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No.2

Corporate Board Diversity and Financial Performance of Insurance Companies in Nigeria: An Application of Panel Data Approach


Pages: 257-277
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Corporate Board Diversity and Financial Performance of Insurance Companies in Nigeria: An Application of Panel Data Approach

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Tukur Garba, Bilkisu Aliyu Abubakar
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Tukur Garba, Bilkisu Aliyu Abubakar (2014). Corporate Board Diversity and Financial Performance of Insurance Companies in Nigeria: An Application of Panel Data Approach. Asian Economic and Financial Review, 4(2): 257-277. DOI:
The major objective of this study is to investigate the relationship between board diversity and financial performance of insurance companies in Nigeria, with specific reference to how gender diversity, ethnic diversity, board size, board composition and foreign directorship affect financial performance of insurance companies listed on the Nigerian Stock Exchange. This study selects 12 listed insurance companies using non-probability sampling method in the form of availability sampling technique for a period of 6 years i.e. 2004 to 2009. Using ROA, ROE and TOBIN’s Q as measures of firm performance and applying Feasible Generalised Least Squares (FGLS) and random effects estimators, the findings of this study reveal that gender diversity and foreign directors have a positive influence on insurance companies’ performance. But the findings indicate a negative and significant relationship between board composition and performance of insurance companies in Nigeria. These findings have the implications that an increase in the number of female directors and foreign directors on the boards of insurance companies in Nigeria will enhance their performance but an increase in the ratio of outside directors on the board will reduce the performance.
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The Effect of IFRS, Information Asymmetry and Corporate Governance on the Quality of Accounting Information


Pages: 226-256
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The Effect of IFRS, Information Asymmetry and Corporate Governance on the Quality of Accounting Information

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Hui-Sung Kao, Tzu-Han Wei
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Hui-Sung Kao, Tzu-Han Wei (2014). The Effect of IFRS, Information Asymmetry and Corporate Governance on the Quality of Accounting Information. Asian Economic and Financial Review, 4(2): 226-256. DOI:
This paper investigates the relationship between the information asymmetry, the ownership structure, the pledge of directors-supervisor, respectively, and the quality of accounting information under different accounting standards. By considering A and B stock market of China, which apply China GAAP and IFRS, we discuss whether IFRS can reduce negative effects of the information asymmetry, the ownership structure, the pledge of directors, and furthermore promote the quality of accounting information effectively. The findings provide other countries will use IFRS as a reference. First, we find that IFRS improves the predictive value and timeliness, and it can’t influences representational faithfulness significantly. Second, the information asymmetry degrades the quality of accounting information. Nevertheless, IFRS can improve the information asymmetry but promote the quality of accounting information is nonsignificantly. Third, state ownership, manager ownership, blockholder and directors-supervisor ownership would affect the quality of accounting information. IFRS would restrain negative effect of state ownership, manager ownership, blockholder and directors-supervisor ownership and could enhance predictive value and timeliness. Finally, the pledge of directors-supervisor would reduce the quality of accounting information. However, IFRS can confine negative effects of the pledge of directors-supervisor but can’t promote the quality of accounting information significantly. As a result, adopting IFRS could enhance the quality of accounting information significantly. Nevertheless, IFRS need to reduce information asymmetry and use corporate governance mechanism to promote the quality of accounting information. The findings of this paper can provide IFRS’s institution and regulator promoting and using IFRS system as a reference.
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The Sustainability of External Adjustment Process in Tunisia: Lessons for Post


Pages: 211-225
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The Sustainability of External Adjustment Process in Tunisia: Lessons for Post

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Salem KANOUN
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Salem KANOUN (2014). The Sustainability of External Adjustment Process in Tunisia: Lessons for Post. Asian Economic and Financial Review, 4(2): 211-225. DOI:
This paper highlights one of the first attempts in the empirical studies. It shall examine the sustainability of external adjustment policy using a quantitative approach. Using intertemporel and consistency approaches of deficits sustainability, our specific framework for Tunisia shows a positive required external adjustment over the entire period (1976-2010). A dynamic Error Correction Model is used to check short and long run relationships between primary current account deficits and the related sustainable thresholds. The evidence resulting from econometric model robustness checks indicates that adjustment forces are in operation to restore long-run equilibrium following a short run disturbance which involves authorities’ ability and willingness to adjust. As a guide to possible policy actions after the “Arab spring” revolution, the sustainability of past adjustment policy which had generated, amongst others, foreign buffers helps the government, to some extent, support the post revolution sizeable official external financing flows and provides scope for the economy to operate at a higher level than would otherwise be the case, in order to sustain political transition. However uncertainty over the “rules-of-the-game” and the period of the political transition cannot be dismissed so easily which could put at risk the future of an already successful adjustment when the reversal in deficit trends becomes practically very difficult.
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Analysis of Fiscal Deficit Sustainability in Nigerian Economy: An Error Correction Approach


Pages: 199-210
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Analysis of Fiscal Deficit Sustainability in Nigerian Economy: An Error Correction Approach

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Oyeleke O. J, Ajilore O. T
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Oyeleke O. J, Ajilore O. T (2014). Analysis of Fiscal Deficit Sustainability in Nigerian Economy: An Error Correction Approach. Asian Economic and Financial Review, 4(2): 199-210. DOI:
The study investigates the sustainability of fiscal policy in Nigeria over the period of 1980-2010 to determine whether or not the government has violated intertemporal government budget constraint. Using error correction method of analysis, the study revealed that fiscal policy was weakly sustainable in the economy of Nigeria. This study therefore recommends that government should improve on her tax revenue generation and other source of income but limit her expenditure to growth enhancing projects.
  1. Abdulnasser, H., 2002. Is the government’s intertemporal budget constraint fulfilled in Sweden? An application of the Kalman filter. Applied Economics Letters, 9(7): 433-439.
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  7. Cuddington, J.T., 1996. Analysing the sustainability of fiscal deficit in developing countries. Economic Department, Georgetown University, Washington. D.C. 20059-1045.
  8. Dalyop, G.T., 2010. Fiscal deficits and the growth of domestic output in Nigeria. Jos Journal of Economics, 4(1): 153-173.
  9. Doh-Nani, R., 2011. Is Ghana’s budget deficit sustainable?  A cointegration analysis.  An M. Sc thesis presented to the department of economics, Kwame Nkrumah University of Science and Technology, Ghana.
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  12. Ezeabasili and Mojekwu, 2011. Analysis of fiscal deficits and interest rates in Nigeria. Journal of Economics and International Finance, 3(4): 236-245.
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  16. Lusinyan and Thornton, 2009. The sustainability of South African fiscal policy; an historical perspective. Applied Economics, 7(41): 859-868.
  17. Obi and Nurudeen, 2009. Dofiscal deficits raise interest rates in Nigeria? A vector autoregresion approach. Journal of Applied Quantitative Methods, 4(3): 306-316.
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  19. Oshikoya, W.T. and A. Tarawalie, 2010. Sustainability of fiscal policy: The West African Monetary Zone (WAMZ) experience. Journal of Monetary and Economic Integration, 9(2): 1-29.
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Impact of Islamic Belief on the Demand for Life Assurance Policies in Lagos State, Nigeria


Pages: 191-198
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Impact of Islamic Belief on the Demand for Life Assurance Policies in Lagos State, Nigeria

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Nwankwo Samson Ifejionu, Bakarey Bamidele Emmanuel
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Nwankwo Samson Ifejionu, Bakarey Bamidele Emmanuel (2014). Impact of Islamic Belief on the Demand for Life Assurance Policies in Lagos State, Nigeria. Asian Economic and Financial Review, 4(2): 191-198. DOI:
Religion has been identified as an important factor that shapes people’s perception about life. Particularly issues relating to safety and security, arising from this, the challenge lies on the insurance practitioners in Nigeria to explore the opportunities provided by the number of Muslims in the country, who have not bought insurance, because of its considered conflict with their faith .Hence this study which discusses how Islamic belief has affected the demand for life assurance and how policies whose operability will be on a mutual and co-operative basis devoid of the competition of private enterprise can be promoted. In doing this questionnaire was administered to some Islamic mission in Lagos State South West Nigeria and spearman’s rho correlation was used to test the hypothesis. It was found out that the respondents agreed that providing for the future and one’s dependant is good but the current way that conventional insurance is practiced is a factor contributing to why they do not consider buy insurance. rather they have explored other ways to meet their future and dependant’s need. The findings showed that Islamic believes does affect the demand for life insurance products; however the effect is relatively low or decreasing.
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Estimation of Urban-Rural Expenditure and Household Size Elasticities of Food Items in Pakistan: - Evidence From PSLM Survey


Pages: 183-190
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Estimation of Urban-Rural Expenditure and Household Size Elasticities of Food Items in Pakistan: - Evidence From PSLM Survey

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Abdur Rehman, Wang Jian, Zhang Runqing
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Abdur Rehman, Wang Jian, Zhang Runqing (2014). Estimation of Urban-Rural Expenditure and Household Size Elasticities of Food Items in Pakistan: - Evidence From PSLM Survey. Asian Economic and Financial Review, 4(2): 183-190. DOI:
This study evaluates the household food demand patterns among different income sorts in urban and rural areas of Pakistan and estimation of food expenditure and household size elasticities. The different income sorts are the Lower Income Group(≤ 8000), Lower-middle Income Group(8001-12000), Middle Income Group(12001-18000),Upper-middle Income Group (18001-35000) and Upper Income Group (35000+) Pakistani rupees respectively. For the analysis purpose the cross sectional data were taken from Pakistan Social and Living Standard Measurement Survey (PSLM) 2010-11 by Federal Bureau of Statistics (FBS), Government of Pakistan, Islamabad. Engel Expenditure elasticities are a powerful research tool in the household analysis. If expenditure on a certain item is proportional to income or total expenditure then the income elasticity of demand is better known as Engel elasticity is unity. The food expenditures are the sum of expenditures by each household on the following commodity groups: cereals, pulses, fruits, vegetables, dairy products, chicken, meat, fish, condiments, sugar, edible oils, drinks and miscellaneous food products. The household size and income elasticities are estimated to explain the food consumption trends in Pakistan. The results of the study indicate that all the income and household size elasticities are positive and significant at one percent level of significance. Results of the study also indicate that the urban food consumption is higher in the upper income group (IG) while households belonging to other classes of rural areas are more food responsive. Urban households depict higher size elasticities in overall, lower IG, lower middle IG and middle IG whereas households belonging to upper-middle IG and upper IG of rural area are also more food responsive.
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  10. Malik, S.J. and N. Sarwar, 1993. Some tests for difference in consumption patterns: The impact of remittances using household income and expenditure survey data of Pakistan 1987-88. The Pakistan Development Review, 32(4): 699-711.
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Suggest Solutions for Diffusion and Implementation of Activity-Based Costing In Vietnam


Pages: 173-182
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Suggest Solutions for Diffusion and Implementation of Activity-Based Costing In Vietnam

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Tandung Huynh, Guangming Gong, Huyhanh Huynh
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Tandung Huynh, Guangming Gong, Huyhanh Huynh (2014). Suggest Solutions for Diffusion and Implementation of Activity-Based Costing In Vietnam. Asian Economic and Financial Review, 4(2): 173-182. DOI:
Activity-Based Costing (ABC) was developed by Robert S. Kaplan in the mid-1980s and up to now the academics, researchers as well as accounting practitioners have perceived it as the normative appropriate cost system. It has been considered as a method to overcome the shortcomings of the traditional costing. However, the application the new method as ABC is a challenge for Vietnamese companies because most of them have used traditional costing for calculating product cost. Changing from traditional costing system to ABC system will face many difficulties. In the fierce competitive business environment, along with the growth of Vietnamese companies – it means that the production of product diversity, machinery and equipment invested more and more modernly and automatically, leads indirect costs increasing and major proportion in total costs. These characteristics are suitable for the application of ABC method to calculate product cost and provide information for management. In addition, increasing of pressure from consumers and competitors force Vietnamese businesses to find a more modern approach to help them achieve advantage competition and increase profitability. Thus, application of ABC method is need for Vietnamese companies. This paper attempts to find obstacles to ABC application and suggests solutions for ABC diffusion and implementation in Vietnam.
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  9. Askarany, D., & Yazdifar, H., 2012. An investigation into the mixed reported adoption rates for ABC: Evidence from Australia, New Zealand and the UK. International Journal of Production Economics, 135(1): 430–439.
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  11. Huynh T.D., Gong G.M., Tran P., 2013. Comparison of Activity-Based Costing and Traditional Costing - the necessity applies ABC method in Vietnam. Journal of Ho Chi Minh City University of Industry, 1(10): 58-70.
  12. Khozein, A. and Dankoob, M., 2011 Activity Based Costing system and its succeed implementing in Organizations. Australian Journal of Basic and Applied Sciences, 5(10): 613-619.
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Government Expenditure on Education and Poverty Reduction: Implications for Achieving the MDGS in Nigeria a Computable General Equilibrium Micro-Simulation Analysis


Pages: 150-172
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Government Expenditure on Education and Poverty Reduction: Implications for Achieving the MDGS in Nigeria a Computable General Equilibrium Micro-Simulation Analysis

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Ernest Simeon O. Odior
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Ernest Simeon O. Odior (2014). Government Expenditure on Education and Poverty Reduction: Implications for Achieving the MDGS in Nigeria a Computable General Equilibrium Micro-Simulation Analysis. Asian Economic and Financial Review, 4(2): 150-172. DOI:
This study examines the likely impact of government expenditure policy on education and poverty reduction in Nigeria. The specific objective of the study is to explore or simulate how government expenditure on education would help to meet the Millennium Development Goals (MDG) of the United Nations in terms of improving education service and reduce poverty in Nigeria. An integrated sequential dynamic computable general equilibrium (CGE) model was used to simulate the potential impact of increase in government expenditure on education in Nigeria. The model is simulated with a 2004 social accounting matrix (SAM) data of the Nigerian economy. The result of experiment indicate that it will be extremely difficult for Nigeria to achieve the MDG target, in terms of education and poverty reduction by the year 2015, because this policy measure in the analysis was unable to meet this goal. The MDG target for Nigeria in terms of poverty reduction is to reduce the percentage of population living in relative poverty from 54.4% in 2004 to 21.4% by 2015. It was found that the re-allocation of government expenditure to education sector is important in determine economic growth and the reduction of poverty in Nigeria. It was recommends that in order to achieve the MDG in both education and poverty reduction poverty, investment in education service should receive the highest priority in the public investment portfolio. The study concludes that if government policy is going to substantially reduce poverty, then future economic growth has to be pro-poor. Investing in education is one of the pro-poor policies for improving human capital and reducing poverty.
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The Measurement of the Relationship between Taiwan’s Bond Funds’ Net Flow and the Investment Risk -Threshold Autoregressive Model


Pages: 137-149
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The Measurement of the Relationship between Taiwan’s Bond Funds’ Net Flow and the Investment Risk -Threshold Autoregressive Model

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Wo-Chiang Lee, Joe-Ming Lee
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Wo-Chiang Lee, Joe-Ming Lee (2014). The Measurement of the Relationship between Taiwan’s Bond Funds’ Net Flow and the Investment Risk -Threshold Autoregressive Model. Asian Economic and Financial Review, 4(2): 137-149. DOI:
This article applies the threshold autoregressive model to investigate the relationship between bond funds’ net flow and investment risk in Taiwan. Our empirical findings show that bond funds’ investors are concerned about the investment return and neglect the investment risk. In particular, when expanding the size of the bond funds, fund investors believe that the fund cannot lose any money on investment products. In order to satisfy investors, bond fund managers only target short-term returns so as to attract investors, while ignoring the risk. Thus, this paper reminds investors to pay attention to risk, and fund managers should look to fulfill their obligations in addition to the pursuit of profit. Finally, bond funds should have risk management professionals help run the funds.

Contribution/ Originality

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Informal Capital Market and Environmental Factors in Nigeria


Pages: 126-136
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Informal Capital Market and Environmental Factors in Nigeria

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ADEUSI Stephen Oluwafemi, OGUNMAKIN Adeduro Adesola
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ADEUSI Stephen Oluwafemi, OGUNMAKIN Adeduro Adesola (2014). Informal Capital Market and Environmental Factors in Nigeria. Asian Economic and Financial Review, 4(2): 126-136. DOI:
Our environments are closely instutionalized with collections of human and material resources for the purpose of economic production and profitability. It was based on this premise that, this study sought to examine the effect of environmental factors on informal capital market in Nigeria. In doing this, Chi-square method was employed. The result revealed the existence of a significant relationship between the environmental factors and the informal capital market performances. The study therefore recommended that the operators of the informal capital market should be accorded the safety of their deposit and a high profitability should be given a priority in other to enhance the performances of the market.
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