Asian Economic and Financial Review

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No.6

Impact of Currency Redenomination on Inflation Case Study Turkey


Pages: 908-914
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Impact of Currency Redenomination on Inflation Case Study Turkey

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DOI: 10.18488/journal.aefr/2015.5.6/102.6.908.914


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Libor Zidek --- Michal Chribik 
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Libor Zidek --- Michal Chribik  (2015). Impact of Currency Redenomination on Inflation Case Study Turkey. Asian Economic and Financial Review, 5(6): 908-914. DOI: 10.18488/journal.aefr/2015.5.6/102.6.908.914
Countries that suffer from high inflation must consequently deal with an unpractical, high price level. This problem lasts even if the country is already on the disinflation path. The solution can be found in redenomination when the face value of all prices is reduced. This raises an interesting question whether redenomination as such could help the disinflation process. Cutting zeros could help convince market subjects that the central bank means its disinflation efforts seriously. In the specific, the goal of this paper is to find out if Turkish redenomination in 2005 contributed to the disinflation process. We used the Chow test and Vector?Autoregressive model to detect if redenomination created a fracture in inflation development. We indeed discovered a fracture, but it is difficult to determine the exact occurrence of the break. We can conclude that the process of redenomination as such probably had a direct impact on inflation in the country.

Contribution/ Originality
This study is one of very few studies which have investigated the impact of denomination on price level. The goal of this paper is to find out if Turkish redenomination contributed to the disinflation. We can conclude that the process probably had a direct impact on inflation in the country.
  1. Eurostat, n.d. Available from www.epp.eurostat.ec.europa.eu [Accessed 15. 2. 2013].
  2. Ioana, D., 2005. The national currency re-denomination experience in several countries: A comparative analysis. SSRN Electronic Journal: 99-120. DOI: 110.1007/1978-1094-1009-3591-1004_1007. Available from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1347407.
  3. Koop, G.M., 2008. An introduction to econometrics. Chicester: John Wiley and Sons.
  4. Mosley, L., 2005. Dropping zeros and gaining credibility? Currency redenomination in developing nations. Conference Papers -- American Political Science Association. pp: 1-29.
  5. OECD, 2002. Economic surveys: Turkey 2001-2002: Paris: OECD.
  6. OECD iLibrary, n.d. Available from www.oecd-ilibrary.org/statistics [Accessed 25. 3. 2013].

Investigating Frauds in Goverment Accounting


Pages: 892-907
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Investigating Frauds in Goverment Accounting

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DOI: 10.18488/journal.aefr/2015.5.6/102.6.892.907


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Kayahan Tum 
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Kayahan Tum  (2015). Investigating Frauds in Goverment Accounting. Asian Economic and Financial Review, 5(6): 892-907. DOI: 10.18488/journal.aefr/2015.5.6/102.6.892.907
The main purpose of creative accounting practices is to show financial indicators and tables of businesses different from and generally better than the originals. Although such deceptive practices are mostly performed by firms, it is observed that fiscal policy executives have turned toward creative accounting practices especially in recent years. Creative accounting practices of governments regarding government accounting practices embody with the stock-flow adjustments. The main stress of this study is that the fiscal policy executives conducts creative accounting practices especially when the fiscal rules are strict and binding, and the main precaution to be taken for the misuse of these practices is transparency of government accounting systems.

Contribution/ Originality
This study contributes in the existing literature by stressing the reality that governments
conduct creative accounting practices as firms during the strict fiscal rules.
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Government Sectorial Spending and Its Effect on Nigerian Economic Growth


Pages: 883-891
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Government Sectorial Spending and Its Effect on Nigerian Economic Growth

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DOI: 10.18488/journal.aefr/2015.5.6/102.6.883.891


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Owolabi A. --- Ibukun-Falayi, Owoola. R. 
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Owolabi A. --- Ibukun-Falayi, Owoola. R.  (2015). Government Sectorial Spending and Its Effect on Nigerian Economic Growth. Asian Economic and Financial Review, 5(6): 883-891. DOI: 10.18488/journal.aefr/2015.5.6/102.6.883.891
Few decades ago many developing economies like Nigeria started to privatize their state owned enterprises. But owning to the fact that these public enterprises are means of income redistribution, those benefiting from this redistribution would use whatever political power they have to oppose this policy. The study investigates the impact of government sartorial spending on economic growth in Nigeria. The study made use of regression analysis (OLS) and cross sectional data for Nigeria between 1970 ? 2012. The study reveals that there is a positive relationship between public enterprise and economic growth. The study, therefore, recommends that government should increase her spending on public enterprises that are highly productive.

Contribution/ Originality
The study contributes in the existing literature in the sense that it throws more light on how Nigeria government allocate fraction of the nation budget to available sectors.
*    The study used regression estimation technique to estimate collected data. The method used in the study incorporated variables that capture sectorial spending in Nigeria by Nigeria government for the period under study.
*    The study originated new formula which is specified thus:
    GDP = F(?L + 1K + 2KAG + 3KEDU  4KTC + 5KH + 6 KIS + 7KD + …………….SA   
*    The study is one of the few studies which have investigated government sectorial spending and shows its effect on Nigeria economic growth.
*     It contributes logical analysis in the relationship of these spending on the growth of Nigeria economy.

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Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence from Sri Lanka


Pages: 868-882
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Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence from Sri Lanka

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Ekanayake E.M.N.N --- Azeez A.A. 
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Ekanayake E.M.N.N --- Azeez A.A.  (2015). Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence from Sri Lanka. Asian Economic and Financial Review, 5(6): 868-882. DOI: 10.18488/journal.aefr/2015.5.6/102.6.868.882
This study investigates the determinant factors of ex-post credit risk considering non-performing loans (NPLs) as proxy variable in Sri Lanka?s commercial banking sector and is carried out with a sample of nine licensed commercial banks for the period from 1999 to 2012. The study finds that the level of NPLs can be attributed to both macroeconomic conditions and banks? specific factors. It reveals that, NPLs tends to increase with deteriorating bank?s efficiency. There is also a positive correlation between loan to asset ratio and NPLs. Meanwhile, banks with high level of credit growth associated with a reduced level of non- performing loans. Larger banks incur lesser loan defaults compared to smaller banks. With regard to macro-economic variables, NPLs vary negatively with the growth rate of GDP and Inflation and positively with the prime lending rate.

Contribution/ Originality
This study is one of very few studies which have investigated the causes of non-performing loans in the commercial banking industry of Sri Lanka.
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  14. Fofack, H., 2005. Non-performing loans in Sub-Saharan Africa: Causal analysis and macroeconomic implications. World Bank Policy Research Working Paper No. 3769.
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Modeling Nigerian Government Expenditure, Revenue and Economic Growth: Co-Integration, Error Correction Mechanism and Combined Estimators Analysis Approach


Pages: 858-867
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Modeling Nigerian Government Expenditure, Revenue and Economic Growth: Co-Integration, Error Correction Mechanism and Combined Estimators Analysis Approach

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Kayode Ayinde --- John Kuranga --- Adewale F. Lukman 
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Kayode Ayinde --- John Kuranga --- Adewale F. Lukman  (2015). Modeling Nigerian Government Expenditure, Revenue and Economic Growth: Co-Integration, Error Correction Mechanism and Combined Estimators Analysis Approach. Asian Economic and Financial Review, 5(6): 858-867. DOI: 10.18488/journal.aefr/2015.5.6/102.6.858.867
Nigeria’s Economic growth has been one of the topical issues attracting several attentions in the recent time. This paper therefore seeks to model and investigate the impact of capital expenditure, recurrent expenditure and various sources of Government revenue on Nigeria’s economic growth using secondary data gathered from Central Bank of Nigeria’s publication from 1981 to 2011. The statistical and econometric tools used for the study include the unit root test, cointegration, error correction mechanism and combined estimators’ analysis. Results reveal that the variables are not stationary in their original form but do in their first difference. The long-run relationship of economic growth (Gross Domestic Product (GDP)) on capital expenditure, recurrent expenditure, oil revenue, non-oil revenue, federation account and federal retained revenue reveal the existence of co-integration and multicollinearity problem among the variables. The use of Principal Component Estimator to correct for multicollinearity reveals positive effect of capital expenditure, recurrent expenditure, oil revenue and federal retained revenue on economic growth. The short-run modeling exhibits both problem of both multicollinearity and autocorrelation which were corrected using the combined estimators. Resulting from the analysis is positive impact of capital expenditure, oil revenue, federation account and federal retained revenue on economic growth. Consequently, the study recommends a re-evaluation and re-assessment of direction of recurrent expenditure and non-oil revenue towards Nigerian development to achieve positive influence on economic growth.

Contribution/ Originality
This study uses new estimation methodology called Combined Estimators. These Estimators are obtained by combining Cochrane Estimator and Maximum Likelihood Estimator with principal components method respectively to jointly handle the problem of multicollinearity and Autocorrelation.
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