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Purpose The purpose of this paper is to assist bank regulators in Africa who are currently considering the implementation of Basel III countercyclical capital buffer (CCB) requirement.Design/methodology/approach Using a panel data set of 129 commercial banks operating in 14 African countries over the period 2004–2014, this paper estimates the system generalized method of moments regression to examine the impact of business cycle on banks’ regulatory capital buffers and attempts to identify the influence of bank revenue diversification, market power and cost of funding (CF) on bank regulatory capital buffers. It further carries out some robustness analyses using a panel data set of 257 commercial banks in 23 African countries over the period 2004–2014.Findings The results show that higher regulatory capital buffers are associated with higher market power, higher revenue diversification and higher CF. Additionally, the results show significant evidence of procyclical behavior of bank capital buffers (BUFs) in the sampled countries.Practical implications The results of this study suggest that African banking systems are not exposed to contagion and systemic risks arising from countercyclical movements of BUFs to the real economy. Therefore, this study does not support the implementation of the Basel III CCB requirement in the sampled African countries.Originality/value Considering that the results of existing studies on the cyclical behavior of BUFs are inconclusive, there is value in studying the cyclical movements of bank regulatory capital buffers in a set of countries that has not been analyzed before. Toward this direction, this is the first empirical study focusing on the cyclical behavior of bank regulatory capital buffers in Africa. Besides examining the cyclical behavior of bank regulatory capital buffers, this paper further investigates the effects of bank revenue diversification, market power and CF on bank regulatory capital buffers. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to discuss more efficient mechanisms of regulation in the financial system.Design/methodology/approach The authors developed a theoretical two-period model of financial flows (FFs) that considers households, banks, and a social planner.Findings It is important to highlight that different from other studies that do not distinguish between financial crisis and financial instability, the authors assume financial instability does not mean crisis, but represents a deviation in the behavior of the aggregate financial intermediation and in the financial operations of each bank from the equilibrium.Practical implications The practical implication of the model is the proposition of an efficient policy for financial stability based on forward-looking financial regulations.Social implications An important result is that bank failures occur when banks do not maintain sufficient resources to support the liquidity constraint from the interbank market. Another result is that the central bank reacts, via exchange of reserves with the market, to financial instability. This behavior on the part of the central bank is inefficient because the banks will assume that in the case of failure they will be “saved;” thus it creates an adverse incentive (moral hazard) that can amplify the risk over the entire financial system.Originality/value The originality of the model is the proposition of an efficient policy for financial stability based on a forward-looking financial regulation. In this strategy the regulator acts in advance (ex ante) to minimize the mismatch of FFs in relation to the flow balance. This manner of acting is a counterpoint to the financial regulation based on capital requirement. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to determine whether current account imbalances – surpluses or deficits – are "excessive" and hence constitute a valid concern. The second objective is to assess the degree of capital mobility by comparing the variance of the current account derived from the intertemporal model with that of the actual current account. Design/methodology/approach – The paper addresses the issues by constructing the intertemporal model using annual data between 1960 and 2006. The authors applied the F-test, the Bartlett test and the Siegel-Tukey test to formally validate for equality of the variances of the optimal and actual consumption smoothing current accounts. Findings – Based on vector autoregressive model, it was found that the present value of future net output closely reflects the evolution of the current account series with a small (insignificant) deviation between the actual and the estimated consumption-smoothing current account. The results show that the hypothesis of full-consumption smoothing could not be rejected by the data for the full sample period, implying that the degree of capital mobility was quite high, even during the post-1997 period. The variance ratio of the actual current account to the optimal current account is not statistically greater than one. Therefore, it is concluded that there is no evidence to suggest inappropriate use of capital flows over the entire sample period under investigation. Originality/value – The authors relied on a more general framework, as suggested by Bergin and Sheffrin, which allows real interest rate to affect current account in order to provide a new perspective on Thailand's current account balance. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to measure the contribution of capital formation, labor, and technological progress to the growth of the Vietnamese economy, the impact of economic reforms (doi moi) since the end of 1986, and the rates of returns to capital and labor. Design/methodologyapproach - Cobb-Douglas production functions are built for Vietnam's economy and then estimated using annual data for 1975-2005. Findings - The two major findings are that: technological progress was statistically absent in the growth of the Vietnamese economy throughout the period studied; and the most important source of economic growth is capital accumulation, accounting for between 84 percent and 89 percent of Vietnamese economic growth throughout the period 1975-2005, and between 85 percent and 90 percent in the reform period (1986-2005). Originality/value - This paper is the first of its kind in the Vietnamese literature that successfully sheds light on, among other things, the roles of capital and technological progress in the Vietnamese economy during the period 1975-2005. It also makes clear that Vietnam's economic growth has been fueled mainly by foreign funds and, thus, the continued heavy reliance of the economy on this financial source will make its growth unsustainable. In order to achieve sustainable growth in the coming decades, Vietnam must shift to rely more on productivity growth, which has been absent so far, and less on factor accumulation growth. [ABSTRACT FROM AUTHOR]

Purpose - To test the Feldstein-Horioka hypothesis that the investment-to-output ratio moves one-for-one with the saving-to-output ratio, suggesting international capital mobility. Design/methodology/approach - The paper uses the econometric framework developed by Fisher and Seater, interpreting the Feldstein-Horioka hypothesis as a long-run phenomenon, and paying particular attention to the integration properties of the data, since meaningful tests critically depend on these properties. The paper also investigates the power of the long-horizon regression tests, using the inverse power function of Andrews. Findings - The paper tests the Feldstein-Horioka hypothesis for 15 European countries, as well as for the USA and Japan, using annual data for the period from 1960 to 2002. Evidence is found against the Feldstein and Horioka hypothesis of low international capital mobility. Originality/value - Although the findings are in contrast to those of Feldstein and Horioka, they are consistent with neoclassical growth theory according to which there is no reason to expect a relation between saving and investment if there are no barriers to capital movements. [ABSTRACT FROM AUTHOR]

Presents a framework for measuring the impact of the political and economic uncertainty on the investment decisions in the mining and manufacturing sectors in South Africa. Equation for the production as a function of capital and labor inputs; Equation for the equivalence of the marginal cost of capital with its marginal return; Measurement of the costs of investors' risk.

Investigates the accepted relationship of public capital and private sector productivity in the economic setting of Ireland. Limitations of past research; Two elements of public capital; Model of aggregate production; Limitation of the study; Caution on increasing public capital expenditures.

Presents a model of the holdings of capital uncertain assets of the personal sector in Great Britain. Relationship between the change in market-value asset holdings and market-value wealth; Imposition of cross-equation restrictions on the long-run parameters; Long-run share equations.

Examines marginal efficiency of capital (MEC) in relation to the neo-classical concepts of the marginal efficiency and the marginal productivity of capital. Neo-classical theory of the demand for capital goods service; Relationship between the marginal productivity of capital and the marginal efficiency of capital; Derivation of the marginal efficiency of investment from the neo-classical MEC.

Members of the Austrian school held particular views on capital. In this essay the development of Austrian theorising on capital is assessed and contrasted with what has been presented as the Neoclassical view. So far as this subject is concerned it was Böhm-Bawerk, among the older members of the Austrian school, who became widely known as the main contributor (partly because some of his work was translated early). [ABSTRACT FROM AUTHOR]

In their analysis of the sources of Colombia's notable economic growth over the period 1963-80, the authors find that, although much can be accounted for by growth in labour, capital and improvements in the labour force, the contribution of inputs was much higher than expected, particularly in the sub-period 1974–1980. The authors conclude that future investigations into sources of economic growth would benefit from breaking down growth into sub-periods, and investigating reasons for sharp differences in performance. [ABSTRACT FROM AUTHOR]

Data on shift-working, annual hours and employment are used to derive alternative measures of capital utilisation in seven countries. There is a positive relationship between utilisation and capital intensity, and utilisation levels in developing countries are significantly higher than in industrialised countries. Inter-country comparisons of capital productivity are made by comparing industries with similar levels of capital per production worker. It is shown that output per input of capital services in some developing countries is half that of comparable industries in industrialised countries. However, the higher levels of utilisation in developing countries partially offset these low values for the productivity of capital services. Data on labour productivity and earnings are combined to measure labour costs per unit of output and thus throw light on the overall competitive position of industry in the different countries. [ABSTRACT FROM AUTHOR]

Studies efficiency criteria and land reform effects in Brazil. Analysis of market performance; Redistributional effects resulting from factor market imperfections; Impact of size and tenure on factor use and return; Relationship between the price of labor and capital and its implications in reducing the relevance of farm machinery and the possibility of increasing returns.