Investment Outlets Research Articles

The Response of Monetary Variables to the Implementation of Sterilization Policy: Evidence from Nigeria

This study used the vector autoregressive (VAR) method to investigate how the monetary variables responded to the Central Bank of Nigeria's implementation of the sterilization policy. The study used monthly series that spanned the period from 2010M1 to 2021M3. The variables used are broad money supply (proxied by M2), Treasury bills rate, inflation rate, exchange rate and total sterilization. The data for all the series were obtained from the CBN Statistical Bulletin, except for data on foreign interest rates, which was obtained from the Federal Bank of St Louis. Findings revealed that money supply, exchange rate and inflation rate responded negatively to shocks in sterilization policy in all the periods. The response of Treasury bills rate to shocks in total sterilization was positive up to period two. However, the response became negative after period two. Consequently, the study concludes that the monetary variables responded appropriately to the policy adopted to neutralize the impact of capital inflows in Nigeria. The study recommends that the use of sterilization policy should be complemented with other policies to avoid repeated rounds of sterilization and that domestic investment outlets have to be developed to attract more local investors in the event of a rising domestic interest rate.

NIGERIA ECONOMIC GROWTH AND CAPITAL MARKET DEVELOPMENT: DOES CONTRIBUTORY PENSION SCHEME MATTER?

Whether the contributory pension scheme (CPS) has addressed the shortage of capital for investments, the challenge of full compliance with the system and the shortage of investment outlets spurred the interest to investigate the impact of the CPS on capital market development and economic growth from 2005 to 2021. Secondary data was adopted for this study, and the data were extracted from the National Pension Commission and world development indicators. The study employed the auto-regressive distribution lag (ARDL) model as an estimation technique. The empirical results show that among the proxies for gross domestic product, total pension fund asset (TPFA) was significant in both the short and long run, which showed that a 1% increase in TPFA would produce a 0.0028% increase in the GDP. Also, among the proxies for capital market development, total pension fund asset (TPFA) was significant in both the short and long run, which showed that a 1% increase in TPFA would produce a 0.024% increase in capital market development. Based on these findings, the study concluded that CPS influenced capital market development and economic growth. Consequently, this study recommended, among others, that the NPC should continue to partner with relevant stakeholders such as pension fund administrators and custodians by making its investment regulations more flexible and encouraging increased pension fund investments.

Effect of Pension and Insurance Funds on Financial Deepening in Nigeria

This study examines the effect of pension and insurance funds on financial deepening in Nigeria for the period 2012Q1 to 2023Q1. Quarterly time series data for pension funds, insurance funds and financial deepening were collected from the Central Bank of Nigeria statistical bulletin. Philip Perron test was used to test the stationarity of the data and the ARDL Bound cointegration test was utilized to determine the presence of long-run relationship. The Fully Modified Ordinary Least Squares regression method was used to test the effect of pension and insurance funds on financial deepening in Nigeria. The findings showed that there was no long-run relationship among the variables, while pension funds have a significant effect on financial deepening in Nigeria, insurance funds do not have a significant effect on financial deepening in Nigeria. It was recommended that, in other to increase the financial depth of the Nigerian economy, a critical upward review of the investment outlet available to pension fund administrators should be done. On the other hand, the Central Bank of Nigeria in collaboration with the National Insurance Commission can take advantage of opportunities in the insurance industry, especially by enforcing all the mandatory insurance policies given by law.

Contributory Pension Scheme and Insurance Industry’s Equity Investments in Nigeria

The paper explores the nexus between contributory pension and growth of the Nigerian insurance industry. Proxies for insurance industry growth were taken as direct premium generated and growth of its investments, especially equity investments. Given that equity investment was one of the prescribed investment outlets for insurance industry funds in Nigeria, authors hypothesized that the contributory pension Act of 2014 would spur rapid growth in equity investments of the industry for the period investigated. Ex-post facto research design was followed and data were drawn from the annual accounts and reports of National Insurance Commission, NAICOM, and publications of Pension Regulatory Commission, PENCOM, National Bureau of Statistics, NBC, and Central Bank of Nigeria, CBN, for the period, 2005-2015. Ordinary Least Square (OLS) was the estimation method, whereas techniques for data analysis included Multi-Regression model, t-test statistic, adjusted coefficient of determination and F-statistic. The result of the tests showed that contributory pension has positive and significant impact on the insurance industry’s equity investments (p<0.05). Clearly, reform of pension industry led to rapid increases in the equity investments of the insurance industry but limited only by statutory ceiling on equity investments and what sound prudence dictates.

Darwinian Grandparenting Redux: a Pre-registered Replication and Extension

Mothers’ fathers consistently invest more in their grandchildren than fathers’ mothers. This pattern was explained by Laham et al. in Personality and Social Psychology Bulletin , 31(1), 63-72. (2005) via the preferential investment hypothesis—the idea that fathers’ mothers invest less in grandchildren than mothers’ fathers because the former typically have more certain alternate investment outlets available. In two studies of prolific workers (combined N = 4086), we first failed to replicate the findings of Laham et al. and then successfully replicated them. In the combined sample, mothers’ fathers received more positive ratings than fathers’ mothers when participants had cousins through fathers’ sisters, but this difference between grandparents disappeared when participants did not have cousins through fathers’ sisters. We also found that people spent more time with their maternal and paternal grandparents to the degree that they were not maternal grandparents to someone else, which mediated the closer feelings.

FINANCIAL DEEPENING AND THE NIGERIAN FINANCIAL SYSTEM.

The ability of financial institutions in mobilizing efficient savings for the purpose of investment in a country is financial deepening.This study seeks to examine the effect of financial deepening on Nigerian Financial system.Specifically,the study examine the effect of money supply to gross domestic product on financial savings to gross domestic product in Nigeria, ascertain the effect of private sector credit to Gross Domestic Product ratio on financial savings to gross domestic product in Nigeria,investigate the effect of market capitalization to Gross Domestic Product ratio on financial savings to gross domestic product in Nigeria and ascertain the effect of all share index on financial savings to gross domestic product in Nigeria.The Expo-Facto design was adopted because the data are secondary data extracted from the Central Bank of Nigerian statistical bulletin. Econometric techniques, including Augmented Dickey-Fuller for unit root tests, Granger causality test and Ordinary Least Square (OLS) regression analysis was used to test the four hypotheses.The data used were collected from the Central Bank of Nigeria Statistical Bulletin.The study revealed that broad money supply (M2/GDP),credit to private sector to GDP,market capitalization to GDP ratio and all share indexes has positive and significant effect on financial savings to gross domestic product (FSGDP) within the period under study. The study therefore,concludes that financial deepening have positive and significant effect on financial system and have enhanced the effective and efficient mobilization of financial resources from the surplus to the deficit unit for investment outlet in Nigeria financial system.The paper recommends amongst other that:Directors of economic managers should focus on money stock,economic velocity and market capitalization which the result indicates are yet to make significant impact on financial system in Nigeria.

The new luxury freeports: Offshore storage, tax avoidance, and ‘invisible’ art

This paper introduces the concept of a Luxury Freeport to describe a novel form of offshore where art and other high-end goods can be stored indefinitely without tax and duty-payments being made. The paper makes three key contributions to our understanding of these new actors in the global political economy. First, it conceptualizes Luxury Freeports as part of what has been called the ‘offshore world’, showing that over the course of the last decade these previously understudied sites have become part of an evolving global ecosystem of tax avoidance. Second, the paper attributes the rise of this new form of offshore to meso-level spillover effects within the offshore world itself: this new model of offshore was born from a combination of the competitive ‘push’ of the rapid spread of Open Customs Warehouses at the turn of the century and the investment ‘pull’ of large pools of money needing new investment outlets in the wake of the recent multilateral effort to clamp down on banking secrecy. Third, it examines how the development and diffusion of the Luxury Freeport model has been shaped and constrained by this clampdown. Navigating the regulatory push against offshore and in an effort to mainstream and legitimize their activities, newer Luxury Freeports have aligned themselves both with the exclusive and high cultural capital environment of the art world and the ecosystem of specialized services offered by the wealth management industry.

Private law and public regulation for investor protection in the asset management industry: Aims and practices of transposing the UK model in China

The paper discusses how asset managers are regulated in the UK in order to provide investor protection and market confidence. Fiduciary duties and the duty of care in the English common law, statutory laws, the rules of the FCA, and other industry codes are examined to provide an explanation of the UK regulatory approach to the asset management industry. The paper then discusses the extent to which a legal transplant of the UK model to China may be feasible as the asset management industry is currently being reformed in China. Recommendations are made for China to develop an independent asset management industry, to provide more investment outlets for investors, and to have effective enforcement mechanisms of laws and rules to deliver market confidence and investor protection.

INVESTORS CONSIDERATIONS TOWARDS INVESTMENT DECISIONS IN STOCK MARKET

Investment decisions are made keeping in view the return and risk factors in mind. Every investment decision involves the effective use of funds for future growth of funds. An investors decision to make investment requires a careful analysis of prevailing condition and future prospects of market. Investment decision basically taken by investors depends upon the various factors. Normally investment decision is an attempt to plan properly, evaluate and allocate funds into various investment outlets that ensure investors safety and expected rate of return. Investors decision toward buying, selling and to keep/hold on particular security depend upon the various factors that affect the stock market. Present chapter deals with the factors that are taken into account while making investment in stock market.

INVESTORS CONSIDERATIONS TOWARDS INVESTMENT DECISIONS IN STOCK MARKET

Investment decisions are made keeping in view the return and risk factors in mind. Every investment decision involves the effective use of funds for future growth of funds. An investors decision to make investment requires a careful analysis of prevailing condition and future prospects of market. Investment decision basically taken by investors depends upon the various factors. Normally investment decision is an attempt to plan properly, evaluate and allocate funds into various investment outlets that ensure investors safety and expected rate of return. Investors decision toward buying, selling and to keep/hold on particular security depend upon the various factors that affect the stock market. Present chapter deals with the factors that are taken into account while making investment in stock market.

Private Law and Public Regulations for Investor Protection in the Asset Management Industry: The UK Model for China?

The paper discusses how asset managers are regulated in the UK in order to provide investor protection and market confidence. Fiduciary duties and the duty of care in the English common law, statutory laws, the rules of the Financial Conduct Authority (FCA), and other industry codes are examined to provide an explanation of the UK regulatory approach to the asset management industry. The paper then discusses the extent to which a legal transplant of the UK model to China may be feasible as the asset management industry is currently being reformed in China. Recommendations are made for China to develop an independent asset management industry, to provide more investment outlets for investors, and to have effective enforcement mechanisms of laws and rules to deliver market confidence and investor protection.

The Annuity Puzzle and an Outline of Its Solution

In his seminal 1965 paper, Yaari showed that, assuming actuarially fair annuity prices, uncertain lifetimes, and no bequest motives, utility-maximizing retirees should annuitize all of their wealth on retirement. Nevertheless, the markets for individual immediate life annuities in the United States, the United Kingdom, and several other developed countries have been small relative to other financial investment outlets competing for retirement savings. Researchers have found this situation puzzling, hence the so-called “annuity puzzle.” There are many possible explanations for the annuity puzzle, including “rational” explanations such as adverse selection, bequest motives, and incomplete markets; and “behaviorial” explanations, such as mental accounting, cumulative prospect theory, and mortality salience. We review the literature on the various plausible explanations given for the existence of the annuity puzzle, suggest ways of stimulating the demand for annuities, and suggest a few of the ingredients needed for further development of hybrid annuity products that may provide a solution to the puzzle.

The Brexit and investors' fear

This paper investigates most important implied volatility indices of Eurozone, Asia-Pacifi c, Africa, Canada and USA on the event of Brexit election of UK. Since the international economic events signal new information to market participants, the Brexit event has gauged in the 12 global markets’ volatility indices such as VFTSE, VIX, VDAX, VSMI, VSTOXX, VXJ, VHSI, VKOSPI, NVIX, VASX, VXIC and SAVI. A high fear of index about 20-36% has been noticed on the day of Brexit decision. Abnormal returns and cumulative abnormal returns on volatility index are found to be positive, while majority of global equity markets have reported negative stock returns on this event. To investigate the ‘fear-and-greed’ of investors on this historical event, a window of 11 -day has been considered. The findings suggest that investors’ degree of over-reaction on Brexit decision was very disappointing and fueled concerns on the future investment and portfolio choices. The key volatility indices were on the rise prior to the decision, while the market noticed astray and breached its normal range on the day of Brexit referendum. The findings suggest that market participants have diverted their funds into other safer investment outlets due to Brexit effects.

The Expanding Techniques of Progress: Agricultural Biotechnology and UN-REDD+

This paper provides a comparative analysis of agricultural biotechnology and the United Nations program for reduced emissions from deforestation and forest degradation (REDD). Despite the existing differences between the technical manipulation of biological systems and a conservation program aimed at reducing carbon and protecting forests, the two share commonalities in ideological origin, application, and values. Presented as positive developments, both seek to address large-scale issues such as global hunger and climate change, but while receiving national and international support they remain controversial issues. Both issues are critically assessed, beginning with a brief history, followed by the application of William Dugger's four invaluation processes: contamination, subordination, emulation, and mystification. This approach unravels the subtle social power of state and market forces that seek to control genetic material and forest frontiers as new outlets for growth and investment.

Performance and role of European listed infrastructure in a mixed‐asset portfolio

PurposeThe purpose of this paper is to examine the performance of European listed infrastructure before, during and after the global financial crisis and the significance of European infrastructure in a mixed asset portfolio. The paper examines the level of correlation of European infrastructure with other major assets classes and substantiates the potential diversification benefits of including European infrastructure within a mixed asset portfolio.Design/methodology/approachThe study uses monthly investment return indices obtained from Thomson Reuters DataStream over a ten year period (2001‐2010). The paper analysed the European listed infrastructure investment return characteristics including average annual return, annual risk, Sharpe indices, mean variance portfolio and maximum return portfolio and computes the efficient portfolio frontiers using the risk solver optimization tool.FindingsThis study shows that despite the global financial turmoil, a robust performance was seen by certain infrastructure sub‐sectors particularly European generation utilities, which posted positive annualised returns during the global financial crisis and European “ports” emerged as the overall best performing sub‐asset class during the post‐GFC period. Using the monthly return indices over the ten year period, European infrastructure investment was found to play a significant role in the optimality of multi asset portfolios.Originality/valueThe originality of the paper stems from the analysis of the performance and significance of European listed infrastructure in a multi‐asset portfolio over unique periods which tested the resilience of European listed infrastructure performance over different financial climates including the global financial crisis period. This paper presents European listed infrastructure as an indication of rewarding investment outlets for investors in quest of exposure to the infrastructure industry and for those seeking to enhance investment portfolio performance.

The Trouble With Capitalism, by Harry Shutt

Harry Shutt The Trouble With Capitalism, Zed Books: London, 2009, 237 pp: 9781848134225 14.99 [pounds sterling] (pbk) In this contribution to the critical financial histories of our times, Harry Shutt explains why he thinks the current crisis may be the end for capitalism as we know it. The book opens with brief chapters sketching the history of capitalism up to the Second World War, followed by a sketch of the workings of the western economies since 1945. Later chapters offer more detailed analyses of current economic difficulties and policy responses. The historical narrative is similar to others in this increasingly crowded field, such as John Bellamy Foster and Fred Magdoff (2009) or Robert Brenner (2003). The principal reason why the current recession may be the final crisis of capitalism is the capital glut thesis. This is similar to the tendency to overaccumulation identified by Marx, then developed by David Harvey, Paul Baran and Paul Sweezy, John Bellamy Foster and other Marxists. Capitalist industry generates too much profit searching for too few investment outlets, with the bourgeoisie chasing around the world in their search for new markets and new investments, only to end up back where they started, facing an even bigger crisis. The next reason why the current crisis may prove terminal is that, according to Shutt, both Keynesian and neoclassical/neoliberal economics have failed. Keynesianism failed in the stagflation of the 1970s; neoclassical economics failed in the succession of bubbles and busts since 1980. There is much to commend in The Trouble With Capitalism. In the historical surveys of capitalism to 1980, the author makes an interesting and useful argument concerning the end of the long postwar boom. The boom itself followed from the confidence felt by both consumers and the private sector in government, keeping the macroeconomic framework stable. This enabled consumers to take on long-term debt such as mortgages and car loans without the fear that such risks would ruin them financially. The welfare state would provide for their children's education and healthcare, and would pay a pension in retirement. Growth began to slow, according to Shutt, when a majority of households in the rich countries had bought their first cars, refrigerators, TVs, etc. From then on, 'the markets for the most durable products ... tended to be more and more governed mainly by replacement demand, rather than by continuous opening up of new groups of buyers' (p. 35). At the same time, there were also signs of a contradiction between government policy and commitment to free markets. More importantly for the viability of the system, profitable investment opportunities were drying up. This final problem, emerging from the long boom, is developed in later chapters of the book. According to Shutt, the long-term cause of the current recession has been 'the impossibility of sustaining high enough economic growth to support the value of capital assets ... while at the same time meeting the income and welfare requirements of the mass of the population' (p. 184). In making this argument, Shutt is on similar ground to David Harvey (1999) and others. Unlike Harvey, Shutt presents the capital glut as an immediate threat to the entire global capitalist economy. The depth and intractability of the crisis is demonstrated, in Shutt's argument, by the myriad policies pursued by governments since the 1970s. All of these policies were sold as means to restore long-term economic growth and ali of them achieved no more than inflating a financial bubble, leading to a crisis more severe than the last, making the problem of capital glut worse. …

The Crisis and the Capitalist System Today

Capitalist crises are specific to the epoch in which we live. Today there is a huge surplus of capital unable to find investment outlets leading to asset inflation and the various bubbles. The downturn itself reduces that surplus, both in monetary and physical terms providing the basis for an upturn. However, the underlying basis for the surplus of capital remains. That reflects the contemporary ruling class strategy of turning to finance capital. However, that too is in crisis and is in process of being controlled and curtailed. A new strategy is needed because capitalism-as-a-system is in crisis, but none is available. Governments and big business/the capitalist class can control the level of investment to a considerable degree, in part through nationalisations and through monopoly control, over firms, and they are not prepared to reflate to the point of full employment. Their initial reaction has been pragmatic assuming that muddling through will work. However, that has been succeeded by demands for massive reductions in the public sector and a squeeze on the standard of living. If successful, which is highly unlikely, it will amount to a period of extreme reaction, and popular defeat, lasting a generation. If it is unsuccessful, it will train a generation in the art of militant and political opposition, threatening the system itself. Crises today do not operate automatically but are closely integrated with politics.

Differential Investment Behavior between Grandparents and Grandchildren: The Role of Paternity Uncertainty

Kin selection theory predicts that grandparents will differentially invest in their grandchildren as a function of paternity certainty. This study explored the hypothesis of “discriminative grandparental solicitude” ( Euler and Weitzel, 1996 ; Smith, 1988 ) in a sample of college students. Students with four living grandparents were asked to indicate the frequency of various behaviors received from or directed to each grandparent. A significant linear trend on a majority of the measures supported this hypothesis. Reported contact and closeness were highest with the maternal grandmother (most genetically certain) and lowest with the paternal grandfather (least genetically certain); maternal grandfathers and paternal grandmothers were intermediate. The “preferential investment hypothesis” ( Laham, Gonsalkorale, and von Hippel, 2005 ) predicts that the investment behavior of the maternal grandfather and the paternal grandmother should differ only when there are cousins through the father's sisters. Contrary to the predictions of this hypothesis, grandchildren did not rate the maternal grandfather consistently higher on any of the indices when more certain investment outlets were available to the paternal grandmother.

Applying portfolio optimisation to the harvesting decisions of non-industrial private forest owners

The non-industrial private forest owner's optimal harvesting and investment strategies are studied at forest holding level by including individual forest stands in an asset class portfolio. The forest owner can either clearcut mature stands and invest the capital in financial or real asset classes (bank deposits, government bonds, stocks, apartments) or postpone clearcutting and retain capital in standing trees. Forest inventory data from actual forest holdings in Southwest Finland, the simulation–optimisation software MELA, and statistics on timber prices are utilised to compute the return series for forest stands. The numerical results show that the optimal level of clearcutting decreases markedly with initial non-forest wealth, especially at low risk-free rates of interest. It may therefore be rational for non-industrial private forest owners to consider shorter rotation periods than those of investors with diversified portfolios. The correlations between returns from forest stands are high, implying that increasing the variety of stand structures achieved by planting different species is not likely to bring substantial diversification benefits. The favoured investment outlet for harvesting revenues (apartments, government bonds or stocks) is sensitive to the period of historical data used to compute the return series and risk-free rate of interest. The value growth of forest stand can be used to estimate annual returns only for those stands that are readily mature. An alternative method of computing returns on stands in any development phase is proposed, based on net present value of stand adjusted for fluctuations in forest land prices. This method applies if selling forest land is considered an option. If selling is not an option, the ratio of maximised net present value to value at immediate harvest can be used as a ‘maturity index’ for ranking the stands for portfolio optimisation.

China and Africa: Emerging Challenges to the Geographies of Power

AbstractOver the last few years, China has assiduously pursued stronger economic and diplomatic relations with many Asian, African and Latin American countries. In part, this is fuelled by its extraordinary economic growth, which has led to a boom in domestic resource demand, and the search for profitable markets and investment outlets. China is also seeking diplomatic support in challenging the inequalities of ‘global’ governance. For better and worse, China's rise will lead to changes in the present structures and loci of power in an uneven world. This review article examines one set of China's ‘South–South’ interactions through an historical account of Sino–African relations from 1949 to the present day. It points to the complexity of interactions between diverse Chinese and African actors, a range of opportunities and problems, and the dangers of a defensive response from the West, if based on unreflexive and unsophisticated foreign policy analysis.