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No. 363

April 2011

Vol. XIC

ISSN 0019-5170

Contents


Determinant of Allocation of Credit Reserve to Loans among Crop Farmers in Cross River State, Nigeria

E. O. Eyo and I. A. Asuquo


This paper assesses credit reserve of crop farmers in Cross River State and the determinants of its use in obtaining loans. The , study reveals that the crop farmers use only about 9.0% of their reserve on the average, in obtaining loans. However, farm size and education arc the most important determinants of the extent that the crop farmers allocate more credit to loans. Consequently, what should be bone to elicit, crop farmers participation in Credit Programmes is to introduce farm size and education enhancing programmes. These would be invaluable in ensuring that farmers allocate more credit to loan than to reserve.


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Commodity Futures Market in India : A Econometric Analysis

Phanindra Goyari and Pratap Kumar Jena


The paper examines the commodity futures market in India during 2005 to 2008 using the daily futures and spot prices. Commodity futures exchanges in India have grown tremendously in terms of the trading volume, number of contracts and turnover after the government of India notification on futures trading in 2003. Three commodities, viz.. gold, crude oil and guar seed, have been among the top 10 most actively traded commodities in futures markets in India during the last few years in terms of the turnover values. The specific objectives of the study are :

(i) to examine the efficiency of futures markets of three commodities (viz.. gold, crude oil and guar seed).

(ii) to forecast both in-sample and out-sample futures prices of selected commodities with a view to select the accurate forecasting model and to do ex-ante forecasts and

(iii) to examine the volatility of futures prices in each forecast period. The study uses time series techniques of granger causality test, Engle-granger cointegration, Johansen cointegration test, ARIMA, RW and VAR models. The analysis is based on available online daily secondary data.


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Sterilization and Domestic Credit Policy of Bangladesh

M. Kabir Hassan, Ashraf Nakibullah, and Kamrul Hassan


Capital inflows in Bangladesh did not pick up before 1997 - few years after Taka has become convertible at end of the first quarter of 1994. Before 1997. foreign direct investment (FDI) in Bangladesh was close to zero and it jumped to $140 million in 1997. In few years, it almost doubled to $268 million in 2003. Since 1997, FDI has covered most (and sometimes fully) of the current account delicit. Surging capital in Hows may overheat the economy or may become a double-edged sword by inflicting destabilizing side effects. Sterilization is usually the first line of defense against the surge in inflows so that the economy does not get to the point of overheating.

The paper attempts to determine whether authorities use domestic credit policy to attain domestic policy objectives while engaging in sterilized foreign exchange intervention. The econometric evidence suggests that monetary authorities of Bangladesh fully sterilized the changes in international reserves to affect monetary growth of the country. Results also indicate that the authorities pursued a countercyclical credit policy.


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Self-Help Group in West Bengal : An Instrument for Alleviating Rural Poverty A Critical Study

Niranjan Mandal


The formation of Self-Help Groups (SHOs) in Rural West Bengal has empowered the rural poor particularly the women. Enhancement of income and thus improved standard of living are the results of such effort. Actually, SHGs act as a catalyst for minimizing the gap of social exclusion of the vulnerable sections of the society as far as the experience of Rural West Bengal is concerned. SHGs have both positive as well as negative impact and at the same time there are some problems associated with the smooth functioning of SHGs. A study on the effectiveness of SHGs in empowering rural women folk at 8 No. Saraboth Gram Panchayat in Garbela Block II of Pachim Midnapore district in the State of West Bengal shows that income and employment opportunities have increased to a certain extent. Growth in the quality of leadership among the women is one of the most important impacts of SHGs. Sometimes financial inadequacy and limited scope for marketing of products of SHGs hinders its smooth functioning in a competitive bussiness environment. Non Government Organizations (NGOs) may come forward to assist these groups in overcoming the difficulties in the way of their smooth functioning.


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Public Education Expenditure and Tertiary School Enrolments in a Globalised Economy : Evidence from Nigeria

Aremo, Adeleke Gabriel and Jegede, Ayodele Charles


The paper investigates the effects of public education expenditure on school enrolment at tertiary level of Nigerian educational system. The methods of analysis include: Augmented Dickey fuller Test, Johansen cointegration test. Granger Causality test and Error Correction Method. The study shows that there is bi¬directional causality between Capital Expenditure on education and school enrolment; however, there is uni-directional causality in the case of recurrent expenditure and enrolment rate, running from school enrolment to recurrent expenditure on education, the result of error correction models suggest that the impacts of recurrent expenditures on tertiary school enrolment remain highly insignificant. The Capital Expenditure on education has wrong negative sign with low coefficient value and rather insignificant. The low value of the error correction term suggests that the Nigerian economy is structurally irresponsive to any shocks or disequilibria which took place in the previous years.

The paper concludes that there is the need to inject more funds into the tertiary level of education which should largely focus on improving the quality of the education system, both in terms of human resource development and infrastructure.


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An Empirical Study of the Relationship between Corporate Information Disclosure and Financial Distress

Sheng-Jung Li Ender Su and Hsien-Chao Cheng


The purpose of this study is to analyze the relationship between corporate information disclosure and financial distress. From the Securities and Futures Institute network, we collected the financial data of the stock listing companies in the Taiwan Security Exchange (TSE) and Gre Tai Securities Market (GTSM). We used logistic regression model to find out financial indices that have significant difference in different financial stages and corporate information disclosure conditions. The test results tell us that the level of information disclosure is significantly related to financial distress.


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Trade Growth Nexus and the Doha Round of Development

Meena Patel


The World economic prosperity of the post war era is largely credited to trade openness which was pushed at several levels. A number of macro level empirical studies reviewed have concluded that the degree of openness explains the differences in economic growth of many developing countries, although the direction of causation has been questioned. Methodological difficulties like separating the effects of trade liberalization from other economic policies implemented at the same time has been stressed.

All the same developing countries are persuaded to liberalise trade in order to improve standard of living. However, developed countries continue to adhere to protectionist policies in agriculture. As a result, developing countries are unfairly disadvantaged in the world market. Therefore, it is vital to reach an agreement on the Doha round taking into account the interests of developing countries at large.


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Globalization and wage inequality : A causality analysis

Aviral Kumar Tiwari


Globalization has found to be having it's pros and cons in the economies. In the present study the objective of the paper is to see not only it's negative impact on wage inequality but also to analyze the causality among the various ingredients or components of globalization, wage inequality and capital output ratio. For unit root analysis (A)DF test, PP test and most powerful test NP test has been carried out and all variable except output are found to be non-stationary. For analyzing the impact of globalization different specification of multiple semi-log linear regression model has been used and normality check for residuals of all specifications has been carried out in order to check the goodness fit specification of the model. Further, following Engle-Granger two step procedure cointegration analysis has been carried out and for cointegrated specifications of the model Granger causality analysis has been carried out. it is found that all ingredients or components of globalization are having negative impact on the share of unskilled workers.

Results of causality analysis shows that causality runs from all ingredients of globalization (except trade with developed countries) to wage inequality and causality also found to be runs from wage inequality to capital output ratio.


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Education Subsidy, Adult Unemployment And The Incidence Of Child Labour - A Three Sector General Equilibrium Analysis

Runa Ray and Biswajit Chatterjee


This paper considers a competitive general equilibrium model of a small open less developed economy suffering from unemployment problem in the adult labour market, on the one hand, and from the existence of a child Labour market, on the other hand. There are three sectors in the model. The rural sector of the economy produces exportable commodity using adult and child labour. One of the urban sub-sector produces non-traded intermediary using adult labour and capital. The other urban sub-sector is the tariff protected import competing sector of the economy that produces its product using adult Labour and a non-traded intermediary input. There is presence of urban adult employment but the other inputs are fully employed. The paper examines the effectiveness of alternative non-trade policies on the incidence of child labour as well as on urban adult unemployment. The main results of the paper are:

(1) Govt, encouragement to school education is effective in eradicating child labour incidence but does not base any impact on urban adult unemployment.

(2) Education cess on urban workers is effective in encouraging school enrolment. It is also effective in curtailing both child labour incidence and urban adult unemployment.

(3) Unemployment allowance to urban adult workers will not be effective in controlling either child labour incidence or urban adult unemployment problem. Moreover, it doesnot have any impact on number of school going children.

(4) Increase in adult literacy rate will create favourable impact on school enrolment of children as well as on child labour supply. This policy will not make any change in urban adult unemployment problem.


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Changing Indebtedness and Saving Pattern of Dongria Kandha: A Primitive tribe of Rayagada district of Orissa

Minaketan Behera


Credit is an important input for forward development of any community. Access to formal credit market proved effective for the weaker section of the society. The present paper elucidates the changing pattern of indebtedness and saving of Dongria Kandha in Bissam Cuttack block of Rayagada district. Orissa. Dongria Kandha is one of the most primitive tribal groups of Orissa. Out of total Dongria Kandha villages of Bisam Cuttack block, 17 villages were randomly selected for the purpose for the study and 311 households were randomly selected and interviewed. The information was gathered thorough interview using pretested structured schedule. The finding reveled that the percentage of indebtedness households among Dongria Kandha has decreased from 54.01 per cent in 2004 to 36.33 per cent in 2009, but loan volume has increased. The per capita loan is Rs 402 and the average loan volume per indebted household is Rs 2485 in 2009. Indebtedness is initiated by unproductive expenditure like marriage, birth and dearth rites, religious ceremonies etc. Thus, there is an urgent need to provide institutional loans on easy terms and need to lunch some income generating programmes to improve their socio economic status and to motive Dongria Kandha to minimize conspicuous consumption.


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Consumption and Income Revisit of Permanent Income Hypothesis With an Application to the Indian Economy

Amit Kundu


This paper tests the prediction of the Permanent Income Hypothesis (PIH) that an income innovation generates the same size revision in consumption as in permanent income. It means that there is a proportional relationship but not causal relationship between permanent income and permanent consumption. Time series data over the period 1971-2005 have been used for the SAARC country India.


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