be willing to pay for the waste management practices. The study recommends that in order to cultivate the waste management practices across communities it is important to prioritize in establishing educational programs that aimed at enhancing vendors' awareness and understanding of the importance of solid waste management, as well as developing income diversification strategies which will help to explore and address the significant role income plays in determining vendors' willingness to pay for solid waste management.

Women empowerment in agriculture and its effect on household food security: evidence from Gamo Zone of Southern Ethiopia

BackgroundWomen empowerment and food security are supposed to be two mutually reinforcing goals of the 2030 Sustainable Development Agenda of the United Nations. However, the measurement of women’s empowerment and its relationship with household food security in the agricultural context is too limited, especially in Ethiopia. The main objective of this study is to examine the effect of women’s empowerment in agriculture on household food security in the Gamo zone of Ethiopia.MethodsCross-sectional data were collected from 385 dual-adult households, selected through a multistage random sampling procedure from two districts—Chencha and Kucha of Gamo zone in Ethiopia. The data were collected on the sample households’ demographic, socioeconomic, women empowerment, food consumption and livelihood activities—crop production, livestock holding and off-farm participation by interviewing both primary male and female decision-makers from each household. Household food security was measured using Calorie Availability, Household Food Consumption and Dietary Diversity Score, while women’s empowerment in agriculture was measured using the Abbreviated Women Empowerment in Agriculture Index. Ordinary Least Square, Two-Stage Least Square, Poisson and Instrumental Variable Poisson regression were used as analytical models.ResultsOur study shows that increases in women’s empowerment are positively and significantly associated with all food security indicators—adult equivalent calorie availability, household-level food consumption and dietary diversity. The result also shows that food security is positively related to the proportion of adult household members, age and education of primary female, landholding size, crop diversification, food crop production, the number of dairy cows owned and off-farm participation. However, food security is negatively related to household size.ConclusionThe implication of the finding is that stakeholders should give due attention to promoting women’s empowerment and eliminating the gender gap in agriculture through appropriate gender mainstreaming intervention in dual-adult households. Food security programmes could also gain from prioritizing female education and promoting agricultural diversification (crop and livestock) and off-farm income diversification strategies as valuable investments to improve household food security. This study is the first application of the Abbreviated Women’s Empowerment in Agriculture Index in Ethiopia as a predictor to household food security, and contributes to the women’s empowerment–household food security nexus literature in developing countries.

Household Income Diversification Strategies, Welfare and Child Nutrition in Uganda: A Dynamic Panel Analysis 2005–2020

Many of the studies on households and people’s welfare dynamics in Uganda have been preoccupied with poverty lines and welfare indices estimation, particularly at the macro level. Little attention has been paid to the impact of livelihood diversification strategies on household welfare and health outcomes (i.e. child nutrition) for both rural and urban dwellers. Thus, this study examines the impact of livelihood (i.e. income) diversification strategies on household welfare and child nutrition. Eight waves of the Uganda National Panel Survey (2005/06–2019/20) dataset collected by the Uganda Bureau of Statistics (UBOS) with the support of the World Bank are utilised for this purpose. An instrumental variable approach implemented through a two-stage residual inclusion (2SRI) technique is applied in which alternative correlated random effects (CRE) and fixed effects models are estimated, these two techniques enabled us to address the endogeneity problem associated with livelihood diversification by including a generalised residual among the regressors and also including appropriate list of instruments in the latter. The findings from the study show that indeed diversified households enjoy higher levels of consumption and thus livelihood diversification strategies are welfare-improving. Second, livelihood diversification is also found to improve child nutrition status. By and large, the results point to the fact that households should at least run a diversified means of livelihood since this offers a feasible way of shielding households against risks and also coping and adapting to shocks among rural and urban poor households.

Are stress‐tested banks in the United States becoming similar? Evidence from convergence tests

AbstractUS bank stress tests were introduced to improve the risk posture and management practices of large and complex banking institutions. We investigate whether stress‐tested banks in the United States converge to each other in their levels and determinants of profitability, as well as their risk taking and systemic risk contributions. Our results are consistent with convergence in profitability, asset quality, management quality, securitization income, and income diversification of stress‐tested banks. Our difference‐in‐differences estimation results provide causal evidence of stress tests leading to convergence in income diversification. Furthermore, stress‐tested banks converge in their income diversification strategies, return volatility, default risk, leverage risk, and systemic risk contributions. This study sheds light on a situation where these banks may simultaneously have exposure to the same risks, leaving the financial system more vulnerable to a crisis as a result of the exposed risk.

Capital buffers, business models and the probability of bank distress: a dynamic panel investigation

PurposeThis paper aims to improve the debate linking the business models of banks to their riskiness by checking if diversification exerts different impacts on the probability of bank distress depending on the level of capital buffers.Design/methodology/approachThe paper focuses on a sample of listed bank holding companies observed between 2007:Q3 and 2022:Q4. The authors use three subindexes of bank diversification. The authors estimate a dynamic model specification using a system generalized method of moments with robust standard errors and consistent estimators under heteroskedasticity and autocorrelation within a panel. Sensitivity and robustness checks are performed.FindingsAsset and income diversification increase the probability of distress in low-capitalized banks during normal periods (excluding periods of crises and high uncertainty). Concerning crisis periods, a marginal increase in asset diversification during the global financial crisis (GFC) and the COVID-19 pandemic crisis induces a more important increase in the probability of failure of well-capitalized banks relative to low-capitalized ones. Contrary to the results obtained for the GFC period, well-capitalized banks were found to pursue more careful funding diversification in reaction to the sudden increase of uncertainty during the Russia–Ukraine war.Research limitations/implicationsPrudential supervision should concentrate on well-capitalized banks to encompass unexpected excessive risk-taking during crisis periods. Regulatory requirements should constrain fragile banks to avoid pursuing assets and income diversification strategies that increase earnings volatility.Originality/valueThe main originality of this paper is to consider the interaction between three different dimensions of bank diversification and capital regulation during stable and unstable periods using the marginal effect analysis. Moreover, this paper uses, initially, the GFC as the reference crisis period to study the impact of capital buffers and diversification interactions on the probability of bank distress. Then, the authors extend the observation period until 2022:Q4 to include two additional major events, namely, the COVID-19 pandemic and the Russia-Ukraine war.

Income diversification strategies of rubber farmers in Southern Thailand: an empirical study

In Thailand, rubber is a very important cash crop of which nearly 95% is produced by smallholders. This study aims to investigate the income diversification strategies adopted by rubber farmers in Southern Thailand. Primary data was collected through a cross-sectional survey conducted in 12 sub-districts under six districts of three provinces (namely, Songkhla, Surat Thani and Trang) in Southern Thailand. A standardized questionnaire was used to receive responses from a total of 398 rubber smallholders selected randomly in the chosen areas (i.e. 12 sub-districts) for this study. The findings revealed that three income strategies, namely, rubber farm income only (R), rubber farm and non-farm income (RN), and combination of rubber farm, other farm, and non-farm income (RAN) were the dominant income strategies adopted by rubber farmers in Thailand. The study identified seven factors namely, age and education of household head, family size, land size holding, access to credit, land right and access to cooperative that had significant influence on income diversification strategies of the households. It was also revealed that rubber farmers with large household size are more likely to pursue all choices of income diversification strategies to increase their income. This might be due to the relation between larger family size and household labor or corresponding higher expenditure in the household. The study findings might be useful for policymakers to design and implement more effective policies to provide more income-generating ventures for rubber farmers in Thailand

Can farmers’ climate change adaptation strategies ensure their food security? Evidence from Ethiopia

ABSTRACT Climate change poses a significant threat to the sustainability of agricultural production among smallholder farm households in Ethiopia. To reduce the adverse effects of climate risks, farm households have sought to adopt different adaptation strategies. This study investigates factors influencing farm households’ choice of climate adaptation strategies and associated effects on their food security in Ethiopia using data collected from 516 farm households from three regions. A multivariate probit and propensity score matching models were used to analyze data. Major adaptation strategies adopted by the farm households in the study area are planting drought-tolerant crop varieties (60%), changing the planting dates (53%), growing diversified crops (49%), and diversifying the sources of household income (45%). Results suggest that older farm household heads are more likely to use drought-tolerant crop varieties to reduce climate risks. Farm households with larger farmland size and those with more years of experience in farming are more likely to use drought-tolerant crop varieties and crop diversification strategies. Farm households with larger family size are more likely to use crop and income diversification strategies and change the planting dates against the backdrop of a high risk of climatic shocks. Membership in input supply cooperatives, frequency of contact with extension agents, and access to information on expected rainfall and temperature are positively associated with different adaptation practices adopted by farm households. Farm households who have adopted climate adaptation strategies have higher food security status (by 2.3–2.8%) compared to those who have not. Thus, the farm households’ climate adaptation practices have positive food security effects in Ethiopia.

Contribution of Income Diversification Strategies to Smallholder Farmers’ Livelihoods in the Upper East Region of Ghana

Many past studies on remote areas of Sub-Saharan Africa regarded income diversification strategies as insurance against food insecurity and a better quality of life. However, it is not yet clear how regional income diversification factors contribute to smallholder farmers’ decision-making. For this reason, this paper examines the implication of localized income diversification strategies in the Upper East Region of Ghana. We conducted a questionnaire survey among 360 farm households in five rural districts of the Region. We found that smallholder farmers’ income diversification had contributed on average 38% of the total household income. In particular, small-scale mining, livestock rearing, remittance, and petty trade contributed most to their livelihoods. We also used the Simpson’s Diversity Index to quantify the diversity level of the respondents’ income sources. The result showed that the average income diversification strategy of the study region was 0.5 out of 1 with strong district variations in diversification levels. Our correlation analysis revealed that age, educational background, farm experience, and farm size significantly influenced respondents’ decision to choose specific income sources. More experienced farmers tended to rely more on on-farm income source diversification whereas young and inexperienced farmers tended to choose labor-intensive mining, firewood collection, and petty trading activities. Most of their household members had moved to urban areas either permanently or temporarily mainly in search of better social services.

Strategies to reduce credit risk and liquidity risk to increase bank profitability

The purpose of this study is to examine the effect of credit risk and liquidity risk on profitability with loan restructuring and income diversification as moderating variables. The research population is all general banking companies, which were listed on the Indonesia Stock Exchange (IDX) during the period 2018-2021. The research sample was created using the purposive sampling technique and 160 observations were obtained. This study conducts panel data regression analysis using EViews 12 software. The results of this study indicate that an increase in credit risk reduces profitability, liquidity risk does not affect profitability, a loan-restructuring strategy can reduce the effect of credit risk on profitability, and an income-diversification strategy can reduce the effect of liquidity risk on bank profitability. The research findings provide an understanding of banking strategy, namely loan restructuring and income diversification can increase banking profitability under urgent conditions. This study provides support for contingency theory and stakeholder theory. The limitation of this research is that it does not discuss Islamic banking because the policies of those companies are different in terms of rules and there are limited data.

Determinants of non-farm income diversification strategies and decisions of Bangladesh farm households

Despite being mostly dependent on agriculture, farm households in Bangladesh frequently engage in non-farm income diversification activities in order to maintain or increase their standard of living. The aim of this study is to examine the factors that influence farm households’ strategies and decisions regarding the accumulation of non-farm income.Multi-stage sampling was used to collect primary data from 139 farm households in the Rajshahi district in order to meet the study aim. Descriptive and econometric analyses were both used for data analysis.The descriptive data showed that around 80% of the respondents earned income outside of agriculture. The findings of the binary logit model demonstrate that family size, years of schooling of the household head, and lack of participation in local organizations have a substantial impact on respondents’ decisions on diversification. The multinomial logit model examined how family size, local organization membership, and farm size affected factor diversification outside of farming. Furthermore, the household head’s years of schooling, participation in local organizations, and distance to the closest product market were the main factors influencing their diversification strategy.Policy makers should provide incentives and training that further stimulates non-farm income generating activities of farm households to facilitate the continuing transition of the Bangladesh economy away from its primary reliance on agriculture to generate national income.

Income Diversification Strategy on Bank Stability:International Banks Evidence

This study aims to analyze the implementation of the income diversification strategy on bank stability carried out by international banks. This study uses panel data from 32 international banking companies from 2010-2019 with a total of 320 firm years of observation. The generalized method of moments is used as a statistical analysis tool for panel data. The study results show that the implementation of the income diversification strategy carried out by international banks was convincingly able to increase bank stability. This indicates that international banks were able to perform cost diversification efficiency to achieve better stability. Furthermore, the use of high leverage could reduce bank stability. This study shows robust results in the measurement of income diversification using either the Herfindahl Hirschman Index (HHI) or the ratio of non-interest income to total income. This is a premier formal assessment of the nexus between income diversification strategies and risk management among the largest commercial banks in the world context. This research is expected to be useful for banking management, regulators, and investors in the banking sector.

Residential renewable energy adoption. Does financial literacy matter?

Clean energy production systems are the most effective and sustainable ways of protecting the natural environment from pollution. Sadly, fossil fuels remain a significant energy source in most emerging economies primarily due to financial challenges. Using Ghana's renewable energy policy initiatives as a case analysis, the study adopted a multiple-stage random sampling approach to sample household heads (N = 413) across two regions in Ghana to assess the adoption of renewable energies' impact of financial literacy among urban households by applying the two-stage residual inclusion technique. The study's findings depict that household income and RE cost are more significant variables impacting RE adoption, whereas the focal study variable, i.e., financial literacy, has some positive effect but at a lower level than these two variables (household income and RE cost). The heterogeneous analysis regarding household income level shows that financial literacy increases the ability to adopt renewable energy in high-income households than low-income households, confirming the significant impact of household income on RE adoption. The study results imply that policymakers in low-income countries should provide tax incentives for importers of renewable energy products/appliances and subsidize the prices for consumers to improve renewable energy technology use. Also, the provision of job opportunities and income diversification strategies education to improve household incomes should be a priority. Moreover, financial literacy through financial education programs in the formal education sector and the mass media to improve citizens' financial skills and knowledge should be prioritized. These recommendations have the potential to advance the financial and economic wellbeing of citizens in facilitating renewable energy transition.

Income Diversification on Stability in Banking Industry A Systematic Literature Review

This study aims to provide a deeper understanding of income diversification carried out by banks and provide guidelines for future researchers in conducting research related to the relationship between income diversification and bank stability. The method used in this research is the Systematic Literature Review (SLR), which identifies and assesses the findings of previous studies in order to guide further research in the future. There was 1 article from conference papers and 1 article from working papers. The remaining 28 articles came from well-known publishers. So 30 articles were obtained from well-known publishers and content following the topic of this literature review. The findings of this study indicate that the main motives for implementing the income diversification strategy are increased performance, reduced risk and competition between banks. This study also shows that there is a fairly wide research gap regarding the relationship between income diversification and bank stability. In addition, it was found that the Herfindahl Hirschman Index (HHI) is the most widely used measurement as a proxy for income diversification, and the generalized method of moment (GMM) is the most commonly applied statistical testing tool. The findings of this study are expected to provide a comprehensive picture of the implementation of the income diversification strategy and provide guidance for future research areas.

Risk Management Strategies Perceived by Tomato Producing Smallholder Farmers the Case of Dugda District, East Shewa Zone, Oromia, Ethiopia

Managing risk is an important part of farming and its management is a concern for those governments which include this as one of their agricultural policy objectives. For effective risk management strategies to be taken, farmers’ perception on risk management strategy in agriculture is important. Farmers have to find ways of risk management strategies and protecting themselves from the uncertainties of the future. This study analyzed the perceived important risk management strategies of tomato producing smallholder farmer using data collected from 167 tomato producing smallholder farmers from four kebeles of Dugda district of the East Shewa zone, central rift valley of Ethiopia, analyzed (using Descriptive statistics, likert scale and Principal component analysis) of primary data collected from 167 tomato producing smallholder farmers from four kebeles of Dugda district. Principal component analysis was used in data reduction to identify a small number of components related to important risk management strategies perceived by the surveyed smallholder farmers in the study area. Results show that using principal components analysis, important risk management strategies were identified. Principal Components (PCs) explained that 58.2% of the variations were extracted. Pest and disease management, alternative market, income diversification and training risk management strategies were perceived as important risk management strategies by the surveyed smallholder farmers. Keywords: Risk Management, Smallholder farmer, PCA, Dugda District DOI: 10.7176/JRDM/86-01 Publication date: June 30 th 2022

Income Sustainability Of Private Universities In A Sub-Saharan African Country: Ghana

Tertiary institutions, both public and private, play a vital role in global socio-economic development through the production of human capacity. However, an area of research that has gotten relatively little academic attention in the Ghanaian higher education milieu is private universities' strategic responses to their financial sustainability. The purpose of this study, which used an exploratory research methodology, was to examine the various sources of income generation by private universities and strategic responses adopted to sustain their financing in Ghana. With an incorporated case study design, the study used a qualitative research methodology. The main findings, which were supported by data from semi-structured interviews conducted in five private universities and documentary evidence, showed that the primary source of pressure on private tertiary institutions comes from the limited funding that prevents them from achieving their missions. The findings also showed that private universities had taken certain strategic steps to counteract the effects of their restricted funding. The options highlighted included sustaining tuition fees through an aggressive admission strategy, income diversification strategy by expanding non-traditional sources of income, commercialising, and research. For the universities, cost-cutting through increased budgetary efficiency also represented a more important strategy. Although private universities in Ghana continue to haphazardly rely on inadequate funding, the survey found that they are actively engaged in numerous varied and alternative income-generating activities in order to survive.

Effects of soil and water conservation investment on household income in the Volcanoes National Park of Rwanda: an instrumental variable quantile approach

Soil and water conservation (SWC) technologies contribute to sustainable agriculture and rural poverty reduction. Yet, the relationship between farm household income and SWC investment is not well-understood in Rwanda. This study aims to assess the effects of investing in SWC on household income and improve the knowledge of how various classes of smallholders can benefit from such an investment at a farm level. The study used survey data from 422 farming households in northern Rwanda’s Burera, Gakenke and Musanze districts. Descriptive analysis was employed to determine levels of use of SWC and SF measures. Quantile estimation classified three classes of farming households: the poor, middle-income earners and the rich. Instrumental variable quantile regression was adopted to assess heterogeneous effects of financing SWC investment. The results revealed that the extent of using SWC and SF measures is generally low. Agriculture income and off-farm (casual) wages had the largest income shares among the poor and middle-income earners. Financing investment in SWC increases income significantly for middle-income earners, i.e. five times more than the poor, but it was ineffective for the wealthy. Socio-economic factors and commercial crops had a significant effect on income across the classes. Institutional factors demonstrated no significant impact on the poor and middle-income earners. The findings suggest that incorporating pro-poor interventions in SWC investment would increase the productivity and commercialisation of cash and staple crops. These results inform a need to promote linkages between SWC investment and income diversification strategies to increase asset-building for the poor and close income gaps among the three farming classes. This finding suggests the need to introduce saving and lending innovations in SWC that link farm activities to nonfarm opportunities.