Faculty of Insurance and Banking

Permanent URI for this communityhttp://dspace.ifm.ac.tz/handle/123456789/5

Browse

Now showing 1 - 20 of 39

Exploring the value of factoring as a finance option for small enterprises in emerging economies: A Tanzanian case study
(Entrepreneurship and Innovation, 2006) Satta, Tadeo Andrew
Using Tanzania as a case study, this paper explores the value of factoring as a finance option for small enterprises in emerging economies. Based on identified challenges, the paper develops a policy framework that could facilitate the growth of the factoring industry in Tanzania. Within the boundaries of the developed framework, the paper concludes that there is a need for the Tanzanian government to create a favourable legal and regulatory environment, foster economic growth, support the formation of factoring associations, strengthen credit information infrastructure, and create an overall favourable tax structure that is supportive of the factoring industry. Furthermore, the paper argues that the ongoing global growth in factoring provides a unique opportunity for fostering the growth of factoring finance in emerging economies through cross-border factoring.
Directors and firm performance: evidence from British soccer corporations
(Leeds University Business School, The University of Leeds, 2011) Mnzava, Bernard Elieza
The purpose of this research is to analyze the importance of the interrelationship between directors and firm performance in UK soccer corporations. In doing so the analysis enriches the existing literature in corporate governance in several ways. The primary innovation contained in this thesis is that it analyses productivity performance in the field of corporate governance for the first time. My empirical analysis considers two distinctive elements of firm performance. The first element is productivity performance, which is measured by on-field football success that includes winning percentage, percentage of league points and attendance. To my knowledge, this has not been addressed elsewhere in the corporate governance research. The second element is financial performance, which is measured by off-field economic success which includes profitability and the ratio of turnover to total assets. Overall, the findings of this research suggest that productivity performance is the principle criterion used to judge corporate decision making. The first element of the empirical analysis examines determinants of directors’ remuneration under three categories, namely; board remuneration, executive remuneration and CEO remuneration. My main findings can be summarized as follows. Firstly, I find evidence that in all categories of directors’ remuneration productivity performance is the chief determinant; concomitantly, there is little evidence of a link between CEO remuneration and financial performance. Secondly, I document that directors’ remuneration is substantially affected by firm size and managerial ownership. Finally, I find that the proportion of non-executive directors significantly reduces board and executive compensation. The second empirical analysis investigates the determinants of executive turnover, through using multiple theoretical approaches. My analysis compares the relative importance of productivity compared to financial performance on executive turnover decisions. My main finding is that productivity performance is more important than financial performance in driving executive turnover. Furthermore, my analysis demonstrates that executive turnover is considerably influenced by managerial ownership and industry experience. Overall, my results suggest a stronger relationship between performance and turnover in listed corporations than in FA Premier League corporations. This implies that quoted firms adhere to corporate governance directives more than FA Premier League firms. The final empirical analysis investigates the impact of multiple directorships, ownership structure and managerial industry experience on productivity and financial performance. My main findings are as follows. First, the results reveal that directors with multiple directorships improve productivity performance by enhancing the firm’s net spending, this having the effect of worsening financial performance. Second, I find that managerial ownership tends to seriously worsen productivity performance, whilst block holder ownership enhances financial performance. Third, managerial industry experience promotes productivity performance but worsen financial performance. Overall, in the contemporary relationship football firms are characterized by a trade-off effect between financial and productivity performance measures. Finally, I document evidence that productivity performance depends on financial performance and vice-versa.
Accounting Changes and Budgeting Practices in the Tanzanian Central Government: A Theory of Struggling for Conformance
(University of Southampton, 2011-07) Mkasiwa, Tausi Ally
This research investigates the phenomenon of budgeting practices in the Tanzanian Central Government. It seeks to understand how budgeting systems under the New Public Management (NPM), World Bank- and IMF-exhorted systems were adopted and implemented. There were several motives for this research: the significance of budgeting in financial management, the sparsity of empirical studies on NPM in developing countries, and a call for an understanding of the local contexts of the country and an evaluation of the reforms themselves. Additionally, the complexity of NPM reforms and the mixed results of previous empirical studies, indicated the need for a more appropriate methodology. The study adopts interpretive research and executes a grounded theory strategy. It develops a substantive grounded theory on budgeting practices and a formal grounded theory on accounting changes in organizations (Glaser and Strauss, 1967; Strauss, 1987). Fieldwork was undertaken in three Tanzanian Ministries. Struggling for conformance is the central phenomenon of the substantive and the formal grounded theory. The substantive grounded theory explained a process through which the Tanzanian Central Government actors were determined to implement budgetary reforms, despite difficulties. Struggling for conformance was illustrated by the establishment of rhetorically applied (rhetorical) rules and regulations, followed by budgeting attempts and games in their implementation, due to the uncertain environment, complex budgeting systems, the donors‟ influence, and cultural and administrative practices. The process of struggling for conformance had positive and negative impacts on budgeting operations and budgeting allocations. The formal grounded theory proposes that organizations adopt and implement accounting changes in order to achieve legitimacy, efficiency and self-interests. Rhetorical rules on accounting changes are established and implemented through accounting attempts and games, which may reveal the coexistence of instrumental and ceremonial aspects of accounting (Covaleski and Dirsmith, 1991), and even fulfill individual, rather than organizational, interests (strategic deterioration). Struggling for conformance is caused by conflicting and enabling power, complex rules, and a fragmented environment. Its consequences reflect the extent of the acquisition of efficiency and legitimacy. This research contributes to the limited amount of empirical accounting research on NPM in developing countries, to grounded theory and interpretive accounting research, and to the expansion of New Institutional Sociology. It further provides a framework of struggling for conformance, which produces possible explanations for the complexities of budgetary and NPM reforms, the adoption and implementation of accounting changes in organizations, and loose coupling
The Effect of Separating Ownership from Control on Corporate Leverage
(Business Management Review, 2012) Lotto, Josephat
This paper aims to examine how corporate leverage is affected by the separation of ownership from control .Using data from a sample of 643 listed UK firms, the results show supportive evidence of a statistically significant positive relationship between the largest shareholder’s ownership concentration and debt ratio. More importantly, the results of the paper show a statistically significant and positive relationship between control-wedge (deviation between control rights and cash flow rights) and the debt ratio confirming that control attracts controlling shareholders to extract private benefits. This finding offers directly evidence for the debt-increasing effect of the hypothesis formulated in this paper: the non-dilution entrenchment effect and signaling effects of debt finance contribute to a higher corporate debt level when the control-rights and cash-flow rights of the largest controlling shareholder are highly separated.
Does IFRS improve the usefulness of accounting information in African capital markets?
(Leeds University Business School, The University of Leeds, 2012) Ngole, Shaban Juma
This thesis examines whether IFRS adoption improves the usefulness of accounting information in African capital markets. Consistent with the IASB (2010) conceptual framework which focuses on shareholders, I define usefulness as the increase in value relevance of earnings and book value of equity, asymmetric earnings timeliness and conditional conservatism and the predictive ability of earnings and cash flow. I use a relatively large sample of 347 firms listed in five African capital markets namely; Johannesburg, Nairobi, Cairo and Alexandria, Botswana and Casablanca Stock Exchanges. The thesis derives its motivation from the contemporary debate on fair value versus historical cost accounting, illiquidity of African markets and the adoption of IFRS in Africa. Although IFRS is widely adopted in Africa there are relatively few studies examining its usefulness. In Africa, capital markets are relatively small and illiquid (Smith et al., 2002 and Kenny and Moss, 1998), there are no sound IFRS enforcement mechanisms (Daske et al., 2011, Anandarajan and Hasan, 2010, World Bank, 2010a, and Prather-Kinsey, 2006), culture is secretive and conservative (Dahawy et al., 2002 and Gray, 1988) and many accounting systems are based on government or bank capital models of corporate governance (Chamisa, 2000). Since, IFRS characterized by fair value accounting principles requires liquid and active markets for its appropriate use (Ball, 2008) and focuses on market led principles of measurement and disclosures (Walker, 2010) it is unclear how useful it is to market participants in illiquid markets particularly African capital markets. The research objectives are fourfold; to examine whether IFRS increases (i) the information content of earnings and book value of equity as measured through the earnings response coefficient (ERC), the book value response coefficient (BRC) and adjusted R2 (ii) the asymmetric earnings timeliness and conditional conservatism as a measure of stewardship role of management to capital providers, (iii) the predictive ability of earnings and cash flow and (iv) to examine the conditioning roles of culture and legal origin on the above research sub-themes. The results are summarized as follows; (i) IFRS increases the valuation role of book value of equity and overall value relevance but not earnings. These findings are consistent with the IASB (2010) conceptual framework' focus on the statement of financial position rather than the statement of financial performance in financial reporting. The results are also consistent with prior studies such as Hung and Subramanyam (2007) and Francis and Schipper (1999) which document the declining (increasing) value relevance of earnings (book value of equity), (ii) IFRS is incrementally more value relevant in code law than common law countries and (iii) the secretive culture prevalent in African countries is associated with greater BRC (lower ERC) after IFRS Moreover, consistent with prediction, the results indicate that IFRS leads to reduced gains, loss, incremental loss and overall earnings timeliness. Also, common law earnings are timelier (untimely) in recognizing bad news (good news) than code law earnings. However, this symmetric earnings timeliness decreases after IFRS adoption. Furthermore, the results indicate that a conservative culture is associated with greater (lower) gains (loss and incremental loss) recognition timeliness. In terms of earnings and cash flow predictability, IFRS results in reduced predictive ability of cash flow and earnings. Also, cash flow dominates earnings in predicting future cash flow. Conservative culture is associated with lower (greater) predictive ability of cash flow (earnings). Moreover, results do not support the contention that IFRS increases the predictive ability of earnings and cash flow more in common than code law countries. This is the first comprehensive study examining the decision usefulness (as defined by the IASB conceptual framework, 2010) of IFRS in Africa. The conclusion is that IFRS has not improved financial reporting in Africa.
Micro insurance in Tanzania: demand perspectives.
(University of Central Lancashire, 2012) Saqware, Abdallah Naniyo
This study addresses three distinct but interrelated areas in the micro insurance sector in Tanzania a) demand perspectives of micro insurance in the informal sector b) examining strengths and weakness of current risk coping strategies in the informal sector c) examining household‘s characteristics that influence demand for micro insurance. The study analyses data from a primary survey and focus group discussion derived from informal sector households‘members of the VIBINDO1 society in three districts of Ilala, Kinondoni and Temeke in Dar es Salaam. The analysis involves three steps; first, household‘s major risk exposures were analysed, secondly risk coping strategies which were in place were examined and thirdly, a probity regression analysis was conducted to establish the relationship between households‘ characteristics and demand for micro insurance in the informal sector. There are three major findings from this study: Firstly, the results indicate that employment, marital status, use of financial services, education, risk exposure and insurance knowledge are significant determinants of micro-insurance demand. Insurance knowledge and trust of insurers were found to have a positive and significant impact on the demand for micro insurance. Contrary to expectations, the empirical analysis shows that income is a significant determinant with a negative impact on micro insurance demand. Secondly, the findings suggest that demand for micro insurance in the informal sector depends on the competitive advantage between formal insurance services and available informal techniques. Informal techniques have important informational advantages due to their close physical proximity and frequent, repeated interactions. This implies that some inferences can be drawn from the design and development of micro insurance. The analysis highlights different approaches to be taken by insurers in designing micro insurance products. Thirdly, there is evidence to suggest that pre-existing informal sharing networks affect demand for micro insurance. The low demand for micro insurance can be explained by available informal arrangements which are characterized by closely knit social networks and groups that provide security in exchange for loyalty to the group. Also, uncertainty avoidance culture is low within the households in Tanzania, hence households seem to be more tolerate to different situations. The findings recommend strategies for micro insurance expansion in the informal sector, which is therefore useful for the expansion of financial services.
Complex corporate ownership and control in UK listed companies
(University of Strathclyde, 2012) Lotto, Josephat
This thesis sets out the empirical evidence on complex ownership and control using data for UK listed firms adapted from Faccio and Lang (2002) for the period 1996-1999. Using OLS estimation method, the thesis links corporate financial policies and performance with ownership and control. It reports a negative relationship between control concentration of the largest shareholder and dividend pay- out ratios in companies which separate ownership from control, and a positive relationship between ownership concentration of the largest shareholder and dividend payout ratios, in companies which do not. I show that higher control-rights grant larger shareholders incentives (lower cash-flow rights) and ability (higher control-rights) to extract private benefits, for companies which separate ownership from control. Supportive evidence emerges of a positive relationship between the largest shareholder’s ownership concentration and debt ratio; when ownership concentration of the largest block holder increases, so does the possibility of collusion with management. It is further reported that, family companies employ more debt in their capital structures to prevent dilution of control and have significantly higher debt ratios and lower pay-out ratios than companies controlled by financial institutions. It may be argued that, the absence of strong external monitors makes it easy for family companies to pass control between generations. Finally, I test the relationship between voting rights of the largest shareholder and firm performance and report a negative relationship, suggesting reduction of corporate values. I demonstrate that firms whose control is shared among two family block holders accumulate more debt and perform worse than firms where the largest family block holder shares control with the second largest financial institution. This suggests that the incentives to collude with the largest shareholder or to monitor the largest shareholder are significantly affected by the type of block holder. It is also shown that firms with control coalition having more than two block holders perform better than those with only two block holders, especially those of the same type.
Governance and Accountability: an exploration of Chairs-CEOs Relationships in Large Scottish Charities
(Business School, University of Aberdeen, 2013) Fadhil, Omary Idd
Charities have been growing in numbers and visibility in many parts of the world over the past two decades. There has been a dramatic increase in the number of charities in the United Kingdom since the 1980s. Government withdrawal from direct involvement in certain service delivery programmes saw charities filling the void. The importance of charities can be reflected in the expenditures which are classified as ‘culture, sports and recreation’, ‘education, training and research’, ‘health and medical’, ‘social services and relief’ and ‘conservation and protection’. Others include ‘housing and community affairs’, ‘civil rights, law and order’, ‘philanthropic intermediation’, ‘international activities’, ‘business and professional’ and ‘religion’ (CaritasData, 2009). Despite their economic importance, limited academic research and professional development have been directed to charities. Laws and regulations for charities have been in place for decades, with Scotland enacting the Charities and Trustee Investment (Scotland) Act 2005 to regulate all charities operating in Scotland. This research focuses on governance and accountability in ‘large’ charities registered in Scotland. The research looks into the working relationships between Chairs and CEOs of charities following the 2008 economic recession. The main sources of data are questionnaires as well as annual reports and accounts. A combination of theories has been used from previous research on both for-profits and non-profits organisations to explain internal governance of charities. The research uses these theories to explain responses from both Chairs and CEOs on charity issues and how they also relate to the financial vulnerability status of a charity. Major findings of this research include the existence of very few differences in responses between Chairs and CEOs when it comes to general issues regarding governance and accountability in charities. Charities focus on having members with specialist expertise on their Boards. There is evidence that charities are engaging in signalling behaviour due to information asymmetry in charities and that the existing economic downturn has increased pressure on charitable operations. The research also found that the financial vulnerability status of a charity has limited or no effect on the responses from Chairs and CEOs; however, the research found significant differences in responses on the importance of legacies and public funding between charities that are financially vulnerable and those that are not.
Towards the Management of Family Firms: Is involvement of Professional Outside-Family Managers Important?
(International Journal of Economics, Finance and Management, 2013) Lotto, Josephat
This paper examines to examine the relationship between family ownership and firm performance by considering the impact of management professionalism on the performance of manager-controlled firms and family-managed firms using data for 643 non-financial UK listed companies. Pooled Ordinary Least Squares Regression specification is used to test whether ownership affects firm performance. A fully robust variance matrix estimator (to estimate t-statistics) is employed to avoid within-cluster (firm) correlation and any form of possible heteroscedasticity. The study reports a positive relationship between ownership of the largest shareholder and performance in manager-controlled firms and a negative relationship in family-managed firms. These findings confirm the allegation that, external managers are professionally trained and may use their managerial skills to boost up the firm performance as opposed to managers chosen within the family members who might lack sufficient managerial skills. This study tries to contribute in literature by addressing how different owners’ identity affects firm’s value differently. More specifically, the study throws light on the impact of management professionalism on the performance of manager-controlled firms and family-managed firms. The key implication of the findings of this paper is that family companies have to accept the involvement of non-family professional managers because outside managers can possibly bring information, competencies, and access to fundamental resources for efficient exploitation of opportunities. The presence of non-family managers could be beneficial in reducing the institutional overlap between the family and the company.
A modified anonymisation algorithm towards reducing information loss
(School of Computing, Dublin Institute of Technology, 2013) Tinabo, Rose
The growth of various technologies in the modern digital world results in the collection and storage of huge amounts of individual's data. In addition of providing direct services delivery, this data can be used for other non-direct activities known as secondary use. This includes activities such as doing research, analysis, quality and safety measurement, public health, and marketing. These activities enhance services experiences for individuals, expand knowledge and making appropriate decisions, strengthen understanding about the effectiveness and efficiency of the systems, support public education and aid organizations in meeting customers' needs. The collected data may contain personal-specific and sensitive information, such as medical records and financial records that may cause privacy breaches if compromised. The process of ensuring an individual's privacy results in information loss which renders data less useful. This problem is everywhere were data is collected, but the problem is critical in the healthcare domain due to the sensitive nature of the healthcare data and their importance for several secondary uses. Therefore, in order to increase sharing of the collected data, approaches that ensure an individual's privacy with reduced information loss that renders the data useful are needed. There are number of approaches used to ensure an individual's privacy such as removing Personal Identifiable Information (PII), encryption, and statistical databases. But most of the existing approaches results in substantial information loss or the anonymisation level achieved may still results in the identification of the individual's sensitive information. This research investigates the problem of ensuring an individual's privacy while reducing the amount of information loss. Thus, the research attempts to answer the problem of how the data holders, such as hospitals, private, and government agencies, can ensure an individual's privacy while sharing data which is still useful. This research proposes an anonymisation algorithm, named kl-redInfo that ensures individual's privacy with a reduced amount of information loss that renders data useful. The kl-redInfo algorithm ensures individual's privacy by achieving the main two privacy requirements, k-anonymity and l-diversity, that aim at ensuring an individual's privacy against both identity and sensitive attribute disclosures. The information loss is reduced by using the three proposed modified approaches that reduce the values of the information loss metrics, which indicate a reduction of the information loss. These approaches are; systematic incorporation of the remaining records in the group that result in lower information loss, using both the group-creation part of the anatomization approach and cell-based generalization, and sorting the records according to the attributes that can be linked to identify an individual, also known as quasi-identifier attributes. The research shows that, each of the proposed modified approaches contribute in reducing the amount of information loss with the approach of systematic incorporation of the remaining records in the group that results in a lower value of the information loss metric being the most important. The research find that, even though each of the proposed modifications contributes in reducing the amount of information loss, the amount of information loss resulting from the application of the combined three proposed modifications is significantly reduced. Therefore, the research uses the three proposed modifications to design the proposed kl-redInfo algorithm. The research shows that, the proposed kl-redInfo algorithm results in significant reduction of the information loss compared to the widely used privacy-preserving data publishing algorithms that proved to result in lower information loss. This was indicated by the lower values of the three information loss metrics; Normalized Certainty Penalty (NCP), Discernibility Penalty (DP), and Kullback_Leibler divergence (KL divergence), that implies reduction in the amount of information loss. The reduction of the information loss resulting from the application of the kl-redInfo algorithm was due to the use of the three proposed modified approaches, systematic Incorporation of the remaining records in the group that result in a lower amount of information loss; using both group-creation part of the anatomization approach and cell-based generalization; and sorting the records according to quasi-identifiers.
Diversification, financial performance and the destruction of corporate value? An application of fuzzy set analysis
(University of Strathclyde, 2013) Mabonesho, Ernest Francis
FSA techniques appear to offer valuable complementary theoretical and empirical insights to conventional finance research methods in order to better understand the financial impact of corporate diversification strategies. FSA can provide a conceptual framework to integrate the often confusing and conflicting theoretical explanations and empirical results of past research. This thesis explores the potential usefulness of FSA in addressing finance research problems or paradoxes that are characterized by large numbers of inter-connected variables, complex causality and where different configurations lead to similar outcomes. Specifically fuzzy set analysis is used on cross-sectional data from firms listed in London stock exchange FTSE All-share index (2001-2010) in order to address a gap in the literature as to “how corporate diversification necessarily and sufficiently leads to favorable financial performance”. The results of this research show that there is no simple answer to this question nor is there a simple theoretical explanation. It appears that a diversification strategy per se is neither a necessary nor a sufficient indicator of favorable or unfavorable financial performance. The FSA results showed multiple configurations of corporate diversifications and other firm attributes which are usually or more often than not sufficiently associated with favorable firm value, profitability, and risk-return performance. This indicates presence of complex causality, asymmetric causality, and equifinality in examining determinants of financial performance. The results are partially explained by elements of standalone theories but better explained by the construction of a series of hybrid theoretical frameworks. The usefulness of FSA in helping understand and improve decision making processes that rely on complex financial or numeric information has been demonstrated, and it is hoped that this research acts as a “stepping stone” to legitimate a new set of analytical techniques for accounting and finance researchers to use. This would help corporate managers/CEOs, analysts, and investors in decision making processes.
Towards Monitoring the Selfish Behaviours of Corporate Managers: Does Institutional Foreign Ownership Matter?
(International Journal of Economics, Finance and Management, 2013-11-07) Lotto, Josephat
This paper investigates the monitoring effect of institutional ownership on managerial behaviors more particularly on the corporate leverage decision of corporations listed in London Stock Exchange. Previous literature on the agency model extensively recognizes that the use of both managerial ownership and debt play a very crucial role in limiting agency conflict and improving firm value. The literature further appreciates the role of institutional intervention in limiting the possibility of managerial selfish behavior which might temper with the value of the firm. However, literature recognizes that foreign institutional interventions have more positive impact on the agency conflict reduction process than their domestic counterpart. Using a sample of 300 UK large non-financial companies in FTSE All share Index represented by FTSE 350 from 2004-2009, this study investigates the usefulness of these agency-conflict-reducing mechanisms studying the inter-relationships among them by utilizing simultaneous systems of estimation procedure. The results of the study show that the predicted inverse relationship between debt and managerial stock ownership is more statistically significant for domestic owned firms than their foreign counterparts. This implies that foreign controlled firms are believed to have higher level of international activities which increases the agency cost of debt. It can therefore be emphasized that the use of more debt is more risky for foreign-controlled firms than for domestic owned firms. This is why it is more likely to find domestic –controlled firms having higher debt levels than foreign-controlled firms.
The Interrelationship between Corporate Ownership Structure and Leverage
(ARPN Journal of Science and Technology, 2013-12-08) Lotto, Josephat
Previous studies on the agency model of the firm extensively recognize the managerial ownership and external debt as important tools in mitigating agency conflicts and enhancing firm value. They also find that increase in the external monitors, for example the institutional investors, can actually play a useful role in limiting agency problems in the firm. This paper, using 1351 companies from UK between 2004 and 2008 explores the impact of institutional holdings on managerial ownership and debt policy in an integrated framework by using a simultaneous equations estimation procedure (2SLS). The findings show that there is a significant negative relationship between institutional ownership and corporate leverage. This escalates the agency costs of debt because debt holders increase the rate of borrowing when they realize that institutional ownership increases in such a way as to jeopardize their wealth because using the control power they accumulate from their ownership, institutional shareholders may engage in riskier projects.In addition, corporate leverage is also governed by managerial ownership and revealed a statistically significant negative relationship. At the same time, debt appears as a key governance variable as it moderates private benefits extraction from corporate free cash flows as reported in the results of this paper that companies with higher average debt ratios accumulate less free cash flows as opposed to companies with lower average debt ratios.
The Level of Business Informality in Tanzanian SMEs and Access to Finance
(The African Journal of Finance and Management, 2014) Lotto, Josephat
The objective of this paper is to assess the level of business informality and access to credit of Tanzania’s SMEs. The study considers business informality as a combination of improper keeping of business records, lack of business licenses, lack of business registration and lack of bank accounts. A sample of 295 SMEs and 4 commercial banks were randomly selected from Dar es Salaam, the business centre of Tanzania. The study found that improper keeping of business records was highly impacting SME’s access to credit, with other factors such as the lack of business licenses, business registration and bank accounts affecting the access to finance in the same order. The study findings reveal that on average, reasons related to business informality (lack of business registration, poor record-keeping and lack of business license) contributed significantly to difficult access to finance for SMEs compared to other reasons such as the lack of collateral and business plan. In this regard, interventions to increase the levels of formality in the SME sector would have a positive impact on the sector being able to access finance. This can be done through compulsory registration of SMEs at minimal or no cost.
Examining the impact of information technology on internal auditing effectiveness in Tanzanian organizations
(Time Journals of Social Sciences, 2014-11-06) Lotto, Josephat
This research assessed the impact of Information technology on internal auditing in Tanzanian organizations. The study was exploratory and descriptive in nature and it was restricted to the Dar es Salaam area, which is the commercial center of Tanzania. As such it represents IT growth of both government and a business organizations in the country. Primary data was collected through questionnaires. The central finding in this research work reveal that the internal audit profession in Tanzania lags behind in effective use of IT to support their duties. From the discussion of the findings it was clearly observed that several factors, which contributed to the hindrance of internal auditors’ use of technology, are interwoven. As such, it was clear that the lack of top management support seemed to be a critical problem because it is from this factor that other factors were brought into existence. For instance, inadequate training programs, internal auditors’ involvement in information systems development, and poor allocation of budget to the internal audit department were the result of lack of top management support.
Assessing the Determinants of Bank Liquidity: Experience from Tanzanian Banks
(The African Journal of Finance and Management, 2015) Lotto, Josephat; Mwemezi, Justus
This paper identifies the determinants of banks’ liquidity in Tanzania. The panel regression was employed for secondary data extracted from published bank financial statements of 49 banks in the sample, covering the period from 2006 to 2013. The results revealed that capital adequacy, bank size and interest rate margin had a negative and statistically significant effect on banks’ liquidity, while non-performing loans and inflation were found to have positive impact on bank’s liquidity. On the other hand, the profitability and GDP growth rate had statistically insignificant impact on banks’ liquidity, although they both had expected positive relationships. According to the study results smaller banks are more liquid because they mainly focus on short-term loans that mature shortly, and are therefore are believed to be more liquid as compared to bigger banks that tie up most of their capital on long-terms loans that mature after some years.
Managing performance or legitimacy? A case study of the Tanzanian Local Government Authorities
(Emerald Publishing Group, 2015) Abeid, Francis Gaspar; Mkasiwa, Tausi Ally
Purpose The purpose of this paper is to investigate performance measurement practices in the Tanzanian Local Government Authorities (LGAs). It seeks to understand the performance measurement practices in the context of new public management (NPM) (Hood, 1991, 1995). Specifically, the paper focuses on the annual performance assessment (the local government development grant system), which operated in the Tanzanian LGAs as a base for accessing grants from the central government. Design/methodology/approach The study executed a grounded theory strategy for data collection and analysis. Fieldwork was undertaken in three Tanzanian LGAs. Findings The findings revealed how performance measurement practices were involved in the process of managing legitimacy, and consequently, in the acquisition of grants from the central government. Dialogue and learning about the performance measurement exercise and the production and manipulation of evidence were the two strategies employed by LGAs in the management of legitimacy. Practical implications In practice, efficiency in organizations may be achieved through the appropriate design of systems, and by understanding, and addressing problems which emerge during their implementation. Learning is a significant strategy used by actors, and this needs to be taken into consideration by reformers when designing and implementing reforms. Originality/value The paper contributes to existing research by providing a framework for managing legitimacy. The framework supports and extends Oliver’s (1991) typology of strategic responses to institutional processes and Suchman (1995) legitimation strategies. It identifies dialogue and learning as other forms of significant strategy in actors responses to institutional pressures. The study also provides additional evidence of the responses to the accounting changes and the NPM reforms.
The two publics and institutional theory – A study of public sector accounting in Tanzania
(Elsevier, 2015) Andrew, Goddard; Mussa, Assad; John, Malagila; Tausi A., Mkasiwa
This paper summarises, and attempts to theorise, the findings of a series of research projects investigating accounting practices across the public sector in Tanzania. Data was collected principally by interviewing participants in central and local government and in a number of NGO's. Analysis was undertaken using grounded theory methods, alongside a theoretical framework. This framework comprised the work of the post-colonial theorist Ekeh, 1975, Ekeh, 1994a, Ekeh, 1994b and the concepts of legitimacy, loose coupling and isomorphism from institutional theory. Legitimacy and loose coupling were central concerns in all the institutions and played a significant role in understanding their accounting practices. However, there were significant differences between the settings’ responses. These can be partly explained as responses to different isomorphistic pressures. Differences between institutions can be further explained using Ekeh's concepts of the primordial and the civic publics. Gaming and corruption were evident in central government, associated more with the civic public. Accountability and a sense of moral responsibility appeared to be stronger in NGOs, which were more closely associated with the primordial public. In contrast to the central government, which was associated more with the civic public, accounting was extremely problematic resulting in many dysfunctional practices. However gaming and corruption were most evident in local government where participants were subject to a conflict between the two publics’ moralities.
Efficiency of Capital Adequacy Requirements in Reducing Risk-Taking Behavior of Tanzanian Commercial Banks
(Research Journal of Finance and Accounting, 2016) Lotto, Josephat
This paper intended to examine the relationship between capital and risk of Tanzanian commercial banks during the period 2009-2014 using the Two Stage Least Square (2SLS) method of estimation. The empirical findings reveal a direct relationship between capital ratios and bank risk-taking behavior implying that as the level of banks’ risk increases bank managers tend to increase the bank capital ratios so as to prevent banks from violating the regulatory minimum capital requirements.The study also found a positive relationship between regulatory pressure and capital. This positive impact shows that Tanzanians large commercial banks approaching the minimum capital requirements are inclined to improve their capital base in order to circumvent the penalties resulted from infringing the legal requirements of keeping minimum capital ratio.The study further shows a positive and significant association between profitability and bank capital implying that that as the profitability of banks increases they retain more earnings to raise the level of their capital. Hence, it is concluded that improvement in profitability helps banks to increase their capital ratios and prevent them from penalty associated with failure to meet minimum capital requirements.
Credit availability for Tanzania’s small businesses: a gender perspective
(Business Management Review, 2016) Lotto, Josephat
The purpose of this study was to examine whether firm and owners’ characteristics are driven by gender and whether gender is attributable to credit accessibility in small and locally-owned firms in Tanzania. The study uses data collected from 400 small businesses through questionnaires and interviews and analyses it using univariate and multivariate statistical tools The findings show that female owners are less educated, have less work experiences and their firms are relatively smaller and younger than in the case for males. Moreover, female-owned firms were more likely to be organised as sole proprietorship or partnerships. Also the findings indicate that female-owned firms are more likely to have a need for credit during the three years prior to the survey. Nevertheless, when it comes to applying for credit, male owners were more likely to apply for credit than their counterpart female owners. Surprisingly, the credit applications of female-owned firms were more likely to be approved than those from the male-owned firms. The results suggest that policy-makers and regulators should not use the “one-size-fits all” approach when setting policies for the growth and survival of small firms due to the differences in firm and owners’ characteristics with regard to credit accessibility between male and female-owned firms. Furthermore, the results imply that when formulating policies for credit accessibility the issues of size and gender are pertinent. On the whole, the study contributes to the extensive literature on gender and entrepreneurship for a specific Tanzanian context.

Browse

Browsing Faculty of Insurance and Banking by Issue Date