This paper aims to examine whether high levels of financial inclusion is associated with greater financial risk.
Abstract
Purpose
This paper aims to examine whether high levels of financial inclusion is associated with greater financial risk.
Design/methodology/approach
The study uses regression methodology to estimate the effect of financial inclusion on financial risk.
Findings
The findings reveal that higher account ownership is associated with greater financial risk through high non-performing loans and high-cost inefficiency in the financial sector of developed countries, advanced countries and transition economies. Increased use of debit cards, credit cards and digital finance products reduced risk in the financial sector of advanced countries and developed countries but not for transition economies and developing countries. The findings also show that the combined use of digital finance products with increased formal account ownership improves financial sector efficiency in developing countries while the combined use of credit cards with increased formal account ownership reduces insolvency risk and improves financial sector efficiency in developing countries.
Research limitations/implications
The paper offers several implications for policy and financial regulation. It suggests policies that would reduce the financial risk that financial inclusion poses to the financial sector.
Originality/value
The recent interest in financial inclusion and the unintended consequences of policy-driven financial inclusion in some parts of the world is raising concern about the risks that financial inclusion may introduce to the formal financial sector. Little is known about the risks that financial inclusion may pose to the financial sector.
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Erick Rading Outa, Nelson Maina Waweru and Peterson Kitakogelu Ozili
The purpose of this study is to examine the capital market effects of corporate governance (CG) practices of a “comply or explain” environment on stock market liquidity in a…
Abstract
Purpose
The purpose of this study is to examine the capital market effects of corporate governance (CG) practices of a “comply or explain” environment on stock market liquidity in a frontier market.
Design/methodology/approach
Using secondary data from Nairobi Securities Exchange, the liquidity position is analyzed using panel data random effects regression against CG guidelines.
Findings
The results show a negative and significant relationship between CG compliance and stock market liquidity, suggesting that regulated CG practices improve market liquidity in Kenya. The results are remarkably robust to different measures of liquidity and supports agency and signaling theory.
Practical implications
The authors provide evidence to show that security regulation improves stock market liquidity in a frontier market whose characteristics are thought not to favor regulation. Therefore, regulators and stakeholders could be motivated by the benefits of regulation, and this could lead to renewed effort to improve CG compliance.
Originality value
The findings show that security market regulation through CG guidelines can improve stock market liquidity in frontier markets. This offers regulators and policymakers a strong motivation to enhance security regulation to improve capital market confidence.
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This paper aims to discuss financial reporting under economic policy uncertainty.
Abstract
Purpose
This paper aims to discuss financial reporting under economic policy uncertainty.
Design/methodology/approach
The paper uses discourse analysis to examine financial reporting under economic policy uncertainty.
Findings
The paper identifies the link between economic policy uncertainty and financial reporting, in terms of earnings management and fair value accounting. It argues that high economic policy uncertainty will transmit fewer new information to firms which can motivate managers to influence accounting numbers in the direction of the desired financial reporting outcome.
Originality/value
The relationship between economic policy uncertainty and financial reporting has not been studied. This paper is one of the first papers to relate economic policy uncertainty to financial reporting behavior.
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Purpose: This chapter revisits digital financial inclusion as an international development agenda and discusses everything you need to know about digital financial inclusion…
Abstract
Purpose: This chapter revisits digital financial inclusion as an international development agenda and discusses everything you need to know about digital financial inclusion.
Methodology: This chapter uses conceptual discourse methodology to explain digital financial inclusion.
Findings: This chapter identifies the definitions of digital financial inclusion, the goal of digital financial inclusion, the components of digital financial inclusion, the types of providers of digital financial services, the instruments for digital financial inclusion, the benefits of digital financial inclusion, the risks of digital financial inclusion, and the regulatory issues associated with digital financial inclusion. It also proposes suggestions on how to make digital financial inclusion work for the good of all. This chapter concludes by offering some implications for policymaking and practice in the digital finance ecosystem.