Journal of Economics and Behavioral Studies

Intersecting Dynamics: The Influence of Macroeconomic Factors and Financial Development on Interest Rate Spreads in Uganda

Benjamin Musiita — 2024-07-03

The study investigates the factors influencing interest rate spreads in Uganda's banking sector, focusing on inflation, GDP, Real Effective Exchange Rate (REER), private sector credit, and financial development. Using an Autoregressive Distributed Lag (ARDL) model on data from 2001 to 2022, it examines short and long-term dynamics between these variables and interest rate spreads, within the liquidity preference theory framework. In the short run, inflation and GDP have marginally significant positive impacts on interest rate spreads, indicating that initial increases may widen spreads due to heightened liquidity demand and economic activity. Conversely, in the long run, these factors exhibit significant negative effects, suggesting a stabilizing influence of monetary policy and increased market efficiency. The REER's short-term impact reflects currency value fluctuations affecting risk premium adjustments, which diminish in the long run as markets adapt. The study also explores the interaction between inflation and financial development, represented by private sector credit, on interest rate spreads. Short-term results show a non-significant negative moderation by financial development, while long-term analysis suggests a potential amplification of inflation's effects as the financial sector matures, requiring nuanced financial development policies. Policy recommendations stress the importance of stabilizing inflation and exchange rates to control interest rate spreads in the short term. Long-term strategies include enhancing banking sector efficiency and promoting competitive practices to mitigate the negative effects of economic growth on interest rate spreads.

Understanding the Dynamics Between Monetary Policy and Interest Rate Spreads in Uganda: A Quantitative Study

Frederick Nsambu Kijjambu — 2024-07-03

This study delves into the intricate relationship between monetary policy variables and interest rate spreads in Uganda's financial sector. It examines the impact of the rediscount rate, inflation, money supply, and the Real Effective Exchange Rate on interest rate spreads. Findings indicate that while short-term changes in the rediscount rate have a limited effect on interest rate spreads, higher rates widen spreads in the long term as banks adjust strategically. Initially, inflation narrows spreads, but persistent high inflation widens them over time as banks hedge against inflation risk. Moreover, an increase in money supply reduces spreads in the short run but has diminishing effects over time. Recommendations include transparent adjustments of the rediscount rate, robust inflation targeting frameworks, and vigilant monitoring of the money supply to support economic growth and financial stability. Overall, this study provides insights for policymakers and financial institutions, emphasizing the importance of considering both short-term and long-term effects in monetary policy adjustments for Uganda's economic stability.

From Realizable Dreams to Sustainable Reality: An Empirical Study on the Relationship between Internship Experience and Future Career Prospects among Business Students

John Baguma Muhunga Kule — 2024-07-03

The objective of this study is to establish the relationship between Internship Experience and Future Career Prospects among Business Students at Mbarara University of Science and Technology. Using a quantitative approach and a cross-sectional survey design, data was gathered from 100 alumni. Using an open-ended questionnaire, Mbarara University of Science and Technology business students' internship experiences and future career prospects were surveyed quantitatively. In addition, a conventional linear regression analysis was performed. The study's findings demonstrated that among the Mbarara University of Science and Technology's business students, internship experience had a strong positive and significant influence on their future career prospects. The study relates to the ongoing discussion about how business students' internship experience influences their chances for future employment.

Financial Innovations and Profitability of Commercial Banks in Uganda

Gershom Atukunda — 2024-07-03

The purpose of this study was to examine the relationships between financial innovation and profitability of commercial Banks in Uganda. The study was prompted by the low profitability evidenced by some banks being closed down because of low profitability. The study adopted a cross-section and descriptive research design using Roscoe 1975 to get a sample size of 24 commercial banks. Self-administered questionnaires were used to collect the responses. Based on the goals of the study, the data was examined for validity and reliability, examined using SPSS, and the results were reported. The results showed that the profitability of commercial banks in Uganda had a positive and significant association with both process and product innovation, suggesting that improving one will benefit the other. However, product innovation was found to be a stronger predictor of profitability in commercial Banks in Uganda. With these findings, the study contributes to providing empirical evidence that financial innovation in commercial banks is highly influenced by commercial banks introducing and improving their products/services since it results in profitability. There is also a need to put much emphasis on Financial Innovations by continuously introducing and improving on the existing products/services. The Commercial Banks in Uganda should promote and appreciate Financial Innovations as they are vital not only in enhancing cost minimization, thus improving profitability

Quantifying Fiscal Multipliers in South Africa: A Structural Var Approach

Lwazi Senzo Ntshangase — 2024-07-03

Fiscal multipliers have deteriorated in South Africa since the global financial crisis in 2008 and 2009. Weakening fiscal multipliers to a record low of zero has constrained the government’s ability to use fiscal policy measures to stimulate the economy, particularly in the aftermath of the COVID-19 pandemic and recent geopolitical risks affecting the global economy. The current paper quantifies fiscal multipliers in South Africa. The study employed the structural vector autoregressive to quantify government spending and government tax revenue fiscal multipliers in South Africa over the period 2000M01–2023M10. The control variables for the study are government total spending, total government tax revenue, and the production index as a proxy variable for economic activity. This is the first study to employ high-frequency monthly data, which increases the number of observations, thus yielding significant and robust results. The accumulated government expenditure and government tax revenue multipliers are 0.4 and 0.1, respectively. The empirical results are consistent with the Keynesian view that government spending, particularly investment spending, fosters economic growth. Structural reforms in logistics, the energy sector, and education to boost economic growth and improve fiscal multipliers that are currently less than one in South Africa must be adopted as a policy response.

Budgetary Control, Managerial Competencies and Performance of Higher Local Governments in Eastern Uganda

Gershom Atukunda — 2024-07-03

The study aimed to explore the correlation between budgetary control, managerial competencies, and the performance of higher local governments in Uganda's Eastern region. Through a cross-sectional research design, 30 higher local governments out of a population of 32 were analyzed against predictor variables. Validity and reliability tests were conducted on research instruments to ensure data quality. Findings revealed a positive and significant relationship between budgetary control and performance, as well as between managerial competencies and performance. Moreover, there was a statistically significant relationship between both budgetary control and managerial competencies on performance. Regression analysis showed that 55.9% of performance variation was explained by these factors, leaving 44.1% to other factors not considered. Recommendations include strengthening financial management processes and investing in training programs to enhance managerial skills, ultimately improving local government performance.

Corporate Governance Practices, Operating Environment and Financial Sustainability of Saccos in Greater Mbarara District

Gershom Atukunda — 2024-07-03

This study investigated the link between corporate governance practices, the operating environment, and the financial sustainability of Savings and Credit Cooperatives (SACCOs) in the Greater Mbarara region. It aimed to understand how each factor, and their combined effect, influence SACCO's financial health. The study employed a cross-sectional design and analyzed data from 164 SACCOs (sample size determined using Krejicie and Morgan table (1970). Statistical analysis revealed that both corporate governance practices and the operating environment have a positive and significant relationship with SACCO's financial sustainability. Additionally, their combined effect was also found to be positive and significant. The results suggest that 42.6% of the variation in financial sustainability can be explained by these two factors, leaving 57.4% to be influenced by other, unexplored aspects. To further improve SACCO's financial health in the region, the study recommends fostering communication with decision-makers, collaborating with governance and environmental experts, and implementing continuous monitoring of governance initiatives and environmental adaptations.

Entrepreneurial Networking and Performance of Ugandan Manufacturing SMEs: The Mediating Role of Innovation Capabilities

Rennie Bakashaba — 2024-07-03

This study investigates the potential impact of innovation capacities on the relationship between entrepreneurial networking and the performance of small and medium-sized manufacturing enterprises (SMEs) in Mbarara City. The target population of the study was 248 SMEs, according to MoFPED (2022). 205 SMEs were obtained when the sample size was calculated using Krejcie and Morgan's (1970) tables. With 186 respondents and SMEs, the response rate was 91%. Data was collected using a cross-sectional research design. To determine the mediating link, the four stages of Baron and Kenney (1986) was completed and every direct influence of the research variables had to meet a substantial requirement. The prerequisites were met and there was a significant direct association (Beta=0.673; p<.01) between entrepreneurial networking and SMEs' performance. Furthermore, there was a direct substantial association (Beta=0.437; p<.01) between innovation capabilities and the performance of SMEs, and a significant correlation (Beta=0.166; p<.01) was found between entrepreneurial networking and innovation capabilities. The association between entrepreneurial networking and the performance of SMEs decreased from Beta=0.673 to Beta=0.617 when innovation capabilities were taken into account, although the relationship remained statistically significant. This suggests that the relationship between entrepreneurial networking and the performance of SMEs is mediated by innovative capabilities. The model's indirect outcome is given by the percentage of 8.32%, indicating that 91.68% explains the direct effect. The study advises policymakers to encourage SMEs to innovate and promote entrepreneurial networking by organizing workshops/seminars where entrepreneurs can interact with each other and thus boost their innovativeness which will enhance SME performance.

e-Shopping Behavior: An Empirical Study of Malaysian Consumers

Syaza Nabilah Kamal Baharin — 2024-07-03

Malaysia's e-commerce industry has grown tremendously, and many activities have been made online. One of the most common activities is online shopping or e-shopping. Online shopping behavior is the actions and decisions of customers when making purchases and completing transactions through Internet-based platforms. Consumer preference for online shopping is because it offers ease of buying or convenience, time-saving, price sensitive, anywhere-anytime, cost-effective, and other categories availability. Thus, this study investigated a few factors that affect Malaysian consumers' online purchase behavior: information availability, social influence, and trust. The researcher used an online survey and a self-administered questionnaire to gather data on the phenomenon. Data were collected from 297 Malaysian respondents using convenience sampling and analyzed using IBM Statistical Package for the Social Sciences (SPSS) 26.0 version software. The results revealed that all independent variables (information availability, social influence, trust) had a significant positive relationship with the dependent variable (online shopping behavior). This study also proved that information availability was the most influential factor compared to other variables. It is hoped that this study will benefit Malaysian marketers as it focuses on the Malaysian context. This finding will also help e-retailers enhance their online sales by creating a strategy that could attract more customers as a concern for building profitable relationships.