African Journals Online
African Finance Journal

Volume 2, Part 2, 2000
ABSTRACTS

LONG-RUN REAL EXCHANGE RATE MOVEMENTS IN AFRICA:
PARALLEL MARKET AND OFFICIAL RATES

Jun Nagayasu
International Monetary Fund
USA

This paper poses the question whether parallel market and official real exchange rates in Africa behave in a manner consistent with the long-run purchasing power parity hypothesis. A recent econometric method, the panel unit root test, enables us to examine the long-run behaviours of real exchange rates by pooling the time-series data. Using data for 16 countries, our study concludes that the parallel market rates in Africa move consistently with the long-run PPP hypothesis, but the official rates follow a non-stationary process. This seems to suggest the existence of substantial parallel market premiums in Africa.


MODELLING THE DETERMINANTS OF PRIVATE INVESTMENT IN GHANA

Salifu Baba Ibrahim
University of Stockholm
Sweden

The main objective of this paper is to analyse the determinants of long-run aggregate private sector investment behaviour in Ghana. We model the long- and short-run investment behaviour of the firm in the private sector in Ghana and solve these models by a dynamic optimisation approach to establish the optimal long- and short-run determinants of private investment functions. Time series data is then used to test empirically the long-run investment function using co-integration analysis. Our empirical results show that there is some significant relationship between private investment and the factors such as mark-up, the general price level, aggregate demand and the cost of investment in the long run. 

This paper highlights the fact that stabilisation policies, aimed at controlling aggregate demand, such as higher domestic interest rates, and exchange rate devaluation, would hurt private investment in Ghana if they increase the cost of investment for private sector firms. Secondly, financing large fiscal deficits through domestic borrowing, in general, reduces the amount of resources available to the private sector and also raises the cost of borrowing for local firms and thereby hurts private investment. 

FINANCE LETTER

INTERNET FINANCIAL REPORTING, OPPORTUNITIES AND CHALLENGES

Fawzi Laswad, Peter Oyelere and Richard Fisher
Lincoln University
New Zealand

Annual reports printed on paper have been the traditional instrument for the distribution of corporate financial information. The development of the Internet provides another medium for corporate communication with shareholders and other stakeholders. Internet financial reporting (IFR) is a recent but fast-growing phenomenon. Many companies worldwide are taking the opportunity provided by the worldwide web (WWW) to disseminate their corporate financial information. This practice is expected to grow in the near future, with possible wide-ranging implications for financial information providers, consumers, auditors and regulators, among others.

The use of the Internet for the dissemination of financial information provides companies with opportunities for the improvement of their information reporting practices. However, this new medium creates challenges for the profession and regulators. In this article, we examine these opportunities and challenges and provide recommendations for increasing the effectiveness of the use of the Internet for the reporting of corporate financial information.